Wait, I can't take your money!

Frustration abounds in mortgage world these days. Closing times are longer, and more regulated wait times will be implemented in the next 60 days. Here’s a particularly sensitive spot that’s been a recent issue.

The Mortgage Disclosure Information Act went into effect in 2009. Its purpose was to protect the mortgage consumer in four areas: Collection of up-front fees, formal definition of “business day”, timing of disclosures, and APR changes.

Consumers cannot be charged anything more than a credit report fee when they inquire about a home loan. Proper formal disclosures must be made to the consumer, with the appropriate wait period, after an actual application has been submitted (and no fees may be collected during this time). Final loan closing is subject to the APR being substantially the same as at initial disclosure, or more wait times apply.

What this means in real life is that you may want a 30-day closing period, but there are mandatory federal wait times in play for your loan originator. As a practical matter, if your Realtor gets the contract to your lender on day three (allowing time for seller and buyer to sign everything), and you meet with your lender two days later (allowing you to gather your documentation), we’re already five days into your escrow.

Once the formal loan application package is submitted, then the formal fee and APR disclosures must be generated (another day or two), and a three-day mandatory wait time applies to give you time to review the figures.

Now we’re at least nine days in – and finally, you can pay to order your appraisal report. This time of year is vacation time, and with our limited supply of talented professionals for appraisal service, turn times for appraisal reports are longer.

Don’t forget that once the appraisal is received, there’s more fun to be had. Not only does your underwriter get to make a manual review, at least two automated quality control checks are needed. If the report scores as risky for either the automated value or Fannie Mae’s Collateral Underwriter, additional time is needed to contact the appraiser and see what can be done to resolve the issue.

Did all the above go as smooth as silk? If your loan doc APR is higher than your initial APR (meaning the rate or fees are higher than what you were promised), then another disclose-and-wait period applies.

Even for the most conscientious and seasoned loan professionals, it’s a minefield of federal regulations. Coming in October, there’s another set of disclosures that mean a mandatory three-day wait period at the end of your escrow. Encourage your Realtor to be in touch with your lender to determine a realistic time frame to close your escrow. Allow some breathing room and you can still have a happy home buying experience.