REAL ESTATE
NEWSLETTER
New Lending Rules
Will They Effect Your
Real Estate Transaction?
Two major changes have been implemented which effect the way real estate mortgages are now being processed. While we don’t have the space here to go into great detail, we will provide you with a basic understanding of their purpose.
The Home Valuation Code of Conduct (HVCC) went into effect May 1, 2009. This regulation was designed to control the appraisal process, it’s primary objective, reduce the possibility of fraudulent real estate appraisals. How does HVCC effect an appraisal? The new regulations require all lenders to use what is called an Appraisal Management Company (AMC) to schedule an appraisal. Lenders are no longer authorized to make the decision of selecting an appraiser, the selection process is now controlled entirely by the AMC. Can an appraiser, from out of my local area be selected by an AMC to perform an appraisal? The answer is yes. Will my lender have the ability to verify the qualifications of the person chosen to appraise my pending real estate purchase? The answer is no.
The present HVCC regulation has created a number of issues, these are currently being addressed by various groups including lenders, appraisers, real estate practitioners and closing attorneys. It is important, that all buyers and sellers understand the new appraisal regulations and ramifications. Your lender can explain the process in detail.
A new set of “Truth In Lending” (TIL) regulations went into effect July 30, 2009. These changes, while providing additional protection for mortgage applicants, will increase the amount of time required to close a home mortgage loan. For applicants, the new regulations require that no fees, or charges will be collected prior to the closing of a loan. On the flip side, most mortgage lenders will require approximately sixty (60) days to complete this process. One specific requirement states that last minute changes, or delays in the process, will in almost every case require the lender to start the process over. For those planning to apply for a home mortgage loan, ask your lender to provide you with a summary of these important changes. Understanding the process will help you avoid problems later.
An “Eleventh” Hour Crisis -
Don’t Let It Happen To You.
Life is good. Your realtor has just sold the family lake property. Regardless of the reason, selling lake property is a significant event for most of us and we want everything to go right. Over the next several days all preliminary work for the upcoming transaction will be completed. Important items such as affixing the required signatures to a sales contract, buyers receiving their loan approval, a satisfactory home/termite inspection and the scheduling of a closing date are just a few of the many tasks associated with the transfer of real estate. Some might think, “it’s now clear sailing” right up until closing day.
Lenders who deal with lake property loans are now being required, in many cases, to provide additional information to the underwriters. Typically the underwriter of the loan does not prepare the final loan package until one, or two days before the scheduled closing. As a consequence, your lender may not be informed of any additional documentation required until the “Eleventh Hour”.
Below we have identified two of the most common requirements that come from the underwriters. Underwriters will request a “flood certification certificate” or FCC. An FCC is simply a certified survey showing the 510’ 522’ and the 524’ elevation of your property. The underwriter may be required to provide
documentation showing the property you’re selling, is not in a flood plain.
An underwriter may also request a septic tank inspection. For either request, a licensed professional will be required to perform the work. Try locating a surveyor, or a septic tank installer who is waiting for your emergency phone call - it’s wishful thinking at best.
Plan ahead, as a seller, if you don’t have an FCC, contact a surveyor and get one. If your property is currently on the market, be prepared to provide a certified septic tank inspection. Don’t let an “Eleventh Hour” crisis disrupt, or worse yet, undermine the sale of your lake property.
Top Of Page
