As anyone whose read my profile knows, I started in the Real Estate business as a loan officer. In the last few years I morphed into a Realtor, and being pretty good at it, I've been happy to call this my little neck of the woods lately. I recently had occasion, however to join forces with a Loan Officer I know on a client I referred him, as his processor for a purchase money loan. I had done a lot of the processing on my own loans, "back in the day" but never wore the title. It's the first time since all these changes to protect consumers have been put into place, that I've had a bird's eye look at the insanity that is a broker originated loan.
My buyer is purchasing a short sale that has fallen on hard times. In reading through the new rules regarding Good Faith Estimates, it turns out that any cost/item required by the lender to close the loan must be disclosed on the Good Faith Estimate, and must be estimated within 10% of it's actual cost, as charged by an independent third party, or the difference must be paid by the Loan Officer. Here's what this means. The property in question has a well, a septic system, and some deferred maintenance. If there is anything called out with any of these things, and a cost for inspecting and repair ends up costing more than 10% of what was estimated, then the loan officer has to pay for it.
What if the well doesn't work? What if the septic system is bad? What if the bank requires expensive repairs to be done after the appraisal is done? Why is any of this the loan officer's fault?
In anticipation of possible trouble, costs for this loan were estimated extremely high and the buyer is understandably concerned. Such requirements are probably out there killing many a deal unnecissarily.
Is anybody out there actually thinking, or has the financial world simply lost their collective minds?
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