Regulations On Mortgages And Real Estate Law

You might be impressed by this new Federal Law

, if you were not involved in the mortgage financing, real estate, appraisals, or other entity or service industry which pertains to the real estate economy. Don't we typically believe everything we read?

The details of the Mortgage Disclosure Improvement Act (or MDIA) and the Housing and the Economic Recovery Act of 2008 (HERA) changed with the passing of the latest federal laws on July 30th, 2009. 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.

Though the recent addition of the Federal Laws give the borrower more time to read and review their Truth in Lending and Good Faith Estimate this is possibly the only positive aspect of the new law. The new law gives the borrower 7 days to read over the papers in case they were not familiar with the particulars of their mortgage like the Annual Percentage Rate (APR), fixed rates, variable rates and scheduled payments. Unfortunately, many borrowers are indeed uninformed when it comes to the terms of their borrowers agreement. 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. Any adjustments in the fees for your title work will also result in new documents being required and a new three-day waiting period will begin. Borrowers who have failed to lock their rates run the risk of this precise situation occurring.

The waiting period begins again, if the loan type changes from "Fixed" and "Balloon", "Fixed" and "ARM," a conventional loan including Mortgage Insurance and a conventional loan that does not include Mortgage insurance, or the type of "ARM" (Interest to Amortized, 3/1 ARM to a 5/1 ARM).

Where do such regulations originate? Has no one thought about the potential ripple effect such regulations could have on the real estate and mortgage fields? The vital importance of timing has been a constant in the world of real estate transactions. As a multitude of properties are now in the hands of banks, that concept has lost its importance.

A 3 to 7 business day delay might not seem like much when considering that the average home takes 4 to 6 months to close escrow. But the interest rate lock is generally only 30 to 45 days and title fees change often, so the new federal laws could keep home ownership just out of reach and closing dates repeatedly retreating for even longer.

by: Nathan Oulman.

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