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The new Federal Law may, at first, appear beneficial to those not familiar with the subjects of mortgage financing, real estate, appraisals or other services concerning the managing of real estate. Is it not the case that if you read it in print, in must be true?

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. Borrowers are given a Truth in Lending and Good Faith Estimate when applying for financing for a home loan, this document will be changed by the passing of the new laws.

Perhaps the only good thing to emerge from the new legislative scheme is the fact that home buyers are given a longer period in which to study the Truth in Lending disclosures and the Good Faith Estimate for their transaction. As is is common for borrowers to have little understanding of the actual terms of their home loan, including their interest rate, loan term, fixed or adjustable rate, and the like, the legislation does offer borrowers a full week to review their loan papers. Now I would not think of debating this. Mortgage paperwork is often very lengthy and complicated, with complex terms and conditions that even a lawyer would have trouble understanding!

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. Borrowers who have failed to lock their rates run the risk of this precise situation occurring.

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.

It would seem that many of these rules are instituted on a whim. 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” always remained the most critical saying in real estate. Since most banks have taken over many homes on the market, this phrase has been totally abused.

What difference does another 3 to 7 business days make, when homes require 4 to 6 months or even longer to close escrow nowadays? 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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