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Calling all realtors - Closing Issues & Time is of the Essence... - The MDIA issue (Mortgage Disclosure Improvement Act)

Mortgage Disclosure Improvement Act

feeling the mortgage blues?

Feeling the blues after hearing about the Mortgage Disclosure Improvement Act? (MDIA) For those that haven't heard, this act is part of the Reinvestment & Recovery Act of 2009.

The MDIA became effective on July 30th, 2009. Here are a few highlights of the act that could delay real estate closings in the near future.

The borrower must receive a good faith estimate and a truth in lending disclosure within 3 days of a mortgage application. (but this had already been in place by RESPA laws a long time ago)
The earliest a transaction can close is 7 days after the initial dis-closers have been issued by the lender. This is assuming that no re-disclosures are needed.
There has to be final disclosures sent if : if the APR is more or less than 0.125% of the original disclosures and or if the loan terms have changed. This has to happen after 3 days have passed prior to the closing date.

time could run out & cost borrowers money

Sounds like time is of the essence and that we all need to be on the same page. Gerry Suarez wrote about the MDIA - What the Mortgage Disclosure Improvement Act will mean to our industry. Gerry gives us his opinion as a mortgage banker and a mortgage broker.

What kills me about all of this is that this is nothing new. Re-disclosing took place and could be done at the closing table or the day prior, as long as it was done. The key point, if it was done. Many of us have heard those horror stories of rates, fees, and points changing last minute. But that the borrower didn't find out until they were at the settlement table. In reality, they had a leg to stand on and could have stopped or held up the closing proceedings.

The long and short of it, this could possibly interrupt closings/settlements if these changes aren't made 3 days prior to closing. These delays could cost many more money, in which case, the reason for this Act is to prevent this.

So what might be so tricky about this? Could there be any confusion on the part of the lender? Keeping this in mind, re-disclosures have to occur if the APR changes by more than 0.125% or if the loan terms change, right? The confusion for many could be what are considered to be APR changes. - Annual Percentage Rate - Regulation Z is part of the TIL, Truth in Lending, and it states what charges are part of the APR, but at the same time, gives a list of items that don't have to be included. I have written why I think the APR is misleading to begin with.- Why is the Annual Percentage Rate (APR) so confusing? -

team work

Here is where we all need to come together as one team now, more than ever, in order to not cost anyone else extra money while trying to close. In many cases, the realtor chooses the title company/escrow company. Why do I bring this up? You better be working with an excellent title company, one that I don't have to follow up with for days, trying to get a preliminary HUD 1. This is very critical because some title fees are also part of the APR. Here is a list of them.

-- Escrow/Closing Agent/Closing Attorney Fee

-- Prepaid items - this is to include property taxes

-- Wire Transfer Fee

-- Courier Fee

Summary : Overall, we all need to be aware of these changes, not just the mortgage company. Because here is one more issue. The only monies that can be collected prior or at time of application is the credit report fee. The appraisal fee can't be collected until 3 days after the initial disclosures are given. Yes, this could delay ordering appraisals also. As a loan officer with a mortgage company, I will need the help of the title company and sometimes the realtor. We need to work as a team.

Important Message -

Keep in mind that if a mistake is caught 2 days prior to closing, that it will need to be re-disclosed and couldn't settle until the 4th day. This is where not only costs could build up because of moving expenses, but because the interest per diem would need to be changed also. This is the interest that you pay daily, the daily interest, which is added into the costs. And keeping in mind that we need the correct and exact tax bill information. Any last minute changes, again, will delay the closing.

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Posted by Jeff Belonger-The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans on 08/14/2009 09:10 AM

Comments (53)

Mortgage Disclosures in the Mortgage / Finance Channel

mdia, mortgage disclosure improvement act, mortgage disclosures, good faith estimates, truth in lending, truthing in lending disclosures, apr

Originally posted at: FHA Mortgage Expert - Tri-State Area - New Jersey/PA/Delaware: Calling all realtors - Closing Issues & Time is of the Essence... - The MDIA issue (Mortgage Disclosure Improvement Act)

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53 Comments on Calling all realtors - Closing Issues & Time is of the Essence... - The MDIA issue (Mortgage Disclosure Improvement Act)

AUG

2009

The big one to me is that everyone needs to communicate and work together. Personally, I try to get my clients to lock early in the process, so hopefully, this whole thing won't be too much of an issue. Between this and HVCC, loan officers had better be paying attention. Good Post, Jeff.

Guess I won't be closing loans in 6 days anymore!! If this info is out there, it may add some stress, but may also add organization to everyone's schedule.

Jeff,

"What kills me about all of this is that this is nothing new." Few truer words have been written about this bit of feel good legislation!

Even the three days prior to closing is a reversion to the original rules, but then it was the only disclosure.

We're suppose to believe that Congress cares! Well, they do care about baffling the public. This act helps no one and hurts a few.

Thank God they don't require us to attend 5 days and 4 evenings of classes like they did the first time

Bill

The killer is a fee that NO ONE knows about that hits the APR - then no one's fault adds some, maybe even a LOT of $$$ to buyer and seller expenses. We have to start talking about power of attorney, flights being changed/cancelled. Another case of a situation where everyeone is honest, trustworthy, and fair and it costs the consumer due to regulations. I'm getting stressed thinking about it!

Jeff - What Bill says couldn't be more true in my book. Anyone doing anything right were disclosing terms of whatever agreement they came to well before when they closed on that particular loan. As far as the new regulations, shit, does any government official want to be a loan officer these days?

I could go on a tangent but I won't, you've kept this simple and straight forward. They can regulate us all they want, just show the same consistency with everybody else... involved or not.

Working as a team. That is the crux of this post. We all need to work together to get our transactions to close in a timely manner. I have always considered the loan officers in my circle to be part of my team.

Great article Jeff and a good comment by Bill. As for who chooses the closing agent we always make it blindingly evident that choice belongs to the BORROWER. We present the fees from our three preferred attorneys and tell the borrower they can close anywhere they choose. Like you, Jeff, we have fought with closing agents about getting the HUD1 and, like you, have often been the last ones to see the HUD1 which invariably is wrong when we use other people's closing agents. The beauty of working with our approved closing agents is they will work with us on fees if there is a problem. Working with "the builder's" closing agent or "the realtors" closing agent usually doesn't turn out the way it is supposed to. The very odd part is those closing agents are actually representing us - the lender - at the closing table. Great work Jeff!

It definitely takes a team to get to the closing table. Always has, but now more than ever.

I just went to a training about this yesterday and they gave us a sheet to fill out for each transaction that includes home warrantys, transaction fees, HOA fees, etc. It will require really good communication by all parties to ensure no delays.

Jeff --

All good points. Real estate agents, attorneys and title companies must promptly return calls to mortgage brokers and lenders to provide any information the lender needs and to ensure a smooth and orderly process to settlement.

A point of clarification is needed on redisclosures, however, Jeff. If the APR changes by more than 0.125 percent, then the lender has to redisclose the Truth in Lending (TIL), and there is a 7 business day wait until settlement, not a 3 day wait. A 7 business day wait effectively translates to a 10 day wait - 11 days if there is a holiday in there!

So, real estate agents, title agent, and attorneys - if there are any changes, make sure the lender knows immediately. If a lender or mortgage broker calls you and needs information, make sure that a call to the lender is first phone call you make. Any delays could cost you (and us) a settlement.

I think that this is good for the consumer. Just so much transparency. For me, however, I don't like it because if the rates are dropped during the process, there shouldn't be a need to re-disclose. We are only improving the borrower's situation. The client's DOOOOOOO NEED protection. But if we're improving the situation, I think the legislation is going overboard.

PATRICK.... . communication and working together? Sounds like terms that many of us should have been working on prior to this major change.. lol Seriously, yes, it will require for more people to be more responsible and to communicate with each other.

STEVE..... . lol I guess not either. Then again, who was closing deals in 7 days. Even if so, it was very rare, especially depending on the loan.

WILLIAM aka BILL.... . feel good legislation.... ;o) Yea, feel good for those in Congress that truly don't understand all of this. Besides, if they would have patrolled the RESPA act prior, that you still were suppose to re-disclose if there were changes, but there wasn't this 3 day issue, maybe the mortgage industry wouldn't have a black eye for those loan officers that changed things the last minute. Anyhow, we could be here all day on this one.. lol thanks

STEVE again.... . you bring up a good point.... even a fee such as a power of attorney and the added attorney's fee for this service. If all found out last minute, the deal now closes 4 days later... arrrrgggghhh

JASON.... . does any gov't official want to be a loan officer? Hell no, not after these changes. Besides the changes, why would they, when they get to make up rules that they think would help, but never get our opinions... they just do what they want to do. But if they would have policed this issue better in prior years, maybe this would not have been an issue. Overall, I think many of us could go on a tangent.. thanks for the quick rant.

CAROL... . well, we need to be more of a team now more than ever... especially when the realtor refers that title company. We need all title companies to understand this, because we will need to know charges way ahead of time and not last minute. thanks

Jeff, please clarify this...

"This is very critical because some title fees are also part of the APR. Here is a list of them.

-- Escrow/Closing Agent/Closing Attorney Fee

-- Prepaid items - this is to include property taxes

-- Wire Transfer Fee

-- Courier Fee"

This may be misconstrued to mean that all of the charges are included in the APR.

KEN.... . I am sure we could talk about this part until we'll blue in the face... but you bring up a good point about the title companies that we don't have control over, hence why I mentioned this in my blog. But I can see us lenders being thrown under the bus, because we delayed the closing, yet it was the closing agent that got us the rest of the fees late... Overall, I can see this being my worst case nightmare, dealing with preliminary huds and the delays. Thanks for the polite and thoughtful compliments.

UNKNOWN.... . that is where so many missed the word 'teamwork'. It was replaced by the phrase, 'do it now for the borrower, because I need my commission check'. But yes, teamwork more than ever before. I am just waiting for when I will be thrown under the first bus.

MELINA.... . that's a great idea, giving out sheets to realtors. Something that myself and a few others have talked about... and giving these classes. Who gave this particular class? And yes, communication needs to be strong amongst all parties involved. thanks

LEWIS.... . thanks for stopping by... but I disagree with what you stated.. you said "A point of clarification is needed on redisclosures, however, Jeff. If the APR changes by more than 0.125 percent, then the lender has to redisclose the Truth in Lending (TIL), and there is a 7 business day wait until settlement, not a 3 day wait."

The gov't put this new act out there and it states 3 business days, which means you wouldn't be able to settle until the 4th day. You are saying 7 days. I can only think of two things. Are you sure you aren't talking about the loan not being able to close in the first 7 days after the loan application with TIL & GFE have been disclosed? The only other thing could be that this is a lender overlay. But this is not the mandatory set up by the gov't and congress that is stated in the new Act.

LARRY.... . yes, I agree, that this does protect the consumer a lot more from those that bait and switch, which usually happens the day of settlement. So now, they will know 3 days in advance.. lol And I agree, if things are better for my client, after my initial disclosures, why do I have to re-disclose again. We must digress. Good points and thanks

STEPHEN... . thanks for asking.... not sure if you know or not, or if it was because I wasn't clear on this. All fees in the mortgage/real estate transaction are not in the APR.. but those fees that I listed for the title/closing side of things, are suppose to be included in the APR. Hence the reason why we need the title companies or escrow clerks/companies to help us as soon as... thanks

OK I have some super technical questions. What are they talking about "application". Let's say I have a buyer that filled out an application in MAY and is still looking to buy their house today. Do you still have to redisclose when they get into contract or do you redisclose every time their APR changes?

This seems a little crazy to me. Sounds like someone needs to build a program that you can enter all of your clients in and send an auto email with the changes.

Jeff, I would love your opinion on this.......using the example on your well written blog Good Faith Estimates - Warnings to be Aware of, are the inaccuracies on the other Loan Officer's Good Faith Estimate likely to result in a .125% difference in the APR, causing a re-disclosure discrepancy and potentially delay closing?

The changes do protect buyers from being taken advantage of...everyone just needs to be on their game.

Bottom line: Realtors should make sure they give the lender as much time as possible.

Jeff,

Good post. In many cases, parties simply don't take the "time is of the essence" clause seriously enough.

Brian

Jeff- I spoke to a rep from Chicago Title here in Madison Wisconsin. They get emails and letters from WELLS FARGO EVERY SINGLE DAY on issues JUST like you describing! They are so sick of them that I fear they will quit READING them...That said, making sure you work with a GREAT title company is a FANTASTIC point!

Also, in regards to closings.....People, YOU DO NOT HAVE TO CLOSE AT THE SELLERS TITLE COMPANY!!!!!!!...Period!

This pisses off some Realtors when us lenders say this...but tough..you know why...because of EXACTLY what Jeff just said! NOT EVERY title company is good! Just because they treat YOU right, doesnt mean they understand the new rules!Additionally, to close at the buyers choice or LENDERS choice of title company, they have to be willing to close on the SELLERS provided committment! Hence, if the committment is endorsed by Chicago Title, then you can close at ANY title company that is a Chicago Title afffilitate!

Nicely done Jeff...Actually I DIDNT know that the Courrier & wire were figured in, because they are "hard costs' for a tangible item...Interesting...

Darin

The more things change the more they remain the same. This industry is in the blender on high speed these days.

Just more hoops to jump through and restrictions to deal with all in the name of helping the consumers who may be harmed by this legislation as they can be by the new appraisal rules.

Jeff, You are right. Redisclosure requires a 3-day wait.

The 7 day waiting period is from initial disclosure. But after reading all of this stuff last month I can understand how some lenders can confuse the two with all of the legal talk.... Darn near need to be a lawyer to do this job anymore!!

Jeff: Great information.. This can delay many closings in the future.

AUG

2009

Morning Jeff,

Thanks for posting. As has been said before, this is nothing new. Everyone needs to do their job in a timely manner. "Service" is our job, be it Realtor, Mortgage Broker, processor, Title Agent! Our focus had to be the Buyer!

Good post, wish I had the time to get one up there first! This new change is a perfect example of lawmakers making rules to protect the citizens, but ends up doing almost as much harm as good. They just don't get it!

Jeff, thanks for the post very informative I have bookmarked it and will read your others. I wonder how many agents will get stung by this because they have not made themselves aware of the changes.

When I first got into the business twenty years ago I went to every loan app. I had one mortgage banker who taught me the business, and I bought him lunch every week to learn about financing. He would agree with you on the confusion about the APR reg. He would tell the buyer after disclosing the APR, that it was written by a man who lives in an apartment in Chicago who had never owned a home, and he doesn't understand it either. I miss that guy.

RENEE..... . yes, you have to re-disclose when you find a house, because the property address has to be added to the mortgage application. Besides, I am sure the figures would change some, between the cost of the points or fees, because I would assume that the first loan amount would not be the same as the 2nd loan amount.

In regards to your question, should they re-disclose every time the APR changes by 0.125%?This is not clear, but the main issue is re-disclosing at least 3 days prior to closing if it has changed by more than 0.125%. Each and every client should be made aware of this, that they could possibly get new docs... and those docs would be.. a updated 1003, TIL, and good faith estimate. thanks for asking the question.

WENDY.... . it wouldn't if they were shopping. But yes, if they aren't disclosing correctly, it could delay the settlement. Keep in mind, as long as they re-disclose 3 days prior to settlement. As long as they do this, the lender is okay. Now, if the borrower doesn't agree with this, and they want the original fees, then that lender has to re-disclose again, which will delay that closing. thanks

CHUCK... . yes, the changes do protect the buyers. You hit the nail on the head with the next statement, hence why I wrote this. "everyone just needs to be on their game." thanks

TOM.... . well, maybe not as much time... lol "hey, I need 4 months now"... lol Well, maybe Bank of America will need 2 months now. And in most cases, my lender fees don't change, unless the client was floating the whole time and rates changed for the worst. But it will come down to the title company and if a lawyer gets involved and changes their fees for the worse. thanks

BRIAN..... . no, they don't. I think the commitment date to some loan offifcers is a joke, that they don't care about this either. Thanks for the compliment.

Hi Jeff, Great info as usual! thank you for keeping us informed on these issues. I love all your graphics! makes it more fun to read.:)

www.charlottelakewyliehomes.com

Just had a loan denied for inconsistent paperwork......anyone ever heard of this?

Two weeks before closing??? chances of being reinstated??

I'll get back to everyone else's comments.. I just wanted to address Lisette, comment # 31 & 32. thanks

LISETTE... . never heard of this before. I know of loans that have been denied by lack of borrowers response, when asked for paper work.

In regards to being reinstated? I am assuming that you mean that the lender would re-open your file again? Sure, but a new application would need to be started... unless they threw out the denial letter. Question, what state are you in? Is this a purchase or a refinance? I can also be reached at jbelonger@ihmci.com thanks, jeff

Jeff - Good post. What is becoming more and more evident is that the "Estimate" is being taken out of the Good Faith Estimate. It is becoming more and more crucial that we have accurate GFE's. THis means calling Title companies and getting their actual "estimated" fees rather then going off a chart, or guessing. Combined with HVCC it means using actual lender fees rather hen average fees. But more then anything, it means staying on top of the process and getting revised GFE's out ASAP.

Effectively, the 30 day close is a pipe dream for many purchases with HVCC and now this.

I suppose that we can cover ourselves by sending out a "High" GFE 1 week before closing and then come in looking good...

A problem yet again is that the LO who is honest and provides an accurate GFE will still lose out to the slim ball LO who makes the initial GFE look good and changes it 4 days prior to signing.

This doesn't really fix anything.

I do not understand why you wrote all this anyways. There is nothing new in the rules that any good loan officer was not already doing. As a loan officer and a real estate agent, the new regulations do not force me to make any changes to what I have been doing for years. Perhaps it will stop some of the slimball lenders out ther from some of the unscrupulous practices they have been engaged in, but I sort of doubt it in most cases.

It all makes sense, but all too often it does NOT happen. We have one closing company in the area I rarely go to (but must when a buyer chooses them) because they do NOT Provide a HUD1 to review until you're at the table!

DARIN..... . I agree, because I have had some realtors chose their title company in the past and I did the major follow up myself.. either requesting the CPL, or the title... or asking for the preliminary HUD, etc,etc... I don't think some realtors realize this, even when I let them know. thanks for the polite compliments and kind words.

CHRIS.... . you kind of lost me on your first sentence. And I loved your second sentence.. "The more things change the more they remain the same. This industry is in the blender on high speed these days.".. funny, yet so true. thanks

CHRISTINE... . yes, more hoops to jump through... and now more than ever, that we must work with each other and not against each other. Each realtor that I am dealing with, I will send this to them.

TOM.... . hell, even lawyers would get this mixed up... lol But yes, it is 3 full business days. Saturdays count also. And as I mentioned, maybe he just got the first part of it mixed up, with the 7 day issue. thanks

ROLAND.... . I believe it will and it think about this.. I just thought about this and will add it now. If it delays one purchase, that is a train... meaning that there are 4 other purchases tied to this, it could kill a few or make many a lot more expensive... rut row.. and thanks for the complimentt.

As a buyer's attorney I review the Good Faith Estimate (GFE) prior to my clients executing the contract of sale. The GFE, being a federal 1 size fits all form, does not give a realistic estimate of the closing costs in NY. Mortgage officers rarely calculate title insurance properly. They generally underestimate recording charges. They generally underestimate miscellaneous charges for items like muncipal, bankruptcy and Patriot Act searches. They rarely include the cost of a survey. Some include 1 day of per diem interest, most 15 days, and small percentage include 30 days. Most mortgage officers default to 6 months tax escrows and ignore that there are pre-paid taxes that will be refunded to the seller. They forget to include a recording charge for POA on a condo purchase. The list goes on.

Some mortgage officers want to see my GFE after I have advised my clients that their closing costs are $2,000 to $5,000 higher than the GFE. These mortgage officers want to know what the range for certain expenses are so they can prepare a more accurate GFE. Other mortgage officers could care less and take the attitude they don't have to disclose that expense (i.e. their responsiblity is done if they disclose a mortgage title premium because, after all, fee title insurance is optional).

There seems to me numerous interpretations on what has to be included on a GFE. Am I wrong in my opinion that mortgage officers better start including every possible expense on the GFE? I am going to fax my marked up GFE's to the mortgage officer with a copy cc'd to my clients and their Realtor. Put these costs on record so if there is a problem scheduling the closing I can tell my client I disclosed the more accurate costs to your mortgage officer and if the closing is delayed it is not my fault.

When the new HUD-1 goes into effect next year this will be more important than ever. I do not look forward to preparing the HUD when teh GFE has a recording charge estimate of $200 when the actual recording charges are $375.

You have outlined some of my concerns about this issue. I have looked at the number of homes pending in our market compared to the monthly sales. These loans are taking way too long as it is.

HAROLD.... . sure, re-disclosing is nothing new. Just the fact that it can't be done at closing.... now 3 days in advance and I know this will effect some closings. And yes, we need people to do their jobs in a timely manner. thanks

JEFF.... .well, doing harm in a way that could delay things... but in reality, they needed to crack down, because many still bait and switch at the end. I just heard of a story on Friday to where the loan officer added another $3,000 at closing. and thanks for the compliment.

DAVID.... . I wonder how many agents and those loan officers that aren't truly following this Act and information. I guess time will tell. Especially in the next 20 days, when loans will start closing after this Act went into affect. And thanks for the compliment.

JOE.... . how funny, about your ex-loan officer and the story that he told. I love it... thanks for sharing this.

GINGER..... . thanks for the compliment. And yes, I love pictures, because it can help keep the blog flowing and can keep your attention. thanks

LARRY... . estimate or actual fees? I don't think it matters much. And over estimating is not going to help, because the act talks about it being accurate up or down... how many lenders will stay on top of that will be the question.

In regards to getting out the revised GFE's as soon as possible? I am not sure this will help. You have a few unknowns that you usually don't know about until later in the processing. Example... you need the homeowners insurance sooner then.. You would need the tax bill/info from the title company sooner. But of the appraiser has different figures than the title company, the underwriter would want to look into this. In my opinion, I don't see this working well, unless nothing changes at the end. But hey, it could help some, that's if the lender got these 3rd party charges quicker... thanks and thanks for the compliment.

JIRIUS.... . I wrote this to not only make people aware of this change, but good loan officer or not, these are costs that effect the APR. What the loan officer or lender was suppose to do prior to this is re-disclose only the lenders fees that changed. But yes, this is to keep some of those slimy loan officers from baiting and switching last minute. At least now, the borrower has 3 days to research this, talk to a lawyer, etc, etc. Before, many were pressured at closing to close that deal.

ERICA..... .well, make the clients aware of this, if they choose that title company. As a listing agent, this will stink. And this title company, not giving a HUD until the day of closing, they will make a bad name for themselves very quickly in my opinion. I guess time will tell. thanks

DAVID... . it's a shame that you come across so many GFE's that aren't accurate. I am actually doing a loan in Buffalo that is closing in 2 weeks and another one in Long Island that is closing in a month. One of the biggest fees that I see many loan officers miss is the mortgage tax fee in NY. And yes, I see many loan officers in many states short escrows for the taxes. Just last week, a client sent me a good faith estimate from a loan officer that their realtor sent them to. This loan officer was about $2,000 short in total fees and didn't have the homeowners insurance on there, showing that it needed to be paid for a year. So I am with you on this rant. I just wrote about this the other day... Good Faith Estimates - Warnings to be aware of !!!

I will disagree with this statement that you made... "There seems to me numerous interpretations on what has to be included on a GFE. Am I wrong in my opinion that mortgage officers better start including every possible expense on the GFE?"

Why? Because not all fees on a good faith estimate are part of the APR, Annual Percentage Rate. And this new MDIA issue, only states if the APR changes by more than 0.125 percent.

In regards to the new HUD 1 that goes into effect next year? I fear this form and think the gov't just added more hurt to the borrower than help in a way. I wrote about this many months ago. Government Intervention - When is enough enough... but I will agree that next year will even be more important in regards to this MDIA issue... just more paperwork. Overall, thanks for your input and feedback.

GENE.... . if dealing with a good loan officer and lender, this new MDIA stuff should not really delay closings much longer. We just need to be on top of our game. I hear many say that loans are taking longer than ever before.. we are still closing them in less than 30 days. I closed one a month ago in 12 days... thanks

I really don't understand how a bank can lend me $80,000 in twenty minutes to buy a car, disclose the interest rate and terms and conditions with no changes but the mortgage industry cannot. The car is worth significantly less the second I buy it and the house is not. Why does the process take as long as it does? Why can't a lender approve a loan day one and be done with it?

AUG

2009

Jeff, thanks for addressing this issue, and to all who have enhanced the post with comments. I personally work with one title company who goes the extra mile to assist me in getting to the closing table with as much ease as possible, Grapevine Abstract out of Stroudsburg, PA. Bottom line, can you state more precisely where any responsibility relative to this issue (i.e., time is of the essence) can ultimately rest in the real estate agent's lap? What specifically should the real estate agent be doing to be part of the team effort . . .

Your post and your work on AR is impressive.

Jeff, getting a GFe correct is not that difficult. Many title underwriters have programs you can download to calculate title premiums, endorsements, mortgage taxes and miscellaneous taxes like Brookhaven's and Warwick open land tax. Yes, the mortgage tax is often calculated improperly. It should not happen.

But may mortgage officers pass on listing certains costs such as surveys saying either they are not obligated to list a survey, that the buyer may go with a personal inspection or no survey at all.

Am i correct that there must be re-disclosure if the APR decreases by an 1/8th also? I had a local loan officer say he was going to prepare the GFE using an interest rate .5% higher than the going rate so that the closing APR could never increase by an 1/8th and he would never have to re-disclosure. Sounds like that logic is shot.

That's how I see a problem with the title fees towards the end of the transaction. Everything is disclosed correctly and then something happens and the closing is posponed because the paperwork needs to be redone again at the 11th hour. This will take some getting used too. Don't know if people have had problems yet, but wait until a normal market finally comes upon us! Yikes.

DAMON.... . first off, how many people are buying $80,000 cars? Just curious, because I would bet that you would need excellent credit, great income to qualify, and at least some cash out of pocket. But back to your issue... you asked, "why can't a lender approve you in one day."

There could be many many reasons why. ... now, most lenders and investors are requiring that the form 4506 be filled out and sent to the IRS. We are double checking income now, making sure that it was properly filed with the IRS. There are many reasons for this, yet fraud is a large reason for this. You can fake your W-2's.... and even pay stubs. So you also need to order VOE's, which is a verification of income. You need to make sure that the bank statements show the coorect assets to close. You can have large deposits.. you can't borrower money to buy a home, unless it's from your 401-k or from the equity of your house. There are checks and balances that just don't happen over night. Sometimes the borrower needs to pay off collection accounts and this needs to be verified.

Overall, if you were lending a few hundred thousand dollars, wouldn't you be checking the people twice, possibly 3 times? Please, be honest. Fraud is one of the main killers of honest lending and borrowing. It is a lot easy to dummy up stuff than it was in the past. People will lie... and you just can't repo a house like you can a car. Does any of this make sense? Just curious.. thanks

RENEE.... . that's great that you have a title company that goes the extra mile. As I mentioned, in some cases, I ended up doing some of the title companies work...it just takes time away from me originating new loans or giving my other clients my attention.

On another note, you asked this question... "Bottom line, can you state more precisely where any responsibility relative to this issue (i.e., time is of the essence) can ultimately rest in the real estate agent's lap? What specifically should the real estate agent be doing to be part of the team effort . ."

As I mentioned, if the realtor chose the title company, that if I need help with anything, that they help contact the title company. The same goes with the borrower, especially if they referred me to the borrower. In a few cases, asking for documentation was like pulling teeth. This rarely happens, but if so, I need the realtor to get involved and help a little. Overall, communication is extremely important and if the realtor knows something that I might not, then they need to let me know about it. How do they know? You don't, unless you bring it up. Maybe the property has an issue or an ajoining lot... I need to know about this. There could be several reasons. The biggest issue to your question? Getting that preliminary HUD in my hands sooner than 4 days before closing. This way we have some time to get things in order. thanks and thanks for the polite compliment and kind words.

DAVID.... . yes, giving a correct good faith estimate should not be difficult. Then again, define correct... at least close to the figures, a good estimate. Not one that is so far off, that we are talking about $500 or more. I love it when I am like a dollar off or so. Now, that is also luck, but I always like to over estimate. Which in some cases, I might lose out on that buyer because the other loan officer undercut fees. Who loses out on this? Well, the buyer and myself. Not only does the buyer need more money, but I might not survive one month because I lost a few deals because someone misled that buyer. And the bad loan officer wins...

In my opinion, those loan officers that make up excuses for 3rd party fees or as in your example, the survey fee... it comes down to a few things. They are too lazy and or don't take pride in what they do. I pride myself in being very accurate. It's just part of the job.

You then went on to say ask this... "Am i correct that there must be re-disclosure if the APR decreases by an 1/8th also?"

Yes, you are correct. This new Act states that an increase or a decrease of 0.125% in regards to the APAR, must be re-disclosed. So this loan officer making all GFE's higher by 0.18%, would be in violation of this. Now, I am not sure how much investors or regulators would stick to this... one would think, anything lower than what I disclosed is great for the borrower. The whole purpose of this new Act and re-disclosing is because of the past... so many baited and switched at closing, the day of closing. This wouldn't give the borrower much time to react, to consult an attorney, or to seek advice. Many were pressured, well, felt pressured. In reality, they could still have stopped the settlement. Besides, any changes of the lenders fees and or rate/terms, had to be re-disclosed prior to settlement. Not many followed this. Now the gov't has stepped in to put a time frame on it. And yes, it sounds like the logic of this other loan officer, is shot, big time. It just goes to show me that they either didn't read this new law, or that his company hasn't addressed it in detail to all loan officers, processors, and or closers. Or, they have and he/she just doesn't understand. thanks for coming back to this discussion and adding my feedback.

LYN.... . first, I think we will be hearing of some issues about closings being postponed in 2 weeks or so. And yes, if the market picks up, yikes. Wait.. a big yikes. Look at many of the lenders now, such as Bank of America and Wells Fargo, who on the average, can't get a loan to close in 45 days. I heard from some that this will tack on another 10 days. Within my company, we can still close loans in under 30 days, but it does come down to the loan officer putting together a very good file when submitting it to their processor. I closed a FHA loan in 12 days last month. And that was tough because I had to stay on top of it, which takes more time out of my day, no matter how good the file is put together. I like to have 30 days and that is usually all I need. But yes, overall, we might be hearing of some horror stories in the next months. thanks

AUG

2009

I find it comical how non-lenders think this is easy.

Jef, you & I don't go running around saying how easy it is to drive a buyer around in a car.

Here is a link to a recent article from the NY Times: http://www.nytimes.com/2009/08/16/realestate/16mort.html?_r=1&ref=realestate

AUG

2009

While facing more last second roadblocks to scheduling closings I came up with a new term, "preventive underwriting." Just like doctors run unnecessary tests to avoid lawsuits underwriters are coming up creative reasons to not clear a file. Many properties in my county were given new addresses for 911 purposes. An underwriter wants a letter from the Building Inspector why the address on a 1991 CO does not match the address on his violations report (but the Section-Block-Lot) match. This is maddness.

The feds and Cuomo are doing all they can to destroy the real estate market.

AUG

2009

The loan processs is obviously complicated. The additional regulations only serve to make things more complicated for loan reps and Realtors alike.

AUG

2009

I just had my first closing postponed because of a change in the APR. My clients are purchasing a new construction condo from KHov. The lender re-appraised the property yesterday and the value actually came in higher than the first appraisal. My clients no longer are required to have PMI resulting in a $72 a month savings. My clients had to re-schedule their days off from work, movers and furniture delivery. Thank god this was not part of a sell/buy transaction.

My clients are suffering a major inconvenience because their mortgage payment is decreasing $72 a month. The idiots (congressmen and bureaucrats) that write these laws while sitting behind a desk and never having worked in the private sector just don't get it. What possible benefit did my clients gain by this delay? If their payment increased by $72 I could understand re-disclosure, but not on a decrease. These are the same idiots that 40% of the country want to trust their health too.

Jeff, great post,

I agree, with this new law and feel that in the long run it will do more to protect the consumer from lenders who want to make a little extra at the end and think they will not have to inform the customer.

AUG

Yo, good looikn out! Gonna make it work now.

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Jeff Belonger-The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

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