Congress passed two measures for the housing market on November 5, 2009!
The first time home buyer tax credit deadline was extended to loans purchased on or before May 1, 2010, and closing by July 1, 2010. For first time home buyers the credit will remain at $8000, and all other home buyers could be eligible for up to $6500. The income limits to qualify for the credits was increased as well, to allow more buyers to qualify, and hopefully boost the move up and move down buyers. This will also hopefully move some inventory in the higher priced homes that have been very hard to sell all this year.
For current home owners looking to cash in on this credit, they must have owned their current home at least 5 years. The tax credit is available for the purchase of principal homes costing $800,000 or less. Purchase of second homes or vacation homes are ineligible. The credit will be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
Congress also voted to extend the higher conforming loan limits for Fannie, Freddie and FHA loans. These limits are set at 125% of the average home price in your area, up to a high limit o$795,000. You have to check your county limits to determine the actual high price limit for your area. This will have the greatest impact on states like California, Washington, and the Northeast where average home prices are substantially higher than most of the country. But, this is good news for home buyers in those areas who would otherwise have to finance home purchases with "jumbo" loans which typically have much higher rates.
Friday, November 6, 2009
Wednesday, October 14, 2009
JD Powers Award
J.D. Power and Associates Ranks Coldwell Banker Highest in Home Seller Satisfaction
SANDY, Utah – September 24, 2009 – Coldwell Banker Real Estate LLC ranked highest among real estate companies in satisfying home sellers according to the recently released J.D. Power and Associates 2009 Home Buyer/Seller Study.
The independently administered study measured customer satisfaction of homebuyers and sellers among the largest national real estate firms. The study incorporates more than 3,100 evaluations from 2,801 respondents who bought or sold a home between April 2008 and June 2009. The survey was fielded between April and June 2009.
“This recognition is a testament to the brand’s legacy as an industry leader, our commitment to innovation and, above all, our powerful network,” said Dan Christensen, president of Coldwell Banker Residential Brokerage in Utah.
“With unsurpassed local knowledge, expertise and work ethic, we at Coldwell Banker have always felt that our network of professionals is the greatest in the industry, and we’re pleased J.D. Power and Associates recognized it,” he added.
J.D. Power and Associates examined four factors in the home-selling experience including: agent, marketing, office, and package of additional services. Among home sellers, Coldwell Banker Real Estate ranked highest with a score of 815 and performed particularly well in all four areas.
Coldwell Banker Real Estate also ranked particularly high in the home-buyer segment. The brand ranked second with a score of 801 on a 1,000-point scale, performing particularly well in the office factor.
About J.D. Power and Associates Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. The company's quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on home building and home improvement, car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit www.JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.
About Coldwell Banker Residential Brokerage
Coldwell Banker Residential Brokerage, a leading residential real estate brokerage company in Utah, operates 12 offices with about 900 sales associates serving the communities of the greater Wasatch Front. The company offers residential and commercial brokerage, corporate relocation and mortgage services. Through its internationally renowned Coldwell Banker Previews® program, the company is widely recognized for its expertise in the luxury housing market. Coldwell Banker Residential Brokerage, online at HYPERLINK "http://www.utahhomes.com/" www.UtahHomes.com, is part of NRT LLC, the nation’s largest residential real estate brokerage company. NRT, a subsidiary of Realogy Corporation, operates Realogy’s company-owned real estate brokerage offices. For more information, please visit "http://www.UtahHomes.com" www.UtahHomes.com or call 801.563.8700.
Thursday, October 8, 2009
Newcomers to Provo!
"The [most moved to area] college towns where students and education professionals help welcome outsiders. Among the places in America that have welcomed the most newcomers in 2008, three are home to major colleges and universities: Raleigh, N.C., Provo, Utah, (home to Brigham Young University, one of the country's largest private colleges), and Austin, Texas, home to the University of Texas at Austin.
"If there are lots of newcomers, it's easy to make friends; there's a sense of vibrancy there," says William Frey, a senior fellow at the Brookings Institution. "Places that don't have a lot of new migrants tend to be older and more stagnant. They're also more close-knit."
Intellectual centers like the above-mentioned college towns, however, reliably attract new residents because universities are large, relatively stable employers--and a steady flow of students keeps the population young.
"You have an educated population, and you have a large youthful population," says Alexander von Hoffman, senior fellow at the Joint Center for Housing Studies at Harvard University. "These places retain people after they've graduated, and attract like-minded people."
Published by Forbes.com
10/01/2009
"If there are lots of newcomers, it's easy to make friends; there's a sense of vibrancy there," says William Frey, a senior fellow at the Brookings Institution. "Places that don't have a lot of new migrants tend to be older and more stagnant. They're also more close-knit."
Intellectual centers like the above-mentioned college towns, however, reliably attract new residents because universities are large, relatively stable employers--and a steady flow of students keeps the population young.
"You have an educated population, and you have a large youthful population," says Alexander von Hoffman, senior fellow at the Joint Center for Housing Studies at Harvard University. "These places retain people after they've graduated, and attract like-minded people."
Published by Forbes.com
10/01/2009
Wednesday, September 9, 2009
Home Sales Up! Summer 2009
Wasatch Front home sales up for second consecutive month
Sales of existing Wasatch Front homes were up for the second consecutive month, rising 4 percent in July, while Utah County sales increased by a whopping 22 percent, according to statistics released by the Utah Association of REALTORS® Aug. 25, 2009.
In July, Salt Lake, Utah, Davis, Weber and Tooele County REALTORS® sold 2,352 single-family homes, townhomes and condominiums compared to the 2,261 properties sold in July 2008. In Utah County, REALTORS® sold 566 existing homes compared to the 465 homes sold last year.
The statistics mirrored figures released by the National Association of REALTORS® that said U.S. home sales were up 5 percent in July compared to July 2008. On a monthly basis, U.S. seasonally adjusted home sales increased 7 percent, the first time in five years that sales increased for four months in a row.
Along the Wasatch Front, sales were down 6 percent from June to July; however, the decrease was expected because sales are traditionally slower in July and the Utah statistics are not seasonally adjusted.
The median price of homes in the five-county area in July was $205,000, down 6 percent from last year. In a separate report, the Federal Housing Finance Agency said Utah home prices decreased nearly 12 percent for the second quarter.
Sales of existing Wasatch Front homes were up for the second consecutive month, rising 4 percent in July, while Utah County sales increased by a whopping 22 percent, according to statistics released by the Utah Association of REALTORS® Aug. 25, 2009.
In July, Salt Lake, Utah, Davis, Weber and Tooele County REALTORS® sold 2,352 single-family homes, townhomes and condominiums compared to the 2,261 properties sold in July 2008. In Utah County, REALTORS® sold 566 existing homes compared to the 465 homes sold last year.
The statistics mirrored figures released by the National Association of REALTORS® that said U.S. home sales were up 5 percent in July compared to July 2008. On a monthly basis, U.S. seasonally adjusted home sales increased 7 percent, the first time in five years that sales increased for four months in a row.
Along the Wasatch Front, sales were down 6 percent from June to July; however, the decrease was expected because sales are traditionally slower in July and the Utah statistics are not seasonally adjusted.
The median price of homes in the five-county area in July was $205,000, down 6 percent from last year. In a separate report, the Federal Housing Finance Agency said Utah home prices decreased nearly 12 percent for the second quarter.
Tuesday, September 8, 2009
Home Run 2 Grant
FREQUENTLY ASKED QUESTIONS ABOUT HOME RUN 2 GRANTS
*What is the $4,000 Home Run 2 Grant?
The Home Run 2 Grant is a mortgage assistance program that grants $4,000 to home buyers who wish to: (A) have a new home constructed, (B) have a partially-constructed home completed, or (C) purchase a newly-constructed home. It must be the primary residence of the home buyer. Homes that have been previously occupied do not qualify.
*How is Home Run 2 different from the first Home Run program?
The first Home Run program, which ended in June 2009, provided a $6,000 grant to eligible home buyers. Home Run 2 provides a $4,000 grant. The first program required that homes be ready for occupancy upon closing. Home Run 2 buyers have two additional options. They can purchase a home that is contracted for construction or partially finished and contracted for completion. Homes that have been previously occupied do not qualify.
When a Home Run 2 Grant Commitment is issued, if the Eligible Home is fully constructed, the Commitment expires 10 calendar days after the date of issuance (unless that day falls on a weekend or holiday and then it is the following business day). If the Eligible Home is somewhere in the construction process, the Commitment expires on June 30, 2010.
All other aspects of the program are materially the same as the first Home Run program.
*Who is eligible to receive a $4,000 Home Run 2 Grant?
• Home buyers who did not receive a $6,000 grant under the previous $6,000 Home Run Grant Program.
• Home buyers (any person taking title) must meet the following income restrictions:
o Single person, maximum income, $75,000
o Married couple, maximum income, $150,000
o If more than one unmarried person is taking title to the Eligible Home, each such single person is subject to the $75,000 income limit.
o Income calculations will be determined by the Adjusted Gross Income as verified by the Approved Lender using the 2008 IRS Federal Income Tax transcript obtained directly from IRS or from an authorized third-party vendor.
• Home buyers must occupy the purchased home as a primary, permanent residence.
• If home buyers need a mortgage loan to purchase the home, the loan must be a fixed interest rate, amortizing mortgage loan with a term of 30 years or less.
• The Home Run 2 Grant Program is effective only for home purchases closed after a Home Run 2 Grant Commitment has been issued for that specific transaction. The grant funds may not be issued for homes purchased prior to obtaining the Home Run 2 Grant Commitment.
*Can Cash Buyers qualify to get the Home Run 2 Grant?
Yes. Cash Buyers must contact Utah Housing directly. Cash Buyers, like all other Buyers, must obtain a written Home Run 2 Grant Commitment prior to closing.
*What property types can be purchased with a $4,000 Home Run 2 Grant?
Eligible property types include single-family detached homes, condominiums, planned unit developments (PUD), twin homes, town homes and manufactured homes permanently affixed to a foundation.
*What type of loan can a home buyer use to purchase the home?
If a home buyer needs a mortgage loan, it must be a fixed interest rate loan with a term of 30 years or less. Loans may be obtained from any Approved Lender. Examples of qualifying loans include:
∗ Conventional loans
∗ FHA, VA, or Rural Housing loans
∗ Utah Housing Corporation loans
*How does a home buyer apply for a $4,000 Home Run 2 Grant?
Apply for a grant through an Approved Lender. Approved Lenders are the key link between a home buyer and the Home Run 2 Grant. The Approved Lender assists a home buyer to provide necessary information to secure the grant commitment from Utah Housing Corporation. A home buyer does not work directly with Utah Housing Corporation (unless the home is being purchased for cash).
*Do I have to be a first-time home buyer to get a Home Run 2 Grant?
No. Home Run 2 Grants are available to all home buyers (all persons who take title) whose maximum income is $75,000 for singles, $150,000 for couples and, if more than one single person takes title, the $75,000 limit applies to each such single person.
*Can the $4,000 Home Run 2 Grant be combined with the new $8,000 federal tax credit?
Yes, if home buyers meet the independent criteria of both the federal government and the Home Run 2 Grant programs, they may take advantage of both. The $4,000 Home Run 2 Grant is available to both those who are first-time home buyers as well as those who previously owned a home. The $8,000 federal tax credit is available only to first-time home buyers.
*How many Home Run 2 Grants are available to home buyers?
A total of approximately 1,950 grants of $4,000 each will be available. Only one grant can be used for the purchase of each home and can only be issued to persons who did not obtain a grant under the previous $6,000 Home Run Program. Home Run 2 Grants are distributed on a first-come, first-served basis to fully-qualified home buyers. The approximate number of remaining grants is posted at all times on Utah Housing web page at www.utahhousingcorp.org.
*Is the Home Run 2 Grant taxable?
The Home Run 2 Grant will probably be taxable as income under federal and state tax laws. Utah Housing does not provide any tax advice regarding the taxability of the Home Run 2 Grant. If Utah Housing receives a favorable ruling from the Internal Revenue Service that a Home Run Grant is not taxable, Utah Housing will post the ruling on its Website (www.utahhousingcorp.org) and a home buyer should review the ruling in connection with the preparation of their tax return(s).
*If I have additional questions, who do I contact?
Contact Heidi Alldredge, Realtor for Coldwell Banker at 801-434-7008.
Important Note: Buyers should make sure that they work closely with a Realtor and an Approved Lender for the Home Run 2 Grant Program to ensure that required materials are submitted in a timely manner, but not prematurely.
When a Home Run 2 Grant Commitment is issued, if the Eligible Home is fully constructed, the Commitment expires 10 calendar days after the date of issuance (unless that day falls on a weekend or holiday and then it is the following business day). If the Eligible Home is somewhere in the construction process, the Commitment expires on June 30, 2010.
*Steps to obtain a Home Run 2 Grant:
1. Buyer signs a contract to: (A) have a new home constructed, (B) have a partially-constructed home completed, or (C) purchase a newly-constructed home. It must be the primary residence of the home buyer. Homes that have been previously occupied do not qualify.
2. Buyer applies for mortgage loan through an Approved Lender and Approved Lender obtains all required Home Run 2 documentation and written loan underwriting approval.
3. When all required Application materials have been obtained, Approved Lender submits a Home Run 2 Grant Request to Utah Housing and receives from Utah Housing a Home Run 2 Grant Commitment authorizing the Grant for the Buyer.
4. The purchase closing is scheduled at a title company. As soon as closing documents have been signed, the title company faxes required documents to Utah Housing so that it can request that the Escrow Agent send a wire of $4,000 to the closing.
5. The Home Run 2 Grant Commitment must be dated on or prior to the date shown on closing documents.
*What is the $4,000 Home Run 2 Grant?
The Home Run 2 Grant is a mortgage assistance program that grants $4,000 to home buyers who wish to: (A) have a new home constructed, (B) have a partially-constructed home completed, or (C) purchase a newly-constructed home. It must be the primary residence of the home buyer. Homes that have been previously occupied do not qualify.
*How is Home Run 2 different from the first Home Run program?
The first Home Run program, which ended in June 2009, provided a $6,000 grant to eligible home buyers. Home Run 2 provides a $4,000 grant. The first program required that homes be ready for occupancy upon closing. Home Run 2 buyers have two additional options. They can purchase a home that is contracted for construction or partially finished and contracted for completion. Homes that have been previously occupied do not qualify.
When a Home Run 2 Grant Commitment is issued, if the Eligible Home is fully constructed, the Commitment expires 10 calendar days after the date of issuance (unless that day falls on a weekend or holiday and then it is the following business day). If the Eligible Home is somewhere in the construction process, the Commitment expires on June 30, 2010.
All other aspects of the program are materially the same as the first Home Run program.
*Who is eligible to receive a $4,000 Home Run 2 Grant?
• Home buyers who did not receive a $6,000 grant under the previous $6,000 Home Run Grant Program.
• Home buyers (any person taking title) must meet the following income restrictions:
o Single person, maximum income, $75,000
o Married couple, maximum income, $150,000
o If more than one unmarried person is taking title to the Eligible Home, each such single person is subject to the $75,000 income limit.
o Income calculations will be determined by the Adjusted Gross Income as verified by the Approved Lender using the 2008 IRS Federal Income Tax transcript obtained directly from IRS or from an authorized third-party vendor.
• Home buyers must occupy the purchased home as a primary, permanent residence.
• If home buyers need a mortgage loan to purchase the home, the loan must be a fixed interest rate, amortizing mortgage loan with a term of 30 years or less.
• The Home Run 2 Grant Program is effective only for home purchases closed after a Home Run 2 Grant Commitment has been issued for that specific transaction. The grant funds may not be issued for homes purchased prior to obtaining the Home Run 2 Grant Commitment.
*Can Cash Buyers qualify to get the Home Run 2 Grant?
Yes. Cash Buyers must contact Utah Housing directly. Cash Buyers, like all other Buyers, must obtain a written Home Run 2 Grant Commitment prior to closing.
*What property types can be purchased with a $4,000 Home Run 2 Grant?
Eligible property types include single-family detached homes, condominiums, planned unit developments (PUD), twin homes, town homes and manufactured homes permanently affixed to a foundation.
*What type of loan can a home buyer use to purchase the home?
If a home buyer needs a mortgage loan, it must be a fixed interest rate loan with a term of 30 years or less. Loans may be obtained from any Approved Lender. Examples of qualifying loans include:
∗ Conventional loans
∗ FHA, VA, or Rural Housing loans
∗ Utah Housing Corporation loans
*How does a home buyer apply for a $4,000 Home Run 2 Grant?
Apply for a grant through an Approved Lender. Approved Lenders are the key link between a home buyer and the Home Run 2 Grant. The Approved Lender assists a home buyer to provide necessary information to secure the grant commitment from Utah Housing Corporation. A home buyer does not work directly with Utah Housing Corporation (unless the home is being purchased for cash).
*Do I have to be a first-time home buyer to get a Home Run 2 Grant?
No. Home Run 2 Grants are available to all home buyers (all persons who take title) whose maximum income is $75,000 for singles, $150,000 for couples and, if more than one single person takes title, the $75,000 limit applies to each such single person.
*Can the $4,000 Home Run 2 Grant be combined with the new $8,000 federal tax credit?
Yes, if home buyers meet the independent criteria of both the federal government and the Home Run 2 Grant programs, they may take advantage of both. The $4,000 Home Run 2 Grant is available to both those who are first-time home buyers as well as those who previously owned a home. The $8,000 federal tax credit is available only to first-time home buyers.
*How many Home Run 2 Grants are available to home buyers?
A total of approximately 1,950 grants of $4,000 each will be available. Only one grant can be used for the purchase of each home and can only be issued to persons who did not obtain a grant under the previous $6,000 Home Run Program. Home Run 2 Grants are distributed on a first-come, first-served basis to fully-qualified home buyers. The approximate number of remaining grants is posted at all times on Utah Housing web page at www.utahhousingcorp.org.
*Is the Home Run 2 Grant taxable?
The Home Run 2 Grant will probably be taxable as income under federal and state tax laws. Utah Housing does not provide any tax advice regarding the taxability of the Home Run 2 Grant. If Utah Housing receives a favorable ruling from the Internal Revenue Service that a Home Run Grant is not taxable, Utah Housing will post the ruling on its Website (www.utahhousingcorp.org) and a home buyer should review the ruling in connection with the preparation of their tax return(s).
*If I have additional questions, who do I contact?
Contact Heidi Alldredge, Realtor for Coldwell Banker at 801-434-7008.
Important Note: Buyers should make sure that they work closely with a Realtor and an Approved Lender for the Home Run 2 Grant Program to ensure that required materials are submitted in a timely manner, but not prematurely.
When a Home Run 2 Grant Commitment is issued, if the Eligible Home is fully constructed, the Commitment expires 10 calendar days after the date of issuance (unless that day falls on a weekend or holiday and then it is the following business day). If the Eligible Home is somewhere in the construction process, the Commitment expires on June 30, 2010.
*Steps to obtain a Home Run 2 Grant:
1. Buyer signs a contract to: (A) have a new home constructed, (B) have a partially-constructed home completed, or (C) purchase a newly-constructed home. It must be the primary residence of the home buyer. Homes that have been previously occupied do not qualify.
2. Buyer applies for mortgage loan through an Approved Lender and Approved Lender obtains all required Home Run 2 documentation and written loan underwriting approval.
3. When all required Application materials have been obtained, Approved Lender submits a Home Run 2 Grant Request to Utah Housing and receives from Utah Housing a Home Run 2 Grant Commitment authorizing the Grant for the Buyer.
4. The purchase closing is scheduled at a title company. As soon as closing documents have been signed, the title company faxes required documents to Utah Housing so that it can request that the Escrow Agent send a wire of $4,000 to the closing.
5. The Home Run 2 Grant Commitment must be dated on or prior to the date shown on closing documents.
Wednesday, August 26, 2009
FHA Changes For Condos
Beginning October 1, there will be some changes to the approval process for FHA Condo loans nationwide. The reason for this change is to complete a current due diligence of all Condo projects.
Up until now, Condo projects were either already approved and listed on HUD’s website for FHA financing, or they could be “spot approved” for FHA loans, meaning the lender could get evidence that the Condo project met FHA guidelines and approve a loan on one of the units. This did not approve the whole project through HUD though, so the next time someone wanted to get an FHA loan on a unit in the same project, they also had to go through the “spot approval” process.
Under the new rules, FHA lenders will have the authority to actually approve a whole Condominium project for HUD. This means that “spot approvals” will be eliminated. Once a loan is done on a unit in a development, it will be added to the HUD approved list and future FHA loans in the project will be easier to do.
Up until now, Condo projects were either already approved and listed on HUD’s website for FHA financing, or they could be “spot approved” for FHA loans, meaning the lender could get evidence that the Condo project met FHA guidelines and approve a loan on one of the units. This did not approve the whole project through HUD though, so the next time someone wanted to get an FHA loan on a unit in the same project, they also had to go through the “spot approval” process.
Under the new rules, FHA lenders will have the authority to actually approve a whole Condominium project for HUD. This means that “spot approvals” will be eliminated. Once a loan is done on a unit in a development, it will be added to the HUD approved list and future FHA loans in the project will be easier to do.
All current Condominium project approval will be invalid. After October 1, 2009 all Condo projects will have to go through new approval. Until a Condo project is approved and listed with HUD then FHA financing will not be an option. Over time, this should really streamline the time it takes to do FHA loans on condos here in the Utah County area.
The drawback is that it may take longer and be far more difficult to get an FHA loan done on that first unit in the project, so keep that in mind when buying a Condo that is not on HUD’s approved list. If you would like more information about these changes and what the requirements are for a Condo project to be eligible for FHA financing, just let me know!
The drawback is that it may take longer and be far more difficult to get an FHA loan done on that first unit in the project, so keep that in mind when buying a Condo that is not on HUD’s approved list. If you would like more information about these changes and what the requirements are for a Condo project to be eligible for FHA financing, just let me know!
Monday, August 17, 2009
New Lending Regulations
New lending regulations could delay closings
New lending rules that require mandatory disclosures and waiting periods for mortgage loans have many lenders advising buyers, sellers and real estate agents to plan for at least 30-day closings and to expect possible delays. The regulations, which went into effect July 30, are part of an amendment to the Truth in Lending Act that seeks to ensure consumers receive cost disclosures earlier in the mortgage process, says the Federal Reserve Board.
The new rules apply to all mortgages secured by the borrower’s home, including primary and second homes as well as refinancings, and require lenders to give good faith estimates of mortgage loan costs within three business days after receiving a consumer’s application for a mortgage loan. The rules prevent any fees from being collected before the consumer has received the early disclosures except for a reasonable fee for obtaining a credit report.
The new rules also include various waiting periods, including the requirement that a home loan cannot close until seven days after the borrower has been issued the initial disclosures.
Furthermore, the new regulations require lenders to disclose if the annual percentage rate on the loan changes by more than 0.125 percent from the amount stated in the initial disclosure. If there is a need for a corrected disclosure, the consumer has another three days to review the new document before the loan can close. Because APR is affected by a variety of items, a corrected disclosure may be needed if there are changes in the interest rate, loan product, closing date, settlement fees or other related items. If these changes occur unexpectedly, it could push back the closing.
In similar fashion, the Home Valuation Code of Conduct (HVCC) gives home buyers three days to review a copy of the appraisal before closing on the loan, unless they waive the right.
In addition to the new review periods, mailing dates could affect closings as well. In cases where the disclosures are mailed, they won’t be considered “received” until three business days after the lender places them in the mail. For example, if corrected disclosures are mailed, the earliest the buyer could close would be on the sixth business day after the mailing (i.e., three business days for mailing and three business days for consumer review, with the consumer being allowed to close on the third review day).
Note: In terms of the three- and seven-day waiting periods, a business day is defined as all calendar days except Sundays and legal public holidays.
Taken together, the new waiting periods could unexpectedly delay closings, especially if an appraisal comes in late or the APR changes. While the borrower may be able to waive the truth-in-lending waiting periods in a “bona fide personal financial emergency,” do not rely on this exemption.
Make sure your settlement deadlines provide enough time to accommodate for the new waiting periods.
By using a realtor, if you do end up in a situation where you won’t be able to meet the settlement deadline because of the timeframes in the new regulations, then your realtor will make sure to extend the REPC with an addendum.
New lending rules that require mandatory disclosures and waiting periods for mortgage loans have many lenders advising buyers, sellers and real estate agents to plan for at least 30-day closings and to expect possible delays. The regulations, which went into effect July 30, are part of an amendment to the Truth in Lending Act that seeks to ensure consumers receive cost disclosures earlier in the mortgage process, says the Federal Reserve Board.
The new rules apply to all mortgages secured by the borrower’s home, including primary and second homes as well as refinancings, and require lenders to give good faith estimates of mortgage loan costs within three business days after receiving a consumer’s application for a mortgage loan. The rules prevent any fees from being collected before the consumer has received the early disclosures except for a reasonable fee for obtaining a credit report.
The new rules also include various waiting periods, including the requirement that a home loan cannot close until seven days after the borrower has been issued the initial disclosures.
Furthermore, the new regulations require lenders to disclose if the annual percentage rate on the loan changes by more than 0.125 percent from the amount stated in the initial disclosure. If there is a need for a corrected disclosure, the consumer has another three days to review the new document before the loan can close. Because APR is affected by a variety of items, a corrected disclosure may be needed if there are changes in the interest rate, loan product, closing date, settlement fees or other related items. If these changes occur unexpectedly, it could push back the closing.
In similar fashion, the Home Valuation Code of Conduct (HVCC) gives home buyers three days to review a copy of the appraisal before closing on the loan, unless they waive the right.
In addition to the new review periods, mailing dates could affect closings as well. In cases where the disclosures are mailed, they won’t be considered “received” until three business days after the lender places them in the mail. For example, if corrected disclosures are mailed, the earliest the buyer could close would be on the sixth business day after the mailing (i.e., three business days for mailing and three business days for consumer review, with the consumer being allowed to close on the third review day).
Note: In terms of the three- and seven-day waiting periods, a business day is defined as all calendar days except Sundays and legal public holidays.
Taken together, the new waiting periods could unexpectedly delay closings, especially if an appraisal comes in late or the APR changes. While the borrower may be able to waive the truth-in-lending waiting periods in a “bona fide personal financial emergency,” do not rely on this exemption.
Make sure your settlement deadlines provide enough time to accommodate for the new waiting periods.
By using a realtor, if you do end up in a situation where you won’t be able to meet the settlement deadline because of the timeframes in the new regulations, then your realtor will make sure to extend the REPC with an addendum.
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