Mortgage broker James P. Febbo updated Realtors on the latest changes to mortgage-related regulation at a recent training session. Febbo, based in Easton, is with American Home Bank.
Changes that Realtors and consumers should be aware of include:
The Mortgage Disclosure Improvement Act. The 3/7/3 Rule requires a seven business day waiting period once the initial disclosure is provided before closing a home loan (business days are everyday except Sundays and Holidays). This means that before a borrower can close on a transaction the borrower must receive the initial Good Faith Estimate (GFE) and initial Truth in Lending statement disclosing the final Annual Percentage Rate seven days prior to closing.
The Home Valuation Code of Conduct. Under this code, Realtors and mortgage brokers are prohibited from selecting appraisers. Lenders are may use “in house” staff appraisers to conduct appraisals. However, the loan production staff is prohibited from:
• selecting, retaining, recommending, or influencing the selection of an appraiser; and,
• conducting any substantive conversation with an appraiser or appraisal management company regarding the appraisal assignment.
For the consumer, the appraisal process has remained largely intact. However, consumers may find the process takes longer than and may be more costly than it has been in the past.
The Real Estate Settlement Procedures Act. HUD is requiring that loan originators provide borrowers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs and that closing agents provide borrowers with a new HUD-1 settlement statement.