Know Before You Owe: A Work in Progress

Know Before You Owe: A Work in Progress

RECBL - Real Estate News

The Consumer Financial Protection Bureaus (CFPB) "Know Before You Owe" harmonization of the Truth in Lending Act and the Real Estate Settlement Procedures Act (TILA-RESPA, or TRID) has been a work in progress for several years, overhauling mortgage disclosure practices to improve clarity with the home-buying process.

With the CFPBs guidance and willingness to reduce ambiguities, lenders, real estate agents, and settlement providers have finally started adapting to the new system.

A National Association of REALTORS(R) (NAR) Survey of Mortgage Originators revealed that while TRID-related delays may still be occurring, cancellations attributed to the new processes have decreased.

When TRID went into effect in 2015, lenders were reluctant to share the new required Closing Disclosure (CD) with real estate professionals out of fear of liability for disclosing clients nonpublic personal information. Lenders claimed that sharing the CD violates federal privacy law (Gramm-Leach-Bliley Act, or GLBA); however, an exception within the GLBA allows lenders to distribute the CD to third parties, including real estate professionals.

In a new final rule issued in July, the CFPB reiterated that TRID did not amend this existing exception and explained that it is "usual, appropriate, and accepted for creditors and settlement agents to provide the combined or separate Closing Disclosure to consumers, sellers, and their agents." This language gives confidence to those hesitant to share the CD as it is "a confirmation, statement, or other record of the transaction" falling under the GLBA exception. The CFPB further clarified permissible CD modifications when necessitated by applicable state laws.

Access to the disclosure by real estate professionals ensures consumers are avoiding costly slowdowns for their real estate purchases, just as it was before TRID, when real estate professionals had access to the HUD-1. According to the NAR lender survey, only 16.7 percent of respondents reported sharing the CD unconditionally.

More than half indicated increasing fees for consumers to cover TRID-related costs, averaging $220 per transaction. When real estate professionals have access to the CD, instrumental oversight is added to the closing process, reducing errors that could result in preventable charges being passed on to consumers.

In addition to the TRID final rule, the CFPB has also issued a new proposed rule seeking feedback on how lenders use a CD to reset tolerances to reflect a valid change in circumstance. The CFPB seeks to minimize transaction disruptions and reduce unnecessary costs by easing restrictions on resetting tolerances after the CD has been provided. Such flexibility should increase lender confidence in addressing issues arising after a CD has been sent to the consumer and ensure smoother closings.

As the leading advocate for real estate professionals and their consumers, NAR supports regulatory reform measures that promote transparency, flexibility and certainty for the industry, striving to help qualified buyers with their real estate purchases.

Modifications to TRID must continue to put consumer interests first while eliminating excessive regulatory barriers for those working to further those interests and the benefits of homeownership.

Christie DeSanctis is a policy representative for business issues at the National Association of REALTORS(R).

This column is brought to you by the NAR Real Estate Services group.

For more information, please visit www.nar.realtor.

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New Bottom for Mortgage Rates

New Bottom for Mortgage Rates

RECBL - Real Estate News

Mortgage rates overall hit a new bottom first week of September, with the 30-year, fixed rate averaging 3.78 percent, a decrease from 3.82 percent the week prior, according to Freddie Macs recently released Primary Mortgage Market Survey(R) (PMMS(R)).

The 15-year, fixed rate averaged 3.08 percent, down from 3.12 percent the week prior, while the 5-year, Treasury-indexed hybrid adjustable rate averaged 3.15 percent, up from 3.14 percent the week prior.

"The 10-year Treasury yield fell nine basis points this week, reaching a new 2017 low for a second consecutive week," says Sean Becketti, chief economist at Freddie Mac. "The 30-year mortgage rate followed, dropping four basis points to a year-to-date low of 3.78 percent."

The movement of mortgage rates is related, to an extent, to the movement of the key interest rate, which is set by the Federal Reserve and will be voted on at its quarterly meeting in September. Employment data for August suggest the key rate, and mortgage rates, as a result, will stay low.

"It has been a humdrum economy so far this year, seesawing between good to tolerable, yet certainly not great," said Lawrence Yun, chief economist of the National Association of REALTORS(R) (NAR), in a statement on the August jobs report. "Nonetheless, the 12-month job gains total still tops 2 million, and that will likely grow household formation and home-buying demand. The job figures...assures that interest rates will remain low for a longer period."

Source: Freddie Mac

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FAVORABLE LENDING STANDARDS, LOW RATES TO LIFT HOUSING THROUGH 2016

Cash Buyers Lists News​

A recently released forecast expects the economy to regain ground through the remainder of the year, boding well for the housing market in the months to come. According to Fannie Mae's Economic & Strategic Research Group's recent 2016 Economic and Housing Outlook, the economy is on track to grow 1.8 percent this year, boosted by an improving employment landscape and higher levels of consumer spending-both of which will give lift to housing.

"Housing market fundamentals remain a mixed bag," Doug Duncan, Fannie Mae's chief economist, explained in a statement about the Outlook. "During the second quarter of 2016, both new- and existing-home sales rose to expansion highs, while single-family starts pulled back, remaining historically low for an expansion.

"Tight housing inventory from a lack of new construction continues to create affordability challenges, particularly at the lower end of the market," Duncan continued. "Robust rental demand during the second quarter of the year has created the lowest rental vacancy rate in decades. In addition, the homeownership rate dropped to below 63 percent in the second quarter, but we are seeing some tentative signs of older millennials moving toward homeownership.

"We expect homebuyers will benefit from improving job and wage growth, more favorable lending standards, and continued low mortgage rates through the rest of the year, with the 30-year fixed-rate mortgage rate projected to average 3.4 percent during the fourth quarter."

Source: Fannie Mae

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