This morning I went to a training that Charter Title offered on the new RESPA rules and how they are going to affect our Spring-Tomball buyers and sellers. Chuck Jacobus SVP of Charter Title and a real estate attorney with law offices in Bellaire was the guest speaker.
RESPA came in to affect in 1973 and to begin with Chuck said the restrictions were difficult to comply with. According to Chuck it is déjà vu 1973. We are going through the adaptation phase of the new RESPA rules and most don't understand them (which includes title companies, lenders etc.).
LONG story short both the seller and the buyer are going to have to be patient while we go through the process. He felt that the days of having a loan done in 30 days or shorter are gone. He recommended allowing 60 days for the loan process. He said some lenders will be able to go through the process in a shorter time and he felt the smaller lenders and banks had a better handle on the changes than the big banks did.
The buyer is going to have to be proactive on their loan. I have had buyers who started the loan process and then took a 2 week vacation. He said if the buyer goes on vacation you can just about be assured that the loan will not close on time. He also said the buyer is going to have to realize that they cannot switch loans a week before closing.
As of January 1st2010 lenders are required to use a new good faith estimate (GFE). The new HUD 1 form and the GFE must look exactly alike. All charges must show on the HUD. Chuck was joking and said if you throw a quarter across the closing table it will need to be on the closing statement.
If there are any changed circumstances that will affect the mortgage amount that is on the GFE the lender will have to make changes which will take time. The lender basically has to live with the GFE that they give you when you start the process. However the quoted terms and prices in the GFE are only good for 10 days. The buyer will need to give the go ahead during that 10 day period or the terms may no longer be available. Please note if you don't contact your lender to say go ahead during that 10 day period; the terms can change on the 11th day.
Changed circumstances include:
- Acts of God, war, disaster or other emergency. For those of us in the Spring-Tomball area this would be something like Hurricane Ike.
- Information particular to the borrower or transaction that was relied on in providing the GFE; which may include; information about the credit quality of the borrower (you lost your job), the amount of the loan, the estimated value of the property.
- New information particular to the borrower or transaction that was not relied on in providing the GFE.
- Other circumstances that's particular to the borrower or transaction, including boundary disputes, the need for flood insurance or environmental problems.
When there is a "changed circumstance" the loan originator must issue a revised GFE within three business days of receiving the information to establish the changed circumstance. This goes back to the buyer not going on vacation as then it will be hard for them to deal with the changed circumstance.
All of this came about to keep consumers better informed in response to the predatory lending that happened in the last few years. As always when the government gets involved it can get a bit more complex so both buyers and sellers are going to need to be patient with the process. More than ever it is going to be important that a buyer go to a reputable lender who can get the loan done. If you need the phone number of a good lender please give me a call.
_________________________________________________________________________________________________
If you are buying or relocating to Spring Texas or Tomball TX and need help from a professional REALTOR®, Marchel can be reached at Marchel@AgentwithResults.com or by phone at 832-721-8332.
If you would like information about Spring-Tomball TX please visit my websites at www.AgentwithResults.com and at www.ResultsRealtytx.com. The AgentwithResults site is rich in Content about Spring and the surrounding areas of Tomball, The Woodlands and Magnolia. If you prefer pictures with your content then visit my ResultsRealtyTX site.
Want to find out about new Spring-Tomball TX properties immediately as they come on the market, then click here to sign up for a free automatic notification of new listings.
Click the button to the left to search our local MLS.
Copyright © 2010 Marchel Peterson, All Rights Reserved. *New RESPA Rules - How they affect Spring-Tomball TX buyers and sellers!!*
Wow -- we met with one of our trusted lenders.. he told us the GFE prohibits including what the monthly payment will be... and there is no signature line. It is going to be fun (NOT). It the buyer wants an enhanced title insurance policy.. a new GFE is mandated, if the buyer decides to pay points, a new GFE is mandated... and the it is going to be challenging to say the least.
I had not heard about this. But that's just another good reason to be on AR! Thanks...
Marchel: This will be interesting for sure, I can't wait to see how it all shakes out.
Marchel
I have recently gone through two trainings on this and am still concerned I need more!
Telling sellers 60 days for a loan process bites; patience needed indeed. Thank you, Marchel, for sharing with us.
JOAN, You are right; it is going to be fun NOT!
DAVID, I have learned so much from AR.
JANE, It will be interesting to see how it all shakes out.
TREY, After I went through the training today I had a trusted lender go over it to make sure I did not have things confused. I did change a few things after she looked at it.
TERAL, It seems like we are going back in time as far as the loan process is concerned. That is good though that people can no longer do the liar loans.
Marchel,
Good to know, I learned somethiing today about the FHA concentration # for the condos in colorado subdivisions
t
As someone famous said just one year ago, "It's going to get worse before it gets better."
Good graphic.
I went to a class last week too in Ann Arbor by a local Title Company. We got 2 hours con-ed legal credit for it.
I learned so much, even though reading about it here for months, a face to face last looking at the GFE and HUD really helped.
Marchel, just to add one more thing to Joan's comment above, the new GFE also does not state the Loan Program that the Borrower is applying for. Not good.
Marchel...I'm glad we have a very good lender who helps us to keep up with all of these changes...Why does bureaucracy have to complicate the process even further? Cherise
RAY, Real estate is always a learning process; isn't it!!
RUSSELL, I'm afraid that his words are going to be prophetic. I'm not pleased at what it is going on!! I DON'T like big government!!
MISSY, I SO AGREE!! I have been reading here but it REALLY was so confusing! It is still CONFUSING but it did help having a GFE and a HUD to look at.
GEORGE, WHEW, I am so glad that my post only left something out. I had my favorite lender read my post over before I posted it. I was so scared I would get something wrong.
CHERISE, I'm all about smaller government. I wish we still had the Gipper to lead us. He would have been 99 years old today.
Marchel: What a great post... very timely. And... your explanations of the new RESPA regulations are excellent. Thanks so much for the update. We may not like the new rules... but the better we understand them... the easier they will be to live with.
By the way... the Gipper and I share a birthday... although I am not quite 99... not yet... LOL.
Marchel, this is a great post, thank you! I get all glazed over when trying to understand what the heck is going on here. Good mortgage people are KEY in the process. But gone are the days of the 30 day closing for sure. Thank you, you really made a few more points that I hadn't realized, or didn't know.
Now I need a drink....
Marchel,
I'm closing a loan this Weds and I received the contract on 1/25. Two and three week closings are certainly possible if your lender is experienced.
Folks will get caught in the lurch if their dealing with a big box bank that specializes in volume vs quality.
KAREN ANN, HAPPY BIRTHDAY! By the way we are both Aquarius. My birthday is the 16th.
ANDREA, I have read numerous post about the changes but it took sitting down and looking at the new GFE for me to truly understand the changes.
MELISSA, That's great that you are still able to close fast!! It is taking my lender a little longer but if push came to shove I expect she could close in three weeks also. I'm afraid that the big banks are going to be a big bummer as far as closing on time goes.
Marchel: Ahhh yes... some really great people were born in February... don't you agree ? :)