You will hear the regulations referred to as:
HERA--Housing & Economic Recovery Act
HOEPA--Home Ownership & Equity Protection Act
HVCC--Home Valuation Code of Conduct.
Here's the breakdown as it will affect your everyday transactions...
There will be mandatory waiting periods put in place so our consumers can review their documents--the TIL and appraisal most notably--at several intervals of the loan process. This ensures that the consumers fully understand the details of their loan terms and the real estate transaction itself. Lenders also may have a waiting period on when they may collect upfront appraisal fees.
It's not so important that you know exactly how it all works or how many days or when we will have to wait, etc.
What is important:
- It will take 30 days to complete the loan process, so that means the close date should be between 35-40 days from your effective date of the contract.
- The buyer should do their shopping/review with lenders in advance of making an offer on a property. It's not just about going to a loan officer and having them pull credit for a prequalification. They should know what loan program they will be eligible for, exactly how much down payment they have available, the loan officer should collect and review their income documents.
- An increase of the APR by more than .125% could cause the closing to be delayed, if changes occur late in the loan process.
Given the new regulations, timing will be more critical than ever and we must insist on timely action of our buyers/borrowers and our partners in the transaction.
Credit isn't quite as easy as it once was, so we must help our buyers understand the importance of doing their mortgage financing homework upfront and working to honor their purchase contract that they have entered into.
