New Mortgage Regulations Put Off Until October

Perhaps in a rare admission that what they are about to do will cause havoc, the Federal government has announced that the new proposed regulations affecting real estate closings will be postponed from August til October.  As far as we can tell,  most closings will be harder to schedule and more likely to be delayed, since any change at all to the documents will require a three-day waiting period, each time something is altered.  This means, in all practicality, that there will be no back-to-back closings, where people sell one house and buy another.  That means no moving from the old home to the new in many cases--a major glitch for lots of families. 


What does the delay mean for you?  You have two more months to get into the pipeline for a mortgage under the old rules.  So hurry up!

Changes to RESPA

The Real Estate Settlement Practices Act, which governs residential mortgage closings, will mandate several changes in closing procedures, beginning in August.  For one thing, we need longer periods until closing--probably 45 days to get a mortgage, and another 15 to close.  Currant rate locks will not last long enough to finish the transactions.  Every change will require three days for clients to look at the documents, so each mistake or missing name will push off a closing.  This will result in no more back-to-back closings--you won't be able to sell your old house and buy your new home on the same day.  There will be more due diligence, and it will need to be done sooner.  All of this will result in a need for an attorney to be involved earlier, and fees will probably go up as a result. 


For real estate agents, we have to do a really good job in managing the expectations of clients.  They may not have anywhere to live between the two closings.  They won't be able to delay the production of forms and facts, and everything will need to be settled sooner.  What's my take away advice?  Buy and sell now, and avoid the whole issue!

A Warmer Winter?

To us, a warm winter is one with a lot of real estate sales! The recent extension and expansion of the homebuyers' tax credit gives us hope for the traditionally slower months. Because of the timing on the new bill, sellers and buyers should realize that they can't wait until the spring market. Buyers who have no home to sell (usually the first-time buyers) can probably put off finalizing a sale, since the contract must be signed by April 30,2010 and must close within 60 days, by June 30, 2010.

Many of the houses listed in the so-called "spring market" are still coming on the market even into May, so it won't be possible to wait until all the possible choices are available for viewing. Of course, if a buyer also has a house to sell, he or she should get started right away, since that could take up the intervening months. In addition, people should factor in extra time for mortgage approval, as we have been finding that the appraisal process in particular is taking far longer than it did before.

All of that leads to the conclusion that buyers who wish to take advantage of the tax credit cannot risk waiting until the spring rolls around. Since sellers certainly need to start soon, that argues for a busier winter than we're used to having. Don't forget that, although the holidays are busy and it's difficult to schedule showings, many homes look their best when decorated. In addition, the snowiest and iciest months are later in the winter, so now is better from that angle. It's also good to remember that it can pay to list when there isn't much around to compete. Once others realize that time is of the essence, you can already be negotiating your sale and moving on to a new purchase.