I suppose if you were not in the real estate, mortgage financing, appraisals or any other service or entity that deals with the real estate economy, you would be impressed with this new Federal Law. Don’t we typically believe everything we read?
Altering a variety of rules with the HERA ((Housing and Economic Recovery Act of 2008) and with the MDIA (Mortgage Disclosure Improvement Act), the most recent federal law was just passed and became law on July 30, 2009. These two Acts directly affect the Truth in Lending and Good Faith Estimate which are given to borrowers when they apply for a home loan.
The only positive to this new Federal Law is it provides a borrower (buyer) more time to review their Truth in Lending and Good Faith Estimate. The new law gives the borrower 7 days to read over the papers in case they were not familiar with the particulars of their mortgage like the Annual Percentage Rate (APR), fixed rates, variable rates and scheduled payments. This is not where my dispute lies. Mortgage paperwork is often very lengthy and complicated, with complex terms and conditions that even a lawyer would have trouble understanding!
One issue that makes things more complicated is if the Annual Percentage Rate either increases or decreases by 1/8% while the loan approval is still pending, you will have to delay a minimum of 3 business days before you can close the escrow on your home. There will be another 3 business day delay if the Title fees change during this time. Such a scene could very easily play out for a purchaser who did not lock in their interest rate.
Loan types vary, and the waiting period will be reset if the loan switches from “Fixed” to “Balloon”, or “Fixed and “ARM”. ARM refers to interest to amortized 3/1 ARM to a 5/ARM–or conventional loans with or without standard Mortgage Insurance.
Can someone tell me who makes up these rules? It makes one wonder if anyone had put any thought at all into how these new practices could impact the housing market.` “Time is of the Essence″ is a phrase known to many people in the real estate business. Since most banks have taken over many homes on the market, this phrase has been totally abused.
Since homes takes 4, 5, 6 months or longer to close escrow in today’s market, you say to yourself, what’s another 3 to 7 business days? But the interest rate lock is generally only 30 to 45 days and title fees change often, so the new federal laws could keep home ownership just out of reach and closing dates repeatedly retreating for even longer.
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