Starting July 30, 2009, if the APR on an initial Good Faith Estimate is no longer accurate (within a 0.125% range) at close of escrow, a lender must generally provide a residential borrower with a new disclosure and a three-day right to rescind before consummating the loan. REALTORS® are forewarned that, because of this new three-day waiting period, a lender's failure to timely provide corrected disclosures has the potential of delaying funding of the loan and close of escrow.
This new requirement is part of the Mortgage Disclosure Improvement Act (MDIA) implementing new loan procedures to protect borrowers and foster greater transparency in mortgage lending. For loan applications submitted on or after July 30, 2009, the new MDIA changes to the Truth In Lending Act are generally as follows:
• Applicability: The new MDIA rules pertain to federally-related mortgage loans covered under RESPA and secured by a consumer's dwelling. The rules apply to both purchase and refinance loans.
• Early Disclosures: A lender must provide a borrower with an initial Good Faith Estimate within three business days of receiving the borrower's written loan application as specified. For this provision, a "business day" is generally defined as a day on which the lender's offices are open for business.
• Upfront Fees Restriction: Neither a lender nor any other person may impose an upfront fee on the borrower (except for credit report) until the borrower has received the early disclosures in person or, if mailed, three business days after the early disclosures are mailed. For this rule, a "business day" is defined as all calendar days except Sundays and legal public holidays as specified.
• Seven-Day Waiting Period: A lender must wait seven business days after providing the early disclosures before consummating the loan. For purposes of this waiting period, a "business day" is defined as all calendar days except Sundays and federal legal holidays as specified. A borrower may waive the waiting period in writing in case of personal financial emergency, such as an imminent foreclosure sale.
• Re-disclosure Requirement: If the final Annual Percentage Rate (APR) at loan consummation varies more than 0.125% (or 1/8 of one percent) from the initial APR on the early disclosures of a regular transaction, the lender must provide the borrower with a corrected disclosure at least three business days before the loan is consummated. For purposes of this waiting period, a "business day" is defined as all calendar days except Sundays and federal legal holidays as specified.
• Three-Day Waiting Period: For corrected disclosures, a lender cannot consummate a loan until three business days after the the borrower receives the corrected disclosure in person. If the corrected disclosure is mailed, the borrower is deemed to have received it three business days after it is placed in the mail. A borrower may waive this waiting period in writing in case of a bona fide personal financial emergency, such as an imminent foreclosure sale.
Sunday, July 19, 2009
Thursday, July 16, 2009
HOW TO FIND THE BEST PLACE TO LIVE
The current economic situation has brought out many home buyers and also has caused some to relocate for new jobs. Finding the right home and one that has the best chance of holding or increasing in value can be challenging; however, real estate experts say that areas where homes retain their values best in tough times tend to have certain factors in common.
KEEP THIS IN MIND
• Since real estate markets are local and vary neighborhood to neighborhood, home buyers should work with REALTORS® who are familiar with the areas in which the buyers are interested.REALTORS® can help narrow down the number of properties to those that meet the buyers’requirements.
• During the height of the market, many home buyers only could afford to purchase in the exurbs.However, long commutes and high gas bills also can take their toll on homeowners. According to Ken Shuman at Trulia.com, homes more than 40 miles outside city centers generally have declined in value the most. For example, Shuman says that homes in Antioch (45 miles from San Francisco) lost 37 percent of their value in the past 12 months, while those in Walnut Creek (25 miles away) declined 18 percent.
• Towns where zoning regulations make it more difficult to build have experienced smaller prices declines than towns that experienced huge building booms in recent years. “Prices are more likely to go higher if you can’t expand supply,” says Daniel McCue, research analyst the Harvard University Joint Center for Housing Studies. Towns nestled against barriers such as large lakes or protected wetlands also usually limit expansion.
• Buyers can call the town or county planning office and ask how many acres of vacant land are in town, how much of it is zoned for residences, and the maximum number of homes that can be built. Requesting a copy of the town’s master plan also should tell buyers how much the housing stock is set to expand in the next 10 years.
• Homes in towns with stores, banks, and movie theaters are more likely to hold value than those that are nearly all residential, as people like to live near these services and jobs, and provide the town a stronger tax base to fund public service items, such as police.
KEEP THIS IN MIND
• Since real estate markets are local and vary neighborhood to neighborhood, home buyers should work with REALTORS® who are familiar with the areas in which the buyers are interested.REALTORS® can help narrow down the number of properties to those that meet the buyers’requirements.
• During the height of the market, many home buyers only could afford to purchase in the exurbs.However, long commutes and high gas bills also can take their toll on homeowners. According to Ken Shuman at Trulia.com, homes more than 40 miles outside city centers generally have declined in value the most. For example, Shuman says that homes in Antioch (45 miles from San Francisco) lost 37 percent of their value in the past 12 months, while those in Walnut Creek (25 miles away) declined 18 percent.
• Towns where zoning regulations make it more difficult to build have experienced smaller prices declines than towns that experienced huge building booms in recent years. “Prices are more likely to go higher if you can’t expand supply,” says Daniel McCue, research analyst the Harvard University Joint Center for Housing Studies. Towns nestled against barriers such as large lakes or protected wetlands also usually limit expansion.
• Buyers can call the town or county planning office and ask how many acres of vacant land are in town, how much of it is zoned for residences, and the maximum number of homes that can be built. Requesting a copy of the town’s master plan also should tell buyers how much the housing stock is set to expand in the next 10 years.
• Homes in towns with stores, banks, and movie theaters are more likely to hold value than those that are nearly all residential, as people like to live near these services and jobs, and provide the town a stronger tax base to fund public service items, such as police.
Thursday, July 9, 2009
HOME AFFORABLE REFINANCE ELIGIBILITY EXPANDED TO 125% LTV
Fannie Mae last week announced the Home Affordable Refinance Program (HARP) will be expanded to permit refinancing of existing Fannie Mae and Freddie Mac loans with current loan-to-value ratios (LTVs) up to 125 percent, an increase from the current LTV limit of 105 percent. Fannie Mae characterized the expansion as a move to help lenders serve more borrowers with a demonstrated track record of paying their mortgages, but who have been unable to refinance due to significant property value declines. Loans with LTVs above 105 percent will be eligible for a same-servicer refinance under the Refi Plus manual underwriting option, and the new loan must be a fully amortizing fixed-rate mortgage with a term greater than 15 years, up to 30 years. Fannie Mae is evaluating potential updates to Desktop Underwriter to allow LTV ratios above 105 percent.
In conjunction with the LTV expansion, Fannie Mae also announced it is offering a 0.50 percentage point reduction in the loan-level price adjustment (LLPA) charged for manually underwritten Refi Plus loans with LTVs above 105 percent and loan terms greater than 15 years, up to 25 years. Refi Plus mortgage loans with LTV ratios that exceed 105 percent are eligible for whole loan purchase or delivery into MBS on or after September 1, 2009. Please refer to Announcement 09-23 for information about a new MBS prefix and other operational and delivery details for loans with LTVs above 105 percent.
In conjunction with the LTV expansion, Fannie Mae also announced it is offering a 0.50 percentage point reduction in the loan-level price adjustment (LLPA) charged for manually underwritten Refi Plus loans with LTVs above 105 percent and loan terms greater than 15 years, up to 25 years. Refi Plus mortgage loans with LTV ratios that exceed 105 percent are eligible for whole loan purchase or delivery into MBS on or after September 1, 2009. Please refer to Announcement 09-23 for information about a new MBS prefix and other operational and delivery details for loans with LTVs above 105 percent.
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