Is your Loan Officer keeping you in the loop?

As you may have read in my recent blog, "Mortgage Disclosures Improvement Act (MDIA) and how it affects YOU, the Realtor", the MDIA time frames that now affect us in the mortgage industry also directly affect you and your escrows. But knowing this may not be enough to ensure your transactions close when you had anticipated. You have enough to worry about on your end - you certainly don’t need to be blindsided by setbacks on the lending side of the deal. Unfortunately, the time frames set forth by the MDIA may throw the occasional wrench in the works. So what can you do to help your escrows stay on track? First and foremost, make sure the Loan Officer you work with is proactive and keeps you in the loop every step of the way. In an effort to keep you in the loop from the get-go, I thought I would give you some scenarios that your Loan Officer is likely to encounter. To recap my previous blog, "Mortgage Disclosures Improvement Act (MDIA) and how it affects YOU, the Realtor":

• No closing can be scheduled for at least 7 business days from the initial disclosure of the loan upon submission to the lender.
• If any re-disclosure is required due to an APR change of .125% or more, a minimum of 3 additional days is required prior to closing.

As I am sure you have experienced before, the final numbers for a typical real estate transaction are not usually available until the day of, or the day prior to closing. Not only does the lender have to prepare figures, the title company and the settlement companies have to do so as well which is what creates the delays in getting exact closing figures prior to closing.

MDIA now requires that these figures are prepared in advance and in the event that the final tally of these numbers impacts APR by .125% or more, re-disclosure is required which automatically kicks in the 3 day additional disclosure time frame. As you will see from the partial list below, the odds on re-disclosure are very high given the multitude of items that can create the need for re-disclosure:

• The borrower decides to pay additional points to buy down their loan rate since initial application and disclosure.
• The borrower reduces their points to save money which results in a higher interest rate.
• The borrower changes their down payment which changes the loan amount.
• The per diem interest will change based upon the actual closing date versus the initial estimated closing date.
• The borrower opts to "float" their rate at time of application and when the loan is locked in during the process, or directly prior to closing, the interest rate has changed.
• A new borrower is added to the loan after the initial application.
• The loan program changes which can cause settlement fees as well as lender fees to change. (Example: application fees, processing or underwriting fees, etc…)
• The initial estimated charges which impact the APR increase by more than $100.00. Some of the main items that can impact APR are Lender Settlement Fees, Points, Per Diem Interest and Lender Fees

The above are the most common, but certainly not the only scenarios that can impact the loan APR resulting in new disclosure being required based upon MDIA.

Due to the ever increasing penalties that lenders are subject to due to the new regulations, it is highly likely that all lenders will create strict time frames for loan closings that will lean toward being extra safe versus working on the bare minimum time frames designated in the MDIA rules.

In summary, it’s now more important than ever for you to work closely with your Loan Officer in order to navigate the inevitable hurdles to come. At Falcon Financial, we strive to form close working relationships with our Realtor partners, so that together we can create the most seamless and rewarding experience possible for our mutual clients.

Tom Smith