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?