Friday, January 15, 2010

New Mortgage Rules... how does that affect YOU?

If you are taking the time to read a real estate blog you are, no doubt, aware there are many changes in the real estate business... more specifically in the financing end of it. One of the most notable is NO MORE PRE-APPROVAL LETTERS. Sort of.

Based on the new federal banking rules mortgage brokers cannot issue a pre-approval letter without also submitting a binding Good Faith Estimate. They may, however issue a pre-qualification without disclosing a new binding Good Faith Estimate to the borrower. No pre-qualification letter can have a property address without issuing a binding Good Faith Estimate. The word I am getting is that every single issue must be addressed before the bank can say. "pre-approved" or "approved".

So what does this mean to us Realtors and our buyers and sellers? Well, it may mean more time. It takes time to get all the information gathered. If you want to shorten the amount of time it will take, the professionals (read: Realtors) must be sure the seller has ALL their documents ready and completely up to date. Contracts must be tight. That means no changes and/or adjustments. If there are changes and/or adjustments they MUST be communicated to the originator and this will often mean a re-opening of the file and re-consideration of the factors previously reviewed.

I suspect that once the loan originators and lending institutions get further along with these changes things will settle down. Right now they are all very "uptight" about how to properly execute the loan documents. They have been spending hours in classes just to get up to speed, and I am hearing that they are being told that these regulations are extremely rigid and that I believe is causing a lot of anxiety!

So the bottom line is this... If you are a seller... have all your documents and pertinent information regarding your real estate in order and close at hand. If you are entertaining an offer be certain that the proper steps have been taken by your buyer and their lending company. If you are a buyer... ask your loan originator if they are completely familiar with the 2010 GFE/HUD Settlement Statement and the new RESPA regulations. And as always do NOT hold back any information or documents from your loan expert. That will only slow down the inevitable.

When this sort of change occurs in any industry, it is even more important to utilize the services of a professional that you know and can trust. If you don't know someone, I bet you know someone who does... call them!

Good luck! And don't forget... if you are going to take advantage of the new home buyer tax credit, you need to be under contract by April 30th!

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