Homebuyer Protection

Recent Federal legislation is having an impact on how long you should reasonably expect the process to take between the time you write an offer on a house and the closing date. Two pieces of legislation are now making the normal time in contract 30-45 days.

Home Valuation Code of Conduct:

• Ensures that appraisals are done objectively without influence from parties involved in the transaction.
• The appraisal and selection of the appraiser is done by someone not directly involved in the origination of the mortgage.
• A copy of the appraisal must be given to the buyer/borrower at least 3 days before the closing.
• Appraisals may take weeks, not days to complete.
• Communication between the appraiser and the originating mortgage professional is prohibited. Agents involved in the transaction should be prepared at the time of inspection to offer supporting value information if warranted.

Housing and Economic Recovery Act:

• Designed to ensure that the borrowers involved in the transaction are given accurate disclosure information (Truth in Lending Statement pertaining to Annual Percentage Rate) regarding the loan they are applying for and adequate time to re-evaluate their decision to proceed in the event of any changes that would impact their costs to finance.
• At the initial time of application no fees may be collected except a fee to cover the cost of obtaining a credit report.
• Should the APR change by more than .125% on a fixed rate loan or .250% on an adjustable rate loan, the lender must disclose the new APR and the borrower must have a minimum of three business days to review the information before the transaction may close.
• Items that can trigger re-disclosure requirements include changes in the loan amount, closing date, loan program, any fees that impact the APR or interest rate from the rate indicated on the original loan application.
• In cases where documents are sent by mail to the borrower related to re-disclosure of APR and/or providing a copy of the appraisal, anticipate six business days (three to allow for mailing and three to allow adequate time to review them) before a closing can occur.