rules, Rules, RULES
As always, the mortgage loan industry is changing, this time it is several updates that can have an effect on how long it takes to get a loan completed and funded. All of the changes are intentioned to benefit the borrower with more time to reflect on their home loan circumstances.
In the mortgage business, we are accustomed to a time crunch which is highly compressed when we reach the final few days of getting loans finalized, signed and funded. One of the new rules requires 7 days between the time the Truth-In-Lending (TIL) disclosure is provided to the borrower and the time the borrower signs their loan documents for a purchase or refinance. This rule intends to reduce the rush and give the borrower ample time to review and digest the information on the TIL. Should financing arrangements change such that the TIL's Annual Percentage Rate (APR) goes up by 0.125% or more, another 3 day wait is required after the revised TIL is delivered to the borrower - again with the intent of giving the borrower enough time for a thorough review of the document.
Another rule intends to reduce the apparent obligation the borrower has to do business with a loan provider by delaying the collection of any fees until 3 days after the TIL and disclosures are received by the borrower. Typical among these fees would be the appraisal fee and for some loan providers, an application fee. The only up-front fee that may be charged is for the credit report. For the record, I have never charged any up-front fees to my borrowers and until other recent rules required it, did not even pass through the cost of the appraisal to the borrower until the loan closed.
Since the appraisal process has been mentioned, the Home Valuation Code of Conduct (HVCC) is another set of new rules for conventional loans. Again, the intent is to improve the quality of the home value in the appraisal through separation of the loan originator from appraisal ordering. This adds an apparent protection for the borrower (and a cost) because some loan originators may have been applying incorrect influence on the outcome of the appraiser's work. Oh, And, the borrower gets to pay for this appraisal up-front. A bit of good news in these rules, the appraisal must be in the borrower's hands for review at least 3 days prior to signing loan documents.
Unfortunately, the early results of these appraisal rules have several unintended consequences including higher cost of appraisals, slower appraisal results delivery and questionable resulting values because the individual appraiser is not familiar with local area valuation factors. As is often the case, these rules will likely be modified and tweaked as we go through time which hopefully will address the overall lengthening of time that they add to the loan process. It would also be a benefit to the borrower if the HVCC rules can somehow allow choosing an appraiser with local knowledge, specified appraisal cost and specified delivery speed as these are important to the success of many purchases.
In the mortgage business, we are accustomed to a time crunch which is highly compressed when we reach the final few days of getting loans finalized, signed and funded. One of the new rules requires 7 days between the time the Truth-In-Lending (TIL) disclosure is provided to the borrower and the time the borrower signs their loan documents for a purchase or refinance. This rule intends to reduce the rush and give the borrower ample time to review and digest the information on the TIL. Should financing arrangements change such that the TIL's Annual Percentage Rate (APR) goes up by 0.125% or more, another 3 day wait is required after the revised TIL is delivered to the borrower - again with the intent of giving the borrower enough time for a thorough review of the document.
Another rule intends to reduce the apparent obligation the borrower has to do business with a loan provider by delaying the collection of any fees until 3 days after the TIL and disclosures are received by the borrower. Typical among these fees would be the appraisal fee and for some loan providers, an application fee. The only up-front fee that may be charged is for the credit report. For the record, I have never charged any up-front fees to my borrowers and until other recent rules required it, did not even pass through the cost of the appraisal to the borrower until the loan closed.
Since the appraisal process has been mentioned, the Home Valuation Code of Conduct (HVCC) is another set of new rules for conventional loans. Again, the intent is to improve the quality of the home value in the appraisal through separation of the loan originator from appraisal ordering. This adds an apparent protection for the borrower (and a cost) because some loan originators may have been applying incorrect influence on the outcome of the appraiser's work. Oh, And, the borrower gets to pay for this appraisal up-front. A bit of good news in these rules, the appraisal must be in the borrower's hands for review at least 3 days prior to signing loan documents.
Unfortunately, the early results of these appraisal rules have several unintended consequences including higher cost of appraisals, slower appraisal results delivery and questionable resulting values because the individual appraiser is not familiar with local area valuation factors. As is often the case, these rules will likely be modified and tweaked as we go through time which hopefully will address the overall lengthening of time that they add to the loan process. It would also be a benefit to the borrower if the HVCC rules can somehow allow choosing an appraiser with local knowledge, specified appraisal cost and specified delivery speed as these are important to the success of many purchases.
Posted by Clare Zickuhr at 7/30/2009 9:10 AM 
Categories: guidelines, change, appraisals
Tags: guideline appraisal HVCC TIL APR rules consumer
Categories: guidelines, change, appraisals
Tags: guideline appraisal HVCC TIL APR rules consumer
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