New Federal-Mandated Lending Changes in 2009 Can Impact Real Estate Closing Dates

Delays in Closing DatesToday’s real estate buyers and sellers need to know that the Federal Reserve has instituted new lending changes for 2009.  These new items can impact when a real estate transaction could close.  Knowledge of these changes and working with them is crucial to assure that a particular piece of real estate closes within important time lines.  Tax planning and the timing of buying and selling assets is key to minimizing tax consequences.  That time element is vital when items like the $8,000 First Time Homebuyer Tax Credit come with an expiration date.  To avoid costly delays in your real estate closing let me briefly explore these new rules.

The 1st change impacts the closing date if the property buyer is financing the purchase. Previously, the buyer and seller chose a closing date and service providers (like lenders) worked to meet that date.  Now the earliest any home purchase transaction can officially close is 7 business days after the homebuyer is issued their initial mortgage disclosures from the lender.  Often Saturdays do not count as a business day so plan closing dates carefully based on the receipt of the initial mortgage disclosure.

The 2nd change effects the collection of upfront fees by the lender.  In the past upfront fees could be collected by a lender at the time of applicaiton either in person or via phone.  Presently, only a credit report fee can be collected upfront.  Other upfront fees can only be collected on the next business day following a business day when disclosures are received. Saturdays and of course Sundays are excluded as business days.

The 3rd change involves the homebuyer’s receipt of the appraisal.  Under new rules the homebuyers must receive a copy of the property’s appraisal a minimum of 3 business days prior to the mortgage closing.  The buyer has the right to waive this requirement if they feel 3 business days for review is unneccessary.

The 4th change by the Fed dictates extreme accuracy in computing estimated fees upfront.  Any increase of more than .125% in the Annual Percentage Rate (APR) from the initial Truth in Lending Disclosure (TIL) requires the TIL disclosure must be revised and re-issued to the home buyer.  Furthermore, the revised TIL disclosure must be received by the home buyer at least 3 business days before closing.  If mailed, a TIL disclosure is considered “received” 3 business days after mailing.

When these new rules are viewed through a filter of the recent subprime mortgage mess, it becomes clear why they were enacted.  It was evident in the past that buyers felt time pressured and often did not understand what their actual loan interest rate was, along with other critical details of the home purchase process.  All of these recent amendments are geared to insure that the home buyer has time to review and hopefully understand exactly what they are legally committing to.

It is important to know that these new rules are not a roadblock in acheiving an expedited closing.  I may explore more shortcut details in upcoming blogs, but a quick way in shortening the time for closing is to lock in the loan rate and the various closing fees as early as possible.  However, the most important element in getting a fast, worry-free closing on your real estate is to use a professional realtor who knows real estate in the area you want to purchase.  This is one of many reasons you want to consider The Jason White Team for real estate in the Smokies.  We know the area and we have the expertise.  Call us today to help find your ideal property.

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Location: Gatlinburg ,Tennessee
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