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The Real Estate Professional’s Guide for the“Know Before You Owe” Initiative

Clients will have questions about the new mortgage disclosures – so be prepared!


The CFPB has developed a great tool for real estate professions at:



Smooth and on-time closings


  • Advise your borrowers to think through their mortgage options carefully.
  • Remind your clients that once they select the loan option that works best for them, they need to inform the lender of their “intent to proceed” with the loan.
  • Be their source for accurate and timely information about the property and the real estate contract.
  • Discuss the closing process, such as what may slow down the process, and be sure to provide the lender with what they need to prevent closing delays.


New disclosures streamline the process


  • Advise your clients of the consolidation of the previous documents (GFE/HUD-1/TIL) and show them how easy it will be to compare the new LE and CD.
  • The on-line Guide provides a great deal of information and links to the Loan Estimator and Closing Disclosure “explainer” tools.
  • The new documents are designed to work together and be consistent among lenders for ease of comparison.


Learn what has and hasn’t changed about the mortgage process


  • Preapprovals and pre-qualifications are unchanged by the rule! Continue to encourage your clients on the value of getting pre-approved for a home purchase.
  • Remind your client that the application begins with a Loan Estimate, which is preceded only by your client selecting a property.
  • Intent to Proceed – remind your clients that if they like a lender’s mortgage loan offer, they have ten days to indicate their intent to proceed, or they risk losing the lender’s offer.
  • Once a client gives their intent to proceed with a lender, that lender can now start to charge fees for the loan process, including appraisal fees or processing fees. Prior to that, no fees (other than credit report fees) can be charged.
  • Explain that a “changed circumstance” could impact their loan offer from their lender. A changed circumstance could be created by information not previously known about the borrower’s credit, the terms of the loan requested were changed, or property changes due to appraisal information that could impact loan charges and/or interest rates.
  • Advise your client that they will have three days to review their Closing Disclosure.
  • The Closing Disclosure must contain the buyer’s and the seller’s real estate brokerages’ and agents’ names, addresses, state license ID numbers, email addresses, and phone numbers. If this information is unknown, the form can’t be completed. So get this in early to prevent delays!


Extra three-day reviews are unlikely


  • Defuse the concern about the likelihood of multiple or extra three-day reviews. This only happens when:
    1. The APR increased by more than 1/8 percent for fixed rate loans, or by a 1/4 percent for adjustable rate loans. Note: A decrease in the APR will not require a new three-day review.
    2. A prepayment penalty is added.
    3. The basic loan product changes, such as switching from a fixed to an adjustable rate loan.



"The information provided has been based on rules and regulations issued by Federal Agencies and interpreted for you by  Interpretations are not guaranteed but we attempt to both make them easy to understand and help you sell more real estate.  Check with your local and state authorities to ensure that you meet all requirements and disclosures."


Copyright © 2015   Reprinted with permission              


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