Mortgage disclosure guidelines set out by the Mortgage Disclosure Improvement Act that went into effect July 30 may represent a host of inconveniences for both buyer and sellers in the coming months, says Mike Anderson, president of Essential Mortgage.
Under the new guidelines, a mortgage broker would have a three business-day waiting period before ordering an appraisal on a home. The earliest a transaction can close is seven business days after the initial disclosure.
Creditors are also required to provide new disclosures with a revised annual percentage rate (APR), and wait an additional three business days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate by 0.125% or more. And for Gulf Coast residents, the presence of a storm in the Gulf will delay all closings until the storm disperses.
The danger of the new guidelines, Anderson says, is that there is virtually no way to pick a closing date and stick with it. That means that the inconvenience for both buyers and sellers may cause them to back out of transactions altogether.
“Imagine when you’re booking your United Van lines to come pick up your stuff, or arrange for the electric,” Anderson says. “Sorry, can’t close on that day. It’ll be another two weeks. Think of all the nightmares that this little act has created.”—Emma James
