Monday, June 14, 2010

Mortgage Changes

We've talked about mortgages before, but it's always worth pointing out when things change. The appraisal issues--time to get one and values obtained--were front and center near the end of last year. Now it's the paperwork and length of time involved in processing an approved loan. I'm not sure that most buyers realize how much documentation is involved in getting a loan from approval to closing. Almost all loans now come approved with contingencies--various types of proof that are needed to substantiate the loan or the loan amount. To many people who have been through the process in the past, what gets requested now can seem absurd. Even to those of us who have been steeped in the industry, the constant changes in RESPA requirements seem bewildering and onerous. There is even a three-day period now between the closing statement production and the closing.

For buyers in a hurry, these rules can be infuriating. Perhaps even more so, sellers--who may not have gotten a loan recently, and may vastly underestimate what's involved today--are often unsympathetic and extremely annoyed. Even attorneys weigh in on the difficulty of scheduling a closing these days.

A good analogy might be the security checkpoints now present at every airport. Comparing them to what was necessary 20 years ago is almost impossible--it would be like comparing a stagecoach journey to a space trip! In addition, many of us feel that we're just trying to avoid a repeat of the last disaster; in one case, 9/11, and, in the other case, the financial meltdown of 2008. Whatever the reason, and whatever you may privately believe about how much the new regulations will prevent similar problems, many of these procedures are here to stay. So pull up a chair, and wait patiently for the closing.