Orlando J. Valero

RESPA (Real Estate Settlement Procedures Act) ..waht you need to know to keep your buyer informed

1. If homebuyers are is financing the property, these new regulatory and investor guidelines will impact-and could even dictate-the closing date, to meet the required time frames.

2. Upfront fees cannot be collected by the lender (except for a credit report fee) until the initial disclosures are received. If the disclosures are overnighted, they are considered "received" the next business day-(excluding Saturdays) allowing the fees to be collected on the following business day.

3. The homebuyer MUST be given a copy of his or her appraisal a minimumof 7 business days prior to closing. This will be fun for the lenders that don't order the appraisal until the very last minute.

4. An increase of more than .125% in the Annual Percentage Rate (APR)from the initial Truth in Lending disclosure (TIL) requires the TIL disclosure to be revised and reissued to the homebuyer. The homebuyer must receive a revised TIL disclosure at least 3 business days before closing, providing the homebuyerwith the time required to determine if the homebuyer is comfortablewith his or her loan choice. If mailed, the TIL disclosure is considered "received" 3 business days aftermailing.

Closing dates come and go..keep doing your best to close on or around the closing date to keep your client happy.

THE SHORT ON SHORT SALES

In today's housing market, short sales are becoming a more common way to purchase real estate. However, they are more complex sale transactions and need to be handled in a special way.

A short sale occurs when the total mortgage amount currently owed on a property is MORE than the purchase price of a property and the mortgage holder is willing to accept the purchase price as "full" payment for the mortgage. Short sales can only occur when the owner of the property is delinquent in their mortgage and the mortgage holder approves the "lower than mortgage" purchase price. The seller cannot ‘apply for or ask permission' of the lender agree to a short sale, until receiving a purchase and sale agreement on the property. The seller has to secure a buyer and have a written Purchase Contract in place.

The risk involved in short sales is greater than "traditional" purchase and sale agreements and the purchase process is different. Some things you need to know as a buyer or seller involved in a short sale are:

-The seller needs to have their mortgage holder "approve" the lower than mortgage purchase price and the attorney for the seller cannot submit the purchase agreement to the lender until contingencies are removed. Because there are no contingencies, the buyer may want to inspect the property before writing an offer. Once the file is submitted to the lender, it cannot be altered for repairs or other problems. The buyer can inspect the property before the offer is made, or inspect after, but before the offer is submitted to the short-sale lender. Either way, if an inspection is completed, the buyer will incur the cost of a home inspection with the risk of not having the offer accepted by the short sale lender. The greater risk is not to have a home inspection completed at all.

-The buyer will have to apply for the mortgage, if they need one, and have it approved well before the short-sale lender will agree to the deal. The buyer will also risk any fees charged by their lender, attorney, title companies, etc. This is because the lawyer for the seller cannot submit the short sale package to the mortgage holder without all contingencies removed.

-Once the contingencies are removed and short sale package is submitted to the lender mortgage holder for approval, the approval/acceptance process can take weeks or even a few months. This is due to the large amounts of short sale packages being submitted and the lenders not being able to handle and process them all. The buyer therefore needs to be in a position to wait for the banks reply.

-Once the mortgage holder approves the purchase price, the bank will expect the buyer to close FAST. This is a fact and just the way banks and lenders are. They are looking getting the loan off their books FAST, therefore, the buyer needs to be in a position to "close" fast.

The reason lenders/mortgage holders accept short sales, is because they don't want to foreclose. They are not in the business of owning and managing property, they are in the business of lending money. If you give them an offer that makes sense they may be willing to work with you to recapture as much of the outstanding mortgage and foreclosing may cost them more money in the end.

Many short sale deals fall through because buyers, sellers, attorneys and/or real estate brokers do not understand the process. Negotiating with the bank on a short sale is more than "asking the mortgage holder to accept LESS than the mortgage amount" and it takes skill and patience to get the purchase contract accepted. We recommend the buyer and seller use attorneys and real estate brokers that have experience in working with lenders for short sales.

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