Regulations On Mortgages And Real Estate Law

Perhaps those not involved in the mortgage brokerage, lending, appraisal or real estate sales realms might find the new Federal regulation to be positive. Is it not the case that if you read it in print, in must be true?

The details of the Mortgage Disclosure Improvement Act (or MDIA) and the Housing and the Economic Recovery Act of 2008 (HERA) changed with the passing of the latest federal laws on July 30th, 2009. Borrowers are given a Truth in Lending and Good Faith Estimate when applying for financing for a home loan, this document will be changed by the passing of the new laws.

That it offers a buyer or borrower additional time to review their Good Faith Estimate and Truth In Lending brochure turns out to be the only positive in this new Federal Law. The new law offers the purchaser seven days to go through these documents, because a number of purchasers did not know the terms when they applied for a mortgage, including length of loan, APR (annual percentage rate), or variable rate vs. fixed rate. Now I would not think of debating this. In signing the many mortgage documents, myself and the majority of purchasers did not have a clear understanding.

Should the annual percentage rate move upward or downward an eight of a percent while your loan application is pending, you will be required to allow another three days to pass prior to escrow being able to close on your transaction. Any adjustments in the fees for your title work will also result in new documents being required and a new three-day waiting period will begin. Borrowers who have failed to lock their rates run the risk of this precise situation occurring.

A new three-day period will also be triggered by any adjustment whatsoever in factors such as whether the loan has equal payment intervals or requires a balloon payment, whether it has a fixed rate or is variable, or whether mortgage insurance is required or not.

It would seem that many of these rules are instituted on a whim. It makes one wonder if anyone had put any thought at all into how these new practices could impact the housing market.` "Time is of the Essence" is a phrase known to many people in the real estate business. But today's real estate market is largely run by banks which completely ignore this time-honored ideal.

With escrow closings currently taking anywhere from four months and upward , some may think there really is no harm in tacking on an additional few days. But, with the ever-changing nature of the fees for title work, and the fact that rate locks typically can be done only for 30-45 day periods, the new regulatory scheme is very likely to be little more than a hindrance to swiftly closing real estate transactions for borrowers.

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