In response to the recent real estate and credit crunch, the U.S. Department of Housing & Urban Development has come up with 2 new forms along with a stack of new rules that will greatly affect how Realtors, title companies, and lenders do business.
Here are some links to these new forms. The new Good Faith Estimate and the new HUD-1 Settlement Statement.
The idea behind these new forms is that buyers will better be able to compare one lender's loan to another. It also forces lenders to keep their closing costs right in line with their good faith estimate. If the closing costs, interest rate, or other loan terms change, the buyer must be given a new good faith estimate and be given at least 72 hours to review the changes. Additionally, the borrower is supposed to get the HUD-1 settlement statement a full 72 hours before closing. Granted, these changes are a good thing for borrowers - I've simply seen too many last minute bait & switches pulled by lenders at the closing.
So if the lenders and title companies don't have their act together, expect delays. In fact, I would go so far as to say not to put any closing date less than 45 days out if the buyer is getting a loan. Just too many variables in play.
I'm not sure how these new forms and rules are going to affect short sales and REOs. Short sales often have strict deadlines, but the short saling lender often takes months to make a decision and by then new mortgage forms for the buyer may need to be redrafted.
Same with REOs. REOs often get delayed because of some silly problem that the seller should have taken care of weeks or months earlier. And if the buyer needs more time, the seller can simply cancel the deal or else force the buyer to pay a per diem (daily) penalty for every day they delay.
These changes go into effect January 1, 2010 - less than 2 weeks from now. So from all of your friends up in Washington. Hope you enjoy your new Christmas present!
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