No More 30-day Closings? The Elephant in the Room!

May 28, 2015

TRID? – On August 1, 2015 the Consumer Financial Protection Bureau (CFPB) is requiring the roll-out and enforced usage of new mortgage loan disclosures and replacing others.  TRID stands for the “Truth-in-Lending and Real Estate Settlement Procedures Act Integrated Disclosures” and these new disclosures will replace the Good Faith Estimate, Truth-in-Lending Disclosure and the HUD Settlement Statement. WOW! This is big news and these new disclosures (Loan Estimate and Closing Disclosure) will mean BIG CHANGES for many of the parties in a Real Estate purchase and refinance transaction.

Expect-Delays-sign(1)

New mortgage disclosures = MORE PAGES + MORE DELAYS.

In our industry, new disclosures usually means MORE PAGES and MORE DELAYS!  This is also true in this case.  These new disclosures will require a delay before the appraisal order can be placed.  The borrower must know exactly what their loan will look like BEFORE the appraisal is ordered and this will result in delays “out of the chute” for many new loans simply because many borrowers are still considering their loan options during those first few days of the mortgage loan process and sometimes have not had time to fully consider the consequences of a 15 year loan verses a 30 year loan, or an FHA mortgage with less down payment compared to a conforming mortgage which usually requires more down but a less expensive monthly mortgage insurance premium.  All of this must be considered, numbers need to be gathered and compared and a busy couple with active kids needs to find a few peaceful few minutes to consider all of this information in the midst of inspections, contingencies, offers, counter-offers and packing!  YIKES!

If that is not enough, the biggest delay related to these new disclosures comes at the end when everyone is weary, worn-out and tired of receiving daily emails from their loan originators, Realtor, inspectors, movers, utility companies, etc.  All of the final numbers represented on the new Closing Disclosure (which replaces the old HUD 1 Settlement Statement) must be “spot-on”, no changes and exact – 3 DAYS PRIOR TO THE CLOSING DATE!  This means no additional changes, last minute fees, or forgotten invoices can be added during those last 3 days prior to the closing date.  If so, then the closing will be pushed back another 3 days to allow the new Closing Disclosure to be printed and received by the borrower to review. Here is link from Frank and Brian at the National Real Estate Post where their video gives more details: Click Here.

The issue at hand with these new disclosures - Will 30 day purchase closings be a thing of the past after August 1?

The issue at hand with these new disclosures – The Elephant in the Room – Will 30 day purchase closings be a thing of the past after August 1?

Many in the industry are hinting at the likely consequences of these delays come August 1 but I have not heard any admit what I am about to say.  Realtors who what to avoid the high-pressure finger-pointing, name calling, threatening phone calls and punishing per-diem being charged to their buyers caught in the middle of these changes will wisely prepare their buyers and sellers for 45-60 day closings rather than 30-40 days closings which will result in eventual extensions and everyone hating everyone at the end of the transaction.  Allow me to address the elephant in the room – these loans will not close until the lenders fulfill the new federally mandated time-lines which are put in place to protect the buyers from being rushed into a 30-year decision – regardless of when a Real Estate Purchase Agreement says the transaction will close.

Please be smart when setting realistic expectations with buyers, sellers, Realtors and your loan originators and set dates which will allow the new system to work to protect the buyer from being caught in a pressure-cooker of unrealistic and overly demanding deadlines which do not serve anyone well.  It is my opinion that a 30 day closing for a purchase transaction is now another historical display in the Museum of Mortgage Lending right beside pre-payment penalties, negative amortization, interest-only loans and 30-day adjustable mortgages.

The CFPB wants to do all they can insure that there will be no surprises for any borrower at the closing table.

The CFPB wants to do all they can insure that there will be no surprises for any borrower at the closing table.

Rushing a home buyer into a 30 year commitment and several hundred thousand dollars of debt with a stack of “sign here quickly” documents and terms not understood or clearly explained is never a good idea, in my opinion.  The CFPB is doing their best to slow this whole process down to allow the borrower digest the details of what is happening.  Buyers. sellers, Realtors, closing attorneys and mortgage originators must now embrace these changes, work as a team and make these Real Estate transactions a positive experience for all parties involved.  Our industries need the public trust and these changes are part of us all working together to rebuild what was lost in the “rush to simply close deals” from 2000-2008 with very consideration given to making sure the buyer knows what they are signing at the closing table.

REALTORS – To view a video presentation by Kenneth Trepeta Esq, Director of Real Estate Services for NAR, explain the new rules and regulations and review the new forms – CLICK HERE.

Advertisements

Winning the Heart of Your Special Woman!

February 13, 2015

I heart my houseOK, gentlemen. The pressure is on!  What to buy your special woman this Valentine’s Day? Flowers die in a week. Chocolates are eaten up in a day or two. Jewelry can only be worn occasionally. This year, why not buy her the HOUSE you both have wanted for years! Great interest rates and new $0 down or low down-payment programs are available for almost any home buyer. Contact me and let me help you know your home financing options. I’m local, licensed, certified and have 17 years of lending experience – Ready to go to work for you or those you know.


Renovation Loans that You can Finally Understand!

January 28, 2015

203K Guide coverHave you every wondered if you could make improvements on your current house in such a way as to bring the value of your house up, “BUT” didn’t have the cash or the equity in your house currently to make this happen?

Have you considering buying a “fixer-upper” to move into, “BUT” knew that 2-3 years of weekend projects would not be realistic with your work or family responsibilities and you didn’t want to pour all of your extra cash into the improvements on the house?

Have you found a house that would be perfect for your family “BUT” the kitchen….., or the master bedroom…., or the exterior (siding, roofing, windows)…., or the bathrooms…., or the heating and air conditioner……..,or the flooring…. need some changes?

Finally, any of these “BUTS” can be alleviated from the mix of your consideration by using the FHA 203K Renovation Loan to finance your desired improvements with OUR MONEY!  You keep your cash and let us roll the costs of the qualifying improvements into your new loan.  You close on your house loan (and transfer ownership into your name if its a purchase loan) and then we’ll pay the contractors as they finish up the work on your house!

This is one of the best WIN-WIN-WIN mortgage loans available in the industry today.  Want to know more? CLICK HERE to download the New 203K Guide: “Building the Bridge to Home Ownership”

Need to learn more about the FHA 203K Renovation Loan?  Try this: http://www.ReBuildTennessee.com


Your Guide to the Mortgage Loan Process – “Preparing for the Loan Process”

January 27, 2015

Your Guide to the Home Mortgage Loan Process coverThank you for the opportunity to assist you in acquiring a mortgage loan. Applying for a home mortgage is one of the biggest and most important financial steps you will take in your lifetime. The mortgage loan process can seem complex to many; LeaderOne wants to ensure you feel fully educated as you move through this process. Let this article serve as a personal resource that outlines the steps you will be taking with LeaderOne as you work towards your mortgage loan.

PRE-QUALIFICATION

Please be sure to provide me the following documents:

• W2s (from the last 2 years)

• 1040 Federal Tax Returns (from the last 2 years)

• 2 most recent pay stubs

• 2 most recent bank statements (all pages)

• Copy of driver’s license

INFORMATION SENT TO YOUR REALTOR

I will send an email to your Realtor, explaining the program you are approved for, closing costs needed and any other details they may need to know.

SEARCH FOR YOUR NEW HOME

Purchase Agreement (PA), is written (including all contingencies) 

• You may decide to have your agent write the offer contingent upon inspection. Typically, you as the buyer, have 5-7 days to remove any inspection contingencies. You will hire an inspector who works exclusively for you to inspect the overall condition of the property and give you a detailed report of the condition of the home. If you should decide that any inspected items needs to be replaced or repaired, you have the right to ask the seller to fix it, reduce the price or cancel the purchase agreement all together.

• You also have the option to make the offer contingent upon financing. If for any reason, financing falls through, you are able to get your earnest money back.

• If you decide the home is acceptable in it’s current condition, you may choose to remove the inspection contingency.

Purchase Agreement is accepted or rejected

• If your purchase agreement is accepted, you proceed to the financing step.

• If your purchase agreement is rejected, continue your search for finding a home.

(CLICK HERE to download the entire booklet “Your Guide to the Mortgage Loan Process”)