The Consumer Financial Protection Bureau’s “Know Before You Owe” rules went into effect one year ago today, and according to fresh survey data from the National Association of Realtors®, there’s still work ahead to get it right.
“Looking back at the first year of Know Before You Owe, we saw a solid mix of challenges and success,” said NAR President Tom Salomone. “Consumers now have a clearer picture of their mortgage when they buy a home, and that’s a good thing, but transaction delays and errors on the closing disclosure continue to frustrate our industry and consumers.”
According to the survey, delayed transactions fell from 10.4 percent in the fourth quarter of 2015 to 8.5 percent in the third quarter of 2016. However, errors on the closing disclosure in the same period rose from 43.3 percent to 50.6 percent. Transaction cancellations edged up slightly as well.
Realtors® have worked since the rules were announced to prepare for the transition and educate themselves on how their closings might be affected. NAR also worked closely with the CFPB to make consumers aware of a toolkit to help them navigate the new closing documents.
This work is consistent with the Realtors®’ role as the expert adviser that guides clients through their home purchase, but one significant concern has frustrated that relationship since the rule went into effect.
NAR has been in touch with the CFPB about the challenge Realtors® face in trying to access the closing disclosure. Doing so allows Realtors® to walk their clients through this important paperwork in advance of a closing and ensure the consumer has a complete idea about their mortgage.
Back in July, the CFPB made it clear that it is appropriate and accepted for creditors and settlement agents to share the CD with consumers, sellers and their real estate agents.
Regardless, nearly half of Realtors® surveyed reported difficulty getting access to the closing documents.
Salomone acknowledged the work being done to address this issue and sounded an optimistic tone on the future of Know Before You Owe.
“The CFPB’s commitment to improve the rule is encouraging,” he said. “I’m hopeful that with time and some responsible fixes to the rule, the process will get smoother in the year ahead.”