Perhaps those not involved in the mortgage brokerage, lending, appraisal or real estate sales realms might find the new Federal regulation to be positive. It seems easier to believe things that we see in written form.
Altering a variety of rules with the HERA ((Housing and Economic Recovery Act of 2008) and with the MDIA (Mortgage Disclosure Improvement Act), the most recent federal law was just passed and became law on July 30, 2009. These two Acts directly affect the Truth in Lending and Good Faith Estimate which are given to borrowers when they apply for a home loan.
The only positive to this new Federal Law is it provides a borrower (buyer) more time to review their Truth in Lending and Good Faith Estimate. The new law gives the borrower 7 days to read over the papers in case they were not familiar with the particulars of their mortgage like the Annual Percentage Rate (APR), fixed rates, variable rates and scheduled payments. This is not where my dispute lies. In signing the many mortgage documents, myself and the majority of purchasers did not have a clear understanding.
Should the annual percentage rate move upward or downward an eight of a percent while your loan application is pending, you will be required to allow another three days to pass prior to escrow being able to close on your transaction. Any adjustments in the fees for your title work will also result in new documents being required and a new three-day waiting period will begin. The borrower must lock in their interest rate to keep these potentially endless delays from occurring.
A new three-day period will also be triggered by any adjustment whatsoever in factors such as whether the loan has equal payment intervals or requires a balloon payment, whether it has a fixed rate or is variable, or whether mortgage insurance is required or not.
Where do such regulations originate? Does anyone consider the domino effect or possible consequences these new laws might have on the housing industry? The most important phrase in real estate has always been, “Time is of the Essence”. As a multitude of properties are now in the hands of banks, that concept has lost its importance.
What difference does another 3 to 7 business days make, when homes require 4 to 6 months or even longer to close escrow nowadays? But, with the ever-changing nature of the fees for title work, and the fact that rate locks typically can be done only for 30-45 day periods, the new regulatory scheme is very likely to be little more than a hindrance to swiftly closing real estate transactions for borrowers.
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