I received a flyer from a mortgage lender this week entitled "Quick Guide to New Mortgage Regulations". Sort of like describing the stimulus bill as a "Quick Guide to Economic Recovery".
The regulations are coming in layers now, with new regulations piled upon only slightly less new regulations, topping slightly older regulations which followed a long season of no regulation at all.
What it adds up to... obtaining a mortgage loan today (and trying to close a real estate transaction) is only a bit less challenging than trying to build a naval warship from the contents of the recycling bin in your garage.
Okay, I exaggerate, but only slightly.
Here's what the first paragraph of the "Quick Guide" said:
The Housing and Economic Recovery Act of 2008 (HERA) was signed into law and now includes new regulations for the mortgage industry under the Mortgage Disclosure Improvement Act (MDIA), which includes an amendment to the Truth In Lending (TIL) Act which changes disclosure requirements previously applied under RESPA. The Home Valuation Code of Conduct (HVCC) has also been adopted by FNMA (Fannie Mae) and FMHLC (Freddie Mac) to enhance the integrity and accuracy of home valuations as of May 1, 2009... blah, blah, blah.
Remember, this is the "Quick Guide"!
What you need to know is that your lender is now required to disclose more information to you, earlier in the process, and if anything changes that affects the APR of your loan, or you decide to buy down your rate, or finance a portion of your closing costs, or amend the terms of the contract to reflect a repair credit, the earliest your transaction can close is seven business days after the new, updated TIL is issued. And if you don't sign the new TIL (and wait the required number of days), you don't get the loan.
What this means is that we are likely to see more rocky landings with our closings... more stress-inducing 11th hour delays and more finger pointing than ever before. All to protect the consumer.
I'm not saying these new regulations are good or bad, but there's a lot of gray area to this entire process. People who have played by the rules are going to have to navigate through a lot of red tape to get to closing, and it will cause some perfectly legitimate deals to get crazy at the end.
That's about as quick as I can explain it.
The regulations are coming in layers now, with new regulations piled upon only slightly less new regulations, topping slightly older regulations which followed a long season of no regulation at all.
What it adds up to... obtaining a mortgage loan today (and trying to close a real estate transaction) is only a bit less challenging than trying to build a naval warship from the contents of the recycling bin in your garage.
Okay, I exaggerate, but only slightly.
Here's what the first paragraph of the "Quick Guide" said:
The Housing and Economic Recovery Act of 2008 (HERA) was signed into law and now includes new regulations for the mortgage industry under the Mortgage Disclosure Improvement Act (MDIA), which includes an amendment to the Truth In Lending (TIL) Act which changes disclosure requirements previously applied under RESPA. The Home Valuation Code of Conduct (HVCC) has also been adopted by FNMA (Fannie Mae) and FMHLC (Freddie Mac) to enhance the integrity and accuracy of home valuations as of May 1, 2009... blah, blah, blah.
Remember, this is the "Quick Guide"!
What you need to know is that your lender is now required to disclose more information to you, earlier in the process, and if anything changes that affects the APR of your loan, or you decide to buy down your rate, or finance a portion of your closing costs, or amend the terms of the contract to reflect a repair credit, the earliest your transaction can close is seven business days after the new, updated TIL is issued. And if you don't sign the new TIL (and wait the required number of days), you don't get the loan.
What this means is that we are likely to see more rocky landings with our closings... more stress-inducing 11th hour delays and more finger pointing than ever before. All to protect the consumer.
I'm not saying these new regulations are good or bad, but there's a lot of gray area to this entire process. People who have played by the rules are going to have to navigate through a lot of red tape to get to closing, and it will cause some perfectly legitimate deals to get crazy at the end.
That's about as quick as I can explain it.
