New Appraisal and Lending Regulations
15 Jun2009
Filed Under Financing · Tagged: appraisals, Lending · Print This Article
Some new regulations have and will go into effect that can affect your closing if you are buying or selling a home. The regulations are as follows:
Home Valuation Code of Conduct rules (HVCC): As of May 1, lenders and third parties are prohibited from influencing an appraisal report — this means that there can be no attempt by lenders to speed-up (and thus influence) an appraisal. Borrowers are also required to have access to a copy of the appraisal within three days prior to the closing of their loan (although borrower may waive this right.) So, these rules are already in affect.
Housing and Economic Reform Act (HERA) updates: As of July 30, changes will be made to the timing of when fees can be charged to the borrower and when disclosures are sent, re-issued and received by borrowers.
All lenders must follow these regulations.
What does this mean?
Set realistic expectations, be prepared and understand that things are tightening every day. We have known that changes would trickle down over time as the powers that be work to improve the state of the housing market.
Basically, this just means that things will take longer and be more complicated, although consumers need to understand these rules are being put in place to protect them. With the HVCC, essentially a ‘firewall’ is being put in place. Lenders can’t do anything to rush an appraisal, or even ask any direct questions, no matter how simple. This means the process will take longer due to this ‘firewall.’ The requirement of the appraisal copies are new, although the Amy B Sells Team has always provided these copies in advance of closings.
Due to the changes under HERA, it just means you need to be attentive and helpful to your lender. If they ask for something, take care of it. Lenders require more documents and information than ever. It is not unsual for a closing to be delayed due to a borrower not providing documents quickly enough! Don’t let this happen to you.
Homebuyers must understand that the interest rate impacts their APR, and you must lock your rate. The rate lock happens at the borrower’s discretion. The longer you wait to lock in your rate, the more you are gambling. If you wait too long to lock in the rate, the disclosures may need to be resent. This is going to slow up your process and jeopardize your closing and maybe even your financing. My lender, Wells Fargo, is requiring the rate to be locked within in 10 days of closing.
[...] mentioned before how the appraisal rules are have changed. (If you need to catch up, read this and this.) The highlights are as [...]