New Disclosure Regs

New Disclosure Regs

Whenever anyone applies for a mortgage loan a lot of information has to be gathered and assessed by both the lender and the borrower. The lender needs to know what kind of property the money is for, if it is worth the price, if the borrower has a reasonable expectation of being able to repay, and a host of other facts. Some of these facts, especially if the loan requested is on a condominium property, such as the luxury condos here in the Hoboken/Jersey City area, are requested from the owners’ association of the property in question.

The borrower on the other hand wants to know the terms of the loan, the rate of interest, what fees may be involved, and other such facts. Since the borrower has a vested interested in getting the best terms, lowest interest rate, etc., it makes sense to apply to several different lending institutions. This can place a paperwork burden on the owners’ association and the lender. If the association has to submit documentation in a timely fashion to every lender who may or may not be chosen, you can imagine how bureaucratic things can become.

Recently the Consumer Financial Protection Bureau has attempted to help alleviate this situation. Now, for the initial steps, the assessment can be made by the lender from information available from other sources, and can be checked without official application to the owners’ association. They can check the MLS listing, get the information from the seller of the unit, or even go to the association’s website.

These relaxed regulations only apply to the initial steps in the loan process. Once the lender has been chosen, more formal information is required. The Closing Discovery must confirm all association charges and other financial information accurately and within a specified time period.

Since these regulations are new, and not everyone is necessarily aware of the changes, it is in the borrower’s (the consumer’s) interest to be self-educated. Before you purchase a property, you may want to take advantage of a free online publication entitled, “Your Home Loan Toolkit: a Step by Step Guide”, found at this link.

Are you ready to buy a luxury condo?

Edward