3 Day Mandatory Buyer Review of Hud-1
Is this another way of slowing down our turnaround times? It is bad enough that the government enacted so many lending changes in the past few years, much too late to avoid the kinds of loan fraud which were prevalent in the mid 2000’s. Now they are continuing to find more red tape that slows down the lending process. They changed the good faith estimate, requiring that the lenders would have to eat any fees being over charged to the buyers at settlement. This was a novel idea which kept the predatory lenders from using bait and switch tactics to take advantage of consumers. They required licensing for individual loan officers, mandatory continuing education, testing, criminal background and credit checks. All of these have been effective in eliminating the less than desirable loan officers from continuing to originate loans. Why are they requiring a minimum of a 3 business day review of the HUD-1? As of August 1, 2015, there is a mandatory 3 business day review in which a buyer can cancel their contract to buy a home after receiving a copy of the HUD-1. This is an example of an overkill. Any discrepancies at closing fall within the 10% tolerance, meaning that the lender or loan officer will have to absorb any additional lender charges incurred by the buyer. Since the fees cannot be changed from what the borrower was shown at the time of application and/or within 3 business days from the date of application, there is no need to delay the closings an additional 3 business days. Many lenders take until the day of closing to do the final preparations of closing papers. They wire the monies needed, and email the papers to the title company within 24 hours of the closing. With these changes, they will have to have everything to the title company at least 4 business days before the closing so that the title company will have the time they need to complete the final HUD-1 and get it to the borrower. This is doing nothing to help anyone, because the culprits who changed the fees at closing are long gone, and only the remaining experienced and reputable loan officers remain. All this does is provide another reason why the government agencies are too late to act, and often overreact to problems. Tack on another 3 days to your real estate contracts!