New Laws All Over the Place!
This week I have an update on the HB 643 Foreclosure Rescue Law AND an update on some BIG changes in the mortgage market that were passed Monday. Both of these may have a HUGE impact on your business and it's important that you become familiar with both.
Monday the Federal Reserve approved a measure to change some of the guidelines about what types of loans can and can't be made. Here's some of the highlights (or lowlights, depending on how you look at it!):
Prepayment Penalties will be restricted and can't exceed 2 years. I'm ok with this one. I hated seeing people put in loans that would start adjusting after 1 or 2 years but had a prepayment penalty for 3 years so the folks couldn't afford to refinance.
Lenders will have to verify both the fact that people make enough money to afford the house AND that they have the downpayment money. This means that Stated Income/No Verification loans are now a thing of the past! This is bad news for most of us in this industry that have PERSONALLY used stated income loans, myself included! No More! These loans served a very good purpose, unfortunately got abused, and now they're gone for all of us!
Mortgage brokers and the industry as a whole got a big gift in being able to still collect YSP or Yield Spread Premium. This is the commission paid by the lender to the mortgage broker for bringing them the loan. Many people think this is a bad thing, but in truth, without it, there would be NO such thing as a Zero-point loan because brokers would have to charge all their fees on the front which means more money out of the buyers pocket.
It also looks like they are going to require you to escrow your taxes and insurance from here on out.
Most of the changes go into effect on October 1, 2009 but some not until 2010. Expect the mortgage industry to change and adapt and be ready for it - don't worry! Here's a link to read a CNN article with some more details: CNN article to read
RECAP for Florida Agents:
HB 643. (Florida Only) Monday I went to a meeting led by Attorney Barry Miller and The Closing Agent. Barry gave us some insights on the law as it applies to Realtors and what we need to do and know to stay out of hot water. His overall consensus is that Realtors are PROBABLY excluded, although there is some weird wording they use in the exclusion. One biggie that you might not have thought of though is this - if you have an unlicensed assistant or a secretary in your office perform any of the duties of "foreclosure rescue" which may in a loose interpretation include anything to do with the listing of a home in foreclosure, you may be violating the law.
HIS SUGGESTION: When in doubt - disclose. There is one disclosure that you will have to give them where you spell out the services you will provide and for what fee. You will have to give them the disclosure one day before you ask them to sign it, and then they will have 3 days to change their mind. You will need to give them a copy within 3 hours of signing it (just bring 2 copies with you!) and you won't be able to collect any up-front fees. (Please note, in this month's Orlando Realtor Magazine the ORRA Legal Counsel, Jim Mitchell stated that the new law does NOT impact Realtors that are listing properties. With so much disagreement that I've seen from the MANY attorney's I've talked to and read articles by, I would err on the side of caution right now and disclose even if you may not have to - you'll never get in trouble for OVER-disclosing!) I'll keep you updated as I get more info.