The Consumer Financial Protection Bureau (CFPB) finalized an update to its mortgage disclosure rules, including an amendment clarifying that it’s appropriate for real estate brokers or agents to receive copies of their clients’ Closing Disclosure.
The Know Before You Owe mortgage disclosure rules issued in 2015 caused lenders and title companies to become concerned about sharing closing documents with any parties other than the principals to the transaction. This change made it more difficult for brokers or agents to access information needed to guide their clients through the closing process.
In a news release about the finalized amendments, the CFPB included the following about privacy and sharing of information:
The Bureau has received many questions about sharing the disclosures provided to consumers with third parties to the transaction, including the seller and real estate brokers. The Bureau understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a Closing Disclosure to consumers, sellers, and their real estate brokers or other agents. The Bureau is finalizing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.
The final rule is effective 60 days after it is published in the Federal Register, but the mandatory compliance date is Oct. 1, 2018. In the meantime, TREC’s Third Party Financing Addendum (TAR 1901, TREC 40-7) and the Authorization to Furnish TILA-RESPA Integrated Disclosures form (TAR 2516) created by TAR provide written permission for lenders and title companies to deliver copies of closing disclosure documents to the principal’s REALTOR®.
There are several reasons why the CD should be given to the Real Estate Agent. > First of all, the Loan Officer does Not represent the borrower as a client. The Realtor may be legally representing the buyer, and how can you give professional advice if you don’t even have access to the numbers on the settlement statement…? > Most loan officers I have seen either Do not explain the CD numbers to the buyer, or Can not explain them to the buyer. The form itself is not totally obvious to the average person buying their first house, contrary to… Read more »
Ditto! How can an agent feel confident about the terms of the agreement they have worked through so intricately with their clients being reflected Correctly if we are not privy to the cd that the buyer is approving? With the increase in real estate transactions in Texas many title companies have not increased their staff to meet the challenge. As a result I am finding more mistakes than ever on closing documents. As a buyer’s agent, my clients expect me to provide that assurance that they are safe in signing when they go to the closing table and are assuming… Read more »
Rick is so correct. The only fiduciary for the Buyer and/or Seller has effectively been cut out of the deal. I have had multiple experiences of Title Companies adding on “Optional” boundary and survey coverage onto the transaction. The Closer usually does not (or are not able or willing) to explain the coverage unless I call them out on it. The problem is I cannot advise my Client what to do because it could be construed as Legal Advice. All I can do is advise my Client that the coverage is not required by the Lender and that they are… Read more »
Thank you, Stuart. It has amazed me from the very beginning that the CFPB thinks they have revolutionized the practice of real estate, and solved all of the borrower’s/buyer’s problems. Maybe they should hire some Realtors on their staff, instead of a bunch of attorneys who are keen on fining the mortgage companies for their slip ups. Very few buyers are so knowledgeable of the details of the transaction that they can figure it all out and understand everything just by reading a form designed by a government agency. (It is so quirky that even an Agent has a problem… Read more »
The confusion seems to be that the Consumer Finance Protection Bureau is actually there to protect consumers. I have seen no evidence of this and the length of time it has taken them to correct this unintended consequence of omitting the broker or agent from the disclosure distribution list is a case in point.
I am in total agreement that realtors should receive an advance copy of the CD. I am in the title business and do not like the fact that we have to be the “police” for who can and cannot see the CD. That said, I am not sure this “announcement” clears the way for us to give realtors the CD. Read the News Release carefully (the portion TAR posted), and you will see that there is nothing definitive there. The last sentence is very vague. “The Bureau is finalizing additional commentary to clarify how a creditor may provide separate disclosure… Read more »
Moral to the story? Keep all “Swamp Grade” politicians away from public office. While we’re at it, let’s repeal the assinine AMC-Appraiser rule created by politicians who have less business experience than a 5-year-old selling lemonade.
The buyer is free to provide a copy of their Closing Disclosure to their realtor…what’s the issue here…I am a loan closer and I always communicate to my customers that the may forward a copy to their Real Estate agent if they so desire.
Is TAR 2516 required for buyers to sign as part of the transaction?