With the new TILA-RESPA Integrated Disclosure rule going into effect on October 3, Fidelity National Title senior sales executive Connie Montalbano-Hill and senior account executive Desiree Baker want to make sure REALTORS® are prepared, so no delays will occur with their transactions. At Thursday’s Silicon Valley Association of REALTORS® Cupertino/Sunnyvale District tour meeting, they explained the fine points of the new law, what’s different, and what REALTORS® can do to make sure a transaction won’t fall through.

The new forms are a consolidation of several forms. The Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosures will be combined into a new form called the Loan Estimate. The HUD-1 and the final Truth-in-Lending disclosures will be combined into another new form called the Closing Disclosure.

Timing is critical. According to the Consumer Financial Protection Bureau, the Closing Disclosure must be delivered and received three days in advance of “consummation” of the loan. If the Closing Disclosure is not actually received in person, the new rules require an additional three-day period if it is delivered by mail or electronically. Given that Sunday is not counted, the Closing Disclosure will have to be delivered seven days before consummation. “Consummation” will typically be the day loan documents are signed, which is usually at least one day in advance of closing but could be more.

Baker said three changes would require a new 3-day review: if the APR increases by more than 1/8 of a percent for fixed rate loans, or 1/4 of a percent for adjustable loans; if a prepayment penalty is added, making it expensive to refinance or sell; and if the basic loan product changes, such as a switch from fixed rate to adjustable interest rate or to a loan with interest only payments.

The title company representatives gave SILVAR members a list of title insurance facts they need to know, including new terms and information included in a loan estimate. They said the new rule ensures that the lender take more of a leadership role in the transaction, but every lender is different. That’s why it is very important that REALTOR® have good communication with their lender, their title officer, and their client.

“Know you client well, so you avoid surprises,” said Montalbano-Hill. “Take care of the details ahead of time. The more you know your client, the better.”

Montalbano-Hill noted that a change in the name of a newly married spouse, for instance, can cause problems if not disclosed to all parties.

Baker added, “Don’t make assumptions. Everyone is going to have to be on the same page at the same time.”