New federal rules on Closing Disclosures creating trouble for real estate agents
The Consumer Financial Protection Bureau’s (CFPB) new rule surrounding federal real estate settlement procedures is causing lenders and title companies to refuse to provide closing documents to real estate agents. According to a National Association of Realtors (NAR) survey of lenders, less than 30 percent are willing to show closing documents to real estate agents under the new rules.
Enacted back in October 2015 under the Truth-in-Lending Act/Real Estate Settlement Procedures Act (TRID), the CFPB replaced the HUD-1 settlement sheet with a Closing Disclosure, or CD. This shifts the responsibility of ensuring accuracy of closing documents from closing agents to the lenders themselves. Instead of relying on real estate agents to double check closing statements for errors, lenders are doing it themselves, but with little success.
According to the NAR, 54.5 percent of agents report having trouble obtaining Closing Disclosure forms from lenders, and 50 percent of these agents discover inaccuracies when they finally reviewed those forms. These inaccuracies include incorrect fee charges, commission splits, taxes, and failure to include seller concessions to the purchasers, all of which add to the cost of buying a house and delay the number of days it takes to close on a purchase. CFPB intervention is again proving to do more harm than good in the real estate community.