Keli McClarty from Atlantic Bank sent me a copy of this article, that I believe synthezises the new changes effected recently on the mortgage industry, and which are essential to keep in mind when buying or selling real estate:
The bottom line is that the new rules are all about giving the borrower time to decide if they want the loan they applied for at the time of application.
RULE: Borrowers have 7 days from the "official" application (meaning they must have a property address) before they can close the loan.
TRANSLATION: Rush closings are a thing of the past - even if a file is transferred to you from another mortgage company.
RULE: A Good Faith Estimate must be sent within 3 days of the loan application disclosing not only the closing costs estimates and APR, but the loan terms.
TRANSLATION: If the Annual Percentage Rate increases more than .125% (1/8th) a new disclosure must be sent. There is a 3-business day waiting period, which means you would not be able to close until day 4.
RULE: The term "business days" means Monday through Saturday
TRANSLATION: Saturdays count, regardless if your office is open or not. The only days that DON'T count are Sundays and Federal Holidays.
RULE: Other than a credit report fee, NO OTHER fees (Application, appraisal, commitment fee) can be collected until after the 3-day GFE disclosure. The 3-day disclosure expires on midnight of the 3rd day.
However, if you have a face-to-face application, you can give the GFE to the client AND collect the remainder of the fees.
TRANSLATION: Since it expires on midnight of Day 3, you can collect the fees on Day 4. Unless you want to take a chance, you now have to wait until day 4 to order the appraisal.
RULE: The waiting period can be waived if there are extenuating circumstances.
TRANSLATION: It better be a super-duper, huge financial hardship case or there is NO WAY the waiting period will be waived.
Just because there is a "closing date" noted in the contract-is NOT a good reason. Advise sellers and buyers that they need to be flexible-or get an official extension of the closing date.
BOTTOM LINE: Please let EVERYONE know of ANY changes.
-pick a loan program and stick with it
-decide in advance who will pay what closing costs and don't change it
-be flexible with the closing date by adding "on or about" (date)
-last minute changes will imperil your closing
JUST REMEMBER: 3-7-3
-3 Business Days to Provide initial GFE/TIL to borrowers
-7 Business Days from delivery of accurate TIL before the loan can close
-3 Business Days after final GFE/TIL delivered to closing.
GFE = Good Faith Estimate
TIL = Truth In Lending Disclosure