The Consumer Financial Protection Bureau has Expanded Coverage for Rural Lending

The Consumer Financial Protection Bureau (CFPB) recently began implementation of the Helping Expand Lending Practices in Rural Communities (HELP Act). This act helps small creditors that operate in rural locations and areas with few lenders to provide home loans. It expands the definition of "small creditors" and enables more lending institutions to take full advantage of the special lending provisions of home loan rules that took effect in January of 2014.

HELP Act

Known as H.R. 1259, the Helping Expand Lending Practices in Rural Communities Act provides guidelines for the Consumer Financial Protection Bureau to designate some counties as rural areas. This allows the Bureau to enact regulations under its authority. As such, the Bureau has authority to spend money from the Federal Reserve without appropriation. It is estimated that the HELP Act will increase CFPB direct spending by about $3 million over the ten year period from 2014 to 2024. Under this circumstance, pay-as-you-go procedures are applicable.

The term "rural" is based on Urban Influence Codes (UIC). These codes, set by the Department of Agriculture, make a distinction between what is a metropolitan location and what qualifies for rural development home loans from the USDA. Under the HELP Act, the CFPB is directed to develop a process by which areas that do not currently meet the UIC standards for rural areas be given an opportunity to receive rural designation. The HELP Act lists the criteria the Bureau should use when evaluating an application for a county to be designated as rural. All applications must also be made publicly available for comments. The Bureau must then make a decision as to whether or not the application is approved within 90 days of the end of the public comment period.

New rule takes effect March 31, 2016

The rule begins March 31 and the period for public comments is 30 days. It will allow more lenders to qualify for the small and rural credit provisions. The CFPB established special lending provisions for small lending institutions in January of 2014. The Bureau has taken several steps since that time to expand the definitions of both "small creditors" and what fits the definition of "rural area". Previously, these small lending institutions qualified for special provisions only if over half of its loans were for rural areas or areas classified as under-served. Beginning March 31, creditors can qualify for special provisions when they originate one home loan for a property located in a rural or under-served area during the previous calendar year. The Bureau plans to monitor how these changes effect lending and make any necessary adjustments as it sees fit.

Balloon payments

A controversial aspect of the HELP Act is that it allows these newly designated rural lenders to make Qualified Mortgages that have balloon payments. This runs contrary to the current Ability-to-Repay rule established by the CFPB. The rule does not allow balloon payments or other features that are considered risky on Qualified Loans. Additionally, lending institutions that meet the new standard for small lenders may originate loans of high value that have a balloon payment. These high value loans do not have to have an escrow account.

CFPB partners with Zillow

The CFPB also announced recently that it will partner with Zillow to collect information about home buyers. The CFPB will pay individuals to participate in surveys about their experience of searching for homes, obtaining a home loan, and the buying process of their primary residence. The Bureau says it will use information gathered to create more resources for educating future home purchasers and provide them with knowledge necessary to make more informed decisions about their personal finances.

The New HMDA Rule from the CFPB

In an effort to improve the information reported by lending institutions on residential mortgages, the Consumer Financial Protection Bureau (CFPB) finalized a new rule for the Home Mortgage Disclosure Act (HMDA) in October of 2015. The Bureau hopes this will simplify the process of reporting this vital information for banks and other lenders. In addition to working with other federal agencies to better assemble and organize information from financial institutions, the Bureau has requested public feedback on the submission process, error thresholds, consequences for exceeding these thresholds, and how the process may be improved with technology.

Changes to HMDA data reporting

Improved monitoring of fair lending: Banks and other lenders are now required to further detail the underwriting practices and how these practices affect a borrower's interest rate and other fees. The rule requires more information on how lenders analyze an applicant's deb-to-income ratio. Ensuring fair lending practices to all people in every community is one of the primary reasons the CFPB was formed after the collapse of the housing market. The new rule stipulates that lenders must report, with a few exceptions, applicant information on any loan that uses the applicant's dwelling as collateral. That includes home purchase loans, reverse mortgages, and open lines of credit.

Data lenders are required to report is updated: The new information that now must be reported includes loan duration, the duration of any incentive teasers or introductory interest rates, the details of any prepayment penalty and the property value. The additional data will improve the analysis of area market conditions and help regulatory agencies and the public identify any possible discriminatory lending.

Streamlining the reporting process

Aligning data requirements with industry standards: Banks and other financial institutions were previously collecting the same data required for HMDA compliance for their own internal processing and to prepare the loans for sale on the secondary market. The new rule updates data requirements to align with recognized and common industry standards. The CFPB hopes this will make data reporting easier for lenders by using definitions recognized by practically all financial institutions and people in the mortgage sector.

Lighten reporting burden on small banks: The new rule also eases the reporting burden for credit unions and small banks that operate outside the market of a large metropolitan area. Additionally, small depository corporations with a low volume are no longer required to report HMDA data. It is estimated that this one change alone reduces the total number of financial institutions required to report HMDA data by 22 percent. It also helps lower compliance costs for these small organizations that have few people on staff.

The CFPB is primarily focused on protecting consumers and making sure they have all the information needed to make informed financial decisions in all areas of their life. The CFPB provides consumers with resources free of charge at the CFPB site. Financial institutions will be required to collect data according to the new rule on January 1, 2018. After necessary modifications are made to protect borrower privacy, the data will be made available to the public in 2019.

Public participation is a part of how the HMDA protects all consumers. The information collected under the HMDA is analyzed by consumer groups, regulators, research organizations, educational institutions, and more. For the HMDA to remain effective, it requires quality data on home loans and the individuals who are applying for credit. In an ongoing effort to improve the function of the CFPB, the Bureau recently announced that it is accepting applications for 23 seats on the Advisory Board and Councils that will become available later in 2016.

CFPB Asks for Feedback on Home Mortgage Disclosure Act

The Consumer Financial Protection Bureau (CFPB) is requesting feedback from the public on resubmission of mortgage lending data that is reported under the Home Mortgage Disclosure Act (HMDA). The federal agency finalized a new reporting requirement for the HMDA in October of 2015. Due to the new requirements, the resubmission guidelines may also need changing. This is why the Bureau is asking the public for help on what changes may be best.

The Home Mortgage Disclosure Act

Congress originated the HMDA in 1975. Enforcement fell under the Federal Reserve Board's Regulation C. in  2011. Authority to write rules for Regulation C was transferred to the CFPB when it was formed by the Consumer Protection Act of 2010 (Dodd-Frank Act). The HMDA stipulates that lenders must report data about the home loan applications they receive, purchase, and originate. This allows regulators and the public to monitor whether or not lenders are properly serving the housing needs for the communities in which they are located. It also helps with the distribution of public-sector investing and brings additional private investments when needed. One of the primary purposes of the HMDA is to prevent discriminatory lending practices by identifying any inappropriate patterns in the origination of home loans.

It is imperative that the information gathered is accurate to fulfill the purposes of the HMDA. The CFPB conducts examinations to ensure the data reported is accurate and establishes resubmission guidelines that detail when the lending institutions will correct and resubmit data.

Request for public feedback

Some have asked the CFPB if its guidelines for resubmission of mortgage lending data would be changed to reflect the additional data submission required under the new rules. The Bureau is asking the public to comment on any changes to the resubmission guidelines needed under the new regulations. More specifically, the CFPB's resubmission error thresholds and how these thresholds should be calculated. The Bureau also asks for comments on whether or not the thresholds should change according to the size of a submission or the type of data in the submission. The CFPB also would like to know public opinion on what the consequences of exceeding a threshold should be. Other points in the request for information are about how the CFPB reviews lending data, processes that can be carried out by technology, improvements to the data collection process, and any input that will help the Bureau reduce errors in the HMDA data. The request for information is open for 60 days after its publication in the Federal Register. More information about the request for information is available at the Consumer Financial Protection Bureau website.

An ongoing effort to improve the mortgage industry

Richard Cordray is director of the CFPB. He reiterated the importance of the HMDA to protect the public from discriminatory lending practices and provide accurate information about home lending in communities across the country. The purpose of the Bureau is to make regulations and guidelines clear and streamlined for consumers. In addition to protecting the public by establishing and enforcing rules for lenders, the Bureau takes complaints from consumers, promotes mortgage education, studies consumer behavior, monitors the housing and mortgage market for an new risks to borrowers and home buyers, and strives to eliminate any unfair or abusive lending practices.

The Consumer Financial Protection Bureau was established as a result of the housing market collapse. That market collapse resulted in hundreds of thousands of foreclosures and even more properties with title problems. It is essential that all home buyers are aware they can turn to the CFPB with any question or concerns and that they have a personal title insurance policy in addition to the policy required by their lender.

How a Land Survey Protects Home Buyers

Purchasing a home involves a lot of different processes all taking place during the same time frame. Once a contract is executed, it puts in motion several actions that must be completed prior to the closing. All of these things take time and require professionals who are knowledgeable and experienced in their particular field. The typical home buyer is a novice to all of this. That is why they need expert counsel by a caring REALTOR who will guide them through the process and explain the importance of things like title insurance and land surveys. Without understanding the purpose of having these things, many home buyers will feel overwhelmed and opt to skip some items to save a little money upfront. Here are a few basics about land surveys and how having one done will help prevent future costs and headaches for home buyers.

What is a survey?

A survey is the official and documented opinion of a certified surveyor on the location of a property's boundaries, buildings, structures, easements, right of way and encroachments. It records projections, variations, easements, boundary lines and is a legal representation of what the home buyer is actually purchasing. A survey is crucial when purchasing title insurance to protect the home buyer.

Why do home buyers need a survey?

The housing market collapse resulted in banks, lending companies, and property management companies receiving a huge volume of properties that they never intended to own and were not prepared to handle. Attorneys and courts were overwhelmed by the number of foreclosures they had to process. For paralegals and and other people in the process, it created mountains of paperwork and massive tangles of red tape (both digital and hard copy) that they had to work through quickly and under ongoing stress. To reduce costs, many essential aspects of proper land transfer were eliminated. These led to many properties being put back on the market with encroachments and other discrepancies in the legal description. Some properties that fell into foreclosure were situated on parcels that were part of large family-owned properties. Banks that made loans to construct homes on these parcels did not always make sure there was proper legal access in place. As a result, the people who purchased the homes from the bank had a costly and tiresome legal process to set things right and have legal access.
Differences between tax maps and survey lines is also a possibility. The property taxes a home owner pays are based on the the size of the property and what is included within the property boundaries. Too often, home buyers pull up tax maps or, even worse, some other online aerial view of property to determine property lines based on fences, trees, the amount of lawn mowed, or driveway locations. This method and taking the word of home sellers, agents, or neighbors is unreliable and will almost certainly lead to confusion and disputes at some time in the future. The only way for a home buyer to know what they are really buying and to protect their purchase is to have a survey done by a certified surveyor and have their own title insurance policy that is in addition to the policy required by lenders.

The cost of a survey

Surveyors typically charge based on how much time it takes to do the survey. Factors like terrain of the property, access to records and size of the parcel all influence the cost. Some surveys do not need a printed map of the property. It reduces costs if all the buyer needs is flags and corner markers. If the buyer uses the same surveyor who did the previous survey, it is typically less costly than hiring someone unfamiliar with the property. Buyers can also reduce the amount of time a surveyor will spend doing their field work by making sure property lines are clear. Much like title insurance, the initial cost is minimal compared to the value of the protection and peace of mind a survey provides.

What's In Store for the 2016 Housing Market?

While the constant headlines of home foreclosure numbers are now a distant memory, the housing market has still not quite returned to its pre-recession strength. New home starts spent this past spring idling in hope that millennials would soon dive full force into home ownership. But a lot of the millennials opted to continue renting and pay down some debt. The federal government enacted numerous rules and laws aimed at protecting home buyers from predatory lending. And mortgage rates remained at historic lows. One positive that has come from the housing market collapse is that more home buyers are aware of the importance of title insurance. This came from the large number of bank-owned (REO) properties that had to be reabsorbed into the market before any substantive market growth could begin. But, what do industry analysts anticipate for 2016?

Many consumers remain pessimistic

Trulia commissioned Harris Poll to survey Americans about their view of the current and future housing market. Business Insider reported the results. Their research found that 80 percent of people in the important millennial demographic hope to someday own their own home. They found that 75 percent of people in all age brackets still hold onto the American dream of home ownership. About 22 percent of respondents believe it will be more difficult to obtain a home loan in 2016 than it was in the preceding years, due primarily to rising interest rates. Thirty-one percent of those millennials say they do plan to purchase a home by 2018. Their job status and how much money they have saved for a down payment will determine whether they pursue that goal in 2016 or later.

Fannie Mae and FHA try to make obtaining a loan easier

In addition to more buyers understanding the importance of title insurance, home buyers are more cautious about getting a home loan. In an effort to draw some of the qualified buyers who are still sitting on the sidelines into the market, the Federal Housing Administration (FHA) lowered premiums on mortgage insurance below the traditional 0.85 percent to 1.35 percent. That is enough to save home buyers about $900 each year on their mortgage insurance. Additionally, Fannie Mae is also trying to make the path to home ownership smoother for buyers. Buyers qualified in other ways can get a home with as little as 3 percent down.

Another effort to make buying easier is the HomeReady mortgage program. HomeReady takes into consideration the income of other people living in the home, without these people being listed as a borrower on the mortgage. This means if a person represents at least 30 percent of the household income, their earnings can count toward the loan qualification. This program can also be used to include persons not living under the roof, like the parents of millennials who are willing to help their children with some monetary assistance.

Boomerang buyers may be coming back into market

While the first-time buyers get the most attention, it is the boomerang buyers who are likely to determine the overall strength of the 2016 housing market. The Northwestern University Institute for Policy Research estimates that  approximately seven million people across the United States lost their home to foreclosure during the recession. While the lenders may be reluctant to lend money to anyone who has a foreclosure in their past, the National Association of Realtors (NAR) says almost one million of those people who lost a home previously are looking to buy again. The housing market will never fully recover until this demographic is once again allowed to borrow money to get their American dream back.


It is important that all home buyers be more prudent with their purchase decision. This includes being sure they can comfortably afford their mortgage. They should also have a thorough home inspection, and purchase title insurance for their own protection, in addition to the title insurance that protects the lender.

The CFPB Continues Striving For Transparency in Mortgage Market Practices

The Consumer Financial Protection Bureau (CFPB) strives to empower consumers by providing them with the information they need to make prudent decisions about their finances. Part of that mission involves simplifying the industry jargon and legalese associated with contracts and most financial documents. Their primary purpose is to educate consumers about abusive practices. They also

actively supervise the conduct of lending institutions and other financial service companies. The CFPB analyzes market information and consumer data to determine the best policies for protecting consumers. The CFPB has just updated rules for loan disclosure and mortgage market practices.

The Integrated Disclosure Rule Rollout

There were vocal critics of the Integrated Disclosure Rule when details were first released in 2013. Combining the Truth in Lending Act (TILA) with the Real Estate Settlement Practices Act (RESPA), it became known as Integrated Disclosure, or TRID. Despite approximately two years to prepare for the implementation, the rollout was not as smooth as the CFPB had hoped. The rule was delayed by two months because the CFPB felt the lending industry needed more time to prepare. There remains some uncertainty of how to best lock interest rates for borrowers on closings that may be delayed to comply with the integrated disclosure rule. Historically, most rate locks were for 30 days and at not cost to the borrower. To meet with the "Know Before You Owe" requirements, some closings are delayed and require rate locks of 45 and 60 days. For a borrower to lock an interest rate for that term, they may incur hundreds or thousands of dollars in additional fees.

Prior to the integrated disclosures rule, many lenders were accused of bumping up interest rates on home loans just prior to closing and tacking on additional fees like prepayment penalties. TRID prevents any last-minute changes by giving borrowers three days to review all loan documents prior to signing. Consumers can also walk away from transactions without penalty, under some circumstances.

The CFPB has just updated rules about lending practices and understands that TRID is the biggest change the mortgage industry has had in the past 40 years. Full implementation requires updates to existing software and changes in how vendors supply market data interest rate information to banks and other lending institutions. The CFPB is expected to re-evaluate implementation and report on progress of adapting the TRID rule later in 2016.

Updates to the Home Mortgage Disclosure Act

The CFPB has just updated rules regarding the Home Mortgage Disclosure Act (HMDA). The rule was enacted over 40 years ago by Congress in response to the allegation that banks were not properly servicing some communities. The HMDA addresses this concern in three ways:

It shows whether or not lenders are properly serving the housing needs of their community.

Provides information to public officials so they can make informed decisions on policies for the local area.

Reveals any lending patterns that may be considered discriminatory.
The CFPB has just updated rules to the HMDA that should improve lending data for local, regional and national housing markets. Lenders will be required to report property value, loan terms, an prepayment penalties, and the specifics of any introductory interest rates or teasers. Additionally, lenders mus provide more information than they did previously on underwriting policies. The new data requirements will be effective on January 1, 2018. The compiled data, edited to maintain privacy of applicants and borrowers, will be available to the public in 2019.

When individuals apply for a loan, they will be asked to provide their race, ethnicity, sex, and income. This information is used by consumer groups, researchers, and regulators to ensure all people are receiving fair treatment and an equal opportunity to realize the American dream of home ownership.

Coastal Home Owners Need to Brace for Hurricane Season

It seems the storms get more severe every year and the financial toll keeps climbing with every hurricane season. For many Americans, the hurricane season is something they only see on the news. But for owners of coastal homes, it is a part of life. The hurricane season runs from June 1st to November 30th. Some years are worse than others, but people living on the coast or planning to purchase a coastal home must always be prepared for the worst case scenario.

Before the hurricane season
A below-normal hurricane season doesn't mean people living near the coast are going to avoid the catastrophic impact tropical storms can cause. The should always be ready to respond quickly and have some basic supplies readily available.

• Know what evacuation route you will use. Keep in mind that thousands of other drivers will probably be using the same roads.
• Have a disaster kit for each family member and be sure they know where it is. It should include a flashlight, batteries, first aid supplies, food, cash and identification. It is a good idea to have a crank charger and spare battery for cell phones and flashlights.
• Be prepared to remain in your home for several days without power or supplies from the store. You may want to seriously consider a backup generator that is capable of powering the entire home.
• During times of crisis, communication is always difficult and cell towers are pushed to their maximum capacity. Prepare a family communication plan well in advance of any emergency.
• Many coastal communities have alert systems to send emergency notifications by text or email. When moving to a new area sign up for these alerts by searching the community name plus "alerts" on the internet or contacting the area fire department and first responders.

Preparing your home
A person's home is often their place of comfort and protection during life's many storms. But these well-built structures are vulnerable to forces of hurricanes and severe storms. Some advanced planning can reduce risks and minimize the financial toll when storm damage occurs.

• Evaluate your home insurance policy for adequate coverage. Most standard policies do not include flood insurance. You should also add coverage for any exterior buildings or other features that could be costly to replace.
• Routinely inspect your rain gutters and down spouts. They should be clear of debris and securely attached to properly divert water away from your home during heavy rains.
• Have wood cut to size for quickly boarding up windows. Storm shutters are the best protection, but more costly. Taping windows and doors provides absolutely no protection.
• Doors should have multiple locking mechanisms to prevent them from flying open during a storm. Open windows and doors increase internal pressure under the roof and can lift it off the house.
• Consider installing hurricane straps that will securely attach the roof to the rest of the structure for added strength.

The inevitability of hurricane season does not mean people can't enjoy the many benefits of living near the coast. Everyone has to prepare for emergencies. Everyone's life has some storms. There are lessons to be learned during sunny weather and things to learn during storms that will enhance a person's life. In addition to protecting your own home and preparing your family for emergencies, participate in community events and take part in helping others prepare for hurricane season. A strong and resilient community needs your participation. By participating in community activities, you help minimize the disruption a storm can cause and help thing get back on track sooner. Remember to include your pets in the disaster planning and have some extra food on hand for them.

Integrated Disclosures : A Crash Course

A recent study by Nationwide Economics shows the housing market is stronger than it has been in the past 14 years. Confidence in the economy continues to improve as more

people are able to find work. As people began feeling more positive about their financial future, they are returning to the pursuit of one of their most significant life-long goals: home ownership. More than half of home buyers each month are first-time buyers. Part of the Consumer Financial Protection Bureau's (CRPB) ongoing effort to protect the public and help them realize their financial goals is the implementation of the TILA-RESPA Integrated Disclosure. It is part of your responsibility as an adviser and real estate agent to clearly explain the new rule in an easy-to-understand manner.

Purpose of the TILA-RESPA Integrated Disclosure rule

The Consumer Protection Act directed the CFPB to establish forms that would combine disclosures for people when they apply for a mortgage. This covers forms required by the Truth in Lending Act, also known as Regulation Z, and the Real Estate Procedures Act, known as Regulation X. In the past, many home buyers were confused and overwhelmed by the amount of paperwork quickly forced on them by unethical people in the lending industry. This led to predatory lending practices and many people with mortgages on their homes that they could not afford to repay. It was a key contributor to the housing market collapse. The TILA-RESPA Integrated Disclosure Rule is meant to simplify and improve the method of supplying information to home buyers. Providing information to borrowers about their rights and responsibilities in clear language empowers borrowers and gives them more opportunity to make informed decisions they will feel good about for many years.

What the rule does

A new form called a Loan Estimate replaces the form required by the Truth-in-Lending Act (TILA) and the Good Faith Estimate required by RESPA. If the borrower is working with a mortgage broker, the actual lender is still responsible for making sure the borrower receives their Loan Estimate. The Integrated Disclosures rule applies to practically all closed-end consumer mortgages, but not to reverse mortgages, loans secured by a mobile home or other residence that is not attached to real property, equity lines of credit, or loans made by creditors who make five or less mortgages a year. With the exception of charging for the cost of a credit check, lenders can not charge borrowers any fees until the borrower has received their Loan Estimate and made the decision to proceed with the loan process.  

The Loan Estimate

Lenders are required to provide consumers with a Loan Estimate when that consumer has given the lender the following information: The consumer's name, social security number, and income. The property address, estimate of value for the property, and the loan amount the borrower seeks. The TILA-RESPA Integrated Disclosures Rule removes other information, called "other relevant information" that was allowed under RESPA. Lenders may collect any additional information needed for extending credit after they have provided the Loan Estimate upon receiving the initial six pieces of consumer information.

The Closing Disclosure

This new document replaces the final document required by the TILA and the HUD-1 settlement statement that has always been required by RESPA. The new Closing Disclosure is five pages and provides consumers with the actual terms of their purchase transaction. The consumer has three days to review the Closing Disclosure before the loan is finalized. If the Closing Disclosure is mailed to the borrower instead of hand-delivered, the three day review period begins three days after it was mailed. The Closing Disclosure must reflect all actual cost of the transaction. If there are any changes in amounts prior to or after the closing, the lender must provide the borrower with a corrected Closing Disclosure with the actual amounts. All amounts must be documented in writing and not delivered verbally.

Countdown to Compliance - What you need to know for Aug. 1

Real estate is a people business. Some of the best agents are not technologically inclined and they have to make an ongoing effort to ensure they properly dot the i's and cross the necessary t's of paperwork. It is fine if your natural talent is face-to-face interaction with your clients or negotiating effectively. But to best represent your clients, you must also understand the new mortgage disclosure forms and be able to explain them to your clients.

Director of the Consumer Financial Protection Bureau (CFPB) Richard Cordray is quick to point out that the new rule was approved 21 months in advance of the August 1, 2015 implementation day. Nobody in the industry can say they were not given time to prepare. Here are a few things all real estate agents need to know.

The Consumer Financial Protection Bureau

Congress formed the CFPB in response to the many people who lost their homes during the 2008 market collapse. The main purpose of the CFPB is to protect the American public from unfair and deceptive practices like the predatory lending that contributed heavily to the housing market bubble of 2006 and the subsequent credit crisis that occurred when that bubble burst. In an effort to help the public better understand their financial products, services, and rights in these matters, the CFPB seeks to simplify required forms and use plain language in all required documents.

The CFPB website has a resource center to answer any questions you may have about forms or the TILA-RESPA Integrated Disclosure rule. It includes sample forms, webinars, and compliance guides. Do not just rely on word-of-mouth information you may receive from other agents or mortgage professionals.  

Initial loan estimates

From August 1, 2015 and going forward, borrowers will receive one Loan Estimate form instead of the separate forms for the Good Faith Estimate (GFE) and the disclosure form mandated by the Truth-in-Lending Act (TILA). This new form is three pages and borrowers should receive it along the same timetable that they had previously received their GFE.

Closing Disclosure form

The HUD-1 Settlement Statement is also combined with the final TILA-mandated form to become one Closing Disclosure form. This form is five pages. It includes terms of the loan and the financials of the sale closing.

Could affect closing date

The new rule mandates that borrowers have some time to review the Closing Disclosure in detail prior to signing. When the rule goes into effect, borrowers will have three days to review the form. That three days stars from the time they receive the form. If it is mailed, the three days start three days after it is mailed. This could result in a total of six days if the form is mailed instead of hand-delivered to the borrower.

No more line numbers

In an effort to make the Closing Disclosure form easier for borrowers to understand, the familiar line numbering of the HUD-1 is gone and in its place the charges and fees will appear under one of the following seven categories:

• Pre-paids
• Taxes and government fees
• Escrow paid at closing
• Origination fees
• Services the borrower did not shop for
• Services the borrower did shop for
• Other

In each of the categories, the individual charges are listed alphabetically. They are divided into columns for the seller, buyer, and other. There are also columns indicating payments made before closing and at closing. It is possible that your clients will get more than one Closing Disclosure. If your buyers receive their Closing Disclosure several days in advance of the closing and final walk-through of the property, another will be necessary to show and adjustments due to issues found during the walk-through or other circumstances. The CFPB requires that any change in the numbers be re-disclosed, even if the changes occur after closing, such as changes to the actual amount of recording fees.