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New closing time lines
Four key elements you need to know:
1. If the homebuyer is financing the property, these new regulatory and
investor guidelines will impact—and could even dictate—the closing date.
Historically, homebuyers and sellers would agree on a closing date, and then
service providers – including lenders – would work as best they could toward
meeting that date. Going forward, purchase contracts can still be written with a
specific closing date in mind, but all parties need to take into account that the
earliest any home purchase transaction can close is 7 business days after the
homebuyer is issued his or her initial mortgage disclosures from the lender.
2. Upfront fees cannot be collected by the lender (except for a credit
report fee) until the initial disclosures are received. If the disclosures are
overnighted, they are considered “received” the next business day—
(excluding Saturdays) allowing the fees to be collected on the following
business day. (Upfront Fees could be appraisal and credit report
none of which I collect from borrowers at loan application but some lenders do.)
Historically, upfront fees could be collected immediately at the time of
application for both in person and phone applications. Moving forward, the
homebuyer must receive his or her initial disclosures before upfront fees can be
collected. The only exception is the credit report fee which can be collected at
application.
3. The homebuyer must be provided with a copy of his or her appraisal a
Minimum of 3 business days prior to closing.
– and the homebuyer must receive the appraisal at least 3 business days prior to the mortgage closing. This means the homebuyer may receive his or her appraisal before or simultaneous to the lender receiving their copy. If the homebuyer believes the 3-business-day required review period is not necessary for whatever reason, he or she has the right to waive that requirement.
4. An increase of more than .125% in the Annual Percentage Rate (APR)
From the initial Truth in Lending Disclosure (TIL) requires the TIL
disclosure to be revised and reissued to the homebuyer. The homebuyer
must receive a revised TIL disclosure at least 3 business days before
closing, providing the homebuyer with the time required to determine if the
homebuyer is comfortable with his or her loan choice. If mailed, the TIL
disclosure is considered “received” 3 business days after mailing.
Amore typical contract date may be 30-45 days — or possibly longer (such as
with a new construction loan). Considering that many things occur and may be
changed or finalized throughout the course of the transaction, there are a
number of things that can impact the homebuyer’s APR. Therefore it is critical
on the front end to ensure that estimated fees are as accurate as possible.
7:03 PM - Sep. 7, 2009 - comments {0} - post comment |
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