If you read our article on a regular basis you know about the new Federal regulations about to go into affect beginning October 3rd. After studying the new regulations in depth we’ve put together some Best Practices to help people understand what’s about to happen.
New regulations affect closings on financed deals only, 1-4 units residential and multi-family. This will not affect cash deals, so financed buyers will need to work with an experienced agent who understands the changes to make your offer look as Best as it can. Otherwise the seller will just go with cash deals.
Listing agents need to really investigate the new rules to protect their sellers. Gone are the 30 day closings. Plan on 45-60 days now, and if there are changes it can be even longer. Here are a few things you can do to avoid re-disclosures and costly delays to your closings. Lending delays about to get real next week.
1. Make sure buyer obtains a 60 day rate lock up-front. In a rising rate environment, if the lender fails to meet the 30 or 45 day rate lock it will trigger a re-disclosure to re-lock the rate. This new time frame could extend your closing up to 10 days or so.
2. Have seller pre-pay their condo and HOA fees. The title company may be forced to acquire a new estoppel letter if the closing is delayed a few days. This happens at the end of a month or quarter. If the new numbers affect the borrower, it could trigger a re-disclosure, which could delay closing up to 10 days.
3. If new extended closings occur before the 5th of a new month, it may not trigger, but after the 6th it can change the borrower’s cash-to-close which can trigger. Dates will become critically important under these new regulations.
4. Have two walk-thrus. A preliminary walk-thru for any repair type items and a final walk-thru solely for the purpose of making sure everything that was supposed to stay with the home is there and for any damages by seller moving out. You really want any repair items fixed well enough in advance and accounted for as new closing and lending disclosures must be accounted for well before closing.
5. Agents will no longer see all the charges to the buyer. The borrower may wish to share this document with your Realtor ASAP so if you’re being over-charged by the HOA, Title Company, or lender it can be spotted quickly.
6. There will not be a unified closing statement on financed deals anymore, so your agent won’t be able to see all the charges to the borrower. The seller charges will be seen, but not the borrower’s.
7. Not all agents will know about the changes. If the agents don’t know, how can the consumer be expected to know? Be sure to work with an agent who does several transactions and is current on lending changes.
8. Communication will be key. Listing agents should call the loan officer before seller accepts a deal with financing. The loan officer may not be able to share with buyer agent everything but a skilled listing agent should be able get the required information. Agents, lenders, title companies, and customers must communicate to avoid costly delays. One delay can create others due to new waiting periods.
9. New sales contracts are coming out soon. We intend to scour the contract for changes as we anticipate several issues that will occur because of new regulations and we want to see how they’re addressed. Otherwise they may need to be addressed by addendum.
For more information, you can review past articles on how the time lines work on our blog at http://blog.topagent.com Just search for TRID
To see all the homes listed in MLS, feel free to search like a realtor on our MLS search site www.LeeCountyOnline.com
Good luck and Happy House Hunting!