Legal
9/4/2015
Michael McDonagh, MAR General Counsel
Ashley Stolba, MAR Associate Counsel
Justin Davidson, MAR Legislative & Regulatory Counsel
September 2015
Q. I just heard of a recent case that may impact where sex offenders can and cannot live. What is that all about?
A. On August 28, 2015, the Massachusetts Supreme Judicial Court ruled in the case of Doe v. City of Lynn (SJC 11822). In its ruling, the Court struck down an ordinance in the city of Lynn that prohibited Level 2 and Level 3 sex offenders from living within 1,000 feet of a school or park. The Court ruled that the ordinance was inconsistent with the sex offender registry and tracking system established by the Legislature, and that municipalities do not have the authority to restrict where sex offenders can reside.
At least forty other cities and towns in Massachusetts have similar sex offender registry restrictions and this case likely makes those ordinances unenforceable. The Legislature, if it so chooses, could amend the Laws of the Commonwealth to create or authorize the restrictions. The Massachusetts Association of REALTORS® has not been involved in the case.
Q. I know that the Real Estate Settlement Procedures Act (“RESPA”) and the Truth in Lending Act (“TILA”) laws and regulations are changing as of October 3rd, 2015. What do I need to know?
A. Because of the central role that REALTORS® play in transactions, buyer and seller clients will be looking to you for guidance as they apply for a loan and prepare for closing. It is always recommended that REALTORS® refer specific questions about their loan or legal obligations to their lender or attorney. Nonetheless, it is important to be familiar with the changes. The most significant change is that the new “Closing Document” form must be delivered to the consumer a full three days prior to closing and if there are changes during that the three day period, the closing could be delayed.
The Consumer Financial Protection Bureau (the CFPB) attempted to give the industry leeway by saying that only a change in major loan terms would trigger a new three day waiting period. However, the CFPB also made it clear that lenders would be liable for the accuracy of the documents. As such, lenders are taking a conservative approach for good reason: a loan that has a potential RESPA/TILA error will be difficult to sell on the secondary market. Thus, lenders will likely be resistant to last minute changes.
REALTORS® should no longer expect to be able to make last minute changes at the closing. It is wise to prepare clients for this as well. A good rule of thumb is if you want to close on the 30th, make sure everything is ready on the 23rd.
Q: Are there going to be any new RESPA/TILA forms that I need to be familiar with?
A: Yes, there are two new forms to be familiar with. First, the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL) have been combined into the new “Loan Estimate” form. This form will explain to buyers the key features, costs, and risks of the mortgage loan and must be provided to consumers within three business days after they submit a completed loan application. Second, the old HUD-1 and final Truth-in-Lending disclosure have been combined into the new “Closing Disclosure.” This will need to be provided to consumers at least three business days before closing.
The MAR Forms Content Committee will also be releasing a new disclosure to buyers and sellers that will be available in September. MAR members should keep an eye out for articles, classes, webinars and blog posts designed to keep agents abreast of the changes that we will experience.
Q. Where can I get more information about TRID?
A. The CFPB, together with the National Association of REALTORS® created numerous helpful documents, which can be found here: http://www.consumerfinance.gov/regulatory-implementation/tila-respa/.
More information can be found on NAR’s website here: http://www.realtor.org/topics/trid-tila-respa-integrated-disclosure