News Flash

12/09/09

Tis the Season for Change, Change, Change

Regulations regarding disclosures to borrowers on their mortgage loan requests are going to be changing January 1, 2010.  There are a variety of changes that will take place regarding the Good Faith Estimate.  One item is the disclosure of the owner's title policy as a charge to the buyer - even though it is not a charge to the buyer, lenders are going to be expected to show this on the Good Faith Estimate.  The title company will then debit the seller and credit the buyer at closing for the amount of the policy.  

What this means in terms of transactions is that the lender must disclose three days after receiving a loan application.  The lender is to disclose accurately and the borrower must receive the disclosures and acknowledge receipt before an appraisal can be ordered.  It will be imperative to know who the title company is going to be on the transaction and to know this information immediately in order that the lender may give the accurate quote on the owner's policy and thus not hold up the process.  It would be of great help if the title company could either be mentioned in the contract or in the MLS.    

If you are a real estate professional, working with a buyer, getting the name of the title company up front will help tremendously.  

The other item that is changing is with regard to debt to income ratios.  In the past, lenders have allowed the debt to income ratio(gross monthly debts divided by gross monthly income) to go to 50%.  The new level is 45%.  There will be some exceptions granted for low loan to value or high liquidity; however, 45% is what we will be using as a guideline when looking at pre-approvals.

Ann & Mo