REGULATION Z WILL EFFECT REAL ESTATE TURN TIMES IN FLORIDA

REGULATION Z TAKES EFFECT AT THE END OF JULY 2009.

The Federal Reserve Board issued final amendments to the rules under Regulation Z, which includes comprehensive changes to the format, timing, and content requirements for disclosures under Regulation Z, and the Truth in Lending Act (TILA). These significant changes are going to drastically change the way real estate and mortgage professionals conduct business.

The main objective is to curtail last minute changes in the loan application process. If the Truth in Lending statement changes more than .125% of a percentage point, this will require the loan to be re-disclosed and have a seven day waiting period to close. This includes fees such as broker, real estate and some title fees. I have designed a timeline below of the actual changes during the entire phase of the real estate transaction.

1. Borrower applies for loan. The initial disclosures are sent from the lender (not mortgage broker) upon registration. The mortgage professional cannot take an application fee at this time. He is free to take an upfront credit report fee. The clock starts ticking at this point.
2. At day five the mortgage professional can now take an application fee and order the appraisal. The lender will require that the borrower receives the disclosures prior to uploading the loan file.
3. If any material changes to include loan amount, program, rate & fees change during the loan process there is a mandatory seven day waiting period for the lender to redisclose the borrower with the changes.

What does this mean to the real estate professionals? Make sure you have a competent loan officer. It is imperative to get the upfront fee correct from the title company, realtors and any other third party players.

Make sure your borrower selects the right program and rate upfront. If you are floating the rate, make sure to give yourself ample time to lock and rediclose, so you do not get stuck in the seven day hold period. Attention to Detail will be critical to making the normal 30 day window for closing. NO MORE ranges for fees etc. ACCURACY ACCURACY IS KEY !

If you want more info, please click below

http://www.fdic.gov/regulations/laws/rules/6500-1400.html