Expect Delays to Your Closings After July 30, 2009

Mortgage and Lending with Advantage Mortgage

Once again we have some big changes being enacted in the very near future. 

If you are a Realtor, an Escrow Officer or a Loan Originator, these changes will impact you in a very substantial way.  For those of you that didn't take HVCC seriously, the new HERA Act amends the current truth in lending act (TILA) substantially. 

For all loan applications taken on or after July 30, several new factors need to be considered when quoting a timeline for a closing.  First, a Loan Originator cannot collect fees from a consumer (other than for a credit report fee) until 3 days from the time in which disclosures have been mailed.  This may seem harmless enough, but there are going to be a whole lot of lenders out there that are going to delay ordering anything that costs money until these three days have elapsed.  Second, a borrower must be provided with a copy of their appraisall at least 3 business days prior to closing.  The borrower can waive this 3 day period if they so choose.  Last but not least, a final truth in lending disclosure (TIL) must be mailed to the borrower 7 days prior to signing.  If the annual percentage rate (APR) changes at closing by more than .125%, a new TIL must be provided and the borrower will have to wait another 7 days to sign.

By the way, we are talking business days for these time periods - not calendar days.  The final TIL review alone is going to take up 1.5 weeks. 

Quoting from a recent Wells Fargo document about the new laws taking place on July 30:  "Historically, Borrowers and Sellers would agree on a closing date, and then service providers - including lenders - would work as best they could toward meeting that date." 

More than ever, it is going to be really important for Realtors to choose lending partners wisely and to make sure that they are prepared for these changes.  With the new regulations, disclosures and current underwriting climate, 45 is the new 30.  I'd highly recommend giving all parties a little extra time to ensure that closings will take place within the time contraints of the contract.

It is going to be truly crucial for Loan Originators and Escrow Officers to be as careful as possible with whatever fees are quoted.  Being as familiar as possible with the fees that affect the APR cannot be overemphasized.

Adversity is always an opportunity to separate ourselves from our competition.  Now is the time to prepare for the changes that will hit us in just a little over 30 days.

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