July 27th, 2009 10:04 AM by Diego Quintero
I am hoping that this blog has the same effect as the last. My efforts on blogging about the Neighborhood Stabilization Program may have led to revisions in the program, locally. The changes were in favor of making it more credible & more useful. When you read some of my blogging, please do not hesitate to call your local State Representatives, Senators, and those politicians who WE elected to help you understand or to stand-up against some of the changes. As a matter of fact, that is precisely what I ask of you after reading this week’s blog.
HERA is the Housing & Economic and Recovery Act of 2008. Some of the rules that have been implemented help the consumer understand the mortgage aspect in regards to costs, fees, time lines, etc. However, the latest changes are very difficult to understand. I am writing to make the consumer (YOU) understand the direct impact on the costs of doing a mortgage loan.
In my previous blogs, I wrote about the process of buying a home and obtaining financing. The time line is 14 days more than I wrote about, now that the politicians have put the new rules in place. On July 31st, the time lines will change drastically. When you apply for a loan there will be a time period where the costs and payment schedules are sent to the consumer. This already takes place and it must happen within three days of signing an application. However, HERA has instated a rule that there is to be NO PROGRESS on the file for seven days after the application/registration of the file.
As the application is initially taken, brokers and bankers estimate fees. While the process is taking place, the title company may adjust fees, the recording fees at the government level may change, etc, etc...In other words, our estimates may be plus or minus $200 or more. This will alter your APR, hence, trigger another 7-day “NO PROGRESS,” situation. You can bet that there will be at least 14 days of no progress on every home loan and home purchase. If you are a real estate professional, make sure to consult your broker about this- it will affect your bottom line.
So what does this mean to you, the consumer? Well, presently, people who are in a 30-day escrow period on their home purchases - you may be late! If you are a short sale purchaser, you may have to pay the $100 per diem penalty for late closure. As for those who budgeted enough time, if a rate lock needs to be placed on your loan due to improving market conditions, you will have to lock at a 45-day lock or a 60-day lock. Either of these lock periods are substantially more expensive than the traditional 30-day lock, or 12 day lock, which offers superb pricing on your rate. HERA is supposed to be in place to save you money and protect the consumer. It’s not working! It costs more and places the consumer in a higher risk position to “play’’ the market when locking rates.
HVCC is another acronym of a law that has been instated as well. HVCC is a method for ordering and monitoring appraisal reports. Basically, HVCC is characterized as a management firm to take your appraisal orders and charge the consumer an additional $100-$200 for the service. Once it is ordered, it is non-transferrable in the event that another lender charges you less for the same services or if interest rates drop and you want to take your business to another lender. You will have to pay for another appraisal if you want to ‘shop’ your mortgage. NOT FAIR! Your costs are still going up and your ability to shop for a better loan are diminished. I thought HERA was supposed to make the consumer more aware of costs and protect the consumer. The best way that the government sees fit, is to charge you more and place you in a higher risk position.As always, I work within the same parameters as the rest of the industry. I understand that we may need regulation, but it is irresponsible to provide that regulation at a greater cost and risk to the consumer. Don’t let this happen! Please call your local government officials and ask them to STOP H.R.1728 and HVCC Regulation. Your next refinance or purchase will cost you more regardless of who is helping you - Your call may save you thousands of dollars!As always, thanks for reading!Your trusted mortgage professional,Diego L. Quintero