Thanks to regulations stemming from the Dodd-Frank legislation, big changes are coming to residential real estate closings on deals initiated after October 3rd. The changes affect everyone from clients to banks to closing agents and Realtors.
The biggest changes buyers and sellers will notice include:
- Buyers taking a mortgage will now receive a “closing disclosure” from the lender at least three days before the closing. This disclosure will include accurate closing fees and other expenses buyers will be expected to pay.
- There will no longer be a “HUD statement” to describe all settlement figures. Instead, two separate closing statements will be generated, one for the seller and a separate one for the buyer (said to better protect financial privacy).
- Closing statements, along with a bank’s closing disclosure, must now be sent to the buyer at least three business days before a closing. This will give buyers time to comb through all the information before coming to the closing.
- During a closing, buyers and sellers will no longer be permitted to be in the same room at the same time. (Again, this is thought to better protect financial privacy for each party.)
- Because lenders will need to complete closing statements earlier, among other reasons, they will need to get details about the deal, such as maintenance figures, earlier than previously required.
- Even private lenders, such as friends or relatives, are affected by this law. In some cases, they will need to adhere to the same timetables and rules as regular banks.