Home Loan Processing and Time

While paying attention to dates in a purchase agreement/contract has always been important, over the last few months some new regulations have thrown other timeline issues into the mix.  Realtors and borrowers should be aware of this new potential for delay.

Conventional appraisals (and soon FHA as well) now have to be ordered through an Appraisal Management Company (AMC) in an effort to completely separate the loan officer from the appraiser and eliminate any sort of influence.  As a result of ordering through this new system, most lenders require that the loan officer collect the fee for this appraisal up front upon ordering.   However, as per the new regulations, a lender cannot accept monies for anything (appraisal, credit report, etc.) until a minimum of three days after taking a loan application.  This can be an issue if the dates in a contract do not allow for sufficient time from application to when the appraisal is due. Most good Realtors are aware of this and allow for enough time.

Many homeowners are familiar with the Good Faith Estimate (GFE) that discloses the costs and rate for their loan.  Related to this is the Truth-in-Lending (TIL) which discloses the Annual Percentage Rate (APR).  If for some reason (such as increased title costs or a change in fees and/or rate) this APR moves by more than 0.125% then it must be re-disclosed to the borrower a minimum of three days prior to closing.  Often times when figures get sent to a title company they come back with figure changes for a variety of reasons. While these adjustments are normally minor it’s important that a lender work closely with the title company to insure this is done in a timely manner and does not delay a closing.

A less common time issue involves the transfer of a loan to another lender because the current one can’t get it done.   New regulations now require a minimum of seven days until that new lender can close the loan.  Often times it would take a new lender this long to get it processed and approved by underwriting.

When I’m originating a loan and in control of the process, I am always sure to check the dates and confirm it’s realistic for an appraisal to be done in time.  It’s also standard practice for me to re-disclose a new GFE and TIL when the loan’s interest rate is locked-in and again if I notice any changes in costs/fees that could impact the APR. While the lender costs on my GFE rarely change much (and if anything are typically lower than my estimate)  in some cases a borrower may elect to add an origination fee in order to reduce the rate, or they may elect to use seller-paid concessions, both of which may be enough to require a lender to re-disclose. I always work closely with the title company to ensure we’ve gotten figures to them well before close so they can get them back to us with their changes and we can confirm our APR is okay.

Questions or comments about Denver mortgage lending?  I can be reached at mupdike@ulc.com or 303-898-6203.  Or if you’d like prequalified for a new home loan or refinance please go to http://mupdike.ulc.com and click on the Apply Online Now link in the left column.  You can also check out my own blog at www.denverloanracer.com.