Just recently, new mortgage regulations were originated by the Federal Reserve with the goal of increased disclosure requirements for mortgages to protect consumers from non-refundable fees and higher interest rates. And these new mortgage regulations may help in this regard in certain instances of potential misrepresentations. However, it will also certainly lead to delays in closings in many purchase and refinance transactions where that is not an issue.

These new rules came into place at the end of July and may lead to longer closing times in the coming months. Specifically they require lenders to:

-Provide a good faith estimate (GFE) of a mortgage’s full cost within three business days of receiving an application.

-Not charge any fees until consumers receive the GFE. The only fee lenders can ask for upfront is a “reasonable fee” for obtaining the consumer’s credit history.

-Wait seven business days after providing the initial loan costs before closing the loan.

-Offer a new estimate of the loan costs three business days before the closing date if the original annual percentage rate (APR) increases by more than one-eighth of a percentage point.

These new regulations are in effect now and as mentioned you may begin to see these lengthening the time frame to complete purchase and refinance transactions in the coming months. How much impact they have on increased transparency is yet to be seen. What we do know for now, is that one additional piece of regulation has been added to the mortgage lending process with the goal of protecting consumers, but the only guarantee at the moment is a lengthier loan process.

This entry was posted on Tuesday, August 18th, 2009 at 11:29 am and is filed under HomeOwner Tips, Loans, Resources, Sellers, home value. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.