A Primer on a New Era in Residential Real Estate Closings

This article originally appeared in the May 2015 issue of the Cincinnati Bar Association’s CBA Report.

The Dodd-Frank Act of 2010 created the Consumer Financial Protection Bureau (CFPB). On March 2, 2015, the Joint Committee between the Cincinnati Board of Realtors and the Cincinnati Bar Association sponsored a presentation of the basics of the new regulations.

The CFPB authored and published 1888 pages of new rules regulating the residential mortgage lending and settlement industries in November, 2013. In what was conceived as a more consumer-friendly form, the Good Faith Estimate, (GFE), renamed the Loan Estimate (LE), and the Truth-in Lending Statement (TIL), and the HUD-1 form are all now combined into a five page document to be known as the Closing Disclosure Form (CD or CDF.) The CD will be used for all loan applications submitted and subsequent closings occurring after October 3, 2015.

The residential closing vernacular has undergone other revisions. The integration of these documents is known as TRID-(Truth-in Lending/Real Estate Settlement Procedures Act) Integrated Disclosure. The Lender will be called the “Creditor,” the Borrower will be called the “Consumer,” and the Closing/Settlement will be called “Consummation.” The Creditor is ultimately responsible for the preparation, accuracy and delivery of the CD, which is required to be received by the Consumer three business days prior to consummation. The method of delivery to the Consumer is governed and defined by the new regulations. The rules allow for the preparation and delivery of the CD to be coordinated with the settlement services provider. Consummation is defined as “the time that a Consumer becomes contractually obligated on a credit transaction.”

Creditors will be subject to severe civil penalties for violations of the new regulations: up to $5,000/day; if the violation is reckless, up to $25,000/day; and if it is knowingly, up to $1,000,000/day.

The CD form and its accompanying rules and regulations can be found on the CFPB website: http://www.consumerfinance.gov/.  Basically, the closing figures will be displayed in a five-column format. The old HUD-1 sequential line numbers are eliminated and replaced with lettered sections, with categories in alphabetical order and numbering starting with the number 1 in each section. Basically, the five-column summary of the closing costs details will be on page 2 of the CD and the cash to close and summaries of transactions will be on page 3 of the CD.

Attorneys are encouraged to become familiar with the new CD format by visiting the CFPB website. In addition, the Joint Committee will present additional forums on the rules and forms, as well as a seminar in the next few months. Dates will be announced through the Cincinnati Bar Association website, including meeting notices for committee members.

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  • About the Author


    Roccina S. Niehaus

    Roccina Niehaus focuses her practice on residential and commercial real estate law.  In her 28 years of experience in the real estate field, Roccina’s practice has included title review and underwriting, including risk assessment and curative measures; preparation and closing of residential and commercial transactions, subdivision/planned unit/condominium development, and the negotiation and preparation of all types of real estate documents.

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