Tips to Take the “Fright” Out of the FR/BAR Contract Under New CFPB Rules

Halloween businessmanWe know people seem to be spooked by  the new Consumer Financial Protection Bureau (“CFPB”) requirements that went into effect October 3, 2015.  Never fear, we have some helpful timeline tricks for your Halloween treat this year:

  1. Loan Application.  To insure that the Loan Application requirements are met, the Buyer has 5 days after the Effective Date (unless otherwise specified) to provide (1) property address (2) loan amount (3) buyer’s income (4) estimate of property value (i.e. purchase price) (5) buyer’s name and (6) buyer’s social security number.
  1. Loan Estimate.  Lender has 3 business days from receipt of the Loan Application to generate a Loan Estimate, which is valid for 10 business days.
  1. Intent to Proceed. Buyer must notify lender of Buyer’s intent to proceed with the loan within 10 business days of buyer’s receipt of the Loan Estimate.  The lender can then start the underwriting process.
  1. Paragraph 12a Property Inspection.  The Inspection Period under the FR/BAR Regular contract is 15 days after the Effective Date.     
  1. Paragraph 8b Financing Contingency.  The Loan Commitment Date defaults to 45 days after Effective Date.     Remember, the lender cannot even start the underwriting process until the buyer gives the Intent to Proceed.
  1. Paragraph 9d Survey. If the Title Evidence Deadline is left blank, the Buyer has to obtain the survey at least 15 days prior to closing.  Consequently, the buyer should order the survey approximately 25 to 30 days prior to closing, depending on the surveyor’s turnaround timeframe.
  1. HOA/Condo Estoppels.  Estoppels must be obtained at least 10 days prior to closing.   Since Florida Statute(s) give associations have 15 days to complete the estoppels, application will need to be made at least 25 days prior to closing. 
  1. Paragraph 9c Title Evidence. The period to obtain the title evidence is now defined as Title Evidence Deadline which defaults to 15 days prior to closing.
  1. Closing Disclosure.   The Closing Disclosure must be delivered by the lender to the buyer 3 business days prior to closing.  However, most lenders will be following the mailbox rule which requires the lender to deliver the Closing Disclosure to the buyer 6 business days prior to closing.
  1. Closing Date.  To avoid a frightening experience at closing, you would be well served to insert a Closing Date no earlier than 60 days after the Effective Date of the Contract.

As always, should you have any questions regarding the foregoing, we urge you to consult with your local real estate attorney.

Sincerely,

Berlin Patten Ebling, PLLC

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

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