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New Loan Protection Rules for Homebuyers

New Loan Rules for Home Buyers

Are you one of the many who are in the process of applying for a home loan or planning to refinance your home ? If so you should be aware of a new set of federal consumer protection rules that take effect July 30th 2009.

The new Federal Reserve guidelines require lenders to provide you with initial disclosures of your mortgage costs within 3 days of your application – if you don’t get them you can RUN……

The rule also prohibits lenders from collecting any fees, except of course a reasonable charge for checking your credit – until you have recieved your loan cost disclosures.

What does this mean to to you?-  It means no more out-of pocket up front applications charges until you’ve recieved the truth-in-lending disclosures and an annual percentage rate (APR) calculation of these loan costs.

Many mortgage brokers and lenders traditionally have collected fees to cover appraisal fees, credit and various other charges at the time of application – this can amount to hundreds of dollars, so this will be a significant change in procedure for the lending industry.

Another rule also prevents quick closings on loans by requiring a seven day waiting period after applicants are given their early mail disclosures or the disclosures are mailed. You will now have up to a week to think about the transaction. Final truth-in-lending disclosures are due three business days before closing.

Here’s another new change – the new rules require lenders to deliver a copy of the real estate appraisal to you three business days before sceduled closing on the loan.  In the past, consumers could request and obtain a copy of the appraisal, buyers often ignored that right – or had no knowledge of this right as no one in the home purchase department had ever told them about this option.

Another important change: if the APR on the early truth- in- lending disclosure increases by more than one-eighth of a percentage point (0.125), the lender will now be required to redisclose to you a corrected version and allow you an additional seven business days to consider the transaction before settlement.

For more information call Pam and Joanna, we are always available and WE ANSWER OUR PHONES!

Pam Parton 760-580-1615

Joanna Woolley 760-580-1630

Information by courtesy of Ken Harney, real estate columnist with Washington Post Writers Group.