Four Initials for AZ Real Estate Agents to Remember – CFPB

Well, it’s really going to happen. However, as AZ real estate agents, we learned just this week that the dreaded “change” that was about to happen is not happening quite as soon as we were originally told. The change we have been dreading is the loan application process and the new CFPB rules. These new rules will include new documents for Arizona REALTORS to use and changes in the residential loan closing process. But, we just learned that the changes that were to occur on August 1, 2015, has been postponed to October 1, 2015. So, we can set aside our fears and anxieties for at least two more months.

CFPB means “Consumer Financial Protection Service”. This new agency is not only changing the rules, they are changing the vocabulary. We have used “Good Faith Estimate”, “Truth-In-Lending” and “HUD-1” for as many years as I can remember. But, alas…no longer.

We must adjust to new language and welcome new real estate terms that relate to the “New Loan Estimate” and new “Closing Disclosure” document (names to be given…which I do not know at the time of this writing.) I understand that we will have a New Form and a New Timeline.

The period between delivery of disclosure and when the borrower can sign documents is changing. Technically, we are being introduced to “3-BUSINESS Days” for the borrower to “review” the loan docs. (All this after we have labored to have ONLY Calendar Days in the contract---and now this!) We must adjust our thinking to accommodate this change.

Fletcher Wilcox presented this scenario. “According to line 73 of the AAR Residential Resale Real Estate Purchase Contract the borrower is to sign loan documents three (full) days before the close of escrow date. So if the close of escrow is a Friday, the borrower is to sign loan documents on the preceding Monday. If the borrower is to have the Closing Disclosure three business days before signing the loan documents, the Closing Disclosure is to be delivered no later than the preceding Thursday. So in this scenario the Closing Disclosure has to be delivered eight days before the close of escrow date.” (Underscore—mine—CDH)

I understand that a special “AAR forms committee task force” is at work re-writing our AAR Residential Purchase Contract to accommodate these changes. (The 3-day cure will NOT work for this new loan provision). This is but one example and I’m confident there will be others. We must be prepared to understand and capable of explaining these changes to our clients (both sellers and buyers). So, prepare now and learn it well.

So, what do we do? We attend classes and learn what the new language will be. We learn to use the new language and follow the new rules. We may have to expect 45 to 60 day close of escrows, rather than 30 to 45 day closings.

Someone asked me a few days ago, “Can we do anything else?” My answer: “Of course, work only with cash buyers.” Happy CFPB.

West USA Realty is committed in ensuring its agents are prepared for the coming CFPB changes, no matter when they occur. To learn more about West USA, please call us today at 602-942-4200 and ask for one of our corporate recruiters.