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How the CFPB’s new HUD-1 closing disclosure forms fall short

CFPB was created by the Obama administration in 2011 to protect consumers, and immediately sought out ways to “bubble-proof” America, starting with mortgage disclosure forms.

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CFPB was supposed to change the world

In 2011, the Consumer Finance Protection Bureau (CFPB) was formed and in the agency’s earliest days, they set out to change housing, hoping that every step of the home buying process is more clear, particularly through the forms being used, because many have pointed out that the lending process can be pretty confusing for the average buyer.

The “Know Before You Owe” forms will be required by August 1, 2015, so the industry has just short of two years to implement the new disclosure forms.

So, the agency created a symposium filled with experts on behavioral economics, linguistics, public policy, and graphic design that came together to focus on redesigning the often overlooked mortgage disclosure form (MDF) in order to better communicate lending terms in a universal way. During the symposium, they agreed that the form needed to speak in layman’s terms and pare it down to data that matters most. The stated goal was literally to bubble-proof the nation by making the process clear at every step.

Here is how it went down. After the symposium, the agency worked for over two years to revamp the form so that it would go from this…
settlement statement

…to this:

Looks good, right?

Unfortunately, that modern form above was simply one of the submissions from Continuum Innovation Design, just one of the firms invited to submit redesigns. It wasn’t the final option chosen, this was:

and this:

What happened?

We never expected forms to start looking like infographics, but the changes could have offered a more aesthetic answer to the complex. Are the forms better than they were? Of course! The yes/no system is phenomenal, tiny fonts have been eliminated, and it is organized better. But, it falls very short of what was floating around in 2011 as possible design options, and with the youth of the organization, we were somewhat surprised that the final version was only slightly better aesthetically.

Aesthetics aside, the National Association of Realtors (NAR) praised the new forms, challenges remain. The agency is pushing for more electronic closings, but the new forms come with new rules, for example, the rule that the final Closing Disclosure form (the new HUD-1) must be provided to the borrower within three business days of the closing. Any real estate professional can tell you, however, that most closings have last minute changes, so requiring a final form be given three days before a closing could begin pushing closings back and delaying the process.

At this point, it matters not that the aesthetics fell short of expectations, the next 20 months before the forms are required to be implemented should include continued examination of the CFPB’s rules associated with the forms so there are no unintended consequences.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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