Yawning is NOT the Wise Response to Upcoming 08/01/15 CFPB Changes...
Every real estate transaction usually has some form of an appraisal attached to it. Anyone who applies for a mortgage will have the property appraised. With the Dodd-Frank Bill, lenders have to meet specific guidelines with regards to such appraisals. This is just the tip of the iceberg when it comes to the regulations and on August 1st, 2015 there will be more changes that will further impact loans and processing times. Most consumers will be looking at 60 day minimum loan processing times.
Step back to the real estate bubble that burst around 2008. The Dodd-Frank Bill was enacted to protect against misuse and fraud of many housing practices; this was done to keep from having falsely inflated market conditions which helped to generate a real estate bubble and when it burst all heck broke loose!
I recommend reading the post below by Lola Audu to get insight into the latest round of changes that are coming. In her post, she has links to the Consumer Financial Protection Bureau and I recommend bookmarking this website for future reference.
Let me add this. As a consumer, if you order an appraisal for your own home, that information is yours to keep and will give you a starting point as to what your home or property is valued at; however, a lender has to order an appraisal if you or any buyer is/are seeking a loan and has to follow the guidelines of the Dodd-Frank bill. The lender's appraisal is what matters and you, as a seller, may not be privy to the information other than knowing that the appraisal came in where it needed to be.
Short Sale Specialists in the real estate community have become acutely familiar with the 60, 90, and even 180 day closing timeline. But, for the larger world of real estate anything beyond 45 days for a Freddie Mac or Fannie Mae transaction belongs to an alternate reality.
Starting August 1, 2015 new guidelines impacting the real estate transaction and lending process are likely to create some headaches for real estate professionals and consumers as adjustments are made to comply with provisions of the Dodd-Frank bill and the Consumer Financial Protection Bureau (CFPB) guidelines.
I've found it mildly surprising that so many agents that I ask are not even aware of the Bureau, much less about the implications for their business this fall and the consumers they serve. The adjustments necessitated because of these changes are NOT mere cosmetics. For the Lending industry, the risk of violating the standards is so high that few Lenders who are interested in staying in business will want to pay penalties which range up to a MILLION dollar for Third Tier violations which are deemed by the Bureau to be reckless and deliberate. Smaller offenses still face stiff penalties in the range of $5,000 PER offense. That's enough to make most rational people take notice!
In case, you've been under a rock and have not heard about the Consumer Financial Protection Bureau (CFPB), you might want to peruse their website to gain some familiarity. The CFPB is tasked with protecting consumers by making markets for consumer financial services work for Americans . The net of financial issues over which they enforce compliance is large, ranging from student loans, pay day loans, consumers loans, mortgage loans, to auto financing.
The Bureau is associated with the Department of the Treasury and has compiled a substantial record of convictions and fines against a number of financial institutions and ancillary service providers including appraisers and title companies. Some of these cases have been settled for hugely substantive amounts) In addition, RESPA compliance (something most real estate professionals normally associate with HUD) is also an area which the CFPB has addressed especially with regards to Affiliate Business Agreements. Brokers and agents who have affiliate agreements with title companies, mortgage companies etc are strongly advised to make sure their agreements are in compliance.
Because REALTORS are the primary coordinators which link all aspects of the real estate process together, it is critically important that we are familiar with not only the mechanics of the changes as they relate to new forms and documents for the mortgage process as well as new timelines which will add a mandatory 3 additional days (and possibly up to 7 depending on if there are holidays or if delivery is by snail mail) to the the closing process.
Additionally, delays which may have been a mere blip in the process (such as appraisal glitches or certain types of contract revisions/addendums) could also inadvertently extend or delay the closing process by several days or more per item. In a business in which moving trucks are often waiting outside the closing, this type of hurdle could build additional stress into tense situations if REALTORS are not prepared to communicate effectively with all parties and adequately counsel their clients.
In less than 90 days, this new reality will be our norm. I've developed a NEW Continuing Education course certified for Legal CE Credits in the State of Michigan specifically designed to aid REALTOR Sales Agents and Brokers in understanding how to manage transactions in this new professional landscape. In addition, the course highlights RESPA issues as well as Fair Housing. What differentiates this course, it that it is written by a BROKER for BROKERS and Salespersons. It is not a regurgitation of lending or title guidelines, but rather a framework to assist real estate professionals in navigating and managing transactions and servicing clients in an increasingly complex world.
To book this course, please contact Lola Audu - 616-791-0511 or email: lola@audurealestate.com. The course is certified in Michigan for 2 Hours of Legal Continuing Education (C000249) on the www.cemarketplace.net. The information is applicable to any part of the country where real estate professionals are helping clients to buy and sell real estate!
Lola Audu, is the Designated Broker & Owner of Audu Real Estate. Our company specializes in helping people buy and sell homes in the greater Grand Rapids, West Michigan area. You can contact us via e-mail @ info@auduhomes.com or by phone at 616-791-0511. Thanks for visiting our blog. Here are links to some of our most popular posts for you to enjoy!
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