Effective July 30th, a whole new bag of tricks will be installed in the lending system. These laws are intended to prevent homebuyers from sudden and undisclosed changes to their new home loans.
The downside is that these laws have mandatory time periods attached. If the buyer wants a fast escrow and anything changes with the loan, they are out of luck.
New federal rules protecting applicants for home loans take effect July 30
A new set of consumer-protection rules take effect July 30, including requiring lenders to provide consumers with initial disclosures of the estimated mortgage costs within three business days of the loan application; prohibiting lenders from collecting any fees prior to the consumer receiving the loan-cost disclosures; and prohibiting quickie closings on loans.
Traditionally, many mortgage brokers and lenders collected fees covering appraisal, credit, and other charges at the time of application. The new rules eliminate this practice and prohibit lenders from collecting any fees until the consumer has received the truth-in-lending disclosures and an annual percentage rate (APR) calculation of the loan costs.
The new rules also require lenders to deliver a copy of the real estate appraisal to the home buyer three business days before the scheduled closing on the loan. Previously, federal regulations guaranteed that consumers could request and obtain a copy of the appraisal, but many home buyers were not aware of this right.
Additionally, the rules prohibit quickie closings on loans by requiring a seven-day waiting period after applicants are handed their early disclosures or the disclosures are mailed. This provides applicants a week to think about the transaction and to decide whether it is right for them. Final truth-in-lending disclosures are due three business days before closing.
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Many of the new statutes regarding foreclosures and short sales are directed at owner occupants. The goal of the government is to find ways to keep people in their homes.
For those of you who have rental properties that are “upside down” you made want to take extra caution when considering what to do. A conversation with a CPA is a must, and possibly an attorney.
Keep in mind a short sale is a negotiation. Some banks were limiting conversations to owner occupants that were behind on payments.
Now, many banks are changing the way they handle short sales. They are looking more at what makes sense to them. Investors are being included, even those that are current on payments.
If you have been denied in the past, you may want to give it another try. Including a Realtor in the negotiations may help, especially if they have successfully negotiated other short sales.
Last night I was waiting for a table at a local restaurant and struck up a conversation with an older gentleman. He is a farmer on the west side, retirement age. He was around during the great depression, and had some interesting in-sites on what he sees today.
He has watched his much-needed retirement fund shrink, and wonders how to water his crops this year. Yet his attitude on life was amazingly positive. He asked me an intriguing question: What was the best dinner you have ever had? While my mind is scanning great restaurants, and I’m hemming and hawing, he finally bails me out.
"The best dinner you ever had is the one that followed no breakfast and no lunch." Everything tastes incredible. He went on to talk about photos from the great depression, and how the mens belts had extra leather hanging down. People went hungry.
Am I naive to think that our country has progressed beyond that point? Am I doing my part to make sure it has?
I have had an idea floating around in my head for a month or so. Now that I am entering the world of social networking with accounts on facebook, trulia, twitter, yelp, linkedin etc., I am connecting with some great people.
Most of us are over forty, and treading into this unknown world is kinda fun. So, I’m thinking, link fun and food together with viral networking and maybe we can do our part to keep Chico fed.
I started a facebook group "Chico Foodbank Tailgaters." Join up, and I will blog more later!
