This article was originally published in Real Estate Agent Magazine Twin Cities, written by Charity Malmberg, Founder and President of Trademark Title
With the RESPA/TILA know before you owe act taking effect this August, you will want to think about the changes and processes you can implement now. Read over the brief checklist below to learn of a few ways you can prepare for RESPA/TILA today, so your business is compliant and relevant when August rolls around.
#1 – Contact Your Lenders Today
Contact your trusted lenders to let them know of any brokerage fees and regular commissions that you or your broker may charge a buyer. This will allow the loan officer to provide an accurate loan estimate form. The accuracy of this form will dictate if you have a smooth and seamless closing.
You will also need to make sure your title company is on their approved list. In the near future, some lenders may not allow certain title companies to be a part of the transaction. This is with good reason; some of these companies may not have handled funds properly, recorded documents in a timely fashion or provided the title policy within the allowed timeframe.
#2 – Get To Know Your Trusted Closer’s Company
Be sure you know the company that your trusted closer works for. Read up on the seven pillars of the ALTA best practices to ensure your closer and the company are living up to ALTA’s standards. Here are some questions to ask your current title company or closer.
- Has your company adopted the best practices?
- Does the finance department conduct daily three way reconciliations?
- How do you handle consumer non-public personal information?
- How fast do you record the closing documents after closing?
- Are you utilizing e-recordings when the county permits?
- How fast will the new homeowner receive their owner’s title insurance policy?
- If the buyer has a complaint, how does it get addressed?
- How many title claims has your company paid out on?
- Do you have the technology in place to comply and work with various lenders?
#3 – Set Appropriate Expectations With Your Buyers And Sellers
As the real estate professional, you have an important role as the main contact in a transaction. Be well informed of the rules and documents. Educate your clients on the timelines, informing them of the longer transaction process. The typical 30-day close will be closer to 45 days. Preparing your clients to be proactive with getting their loan information to the lender will be vital in order to make the contractual closing date. Letting your sellers know if there are any fee tolerance violations on the buyer’s side, a closing may get delayed up to three days. Be sure your clients have alternative plans in these instances. If you are set to close on a Friday, make sure everything is done the Friday before. Also be prepared for longer closings if we need to rely on the lender in a different state to make changes to the closing disclosure.
#4 – After Signing a Contract Request the HOA Resale Disclosure Documents
Keep in mind the buyer has a 10-day right of rescission just for the resale documents. Additionally, your title company will probably require a dues current letter from the association, which takes an average of seven-10 days as well. These timelines are going to be very important as you try to comply with what is commonly called the three-day rule. Again, 15-20 day closings will be a thing of the past.
#5 – Do an Early Walk-Through
Seven-10 days prior to closing, monetary changes to the closing disclosure will be limited if not entirely prohibited. For this reason it makes sense to do a preliminary walk through at this time to take inventory of the property and try to anticipate any monetary issues that might affect the closing disclosure.
#6 – Review the Closing Disclosure for Accuracy
Preliminary closing disclosures will be sent out seven-10 business days prior to closing. Pay close attention to your commissions, broker fees, home warranty information or any other changes that may not have made their way over to the lender and/or title company. Be proactive; if you haven’t received a closing disclosure, call your lender and/or title company to get one. Upon receiving one, carefully look it over and notify your lender/title company with changes or send your approval within 24 hours so as to not delay the three day wait. Waiting and making any corrections to the buyer side closing disclosure could trigger a re-disclosure and another three-day wait for your buyer to close on the home of their dreams. Additionally, if that transaction is one of four, then you’ve just delayed all four transactions for three days.
Now that you’ve got a head start on revamping your business for RESPA/TILA, be sure you take the time to read the act and familiarize yourself with the new loan estimate and closing disclosure. By staying educated on these important industry changes, you’ll be doing yourself, your clients and your business a big favor.