Think carefully before rocking that 3 day CD boat

With the new CFPB regulations that went into effect October 3, 2015 in full swing now, buyers, sellers and realtors need to plan for potential delays on closings.

Lenders and title companies are both working through all the kinks in the practical application and implementation of the new rule requiring buyers/borrowers to receive a final Closing Disclosure with all fees and closing costs 3 days before the closing date. Any substantial changes to these fees, even downward, can delay closings in frustrating 3 day increments. A recent pre-holiday 2015 closing didn’t close until 16 days later due to so many holes in the process and the always complicated holiday period. The timing for the first set of loans to hit the closing table could not have been worse.

As February is underway, it seems lenders, title companies, realtors, buyers and sellers are all becoming more familiar with the process and things are settling down. Fortunately, the Florida Association of Realtors FAR CRSP14 and FAR/BAR14 contracts adequately address these delays, so sellers are obligated by contract to cooperate.

Here is the main takeaway so far:

Buyers and sellers both will get frustrated with delays that are generally not of their own making.
Remember ANY changes to the buyers loan /cash to close, even a last minute seller contribution or a realtor credit, will trigger a delay since the loan’s terms have to be re-disclosed. Think carefully before rocking that 3 day boat.
Suggest that out of town/ absentee sellers plan for what is known as a “mail away closing” (their documents are signed/notarized in their hometown and sent back via FEDEX) to avoid pricey airline tickets and expensive flight changes. Have sellers pre-sign their seller documents (deed, bill of sale) as far in advance as possible and assign a local Power of Attorney for the final closing documents to be executed and expedited locally.
Since moving is brutally stressful on buyers and sellers, suggest they wait for the loan commitment and closing date in writing from the lender before starting the packing process
On contingency sales, make sure to the seller’s purchase is timed to allow plenty of time for their 1st closing and delays as well as for the 2nd closing and delays. I have even told buyers to look into Airbnb.com and storage options, since these scenarios have and will happen.
Reminder that FHA loan documents and some conventional loan documents require seller signatures, so plan ahead to have sellers on standby to sign these.
Lenders are still working out the kinks in their procedures and will without apology cancel and reschedule closings often without communicating this effectively. Buyers/borrowers, more than ever need to select competent lenders/mortgage brokers with a proven track record and constantly communicate with them regarding their loan status and anticipated closing date to ensure accountability.

CDTiming cheat sheet and nerves of steel will help real estate industry professionals adjust. The process is messy planning-wise, but can be accomplished by letting buyers and sellers know delays are likely and that their best option is to cooperate fully and let the process unfold. Closings do get closed, albeit a more tediously than before. Please contact us at 305-271-0100 or [email protected] with any questions.

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