Palm Beach County, Florida – September 21, 2015 – Along with Dodd-Frank came sweeping reforms to the Mortgage Industry. The new rules implement various Dodd-Frank sections and amend several existing regulations, including Regulations Z, X and B, which implement the Truth in Lending Act, Real Estate Settlement Procedures Act and Equal Credit Opportunity Act, respectively. The Ability-to-Repay (ATR) and Qualified Mortgage (QM) Standards rule has received the most attention. It is intended to protect consumers from irresponsible mortgage lending by requiring that lenders follow strict procedures for determining that prospective borrowers can actually repay their loans.
In addition, a new mortgage servicing rule is intended to establish stronger protections for homeowners facing foreclosure, while new loan originator compensation rules address practices that promote steering borrowers into risky or high-cost loans. The CFPB also finalized rules to strengthen consumer protection for high-cost mortgages and instituted a requirement that escrow accounts be established for a minimum of five years for certain higher-priced mortgage loans, among the other provisions.
Real Estate Investors need to be up-to-date in their knowledge of the new rules. Here is an outline of the new rules: First, the Loan Estimate must be delivered to the prospective buyer no later than 3 business days after receiving the application. Currently, the HUD-1 Settlement Statement can be presented to the buyer on the day of closing and any changes to the statement can take place during the loan closing. Under the new rule, the biggest change is that the Closing Disclosure must be provided to the consumer a full 3 days prior to the closing, and if there are changes during that 72-hour period, the closing could be delayed. This delay can cost the investor his tenant, a higher rate when using hard money financing, delayed payment to contractors, etc…
The best tip for getting in front of a perceived problem with the new 72 hour period, is to be ready to close 7 days before the actual contracted closing date. Working closely with your lender and the title company will be a huge benefit in accomplishing this. Investors often buy properties with city fines and liens, HOA problems. Be sure your contact address the possibility of additional extensions due to the time it may take to clear the title and comply with the new rule. In closing, the goal of these changes are to protect the consumer, which is always a good idea. Work smart in your business to avoid the pitfalls for the new (HUD1a) until everyone is on the same page and it becomes routine with no delays.
For complete information, please visit: The Tropical Real Estate Investors Association
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Company Name: The Tropical Real Estate Investors Association
Contact Person: Linda J Willis
Address:123 N Congress Ave #391
City: Boynton Beach
Country: United States