The Consumer Financial Protection Bureau (“CFPB”), a new federal agency created in 2010, is imposing new financial disclosure rules for residential mortgage loans applied for on and after August 1, 2015. The new rules will eliminate the HUD-1 settlement statement which has been part of residential closings for many years and replace it with new forms, one of which, the Closing Disclosure, must be sent to the borrower/buyer a fixed number of days in advance of closing. Because large fines of as much as $1,000,000 per day can be imposed on lenders for violating the new rules, it is expected that lenders will err on the side of caution in following the new rules.
Under the new rules the Closing Disclosure, which contains all of the financial information about the closing must be received by the buyer/borrower at least three days before closing. Since it is expected that most lenders will mail the disclosure and because of the time periods for receipt of mailings imposed by the new rules, the Closing Disclosure will have to be mailed more than a week before a closing can occur. Adding to that period, the additional time to be imposed by national lenders for preparation and processing of the form, many lenders are likely to require final closing figures as much as 12 to 14 days in advance of closing.
Thus, for a real estate deal which today could be closed a day or two after final “clear to close” loan approval, the new rules will likely push off that same closing for two weeks after final loan approval.
Feel free to contact an Illinois attorney experienced in handling all aspects of real estate closings for both buyers and sellers at Logan Law if you have questions about the sale of your Chicago area real estate or any other area of the laws governing the purchase or sale of real estate.