When a prominent McLean real estate attorney gave a presentation to our office about the upcoming TILA-RESPA changes, he used “Consummation” of the sale rather than Settlement.
The room chuckled like a class of 8th graders, looking at each other and whispering, “Consummation?”
Of course we were all thinking along the lines of a proper Wedding night consummation.
Let’s get over the giggles now because this is real, hard-core, must-know real estate information for buyers and home sellers across the United States.
What is consummation in real estate loans exactly?
Let’s look at the CFPB‘s definition:
Source: Consumer Finance Protection Bureau
Okay, that does help clarify that consummation occurs when the Consumer (aka the buyer or borrower) signs the loan papers from the mortgage lender.
But remember consumers, consummation happens three days after you acknowledge receipt of the Closing Disclosure.
Real Estate Timelines Moving Forward
Understanding the timelines will become significantly less flexible for a proper consummation in real estate or in a home sale… after August 1 October 1, 2015.
This job is really shifting to the individual loan officers to explain what once took place in the Title Company offices. Essentially, they are the ones who need to deliver the Closing Disclosure document to the Consumer properly in order to close on the contract closing date.
My tip here… lender selection is going to become more important than ever. Best to ask me or your real estate professional for a recommendation. There will be a new level of technology involved and you will need to feel comfortable in advance that a well trained professional is handling this critical part of your home purchase.
And, for a negotiating tip… home buyers need to know that sellers will be much more suspect of unfamiliar lending institutions when they are evaluating your offer and pre-approval letter especially in competitive bid situations.
And if you are a home seller… the days of back-to-back closings isn’t going happen anymore. There are just too many variables including mandatory three day waiting periods.
Just some food for thought for you taken from what I see happening in the local real estate market.
Interested in reading more? Check out the 96 page TILA-RESPA Integrated Disclosure, Guide to the Loan Estimate and Closing Disclosure Forms.
Let me know if you have any questions because you’re not going to see this on HGTV.
