How the New Government Regulations May Impact Your Closing Dates

By
Real Estate Agent with Windermere Real Estate - Palm Springs CalBRE# 01339266

This week I received an email from Wells Fargo Bank titled: "How the New Government Regulations May Impact Your Closing Dates".

"On July 30, 2009, the new Housing and Economic Recovery Act (HERA) laws will go into effect. They require all mortgage lenders and mortgage brokers to help prevent deceptive lending practices and protect customers by helping them become more informed".

Four of the most significant factors that can dictate a closing date can be summarized as follows:

1.  "All parties need to take into account that the earliest any home purchase transaction can close is 7 business days after the home-buyer is issued his or her initial mortgage disclosures from the lender."

Effectively we as Realtors need to confirm that the Buyer has received the initial mortgage disclosure from their lender.

I plan to now request confirmation of this in writing from all Buyers using mortgage finance.

2.  "Upfront fees cannot be collected by the lender (except for a credit report fee) until the initial disclosures are received."

I cannot figure out why this may now impact the closing date of a transaction, but the email from Wells suggests it could.

3.  "The home buyer must be provided with a copy of his or her appraisal a minimum of 3 business days prior to closing."

I always insisted my Buyers received a copy of the appraisal of their property prior to closing, but at least this will now be mandated by law.

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 home buyer. The home buyer must receive a revised TIL disclosure at least 3 business days before closing, providing the home buyer with the time required to determine if the home buyer is comfortable with his or her loan choice."

Over the last few years I was amazed to see how many Lenders failed to provide their clients with the Truth in Lending Disclosure .... often, this statement was first seen by the Buyer at the time of signing loan documents.

While the 4 points above are important, the new regulations fail to protect the Buyer from unexpected delays caused by the Lender.

I have recently experienced several delays in Closing resulting from unexpected and last minute requirements demanded by underwriters .... Isn't it time that legislators paid attention to real-world situations?

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  1. Cheryl Johnson 07/12/2009 06:08 PM
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Show All Comments
Rainmaker
659,862
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

Stewart, not sure how quick is the usual closing in your market place, in Manhattan New York, even if it is an all cash closing can take up to 45 days (most times longer). If it is a deal that needs to financed, it can take up to 120 days depending on if it is a Condo, Co-Op... So, this new regulation may change things in other parts of the country, but in Manhattan New York, we wait, we wait, and we wait...!

Jul 12, 2009 12:30 PM #1
Rainmaker
591,126
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Stewart,

This isn't good but it isn't very bad either.

#1. Is in sane, but not many mortgages close within 7 days anyway! The new appraisals procedures virtually eliminate quick closings already.

 

#2. The problem here is minamal. The only question is the appraisal fee. But this is a mote point once the Good Faith Estimate and T in L are delivered!

#3. Is only a problem in that no longer feasible quick loan.

#4. Accurate to 0.125% is the long term standard for fixed rate loans. The 3 days prior is a throw back to the original Reg-Z when we delivered the Good Faith and T in L 3 days before closing, it did no good 37 years ago and it will do no good today! What is a buyer going to do 3 days before the closing? This is a nuance, it's going to delay some closings but not really change much.

This is feel good legislation, it helps no one but it lets polecats politicos claim they are doing something.

Bill

Jul 12, 2009 12:39 PM #2
Rainmaker
816,191
Richard Weeks
Waller Group - Dallas, TX
Realtor, Associate Broker - Manager Business Development

Stewart,

Great information. Thanks for sharing with us.  Now more things to keep up with.

Jul 12, 2009 12:50 PM #3
Ambassador
849,141
Suzanne McLaughlin
Sabinske & Associates, Inc. (Albertville, St. Michael) - Saint Michael, MN
Sabinske & Associates, Realtor

Stewart - thanks for the heads up.  I will have a lot more due diligence it seems, but whatever.  This profession just keeps getting more paper-heavy and I don't mean greenbacks!!!!

Jul 12, 2009 12:53 PM #4
Rainmaker
1,657,186
Dorie Dillard
Coldwell Banker United Realtors - Austin, TX
Realtor-Canyon Creek- NW, Austin TX Homes For Sale

Stewart,

I did a blog on this last week and feel we do have to watch these deadlines more closely. It actually is exactly the type of information a buyer or seller does not understand and when proving our worth as a Realtor it can show them why they need to use our services rather than going it alone!

Jul 12, 2009 01:25 PM #5
Rainmaker
335,106
Matt Listro
National Credit Fixers - Matt Listro - Vernon, CT
Your Credit Repair Expert

Hi Stewart: I agree with Bill.  This is feel good legislation that doesn't do anything.  #4 is the point that will delay / affect closing the most.  If a borrower is floating and decides to lock just before closing and the rate points they choose are different from the application, this will start the new disclosure and 3 days waiting period.

:)

Jul 12, 2009 02:09 PM #6
Rainmaker
978,894
Edward & Celia Maddox
Solutions Real Estate - Queen Creek, AZ
EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD

Good information to help us tay up to date.  Thanks,

Your Queen Creek AZ Real Estate Specialist

Jul 12, 2009 02:19 PM #7
Rainmaker
109,382
Carolyn Shipp
Source 1 Real Estate - Mineral Wells, TX
Mineral Wells Texas Real Estate

The only thing that I have had come up lately is on one of my loans the lender "forgot" to order the appraisal.  On the day before closing the loan processor was getting ready to e-mail closing documents to the title company.  I was on the phone with her giving her the e-mail address when all of a sudden she said, "can you hold on a moment?"  I said sure and she said okay, but didn't put me on hold.  Consequently I could hear her talking to everyone around her.  She kept asking everyone if they knew where the appraisal was.  Those around her said it was in the file or maybe on someone else's desk, but no one could find it.  She finally started looking through the file and found where the loan officer had cancelled the appraisal for "some reason."  Needless to say, the loan did not close the next day.  But with the help of a very good appraiser we were able to get the loan closed with a delay of only two days.  We were all willing to do what we could to make sure that the buyers were able to get into their house as quickly as possible as they had already sold their house and were moving when all of this was found.  The seller was nice enough to let the buyers move in their furniture the morning of closing so that they would not have to pay extra for keeping their furniture on the truck.  It could have been a real mess, but everyone was great in cooperating and all worked out okay.  I think if more people were willing to help out and cooperate we would not have as many troubles as we do.   So many times I find that the parties in the transaction are only thinking about themselves and not the affects they are having on all of the other parties involved.  When we all cooperate and look out for each other, things run more smoothly and get done much more efficiently and quickly.

 

By the way...wow Eileen...45 days or longer for a cash closing!  We can do a cash closing in less than a week here.  The quickest it has happened has been in two days.  A contract was written and negotiated in the afternoon and closed the following evening.  Again, everyone was cooperating and helping out.  The title company got the title work done the morning when they received the contract and closed the loan for us that evening.  

Jul 12, 2009 02:31 PM #8
Rainmaker
152,862
Kari A. Battaglia
RE/MAX Alliance Group - Venice, FL
Venice FL Realtor - RE/MAX Alliance Group

Thanks for the information!  I just had one deal fall apart due to the new HVCC rule and just wrote about it yesterday (New Appraisal Rules Killing Our Deals).  So many rules to remember.

Jul 12, 2009 02:45 PM #9
Anonymous
Anonymous
Anonymous

Stewart, thanks for keeping us informed. Happy Sunday.

Jul 12, 2009 03:32 PM #10
Rainmaker
413,488
Betina Foreman
512-771-6318 Austin Home Girls Realty - Austin, TX
Realtor, C.N.E. Selling Homes in Lake Travis & Central Austin!

I received this information from my Wells Fargo lender as well. It is good information. I think it is always smart to stay in touch with your lenders as mortgages change all the time!

Jul 13, 2009 11:41 AM #11
Show All Comments
Rainmaker
476,663

Palm Springs Realtor Stewart Penn

Windermere Real Estate - Associate Broker
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