New Loan Rules Could Slow Home Closings
HOME LOANS, INDUSTRY NEWS, REAL ESTATE PRACTICE
July 30th, 2009
As of July 30,2009, home buyers securing a loan may experience a delay in the loan closing if the interest rate on their loan changes from the initial quote. The Good Faith Estimate will have to be redone if the interest rate changes by more than one eighth of a percent (0.125%) triggering a three-day right of rescission. The new rule is part of the Mortgage Disclosure Improvement Act which is intended to increase transparency in the mortgage lending arena.
Here are some of the details:
- The new rules apply to purchase and refinance loans
- Covers all loans subject to RESPA regulations
- The lender must provide the borrower a Good Faith Estimate within 3 business days of receipt of a written loan application
- No one can charge an upfront fee on the borrower (except for a credit report) until the borrower has received the loan disclosures
- Barring financial emergencies, the lender must wait seven business days to close the loan from the date the borrower receives the loan disclosures
- As mentioned above, if the final interest rate changes more than 0.125%, the lender must provide the borrower a corrected loan disclosure which allows the buyer an opportunity to cancel loan
Lenders, escrow companies and real estate agents will need to be aware of these new regulations to prevent a delay in the loan closing. Hopefully, this will change the practice, by many lenders, of waiting until the last possible moment to draw final loan documents for signature, funding and closing!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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