Q & A | CFPB: What changes in the new Closing Disclosure WILL NOT require a new 3-day review period?

Q: CFPB: What changes in the new Closing Disclosure WILL NOT require a new 3-day review period?

A: By now we have all been hit over the head with the fact that a change in the new Closing Disclosure  (which goes into effect for closed-in loan applications taken August 1, 2015 or later) requires a re-disclosure and potentially  a new 3-day review period.  However, keep in mind that while all changes trigger a re-disclosure, it is a myth that all changes also trigger a new 3-day review period.  Only three changes trigger a new 3-day review period: 1) an increase in the APR by more than 1/8^th of a percent for fixed rate loans; 2) the addition of a prepayment penalty; and 3) a change in the loan product  (such as a change from a fixed rate loan to an adjustable rate loan). ALL OTHER CHANGES leading up to closing DO NOT require a new 3-day review period, although they do require a an updated Closing Disclosure be provided to the Consumer prior to closing.  Items such as broken  or missing appliances discovered during a pre-closing walk-through that may trigger a seller credit, changes to realtor commissions, proration of taxes and amounts collected for impounds (escrow for taxes and insurance) and the correction of typos in the closing documents DO NOT trigger a new 3-day review period for the consumer. While there will no doubt be growing pains as the industry adjusts to these new changes, we must continue to educate ourselves about these changes and not allow misinformation to cloud our vision or dampen our outlook.

“You can’t stop the waves,  but you can learn to surf.” John Kabat-Zinn