San Diego Home Mortgage Blog

        Changes have just been made to the "Truth in Lending Act" requirements regarding early and final disclosures to home buyers and the timing of when fees can be charged. These changes can and will increase the time needed for lenders to close your San Diego home loan.

Summary of key elements that will impact your San Diego home mortgage:

· New regulatory and investor guidelines will effect (and may decide) the closing date. While a purchase contract may specify a closing date, the earliest any mortgage closing may occur is seven (7) business days after the borrower is issued the initial mortgage disclosures. Lenders count Saturdays, with the exception of Federal holidays, as a business day for the purpose of disclosures only.

· Upfront fees cannot be collected (except for a credit report fee and we don't charge those upfront anyway) until the initial disclosures are received by the borrower. The regulations provide guidelines that deem disclosures to be received three (3) full business days after mailing. Starting July 30, 2009, upfront fees cannot be collected (including, but not limited to, the appraisal fee for you San Diego home loan) until four (4) business days after the Lender issues its initial disclosures to the borrower. The credit report fee is an exception to this rule and may be collected at application.

· A variance of more than .125% in the Annual Percentage Rate (APR) from the initial Truth in Lending Disclosure (TIL) requires a revision and reissuance of the TIL disclosure. If this is the case, the borrower must receive the revised TIL disclosure at least 3 business days before closing. The mailing rule above applies to TIL re-disclosure as well. Therefore, the TIL disclosure is deemed to have been received by the borrower three (3) business days after mailing. As a plethora of items may impact, change or revise APR, all parties must ensure estimates are as accurate as possible.

My take on how the will affect the San Diego Ca Mortgage process:

The main problem with this new requirement is the repetitive disclosure process and what they have deemed to be upfront fees. We already had a "Truth in Lending Act" and disclosures were generated and delivered when we took your loan application for a San Diego home loan and at the mortgage closing. There is a mandatory waiting period of 7 days after the disclosures are generated under this new rule to be able to charge fees related to the loan. This is a huge problem due to the "HVCC" appraisal rule that was effective July 1 , 2009. The "HVCC" (Home Valuation Code of Conduct) rule keeps mortgage lenders from directly ordering an appraisal. Instead they must go to an appraisal management company who orders the appraisal from a random appraiser that may or may not know the San Diego home market. This new code requires an upfront payment from the San Diego home buyer (or person refinancing) in order to order the appraisal. The appraisal process has changed from 3-5 days to 10-15 days with the "HVCC" system in many cases already impacting how long it takes to close a home loan in San Diego. If we add the 7 days of mandatory waiting process for the original disclosures to the 2 week turn around for the appraisal we can assume AT LEAST 20 days for a full file to be in underwriting for a loan to be considered. This could mean the buyer and seller would have to wait 45-60 days for escrow to close as opposed to the standard 30 days. I fear that the end result of this will be another setback in our already damaged real estate market.