In case you haven’t heard, the mortgage industry has changed. Everything about obtaining a loan to purchase real estate has become more stringent and time consuming.
1) Underwriters are scrutinizing every detail of the buyer’s qualifications and the property of interest. In many cases a second appraisal (called a “field appraisal”) is being ordered. Due to #2 below, just getting that first appraisal is causing delays.
2) Fannie Mae and Freddie Mac have adopted the Home Valuation Code of Conduct (HVCC). The purpose of which, is to protect valuations of properties and reinforce appraiser independence. The regulation requires the disconnection of the communication lines between appraisers and lenders. The result has created delays in appraisal report turn around times.
3) In addition, lenders must comply with the 2008 Home Ownership and Protection Act (HOEPA) and the Housing and Economic Recovery Act (HERA). A recent amendment effective July 30, 2009 is called Regulation Z and is published under the Truth and Lending Act (TIL). The regulation adds additional steps for lenders in order to prevent deceptive lending practices and to protect consumers.
Whew! That’s a lot of acronyms to consider. No wonder it’s taking longer to get a transaction closed.
Bottom line? Whether you are a buyer or a seller, be prepared that it may be a tall order to expect to close a transaction in 30 days. 45 day closings are now being recommended by most lenders and some suggest 60 days. Buyers should discuss with their lender how the longer closing periods may affect their purchase including the interest rate lock, closing costs, prepaid expenses, etc. Sellers should be aware that there is a good chance that their sale may not close in 30 days. Sellers should discuss with their Realtor and perhaps ask them to contact the buyer’s lender to confirm that the negotiated closing date is do-able.
The good news is that sales have definitely picked up. There is a lot of talk about the bottom being hit. Interest rates remain low…for now. It’s competitive out there. The homes that are priced correctly and show nicely are getting multiple offers. My office is jumpin!
Oh by the way…I am never too busy to help you or your friends or family.
All my best~ Kevin
Kevin Gorman Broker/GRI/CDPE