Magazine article American Banker

CFPB's Cordray Confident New Mortgage Disclosures Won't Be Disruptive

Magazine article American Banker

CFPB's Cordray Confident New Mortgage Disclosures Won't Be Disruptive

Article excerpt

Byline: Brian Collins

WASHINGTON -- A new mortgage disclosure regime due to take effect on Aug. 1 is unlikely to cause closing delays, according to Consumer Financial Protection Bureau Director Richard Cordray.

Under the new disclosures mandated by CFPB, homebuyers must receive the new closing disclosure three days prior to the closing. Lenders fear if they must make changes to the document, it could effectively cause a delay in closing.

But Cordray insisted that wouldn't be the case.

"The three-day requirement should not interfere with a successful closing, as some have claimed," Cordray told a National Association of Realtors conference on Tuesday.

Cordray stressed that there are "serious misunderstandings" about what last-minute changes to the closing disclosure would prompt a delay.

"The timing of the closing date is not going to change based on any problems you discover with the home on the final walk-through, even matters that may change some of the sales terms or require seller's credits," Cordray said.

There are only three circumstances that would delay a closing: an increase to the annual percentage rate by more than one-eighth of a percent for fixed-rate loans or more than one-fourth of a percent for variable-rate loans; the addition of a prepayment penalty to the loan; or a change in the basic loan product, such as moving from a fixed-rate loan to a variable-rate loan.

"That is it," Cordray said. "We recognize that various other things can and do change in the days leading up to the closing, so the rule makes allowances for those ordinary changes without delaying the closing date in ways that neither the buyer nor the seller may be able to accommodate very easily. …

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