I suppose if you were not in the real estate, mortgage financing, appraisals or any other service or entity that deals with the real estate economy, you would be impressed with this new Federal Law. Don’t we typically believe everything we read?

Altering a variety of rules with the HERA ((Housing and Economic Recovery Act of 2008) and with the MDIA (Mortgage Disclosure Improvement Act), the most recent federal law was just passed and became law on July 30, 2009. These two Acts directly affect the Truth in Lending and Good Faith Estimate which are given to borrowers when they apply for a home loan.

Though the recent addition of the Federal Laws give the borrower more time to read and review their Truth in Lending and Good Faith Estimate this is possibly the only positive aspect of the new law. Since many buyers were not aware of their terms when applying for a mortgage, such as APR ( annual percentage rate), length of loan, fixed rate vs. variable rate, the new law gives the buyer seven days to review these documents. Oh, I won’t argue this. Typical buyers, a category in which I am included, did not fully comprehend the terms of their home loans when they entered into their agreements.

One issue that makes things more complicated is if the Annual Percentage Rate either increases or decreases by 1/8% while the loan approval is still pending, you will have to delay a minimum of 3 business days before you can close the escrow on your home. There will be another 3 business day delay if the Title fees change during this time. Such a scene could very easily play out for a purchaser who did not lock in their interest rate.

If the type of loan changes from “Fixed” and “Balloon”, “Fixed” and “ARM” ,the type of “ARM” (Interest to Amortized, 3/1 ARM to a 5/1 ARM) or a conventional loan with Mortgage Insurance and conventional loan without Mortgage Insurance, the waiting period starts all over.

Can someone tell me who makes up these rules? It makes one wonder if anyone had put any thought at all into how these new practices could impact the housing market.` “Time is of the Essence” is a phrase known to many people in the real estate business. Since most banks have taken over many homes on the market, this phrase has been totally abused.

Since homes takes 4, 5, 6 months or longer to close escrow in today’s market, you say to yourself, what’s another 3 to 7 business days? But the interest rate lock is generally only 30 to 45 days and title fees change often, so the new federal laws could keep home ownership just out of reach and closing dates repeatedly retreating for even longer.

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