Tuesday, June 23, 2009
New Govt. Regs will impact closing dates
Just when we thought it was safe to go back into the water -- the Feds have decided that there is yet another layer of hurdles to overcome in the home purchasing/selling process for any loans that are Federally guaranteed (Fannie/Freddie, HUD). As of July 30, 2009, two important loan disclosure changes go into effect. The purpose is to give the homebuyer better loan disclosures and enough time to review those disclosures. Another purpose is to make appraisals more accurate by shielding appraisers from lenders. These new disclosure deadlines will dictate closing dates.
The specific programs that created these changes are:
a. HERA (Housing & Economic Recovery Act
b. HOEPA (Home Ownership & Equity Protection Act)
These two were passed by Congress and are regulated by the Federal Reserve.
A third regulation regarding appraisers/appraisal regs was put into place as of 5/1/2009, and adopted by Fannie and Freddie:
a. HVCC (Home Valuation Code of Conduct)
Five key elements you need to know about the above changes:
1. If you are financing the property and have made loan application the lender has 3 business days to provide you with the initial loan disclosures. In the past these have usually been mailed. To accomodate the regulation it will be best if you do a face to face loan app and receive the disclosures on the spot from the lender. The old theory of "shopping" a lender will now put the Buyer at risk for not performing to the dates of the Contract.
2. The lender cannot collect any upfront fees (appraisal and/or application fee) from you until the initial loan disclosures are received. Also, you will now be required to pay for the appraisal up front. The days of having the appraisal rolled into the loan at closing are over.
3. The Buyer must receive a copy of the appraisal a minimum of 3 business days prior to closing date.
4. If the A.P.R. (annual percentage rate) goes UP more than 1/8% from the TIL (Truth in Lending Disclosure) that was part of the initial loan disclosures then the TIL must be re-disclosed. You are to receive this re-disclosure of the TIL at least 3 businesss days prior to closing. If this occurs, it will undoubtedly put the original closing date at jeopardy.
5. All parties to the transaction will need to plan on at least 14 days for an appraisal to occur and be in the hands of the Buyer and Lender. The appraisers are now hired by a third party company not connected with the transaction. The appraisers are chosen from a pool of appraisers working with this third party company, and in many if not most instances will be coming from outside the normal working area of the property in question. The appraisers are required to pick comps from a one mile radius of the subject property, and comps cannot be older than (3) months prior to the date of the purchase contract. The appraisers are also required to include any and all short sales and foreclosures that have occurred in this (3) month window, as comps to use for the subject property appraisal. Neither the Lender, the Buyer or the Buyer's agent may have any contact with the appraiser - period. Only the listing agent may have direct communication with the appraiser at the time of setting up the appointment to do the appraisal, and the guidelines for what can be discussed with the appraiser by the listing agent are very tight and limited. If there is a 2nd appraisal requested by the Buyer or Buyer's lender, for what ever reason, the appraisal with the lowest appraised value will be the one which the Lender will be required to use for loan approval. Also, the Buyer will be responsible for payment of both appraisals up front.
In conclusion -- no matter what dates we write into a contract the Banks will not be allowed to waiver from the disclosure deadlines, on any and all Fannie/Freddie/Government guaranteed loans. The consumer will find that many agents will not be as educated as they need to be on these very extensive changes. That will cause many contract and closing issues as a result. We will see more and more homes not appraising for the agreed to sales price between Buyer and Seller. Appraisers are also receiving anywhere between 60% and 40% LESS for the work they are now doing through the Federally mandated "clearing houses". There is also a national appraisal and lender tracking system that points a finger at the appraiser if the homes he/she appraises go into foreclosure. The new limitations on the radius and months back for comps will have a very dramatic affect on many home prices in any given neighborhood, whether or not the subject property has had any financial troubles associated with it. Bottom line, we will see many transactions be delayed or worse not close at all. In that event it is quite likely that the property will have been off the market waiting for the closing for as much as 45 or 60 days before learning that the closing will not occur, and end up not closing, and the Seller having to put the home back on the market and start all over again.
More than ever now is the time to be sure that your Realtor has the knowledge and experience to bring a purchase/sale to a successful end.
The specific programs that created these changes are:
a. HERA (Housing & Economic Recovery Act
b. HOEPA (Home Ownership & Equity Protection Act)
These two were passed by Congress and are regulated by the Federal Reserve.
A third regulation regarding appraisers/appraisal regs was put into place as of 5/1/2009, and adopted by Fannie and Freddie:
a. HVCC (Home Valuation Code of Conduct)
Five key elements you need to know about the above changes:
1. If you are financing the property and have made loan application the lender has 3 business days to provide you with the initial loan disclosures. In the past these have usually been mailed. To accomodate the regulation it will be best if you do a face to face loan app and receive the disclosures on the spot from the lender. The old theory of "shopping" a lender will now put the Buyer at risk for not performing to the dates of the Contract.
2. The lender cannot collect any upfront fees (appraisal and/or application fee) from you until the initial loan disclosures are received. Also, you will now be required to pay for the appraisal up front. The days of having the appraisal rolled into the loan at closing are over.
3. The Buyer must receive a copy of the appraisal a minimum of 3 business days prior to closing date.
4. If the A.P.R. (annual percentage rate) goes UP more than 1/8% from the TIL (Truth in Lending Disclosure) that was part of the initial loan disclosures then the TIL must be re-disclosed. You are to receive this re-disclosure of the TIL at least 3 businesss days prior to closing. If this occurs, it will undoubtedly put the original closing date at jeopardy.
5. All parties to the transaction will need to plan on at least 14 days for an appraisal to occur and be in the hands of the Buyer and Lender. The appraisers are now hired by a third party company not connected with the transaction. The appraisers are chosen from a pool of appraisers working with this third party company, and in many if not most instances will be coming from outside the normal working area of the property in question. The appraisers are required to pick comps from a one mile radius of the subject property, and comps cannot be older than (3) months prior to the date of the purchase contract. The appraisers are also required to include any and all short sales and foreclosures that have occurred in this (3) month window, as comps to use for the subject property appraisal. Neither the Lender, the Buyer or the Buyer's agent may have any contact with the appraiser - period. Only the listing agent may have direct communication with the appraiser at the time of setting up the appointment to do the appraisal, and the guidelines for what can be discussed with the appraiser by the listing agent are very tight and limited. If there is a 2nd appraisal requested by the Buyer or Buyer's lender, for what ever reason, the appraisal with the lowest appraised value will be the one which the Lender will be required to use for loan approval. Also, the Buyer will be responsible for payment of both appraisals up front.
In conclusion -- no matter what dates we write into a contract the Banks will not be allowed to waiver from the disclosure deadlines, on any and all Fannie/Freddie/Government guaranteed loans. The consumer will find that many agents will not be as educated as they need to be on these very extensive changes. That will cause many contract and closing issues as a result. We will see more and more homes not appraising for the agreed to sales price between Buyer and Seller. Appraisers are also receiving anywhere between 60% and 40% LESS for the work they are now doing through the Federally mandated "clearing houses". There is also a national appraisal and lender tracking system that points a finger at the appraiser if the homes he/she appraises go into foreclosure. The new limitations on the radius and months back for comps will have a very dramatic affect on many home prices in any given neighborhood, whether or not the subject property has had any financial troubles associated with it. Bottom line, we will see many transactions be delayed or worse not close at all. In that event it is quite likely that the property will have been off the market waiting for the closing for as much as 45 or 60 days before learning that the closing will not occur, and end up not closing, and the Seller having to put the home back on the market and start all over again.
More than ever now is the time to be sure that your Realtor has the knowledge and experience to bring a purchase/sale to a successful end.
Friday, June 12, 2009
Today's Real Estate Market Denver Front Range
The real estate market here in the Denver Front Range area has made it to the "big time" in an interview on the Today Show recently - when Barbara Corcoran announced the top (5) cities that are poised to see the economic and real estate recovery first. Denver was in fact ranked as the #1 city to see this happen in the very near future. This is very good news, of course, but seeing is believing. It is my professional opinion that we will see our local real estate market begin to signs of an "up tick" sometime during the end of the 3rd quarter to the beginning of the 4th quarter, with true strength appearing in the end of the 1st quarter of 2010. Meanwhile, it is indeed a GREAT time to buy. This is truly a once in generation occurance in real estate. The rates are still at record lows (for how long is the question!), and prices are back where they were some 7 to 10 years ago. If you are thinking about maybe getting into the market do not hesitate. This "moment in time" is just that -- a moment in time that will pass before you know it! I'd be happy to be of any help if you have any questions about real estate that you think I might be able to provide. Have a great day!
Monday, June 8, 2009
Evergreen, CO
It is a glorious time of year here in Evergreen, Colorado! We are a short 30-40 minutes from Denver, but the altitude of Main Street Evergreen is over 2000' higher than the 5280' of Denver. As a result, the temps here are on average about 10 degrees cooler than Denver's. This is Colorado lifestyle at it's very best. The small community way of life makes this a wonderful place to raise children. Just about any outdoors activity you can think of is right out your back door when living here. If you are looking for a beautiful place to live, and yet within a short distance of a major metropolitan area, think about checking out the Evergreen/Conifer area of the Foothills of Denver. You won't be sorry at what you find in this jewel of a place!
Friday, June 5, 2009
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