New government mortgage regulations took effect on July 30, 2009. Here are four key elements Realtors need to know.
(1) If the homebuyer is financing a property, these new regulatory and investor guidelines will impact and could even dictate the closing date.
Historically, homebuyers and sellers would agree on a closing date, and then service providers, including lenders, would work the best they could toward meeting that date. Going forward, purchase contracts can still be written with a specific closing date in mind, but all parties need to take into account that the earliest any home purchase transaction can close is 7 business days after the homebuyer is issued his or her initial mortgage disclosures from the lender.
(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 overnighter , they are considered "received" the next business day, allowing the fees to be collected on the following business day.
Historically, upfront fees could be collected immediately. Starting July 30, 2009, upfront fees could be collected immediately when the application is taken in person and the homebuyer receives his or her initial disclosures. The only exception is the credit report fee which can be collected at application.
(3) The homebuyer must be provided with a copy of his or her appraisal a minimum of 3 business days prior to closing.
The homebuyer must receive the appraisal at least 3 business days prior to the mortgage closing. If the homebuyer believes the 3 business day required review period is not necessary for whatever reason, he or she has the right to waive that requirement.
(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 homebuyer with the time required to determine if the homebuyer is comfortable with his or her loan choice. If mailed (or e-mailed) the TIL disclosure is considered "received" 3 business days after mailing.
A more typical contract date may be 30 to 45 days, or possibly longer ( such as with a new construction loan). Considering that many things occur and may be changed or finalized throughout the course of the transaction, there are a number of things that can impact the homebuyer's APR. Therefore it is critical on the front end to ensure that estimated fees are as accurate as possible.
Co-written by Jeff Bradburn , LakeSide Lending. Contact Jeff at 254-296-5046, JBradburn@txlmortgage.com or www.LSLTD.com
