Monday, July 2, 2012

New Documents Intended to Simply and Clarify Settlement Procedures

Well the Dynamic Duo without a Clue-o, Barney Frank and Chris Dodd are at the center of more changes in real estate. The Dodd-Frank bill established the Consumer Financial Protection Bureau (CFPB). The CFPB developed new settlement statements and other changes soon to take effect in our world. I blogged previously about that Dodd Frank changes that will increase closing costs and loan costs to consumers. Previous changes were made to the Truth-in-Lending Act (TILA) and the Real Estate Settlement Procedure Act (RESPA). I had an opportunity to review the new proposed forms that were intended to SIMPLIFY and CLARIFY the settlement procedure. Naturally, as only the government can do, in my opinion, the proposed changes only serve to make a relatively clear and simple procedure more convoluted. The HUD-1 was pretty clear and easy to understand and it was only two pages. Since it was a government document, it made most sense when you read the second page first and the first page second!! LOL The new HUD-1 will be known as the “Loan Estimate and Settlement Disclosure Form”. So, it fine government fashion, it makes sense to replace a tow page document with one that is 5 or 6 pages. Remember, this new document is intended to clarify and simplify the process. I reviewed the document and it is easy to understand, but it is a bit overwhelming. There appears to be SOOO much on it. Therefore, it hardly qualifies as an improvement and as I mentioned, it is a bit overwhelming if in nothing else but sheer volume of information. In all likelihood, buyers and sellers will end up paying more in settlement costs as this new document is not without new expenses that are sure to be passed on to buyers and sellers. I cannot help but think about the old adage: “if it ain’t broke, don’t fix it.” Paddy Deighan J.D. Ph.D

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