Recent regulatory changes to RESPA are focused on creating a more transparent experience for homebuyers and borrowers.
The upside:
- Borrowers are able to compare actual closing costs with fees originally quoted on the lender’s good faith estimate (GFE)
- Lenders are required to provide more accurate GFEs or be forced to reimburse borrowers for certain costs that exceed the original quote by more than 10 percent (see page 28 of RESPA handbook for more explanation)
The downside:
- Lenders are taking longer to process a loan, thus extending the time needed to close a real estate transaction by a few days
Prior to these changes, most real estate closings could be preformed within one hour. However, lenders are not the only folks needing more time to deal with the new regulations. Real estate attorneys and title agents are taking more time to explain new closing documents.
In today’s environment, trying to fit a real estate closing in one hour is like trying to fit a square peg in a round hole. There is widespread bellyaching from all sides involved that closings are being rushed in an effort to move on to the next one. To avoid adding more stress into the mix, real estate attorneys and buyers would be wise to allow two hours for closing escrow. An attorney’s focus should be on the closing at hand and not the next party waiting to close.
DHW asks: Do you think real estate attorneys and title agents should allow more time for closings?