You might be impressed by this new Federal Law, if you were not involved in the mortgage financing, real estate, appraisals, or other entity or service industry which pertains to the real estate economy. Don’t we typically believe everything we read?
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. Given to the borrowers after they make application for a home loan, these two acts directly impact the Truth in Lending and Good Faith Estimates.
That it offers a buyer or borrower additional time to review their Good Faith Estimate and Truth In Lending brochure turns out to be the only positive in this new Federal Law. The new law offers the purchaser seven days to go through these documents, because a number of purchasers did not know the terms when they applied for a mortgage, including length of loan, APR (annual percentage rate), or variable rate vs. fixed rate. Now I would not think of debating this. 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. Borrowers who have failed to lock their rates run the risk of this precise situation occurring.
Loan types vary, and the waiting period will be reset if the loan switches from “Fixed” to “Balloon”, or “Fixed and “ARM”. ARM refers to interest to amortized 3/1 ARM to a 5/ARM–or conventional loans with or without standard Mortgage Insurance.
Can someone tell me who makes up these rules? Do they even contemplate the type of consequences that such new laws could cause for the housing industry as a whole? “Time is of the Essence” always remained the most critical saying in real estate. This saying was completely abused, since the majority of banks have seized numerous homes on the market today.
With escrow closings currently taking anywhere from four months and upward , some may think there really is no harm in tacking on an additional few days. 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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