A few Reasons Why Closings are taking longer....
Published On: August 2, 2009
My broker tells me...
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Dear All:
There are substantial federal regulation changes - some effective as of 7/30 and others as of 10/1/09. These changes can and will impact loan closings - in many cases you will see a delay in the closing. These changes are mandated by federal law and leave no wiggle room. I believe it is a necessity for all realtors to understand and plan for these changes within their transactions. Here are some highlights of the changes occuring 7/30/09 - if the APR results in an increase of .125% greater than what was disclosed at application - very small window, we must adhere to the following:
There are substantial federal regulation changes - some effective as of 7/30 and others as of 10/1/09. These changes can and will impact loan closings - in many cases you will see a delay in the closing. These changes are mandated by federal law and leave no wiggle room. I believe it is a necessity for all realtors to understand and plan for these changes within their transactions. Here are some highlights of the changes occuring 7/30/09 - if the APR results in an increase of .125% greater than what was disclosed at application - very small window, we must adhere to the following:
Any changes to the loan will require new disclosures. The closing
CANNOT take place for 8 business days after the mailing
of these disclosures regardless of the sales agreement dates, time is of the essence clauses etc.
If the customer does not lock in at application time, the loan cannot
close for 8 business days after that lock in. If the borrower changes
an existing rate lock to a different option, t
he loan cannot close for 8 business days after that change.
Once the attorney sends in the HUD1 for approval (sometimes the day of
closing) if the costs exceed what was originally disclosed (greater
than the .125% in APR) the bank will have to cancel the closing and
disclose and then wait 8 days to reclose.
Concerning a new loan application, the loan cannot close until 8 days
AT THE EARLIEST assuming there are no changes. One week closings are
few and far between but I have had requests for them, they can no
longer be done.
Foreclosures and short sales may be impacted because typically the
final answer doesn't come in until the end of the transaction and many
banks want the loans closed immediately - that cannot happen if the APR
changes more than .125% which is often the case.
With increased legislation all buyers and sellers should plan accordingly. Put yourself with a realtor who searches this out for you.
