Remember, It’s The Law! Five Things You Need To Know About Changes in Buying a Home

Starting October 3, 2015, there will be significant changes to the homebuying process in the U.S. The Consumer Financial Protection Bureau (CFPB) was established by Congress to improve consumer financial laws, and parts of these new laws will change the way homebuying disclosures are presented.

Here are five important things you need to know about these changes:

1. The Good Faith Estimate is no more. This has been replaced by the Loan Estimate, a disclosure that helps consumers understand the key features, cost and risks of a mortgage loan. 
2. Also gone is the Truth in Lending Disclosure. Now homebuyers receive an updated Loan Estimate and a Closing Disclosure, which helps them understand all of the cost of the purchase transaction.
3. There are significant new laws in place to help protect consumers from predatory lenders. They include the Homeowners Equity Protection Act (HOEPA) and the TILA-RESPA Integrated Disclosure (TRID), which integrates previous consumer disclosures. 
4. There are new time limits in place, as well. Pay close attention to the distinctions in these limits. The Loan Estimate must be provided to consumers no later than three business days after the loan application is submitted. In this case, a business day is any day that the lender’s offices are open to the public. The Closing Disclosure must be provided to the consumer three business days before they close on the loan. In this case, a business day is any calendar day except Sunday and legal public holidays.
5. One more document to know about is the Written List of Providers. This is a list of providers for a variety of services that homebuyers may shop for. It provides the type of service, estimated cost and contact information for the provider. Homebuyers are not required to use a provider from the list.

If you apply for a mortgage before these changes take effect, you will still use the current documents, including the Good Faith Estimate, Truth In Lending Disclosure and HUD-1 Settlement Statement throughout the loan process and loan closing, even if it extends past the date of the change. But if you apply for the mortgage starting on the day the changes take effect, or after, you will use the new documents.

VHDA’s Homebuyer Education program (in-person and online classes) is being revised to reflect the CFPB’s new laws and system. For more details on these topics and many more, visit our Homeownership Education webpage.

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