The loan estimate and settlement disclosure form will soon be replacing not only the trusty HUD 1 but it will wear 2 additional hats-replacing both the Good Faith Estimate and the Truth-in-Lending Disclosure as well.
The Consumer Financial Protection Bureau’s (CFPB) rationale is there is too much “legal ease” within the 3 documents that will confuse buyers and inhibit them from answering the right questions.
However, the New HUD, isn’t even going to be called a HUD. It will replace the 3 page HUD-1 (which is essentially just a general ledger of debits and credits) with an even lengthier version. To take a simple debit and credit ledger and make it longer and more complicated, as a way to “simplify” it for Joe Q Public seems quite seems counter intuitive, not to mention, expensive.
This is not just changing a few documents. This will require implementing new software and providing mortgage company and title company staff members with additional training. Take a guess at who this ultimately result in costing more money at the closing table? The homebuyer. Good start, undoubtedly it will cost more money for Real Estate Agencies, Brokers, Real Estate Agents and Title Companies, too. Possibly this is what the current administration is doing to create jobs, who knows? Because every company that uses these documents on a daily basis, on any sort of volume, will need to add people in order to keep up with the changes and regulations.
Here’s one big reason I despise the current administrations efforts, and their amazing oversight as to what’s even going on… and this should give you some insight as to showing you that they don’t have a clue. The Current HUD-1 doesn’t say “Buyer” It says “Borrower”. As most of our readers know roughly 30% of every purchase last year was cash. So why in the world is the government putting “Borrower” instead of “Buyer” in the column for the BUYER’S Side, especially when the buyer 1 out of 3 times is not even borrowing anything?!?! Just one of the many reasons why we don’t need the government making our simple enough HUD, and complicate it!
Thank you Dodd-Frank. Which was supposed to make it easier for the average consumer to understand a settlement statement (among other things)…. OR was Dodd Frank’s regulatory change to the HUD done because the current administration felt the typical buyer lacked the necessary intelligence to interpret the documents? Either way, I think it’s an insult to the intelligence of the American Homebuyer. Does the Government really feel that Americans can’t Add and Subtract from a Ledger? Wow, have some faith!
It seems that all the current administration does is just create more and more layers of unnecessary paperwork and bureaucracy as a ploy to create jobs in the face of a “real” 12%+ unemployment rate. But that’s a topic for someone else’s blog, not a Real Estate Blog.