Will the Proposed New Rule Allowing Buyers a 3 Day Cancellation Period, As Well as Getting Their Mortgage Applications Fees Refunded Help or Hurt?

By
Real Estate Agent with Lanier Partners

The federal reserve is proposing new rules that will allow home buyers to cancel their mortgage loan within three business days. Additionally, it will require that all fees paid, except for credit checking fees, to be refunded. It also appears that it will allow the borrowers to make multiple applications and then cancel all but one.

The article about these proposals appears to reach the conclusion that this will be somewhat benign and have little impact upon borrowers and lenders, but, I am not sure. Will there be a ripple effect upon finance contingencies in a home purchase? Will it encourage buyer's remorse during any due diligence period?

I am very leary of any new regulations that hit the markets, whether housing or otherwise. They often have more unintended consequences than benefits. Does anyone remember HVCC?

What do you think. Will this be benign? Will if be positive? Will these have a negative effect on a housing market that is already on life support?

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3 day right to cancel mortgage

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Rainmaker
591,122
William J. Archambault, Jr.
The Real Estate Investment Institute

Got protect us from well intentioned fools and those buying votes with other peoples money!

"cancel their mortgage loan within three business days." They all ready have this right with the new RESPA rules, allowing them to back out three days before closing. I wounder how they propose to back out of a loan 3 days after closing and for no cost?

Fees would have to go up drastically to cover the cost of rescission's and multiple approvals! But it does sound good to the ignorant!

Bill

September 05, 2010 11:09 AM
Rainer
189,196
Jon Budish
Resident Realty

In a more prefect, honest world, it would probably be benign.

September 05, 2010 02:24 PM
Rainmaker
290,585
John Mayer
Your Beach Area Expert
Oikos Realty, Cape Canaveral, Cocoa Beach Florida

Mike - It's total BS! Make a decision and run with it or pay the consequences.

September 07, 2010 08:47 PM
Rainmaker
563,876
Mike Saunders
Lanier Partners

Bill - isn't that only if the GFE and closing HUD-1 are grossly different?

Jon - I can see it being abused.

John - I think it is the all fees reimbursed that worries me the most

September 10, 2010 10:25 AM
Ambassador
1,859,287
Judi K Barrett
Broker/Owner, Integrity Real Estate Services -IDAB
Judi Barrett~Integrity Real Estate Services~Idabel, Oklahoma

Mike,

I had not heard this was being considered. 

So their appraisal fees and all other fees would be refundable??

September 10, 2010 10:31 PM
Anonymous
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Rainmaker
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Mike Saunders

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