Are the Rules Really Changing?

In a recent meeting with the Mortgage Lender who helps our buyers out, we were interested to find out how the landscape of the mortgage industry is changing.

Not only are the smaller brokers sucking wind (like automakers, builders & tradesmen) but the government is changing how they must do business. One of the changes that was implemented, after the “emergency” bill was passed thru congress early 2009, was the need for detailed disclosures. The new Guidelines are labeled as:

Housing and Economic Recover Act

 

and

 

Home Ownership and Equity Protection Act
To make life more interesting, these changes are apparently to make the transaction more “transparent” and “equitable” for the consumer. In the government’s version of making the transaction equitable & transparent one must disclose an inordinate amount of information, making the transaction more cumbersome with disclosures to read and sign.
I think the larger issue is the fact that the customer has to receive the Truth In Lending statement & the appraisal 4 days prior to closing and can back out if the APR changes.
What does this mean to you as a sales agent? If the facts about the loan change just before closing, the buyer can choose to start the mortgage process over….and over….and over. It means your transaction is not complete until all the disclosure time frames have been met, the appraisals have been reviewed, the walk through has been performed, the inspection has been complete, the repairs have been made, the customer has signed all the documents and the purchaser has the keys in their possession.
What it also means is though your transaction may go smoothly, the transaction behind you allowing your buyer to sell and move up may be skewed. Rushed closings? That, my friend, is a thing of the past. There is no waiver to forgo this “cooling off” period of time. It also means more “hand holding” and better bedside manner throughout the entire process. There is no more estimating low on the Truth in Lending statement and calling it just an “estimate” when the facts change right before closing.

Does backing out of the financing exonerate the purchaser from having to perform on the purchase agreement? Check with your attorney, but it doesn’t appear that way. What I can assure you is it may be messy for the loan agency, may push the sales agent into an eating disorder and raise the blood pressure of the seller….nice fix.

More than anything, it really forces the sales agent to help pick a mortgage team better at estimating closing cost. Forces the mortgage lender to be very accurate in their Truth in Lending statement. It forces the closing attorney or agency and the seller to be better organized. Though cumbersome for the experienced buyer and the all in the process, the 1st time home buyer will be appreciative and informed in the process.

The silver lining in all this is all the Truth in Lending estimates will be very tight and transparent, the customer will be given more service, all those involved in the transaction will have to be more organized, I’ll loose some weight with my new eating disorder and oh, by the way, this goes into effect July 31, 2009. Get ready!