Consumer Financial Protection Bureau's rule for integrated

mortgage disclosures goes into effect August 1, 2015:

Big changes are coming to the real estate closing process when the Consumer F i n a n c i a l P ro t e c t i o n Bureau's rule for integrated mortgage disclosures goes into effect Aug. 1, 2015. The new rule integrates forms required under the

Truth-in-Lending Act (TILA) and Real Estate Settlement and Procedures Act (RESPA). The names and format of many old standards will be changing. A “Loan Estimate” will replace the current Good Faith Estimate and early TIL disclosure, while a “Closing Disclosure” will replace the HUD-1 and final TIL disclosure.(1) The buyer/ borrower will now be “the consumer”, I’m not so sure why the

seller isn’t also a consumer, but they aren’t. The closing w i l l b e c o m e t h e “consummation”, a term no d o u b t u s e d f o r t h e (continued on pages 2 and 3)

Important Changes Coming to the Real Estate Closing Process, Take Note!

D*G*L Board NewsFIRST QUARTER, 2015 DIXIE-GILCHRIST-LEVY BOARD OF REALTORS ISSUE FIVE

"To be the voice of Real Estate in the Dixie/Gilchrist/Levy

communities--while being educated in rules, codes and ethics--so we

can better instill confidence, educate, and serve the local public

while extending to one another professional courtesies."

Help me! Please submit news, events, photos, alerts! Vanessa Edmunds PO Box 534 Cedar Key FL 32625

vanessaedmunds@bellsouth.net

To contact Dixie Gilchrist Levy

Board of Realtors PO Box 2059 (4 W. Park Ave.)

Chiefland, Florida 32644 Office: 352.493.9683

Dr. Eugene R Gibbinsae@dglmls.com

hundreds of jokes it will inspire. The list goes on but the point is that these are destined to be the most comprehensive changes to the closing process in our working lifetimes and every realtor needs to be planning to deal with them. ! That’s right, the HUD-1, which has been the industry standard since the mid 1970’s will be gone. I personally actually like the look and feel of the new forms. The initial disclosure, called the “Loan Estimate”, given by the lender near the time of the loan application, and the “Closing Disclosure”, which is the final closing statement, seem very user friendly and are very similar to each other. The problem is evidently in programming the software to create them. The current HUD-1 settlement sheet has dedicated lines for certain fees and other data, with each line numbered. Therefore, the software at the lender and that of the title agent can be different so long as they know what belongs on each line. But the CFPB's new closure document does not have numbered lines — and it's causing

big problems. "The problem is how do you set up the software systems and how to ensure compliance if you don't have any way to keep track of the line numbers," said Rod Alba, senior regulatory counsel of the American Bankers Association. "It is a substantial change from what we have now," said Cynthia Blair, a member of the board of governors for the American Land Title Association. "The software providers are quite concerned about getting everything changed over." (2)

While that is a matter to be worked out by the programmers and compliance departments of the various lenders and title insurers, you will need to begin educating yourselves soon about the forms and the information they contain. We all know very well that the Realtor spends more time in direct communication with the buyer than either the lender or the closing agent. Inevitably, they will ask for your advice and input when they receive these forms. Other aspects will have a more direct

connection to you as Realtors and will be less under your control. The new rule puts more responsibility on lenders for the precise timing, accuracy and delivery of the Closing Disclosure, which must be given to the borrower three business days before closing. The rule appears to be that it must either be received by the “consumer” at least three business days in advance or else sent by the lender seven calendar days in advance. There seems to be some confusion yet on delivery via email, which is now the most common method. It is doubtful that an automatic email confirmation that a message has been opened will suffice to prove delivery. However, the consumer logging in under an encrypted email system appears to meet the standards. Based on a calendar provided online by the American Land Title Association, if your closing is scheduled for Friday, the disclosure must both be delivered and confirmed to have been delivered by Tuesday or else it must

Note from our DGL Attorney, Continued:

have been sent out on the previous Friday. Therefore, if the lender missed last Friday, and your buyer and his wife are in their U-Haul van coming from Toledo on Tuesday and can’t open the encrypted email, or sign for the Fed Ex, you aren’t closing on Friday, and when you will close now depends on when they can actually get a new Disclosure signed.(3) Finally, for now at least, all of this is going to be enforced by the Consumer Financial Protection Bureau, a new and more powerful federal agency than has ever been involved in these matters. They are not directly beholden to Congress for their budget the way most agencies are. Much of their budget comes from fines and penalties assessed, which can be remarkably high. One speaker at the mid-winter meeting called them “a bulldog, with sharp teeth, that gets paid to bite someone”.(4) Directly on the face of the Closing Disclosure is an invitation for consumers who are dissatisfied to

report their experience to the CFPB. A rather new term circulating among lenders is making its way up the hierarchy of risk; it is “regulatory risk”. It is the idea that lenders will either be penalized or else have to pay additional employees to answer investigations to avoid being penalized, and that either way it is a huge expense to be avoided regardless of the effect for any one deal. While the Realtors won’t be directly in their sights like the lenders and closing agents it seems reasonable that the caution on the part of those entities will inevitably cause delay in closings and likely additional steps in the process as they attempt to avoid this “regulatory risk.” I recall this ominous feeling before the whole Y2K thing and others that have turned out to be nothing in the end. I have also lived through changes much less foreboding than this that turned out to be stumbling blocks for months or years. I don’t think this should be a moment of panic for

Realtors, but it should be a moment of preparedness and you might actually make it a moment of opportunity. Those who understand it and explain it well will doubtless appear very professional in the eyes of the “consumers,” which in my lexicon also includes sellers. I’ve got a few good websites bookmarked and will be glad to share them with any of you upon request. You might simply Google “CFPB changes August 2015.” I am by no means an expert on any of this but I will be paying attention to it over coming months and will be glad to discuss it at one of our future member meetings. !Footnotes: (1) CFPB Integrated Mortgage Foreclosures, American Land Title Association, www.alta.org, 2-19-2015.

(2) “Why New CFPB Closing Form is Driving Lender’s Crazy”, Brian Collins, National Mortgage News, 2-5-2015.

(3) Three-Day Closing Disclosure Rule, ALTA Blog, American Land Title Association, www.alta.org, 1-29-2015.

(4) Dana R. Ward, Real Estate Closing Solutions, LLC, Florida Realtors Mid-Winter Meeting, 1-23-2015

Note from our DGL Attorney, Continued:

Doug McKoyDGL Board Attorney

Children’s Table Distribution

A Cause Worthy of Our TimeThe Dixie Gilchrist Levy Board of Realtors® is here to support our members, but at the

same time is here to support our community any way we can.

The children’s Table provides food to needy families. It is their belief that no man, woman, or child should be without the nutrition to lead a healthy, happy and productive life.

The organization is 100% volunteers and covers 53 Florida counties.

Recently, four of our members spent their time volunteering with food distribution services in Bronson.

Our Dixie/Gilchrist/Levy volunteers were: Joel Ward, Tommy Harrington, Dale Herring, and Robin Schwartz. They are simply four examples of the many of our members who give their time to voluntarily help our community.

Anyone interested in helping this cause, please contact the DGL Board of Realtors®.

DGL REALTORS®: Out and About REALTORS® Joel Ward, Tommy Harrington, Dale Herrring and Robin Schwartz are pictured here on their volunteer day with The Children’s Table. Please send photos and info about your own community service to share, as well. We need to “be seen out there!”

The Early Bird Gets the Worm!!T h e F l o r i d a R e a l t o r s A n n u a l Convention & Trade Expo will be  August 19-23, 2015 at the Rosen Shingle Creek in Orlando.  THE REGISTRATION OPENS ON MARCH 1ST!  Also, remember, if this is your first time attending and you are one of the first 175 first-timers to register for FULL convention, your registration may be free!" "We thank you for your help and support of the annual convention.  We’re looking forward to an incredibly exciting, action-packed, sensational education event!  Here are just a few of the many presentations for 2015: " "

-Personalized Success Plans in Dealing with Buyers and Sellers"

-Open House Strategies that Produce Results"

-Powerful Real Estate Business Plans"-Scripts – If you use them, clients will

come!"-Social Media Risk Management – Your

get out of jail free card!"-The Economy of Selling – Buyer/Seller

Presentations"-The Paperless Agent"-Hear it Direct – Live Buyer/Seller Panels"-Needles & Haystacks – Lead Generation

& Conversion"-Top Twenty Branding Mistakes Real

Estate Agents Make 

Be Sure to “Like” the Board’s Facebook Page:

Dixie Gilchrist Levy Board of

42 Realtors Inc.

Invite your friends to “Like” us, too!

There are three kinds of people in the world: !

--Those that MAKE things happen --Those that WATCH things happen --Those that SAY ”What happened??” !

Which type are you?

Report from Robin Schwartz, District 8 RPAC Trustee: FR Mid-Winter Business Meetings, January 21-25, 2015, Renaissance Hotel, Orlando ! I attended the Florida Realtors Mid-Winter Business Meetings again this year. As usual, I started the first day bright and early at 8:00 am by attending the RPAC Trustee’s meeting. I am District 8 RPAC Trustee for one more year. It has been a great experience to learn the many layers to our local, state and national political process and how the REALTOR Party Action Committee fits into that process. The REALTOR Party Action Committee is a non-party affiliated Committee that focuses on private property rights and legislation that would limit or harm those private property rights. This year we are focusing on legislation that may come regarding fracking and mineral rights in Florida. Who knew you could frack in Florida, but you can. They are already doing it in S. Florida. The national political scene is already gearing up for the 2016 elections and Florida has been given its goals and directives from NAR accordingly.! I attended the Public Policy Committee which sets the stage for FL Realtors positions in the coming year. We will carry these positions forward during out trip to Tallahassee on Great American REALTOR Days, March 3 & 4. If you are interested in going to Tallahassee on March 3rd, we can ride the bus with Gainesville and Lake City. Registration in on FloridaRealtors.org. The cost covers the lunch and Block Party. You must register on-line for GARD AND let either AE at Gainesville BOR or Lake City BOR know that you want to ride the bus. GARD is our opportunity to talk to our Representatives directly and show our solidarity for OUR private property rights.! I had the privilege to chair the Land Use, Property Rights, and Sustainable Development Subcommittee (see a theme here?). We had several guest speakers. Representative Matt Caldwell talked about Florida’s Water Policy and the effect of the newly passed Amendment 1 (Water and Land Conservation amendment) They are trying to develop a statewide water policy. Thomas Ruppert, Coastal Planning Specialist from Florida Sea Grant gave us an update on sea level rise. Doug Kruse and Mark Miller gave us an update from the Pacific Legal Foundation on current and pending private property rights cases. The Pacific Legal Foundation is a non-profit legal foundation that will take private property rights cases, pro-bono, for private citizens who have had their private property rights taken away or infringed upon. They have successfully represented cases all the way to the Supreme Court of the United States.! There is proposed legislation to allow solar customers to not only see a reduction in utility bills and the ability to sell power back to the grid, but a new ability to sell to adjacent customers. ! The Board of Directors meeting was on Sunday to finish off the week. Joel Ward and Karen Smith did a great job representing Dixie-Gilchrist-Levy BOR, District 8.

Rules regarding “Drones” NAR Staff Attorney Leslie Walker gave an update on the current stance with FAA and NAR for “Drone” use in real estate. NAR is currently corresponding with the FAA about Realtors being approved to use “Drones” in the real estate business. Leslie stated at this time the use of “Drones” in real estate is prohibited unless you have approval from the FAA, and NAR. She stated that so far only one real estate company in the mid-west has applied for and received the authorization to us a “Drone”. Leslie said the NAR is going to come out shortly with a policy for the use of “Drones” and any questions should be directed to the legal departments. Dodd-Frank Grant Simon and Dana Ward gave a great and very informative talk with the mortgage company or bank and title company perspectives. The first point that Grant drove home was about the Consumer Protection Act and the CFPB’S (Consumer

Financial Protection Bureau). The CFPB was formed to protect consumers from illegal lending, closing and real estate practices. Grant said that this group really got up to speed in 2014 with answering complaints and issuing a total of over one million dollars in fines and expects to have more this year. The second part of the discussion was about the Dodd-Frank Wall Act which is also part Consumer Protection Act. This is going to change closings as we know them especially those dealing with financing. There is going to be a complete overall starting Aug. 1, 2015 with the forms and procedures pertaining to the closing process. Grant explained the lender side of the changes and that the timing the documents had to be to the title company and to all parties. He explained that there will no longer be closings where the lender package was received the same day as the as the buyer has to have the Loan Estimate (formally known as Good Faith Estimate) and Closing Disclosure (formally

known as HUD) to review at least 3 days in advance. Dana explained the title company side of these changes and that it was going to create a lot of extra work and the lender, title company, buyer and Realtor were all going to need to communicate to meet these new guidelines in a timely manner. For more information and compliance guides go www.consumerfunance.gov/regulartoryimplemention. It is highly recommend that if you have a chance it would very beneficial for you attend any training that they may have on the Dodd-Frank implementation. It is possible that something might be setup for DGL Members to get more info via webinar or class. Board of Directors Meeting of the business meeting on Sunday was typical for Mid-Winter Meetings only a few amendments to clear up some language in the by-laws. There were no major issues and it was stated that overall it looked the market was starting to rebound.

Notes from Joel Ward, Vice President, DGL Board of Realtors®

Eugene’s Tip of the Quarter: From time to time I hear an agent say, I was working with a client and then

when it came time to write the contract, the client said, “I’ve been working with another agent and they will be writing the contract.” How many have heard those words? Over the years that I have coached/mentored agents and brokers, I’ve heard this said more times than I’d like to admit. Whenever an agent first starts to work with a new buyer, the agent needs to ask several questions. One of those is, “Are you working with any other agent that may be involved in this transaction?” This will eliminate possible future problem.

We congratulate Robin Schwartz, who was recently named “Realtor® of the Year” by the Lake City Board of Realtors®