Ouch! Where is the Money?

The mortgage industry is tightening up.  This is long over due but is adding a new twist to the real estate transaction.  It is taking longer for the mortgage companies to get home purchases funded.  As a result closings are some times delayed.

Recently a lender called me and told me it would take an additional ten days beyond the closing date to get final approval for a loan.  He was very casual about the whole date thing, and the legally binding contract thing too.   

We had a pre-approval letter from the buyer but they don’t seem to mean much these days.  When I represent the seller I call the lender who wrote the pre-approval letter.  They always say the same thing, that the buyer is outstanding and there won’t be any problems.  When there are problems the lender blames the buyer.

Ours is not the first closing to be delayed because of the financing.  It isn’t over until the fat lady sings.   We are all hoping to hear that singing soon . . .

Here are some new Minnesota laws that became effective on August 1, 2007:

Toughening mortgage broker regulations  A mortgage broker or lender will be prohibited from making or arranging a loan without verifying the borrower’s ability to pay back the money, according to a new law sponsored by Rep. Jim Davnie (DFLMpls) and Sen. Linda Higgins (DFL-Mpls). The law also prohibits the practice of "churning," whereby a lender arranges or provides a new loan to finance an existing loan when the new loan does not benefit the borrower. Another provision prohibits "negative amortization loans," or mortgage loans in which the amount owed on the loan can increase rather than decrease over time, except for an increase that takes place over a short period. HF1004*/SF809/CH18

Fighting mortgage fraud A new law prohibits a lender or mortgage broker from making or arranging a new mortgage loan to refinance a so-called "special mortgage" unless the borrower has received qualified mortgage counseling on whether the move is a good idea. Examples of special mortgages include one that a borrower obtained from a government or nonprofit entity and that contains favorable terms, such as payments that vary with income or that are forgivable. The law also bans prepayment penalties on subprime loans, and gives Minnesotans the right to sue mortgage lenders, brokers and servicers for violation of certain laws. Rep. Joe Mullery (DFL-Mpls) and Sen. Linda Higgins (DFL-Mpls) sponsor the law. HF931/SF988*/CH74

It might just be the rule verifying the borrowers ability to pay back the loan that is slowing us down, who knows.

Speaking of closings.  Edina Title rocks! Yup here you have it, a Keller Williams agent that highly recommends Edina Title.  Why?  Because they have experience, and their closing centers have enough people and enough depth so that if we throw them a curve, like a last minute change they can handle it.  They also understand customer service, they don’t brag about it,  instead they actually provide it. I think they should brag more, but they should keep providing it too.