The new Federal Law may, at first, appear beneficial to those not familiar with the subjects of mortgage financing, real estate, appraisals or other services concerning the managing of real estate. Is it not the case that if you read it in print, in must be true?

On July 30, 2009, a series of significant regulatory shifts occurred with the federal enactment of the Mortgage Disclosure Improvement Act (MDIA) and the Housing and Economic Recovery Act (HERA). Borrowers are given a Truth in Lending and Good Faith Estimate when applying for financing for a home loan, this document will be changed by the passing of the new laws.

Perhaps the only good thing to emerge from the new legislative scheme is the fact that home buyers are given a longer period in which to study the Truth in Lending disclosures and the Good Faith Estimate for their transaction. As is is common for borrowers to have little understanding of the actual terms of their home loan, including their interest rate, loan term, fixed or adjustable rate, and the like, the legislation does offer borrowers a full week to review their loan papers. Now I would not think of debating this. Mortgage paperwork is often very lengthy and complicated, with complex terms and conditions that even a lawyer would have trouble understanding!

Should the annual percentage rate move upward or downward an eight of a percent while your loan application is pending, you will be required to allow another three days to pass prior to escrow being able to close on your transaction. The 3 business day rule begins all over again if Title fees are changed, since this sets off an alteration of the mortgage documents as well. Such a scene could very easily play out for a purchaser who did not lock in their interest rate.

If the type of loan changes from „Fixed“ and „Balloon“, „Fixed“ and „ARM“ ,the type of „ARM“ (Interest to Amortized, 3/1 ARM to a 5/1 ARM) or a conventional loan with Mortgage Insurance and conventional loan without Mortgage Insurance, the waiting period starts all over.

It would seem that many of these rules are instituted on a whim. It makes one wonder if anyone had put any thought at all into how these new practices could impact the housing market.` „Time is of the Essence“ always remained the most critical saying in real estate. Since most banks have taken over many homes on the market, this phrase has been totally abused.

With escrow closings currently taking anywhere from four months and upward , some may think there really is no harm in tacking on an additional few days. This new law will doubtless interfere with the closing date of the purchaser’s new home, as the greatest challenge lies with title fees constantly changing while interest rate locks are typically only available for 30 or 45 days.

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