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RSS FeedMore About Lending! |
Posted at Hilton Head Island Kat by Katheryn "Kat" Gardner
Jul. 27, 2009
Well, well, more changes in the lending department are happening. In my opinion, these are welcome changes and signal a more fair and open lending market for consumers. The latest change has to do with “Good Faith Estimate” (GFE) and the “Truth in Lending” (TiL) form.
As of July 31, 2009, consumers must have the GFE in their hands at least three days before closing. Then, the actual TiL must not deviate from the amounts quoted on the GFE by more than .125%. If it does, closing must be postponed by one week in order to give buyers time to reconsider.
Most lenders I work with are usually within these parameters anyway. However, I have been witness to some unbelievable instances where buyers were, let’s just say, “hoodwinked” by their chosen lender.
Often this happens when a buyer goes on line to shop interest rates or responds to an email or other offer that promises much better rates than other lenders. The rates are great! The charges are extremely low! This remains true right up until the borrower goes to closing. They have probably never seen a GFE at this point and are shocked at what they are seeing on the TiL. Suddenly, there are charges they were not aware of. Maybe, points are now being charged where there were supposed to be none. All sorts of “fees" can appear out of nowhere. Some fees are the same as a reputable lender would have charged only much, much higher. Often, the interest rate has now changed, and not for the better! What does the buyer do? If they don’t sign the documents, they can’t close. If they don’t close, they must start this process all over again with another lender, that is, if the seller does not cancel the sale and keep the buyer’s earnest money. In short, the buyer feels forced to accept the new terms. And this is just what the lender planned for all along!
These new regulations should put a stop to this. Always keep in mind there is a reason your Realtor recommends certain other professionals. To make my referral list, I must have consistently great service and my clients must be completely happy with the results. For lenders, this means they are up front and accurate about the lending procedure and they keep the client up to date as to all progress being made on their loan. And, most importantly, no surprises at the closing table!
For more information on this subject, please email me at Kat@KatGardner.com. For more information on the Real Estate market in the Hilton Head Island area, please visit http://www.KatGardner.com
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