Florida Real Estate Closings
In any real estate transaction involving the sale of property, federal law requires that both buyers and sellers receive certain closing documents before the sale can officially be finalized. Prior to October 1st, the closing documents included the “HUD-1 Settlement Statement.” However, since the passage of the Dodd-Frank Act in 2010, the Department of Housing and Urban Development (“HUD”) has turned over responsibility for overseeing national home loans and mortgages to the Consumer Financial Protection Bureau (“CFPB”).
The result is stricter regulations which are implemented by the required completion of a new set of documents known as the “TILA-RESPA Integrated Disclosure Forms” (“TRID forms”). The new set of guidelines will significantly alter the process of obtaining a loan for the purpose of purchasing real estate in the state of Florida.
The CFPB has been charged with implementing changes through the following federal laws: the Truth in Lending Act (“TILA”), and the Real Estate Settlement Procedures Act (“RESPA”). TILA is specifically aimed at protecting consumers by requiring banks to disclose to potential borrowers specific details about credit terms. RESPA further protects borrowers by requiring lenders to give full information on home loans when consumers are making mortgage decisions.
There are several major differences in closing requirements now that TRID forms are a necessary part of any closing documents. These differences include:
The Good Faith Estimate and the Truth-in-Lending forms have been replaced by a Closing Disclosure, which is used to disclose the terms and provisions of the loan as well as the financial transaction of the sale, and a Loan Estimate;
A lender cannot impose any fees except for obtaining a consumer’s credit report, until the loan estimate has been received by the consumer, who also must have shown an intent to proceed with the transaction;
Mortgage lenders are required to give a potential home loan borrower an estimate within three full days of the date of the application; and
Lenders must provide any home loan closing documents within three days of the closing date.
Rules for Closing Procedure
In its efforts to increase transparency for consumers, the CFPB has instituted the following guidelines regarding deadlines and waiting periods:
- All forms must be ready three days prior to closing;
- The three-day waiting period: One aspect of the new form that has received a significant amount of criticism is the requirement that the parties wait for three days when any changes are made to the form; and
- The new mortgage process will take approximately 45 days instead of the traditional 30 days.
The transition from the old system to the use of TRID forms may result in the lengthening of the mortgage process as the new rules are implemented. At the Law Offices of Larry E. Bray, we can help you navigate your TRID forms and speed up the process while also assisting you with any other questions you have about your real estate transaction. Please contact us in West Palm Beach for a free initial consultation.