I suppose if you were not in the real estate, mortgage financing, appraisals or any other service or entity that deals with the real estate economy, you would be impressed with this new Federal Law.
I mean we always believe what we read, right? I have been practicing real estate for 20 years and the only ones getting "stimulated" in the housing industry are the "bailout" companies.
Here's the latest disaster to date.
The latest federal law that was recently passed and became effective on July 30, 2009 changed some rules with the MDIA (Mortgage Disclosure Improvement Act) and the HERA (Housing and Economic Recovery Act of 2008).
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.
Since many buyers were not aware of their terms when applying for a mortgage, such as APR ( annual percentage rate), length of loan, fixed rate vs.
variable rate, the new law gives the buyer seven days to review these documents.
Oh, I won't argue this.
Most buyers including myself had somewhat vague understandings when signing all these mortgage documents.
Now, let's discuss all the negatives to this new law.
First of all, closing of escrow may not occur for a minimum of 7 business days after these buyer disclosures are sent to the borrower.
Oh and if the buyer decides to go to another lender midstream, the process starts all over.
If the APR (annual percentage rate) changes by 1/8%, up or down, while you are waiting to get your loan approved, you have to wait a minimum of 3 business days before closing escrow on your new homes.
If Title fees change this also triggers a change to these mortgage documents and the 3-business day process starts all over.
If the buyer does not "lock" their interest rate this scenario could very well happen.
If the type of loan changes from "Fixed" and "Balloon", "Fixed" and "ARM",the type of "ARM" (Interest to Amortized, 3/1 ARM to a 5/1 ARM) or a conventional loan with Mortgage Insurance and conventional loan without Mortgage Insurance, the waiting period starts all over.
And finally, the appraisal fee cannot be collected until these disclosures are delivered to the buyer and the waiting period is over.
Who comes up with these rules? 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".
Since most banks have taken over many homes on the market, this phrase has been totally abused.
Since homes takes 4, 5, 6 months or longer to close escrow in today's market, you say to yourself, what's another 3 to 7 business days? The biggest problem since title fees change frequently and interest rate "locks" are usually for only 30 or 45 days, this new law without a doubt is going to put a crimp on the closing date of the buyer's new home.
I mean we always believe what we read, right? I have been practicing real estate for 20 years and the only ones getting "stimulated" in the housing industry are the "bailout" companies.
Here's the latest disaster to date.
The latest federal law that was recently passed and became effective on July 30, 2009 changed some rules with the MDIA (Mortgage Disclosure Improvement Act) and the HERA (Housing and Economic Recovery Act of 2008).
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.
Since many buyers were not aware of their terms when applying for a mortgage, such as APR ( annual percentage rate), length of loan, fixed rate vs.
variable rate, the new law gives the buyer seven days to review these documents.
Oh, I won't argue this.
Most buyers including myself had somewhat vague understandings when signing all these mortgage documents.
Now, let's discuss all the negatives to this new law.
First of all, closing of escrow may not occur for a minimum of 7 business days after these buyer disclosures are sent to the borrower.
Oh and if the buyer decides to go to another lender midstream, the process starts all over.
If the APR (annual percentage rate) changes by 1/8%, up or down, while you are waiting to get your loan approved, you have to wait a minimum of 3 business days before closing escrow on your new homes.
If Title fees change this also triggers a change to these mortgage documents and the 3-business day process starts all over.
If the buyer does not "lock" their interest rate this scenario could very well happen.
If the type of loan changes from "Fixed" and "Balloon", "Fixed" and "ARM",the type of "ARM" (Interest to Amortized, 3/1 ARM to a 5/1 ARM) or a conventional loan with Mortgage Insurance and conventional loan without Mortgage Insurance, the waiting period starts all over.
And finally, the appraisal fee cannot be collected until these disclosures are delivered to the buyer and the waiting period is over.
Who comes up with these rules? 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".
Since most banks have taken over many homes on the market, this phrase has been totally abused.
Since homes takes 4, 5, 6 months or longer to close escrow in today's market, you say to yourself, what's another 3 to 7 business days? The biggest problem since title fees change frequently and interest rate "locks" are usually for only 30 or 45 days, this new law without a doubt is going to put a crimp on the closing date of the buyer's new home.
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