• Ask about our bank statement program which eliminates the use of tax returns and we just use the deposits in your bank account to calculate income.
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Credit Score Tips

Credit Score Tips

When you apply for a home mortgage, your credit scores will be one of the most significant factors that will influence the interest rate and loan terms that you receive. Your scores can also have a direct impact on whether you are approved for your mortgage or if your request is denied. Some people believe that only those with very serious credit issues will have lower scores, but there are actually a number of factors that can influence your scores.

A Single Late Payment Can Have a Dramatic Impact on Your Score
Your credit scores are often more significantly impacted by a recent late payment rather than by multiple late payments that are several years old. More than that, if you had a higher credit rating before the recent late payment, your score may decrease more dramatically than those who had a lower rating to start with. For example, if you had a 780 FICO score and you just had a 30-day late payment on a mortgage reported, your score may decrease by approximately 100 points. On the other hand, if you had 680 FICO score, that same 30-day late payment would only drop your score by 60 to 80 points.

Before You Apply for a Mortgage
Your credit rating is integral to your qualification of a mortgage as well as the terms that you will receive. With this in mind, before you apply for a mortgage, you should consider pulling a copy of your credit report and reviewing the information being reported. If any information is not accurate, you can contact the bureaus to correct the information. If you have a recent late payment, it may be worthwhile in some cases to delay applying for a mortgage for several months so that can improve your scores. In addition, during the loan process, take every step possible to pay your bills on time during the loan process. Many lenders will pull a final credit report a few days before closing to ensure that your rating has not changed.

Credit ratings can be confusing to understand because so many factors are reviewed and analyzed. Keeping your rating in good standing is ideal, but if you do have delinquencies or other types of derogatory credit information, taking time to re-establish your credit rating can be beneficial for you. MortgageDepot.com can provide you with more insight about your current scores and steps you can take to improve your rating.

To consult about credit scores or to see how much you can qualify for with your current situation, call us and we’ll connect you to one of our loan consultants at 800-535-0270

Condo Limited Review – 90% LTV

Condo Limited Review – 90% LTV

A condo can provide you with an affordable, convenient housing option, but financing a condo can seem challenging. You may have your eye on a new condo you would like to purchase, or you may be interested in refinancing a property that you already own. Many lenders have numerous requirements for condo financing that can make your property ineligible for some of the programs. While finding the right financing solution for condo projects can seem overwhelming and stressful, MortgageDepot is the New York mortgage broker you can trust to help you set up the financing you need. We currently offer a limited review program for condo projects that may be suitable for your needs.

What Is the Limited Review Program?

The limited review program for condo projects is suitable for condo purchases where the borrower intends to occupy the property as his or her primary residence. You can borrow up to 90 percent loan-to-value, and many condo buyers are interested in this program because of the loan down payment requirement. This program is designed for existing condo projects rather than new construction properties. There are special rules in place for the program that must be met. For example, the commercial space in the condo property cannot account for more than 20 percent of the total square footage in the building, and no single entity can own more than 10 percent of all of the condo units. These are just a few of the requirements that must be met in order to qualify for this program.

To Get Pre-Qualified

A limited review program provides you with a faster, easier way to get approved for a condo loan, and you may not need to provide as much documentation to the lender for underwriting. However, there are some rules and requirements that must be met in order for you to apply for this streamlined condo financing program. If you are looking for the right condo program to apply for, a great idea is to contact MortgageDepot to get pre-qualified. You can complete a short inquiry online or over the phone with one of our friendly representatives. By doing so, we can help you to determine if this program is ideal for you or if you would qualify for one of our other condo financing programs.

We are committed to helping you achieve your financing goals. If you need condo financing or financing on another property type, contact Cgap Inc., today.

To contact us by phone call 800-535-0270.

Financing Updates

Financing Updates

Whether you are thinking about applying for a new mortgage to purchase a home or you have plans to refinance your home, you may be wondering if Fannie Mae loans are right for you. These are a unique type of financing option that is known for having competitive interest rates and great loan terms, but some of the rules and requirements for Fannie Mae financing has been rather restrictive. The good news for homeowners and home buyers is that some recent updates to these programs have made the programs more attractive and beneficial than they were in the past. At MortgageDepot.com, we are a New York mortgage broker that specializes in helping our clients achieve financing goals, and we can help you to learn more about the updates.

If you have plans to refinance an existing mortgage, you may be pleased to learn that you no longer will be required to close accounts that you pay off with your home equity. In addition, there are standard reserve requirements for a conversion of your principal residence.

For purchase loans, you can now use stocks, bonds and mutual funds as a source of liquid assets for the down payment or closing costs. There is also more flexibility with regards to unreimbursed business expenses and how they are calculated for underwriting qualification.

Each of these rules has made the Fannie Mae programs rather undesirable for some borrowers in the past. In some cases, they have made some borrowers ineligible for the programs. These revisions may have beneficial impacts on your loan request, and you may learn more about special rules regarding the program when you contact MortgageDepot.com for assistance.

Whether you choose to apply for a mortgage loans or you are still trying to decide which loan program to apply for, you can speak with our loan specialists for personalized assistance. We can learn more about your unique financing needs and goals, and we can help you to determine if our streamline program or another program is best for you. We can also walk you through the pre-qualification process so that you can learn more specifically about the loan amount and terms that you may qualify for. Call us today, If you are ready to learn more about our niche mortgages and other financing solutions we offer.

HomeStyle Renovation Loans

Renovation loans expand a consumers power to own a home that best suits their ideas at an affordable price.
• Allows a borrower to obtain a more favorably priced property in a prime location.
• Widens the borrower’s options by allowing the borrower to focus on a more limited set of parameters.
• The expanded search results allow the borrower to choose the most prime location possible while addressing deficiencies with the property.
• Increase square footage
• Add new bedrooms and baths
• Renovate kitchens and existing bathrooms.
• Update floor plan to create an open concept.
• Create additional living space by finishing basements.
• Eliminate the need to move if the borrowers current home is in a prime location.

Renovation lending will open new doors within the market and allow you to strengthen your existing relationships.
• Convert more opportunities by eliminating the possibility of losing loans due to deficiencies with the subject property.
• Create more dynamic relationships with realtors by becoming the resource that allows them to sell any home in their inventory.
Augment your current position in the market by capitalizing on the effects of renovation lending and your improved relationships.
• Revitalize communities by renovating homes
• Transform Foreclosure / REO homes
• Expand virtually any borrowers ability to procure their ideal home in their ideal location.

The HomeStyle Renovation loan is a single close mortgage that allows a borrower to either purchase a property or refinance an existing property and also include the cost of making renovations to the property.
• The borrower has one permanent loan with no need for conversion.
• The HomeStyle is a Fannie Mae conventional loan product that bridges gaps to new audiences outside of the traditional 203(k) audience.

HomeStyle Renovation Loan
HomeStyle loans are designed to handle major home transformations, minor remodels, and everything in-between.
• Conversion to or from a single family home
• Additions
• Installation of pools and spas
• Landscaping/hardscaping projects

FHA 203(k)
• 203(k) loans are versatile, the ability to use FHA manual underwriting guidelines allows greater flexibility.
• K’s are also subject to the FHA programs mandatory MIP.
Luxury Items
Pool repairs in excess of $1,500
Exterior kitchens

Major structural alterations/additions (room/garage additions, finish attics/basements, repair of termite damage).
• Tearing down a structure and rebuilding on existing foundation or part of the existing foundation
• Changes to improve function/modernization (bath/kitchen remodel)
• Converting single family to multi-family dwelling or from a multi-family to single family
• Repair/replacement/upgrade of plumbing, heating, air conditioning and electrical systems,
• Repair/replace flooring, appliances,
• Window and door replacement,
• Interior/exterior painting,
• Weatherization including storm windows/doors, insulation, weather stripping,
• Major landscaping that adds permanent value to the property and/or corrects any fire, health or safety issue,
• Repair/replace roofing, gutters and down spouts,
• Installation of new well and/or septic system
• Enhancing accessibility for a disabled person
• Well/septic repair/replacement work.

With a Consultant
HomeStyle loans are designed to handle major home transformations, minor remodels, and everything in-between.
• Conversion to or from a single family home
• Additions
• Installation of pools and spas
• All landscaping /hardscaping projects

Without a Consultant
• Streamlines are intended for more simple renovation plans and do not require the use of a HUD Consultant.
• Streamlines have a maximum total repair escrow amount of $15,000 and have a larger list of impermissible repairs such as:
Structural repairs or additions
Major landscaping improvements
Architectural plans and/or exhibits

Two Halves of the Same Coin
While there are important differences between the Full and Streamline K the programs are built from the same base and are the same in many instances
• General eligibility requirements
• Credit Qualification
• Age of Documentation
• Appraisal Requirements

Eligible Properties
• Single Family Residences
• 2 – 4 Unit
• PUDs
• Established Warrantable Condos
• With more than 5 units.

Ineligible Properties
• New Construction without CO issued
• Properties not completed
• Properties that need to be entirely demolished.
• Condemned properties
• Coops
• Modular Homes
• Manufactured / Mobile Homes
• Condo Hotels
• Unique Properties
• Farms, Orchards, and Ranches
• Commercial Property

The appraiser provides the appraisal report, which must include all details of the renovation plan.
The contractor provides the Bid, which details all of the work to be performed, and then executes the renovation plan post closing.
The Consultant provides the Specification of Repairs report.

The appraiser provides the appraisal report, which must include all details of the renovation plan.
A HomeStyle appraisal is a conventional appraisal which indicates the value of the subject property ‘subject to’ the completion of the renovation plan.
All HomeStyle appraisals reflect the value of the property after the completion of the planned renovations only.
The appraiser must indicate if the utilities were on or off at the time of the appraisal.
Purchases
• The value indicated by the report is the value of the property after making all of the planned renovations.
• The effective value of this transaction will be the lesser of the After Improvement Value or total acquisition cost of the property (Purchase Price + Total Cost of Repairs).
Refinances
• The value indicated by the report is the value of the property after making all of the planned renovations.
• The After Improvement value is the only property value considered in a HomeStyle Refinance.

The appraiser provides the appraisal report, which must include all details of the renovation plan.

The contractor provides the Bid, which details all of the work to be performed, and then executes the renovation plan post closing.
• MortgageDepot.com will work directly with one contractor who will be the General Contractor in charge of the execution of the entire renovation plan.
• Subcontractors may be used, but are managed by the General Contractor.
• There GC must provide a complete written bid inclusive of all work required to complete the bid, including all work to be completed by subcontractors.
• The General Contractor must be sufficiently licensed and insured in accordance with all applicable standards set the be the state and local government where the subject property is located.
• MortgageDepot.com does not allow the homeowner to participate in the renovation of the subject property, this includes purchasing materials that will be used to complete work listed on the bid.

The contractor provides the Bid, which details all of the work to be performed, and then executes the renovation plan post closing.
Bids are required when the Contractor has not:
• Initialed each page of the SOR
• Sign and date the last page of the consultant’s report
• Provide a Bid Sheet

The Consultant provides the Specification of Repairs report.
• A HUD Consultant is required for any HomeStyle loan with a total renovation budget equal to or greater than $15,000.
• The consultant provides the borrower with a Specification of Repairs (SOR) that outlines all of the planned renovation to subject property, the total estimated cost of the repairs, and the number of draws required.
• The SOR also identifies all required repairs in addition to the borrowers requested renovations.
• The Consultant also makes inspections of the work prior to each draw during the construction period.

The Consultant may also provide a Preliminary Feasibility Analysis Report
• The Feasibility Analysis Report is shorter than the SOR, this report:
• Indicates the cost of the repairs required to make the subject property meet minimum standards for health and safety.
• Costs less than the standard SOR, the typical fee for this report is $250 – $350.
• This report may be used as a tool to help home buyers negotiate the sales price by demonstrating the scope of work necessary to bring the home up to livable standards.

The Consultant provides the Specification of Repairs report.
• The HUD Consultant provides a layer of insulation for both the borrower and the lender.
• The up-front fee charged by the Consultant is an APR fee and must be disclosed on your initial Good Faith Estimate.
• The Consultant is also subject to an Identity of Interest agreement and must not present a conflict of interest.
Consultant Fees
Renovation Cost Fee
$5,000 – $7,500 $400
$7,501 – $15,000 $500
$15,001 – $30,000 $600
$30,001 – $50,000 $700
$50,001 – $75,000 $800
$75,001 – $100,000 $900
$100,001 and up $1,000

Total amount of repairs from the contractors bid
• The entire contingency reserve
• Draw Inspection Fees
• Up to 6 Months mortgage payments (if the home is uninhabitable during the renovation)
• Title updates
• Consultant, architectural, or engineering fees when applicable
• Permits
Note Regarding The Contingency Reserve The Contingency Reserve is required, and depending upon the Consultant’s recommendation will be between 10% – 20%
Note Regarding Financed Mortgage Payments The Consultant will determine if the property will be uninhabitable and the duration it would be uninhabitable during the renovation.

Please provide the following documents in addition to the standard docs required for conventional fixed Fannie Mae loan.

HomeStyle Contractors Acknowledgement
• HomeStyle Contractor Profile
• HomeStyle Consumer Tips
• HomeStyle Construction Contract
• HomeStyle Renovation Maximum Mortgage Worksheet
• HomeStyle Renovation Mortgage Payment Disclosure
With Consultant:
• Specification of Repairs (SOR), aka Work Write Up
• Contractor’s Bid (conditionally)
Without a Consultant:
• Contractor Bid(s)
• Required if the contractor did not initial all pages of, as well as sign and date the last page of the consultant’s SOR and provide a Bid Sheet.

Begin at the Beginning
Qualify the borrower and assemble a credit
package with all standard docs required by DU.
Renovation Preparation
• Do you have a reasonable expectation of the
property’s value?
• Has the borrower selected a consultant and has
the consultant made the initial inspection?
• Has the borrower selected a contractor? Has
the contractor submitted a bid or bid sheet?
• Have you collected all of the required 203(k)
forms and disclosures?
The Appraisal
Make sure the Specification of Repairs
(Consultant’s report) is provided to your AMC prior
to the appraisal inspection.
Don’t Cut Corners
Moving forward without answering fundamental
questions will negatively impact the file.
Taking the time to collect a complete package will
provide your borrower with the smoothest
possible experience.

The Renovation Concierge desk acts as the administrator during the construction period.
All loan level fees are paid – all fees for renovation work will be placed into escrow.
Our lender acts as the administrator during the construction period
• All draws to the contractor take place after an inspection by the consultant, the contractor is only paid for work as it completed.
• Instruct the borrower, contractor, and consultant to contact us directly with all issues and requests:
• Compliance Inspection Reports
• Draws
• Change orders
• Final Inspections
• All work must begin within 30 days of funding
• The borrower is responsible for making all fully amortized payments after closing
• All draws are subject to a 10% hold back
• The sum of the holdbacks is paid with the final draw

HomeStyle Renovation Lending Snapshot
HomeStyle W/ Consultant HomeStyle W/O Consultant
Type of construction allowed? Using a consultant will allow the borrower to take on large scale projects that include structural changes and additions.
Simple renovations- updating kitchen and bathrooms are allowable. Structural repairs and conversions are not permitted.
Is there a minimum / maximum repair amount?
There is no true minimum amount to finance. The maximum amount that can be financed for repairs is 50% of the After Improvement Value .
There is no minimum amount to finance, however the total amount financed may not exceed $15,000.
Is a HUD consultant required? Yes No
Is it possible to escrow Mortgage Payments?
Yes, however the Consultant determines if the property is uninhabitable and amount of time the property would be uninhabitable.
No Number of Draws allowed? The maximum number of draws permitted is 5.
The maximum number of draws permitted is 1.
Is there an initial draw to the contractor?
No!The contractor is only paid for work that has been completed.
No, the contractor will be paid after all work is completed and a passing final inspection is provided by the appraiser.
How much time is allowed for the completion of the renovation?
The contractor will be allowed 6 months from the date of funding to complete all renovation work.

Contact us at (800) 535-0270 for a FREE consultation or email us here.

What Real Estate Agents Need to Know

What Real Estate Agents Need to Know

October 3rd, 2015 the CFPB is implementing the new TRID disclosure which technically eliminates the Good Faith Estimate and the HUD1. This is good news for the mortgage broker community because the lender paid compensation will not be disclosed on the HUD1 because there won’t be a HUD1, below are some of the things to keep in mind, go ahead and educate yourselves.

•TILA RESPA Integrated Disclosure rule or TRID is far more than new set of mortgage disclosures
•Ushers in new responsibilities for lenders, real estate agents, title and other service providers, buyers, and sellers
•Creates new liability and enforcement risks for lenders and investors in mortgages
•Challenges include major systems and business process changes, training and monitoring to operationalize rule and serve consumers
•Post-October 3, real estate transaction timelines will change and greater care will be necessary to manage consumer expectations and ensure deals close

TRID: What it Does

TRID Rule:
• Combines TILA and RESPA disclosures
• Establishes new 3 page Loan Estimate (LE) as early disclosure at application – replaces GFE and early TIL
• Establishes new 5-page Closing Disclosure (CD) as disclosure at consummation – replaces final TIL and HUD-1.
• Provides new information relevant to consumers including cash to close
• Marks end of the GFE and HUD-1 for most loans
• Establishes pre-application requirements but still allows pre-approvals
• Establishes new definition of “application“ for consumer to obtain LE
• Prohibits upfront fees for loan estimates except for fees for credit reports

TRID: What it Means for You

• TRID Rule brings significant changes to the real estate transaction:
• Longer time frame from application to closing
• 3 days to provide loan estimate
• 7 days between estimate and closing
• 3-day waiting period between Closing Disclosure and consummation
• 3 more days (Mail box rule) for disclosures not provided in person
• Additional 3 day waiting period for certain APR and product changes
• Tighter tolerances for lender, affiliate and required provider fees on Loan Estimates except where changed circumstances and revisions to Loan Estimate or Closing Disclosure
• Because lenders are ultimately liable for the LE and borrower’s Closing Disclosure – no matter who provides them – you can expect lenders will demand accurate and timely information from other providers.
• Inaccurate and late data will jeopardize closings.

All of these changes require business process and systems changes to ensure satisfactory consumer experience.

Scope of the New Disclosures

Applies to most closed-end consumer credit transactions secured by real property
Excludes:
• Open-end credit (i.e., HELOCs)
• Reverse mortgages
• Mortgages secured by a dwelling that is not real property (e.g., mobile home, house boat).
• Lenders who made 5 or fewer mortgage loans in the preceding calendar year (unless made more than one HOEPA loan in any 12-month period). Loans not covered by the rule are still covered by the current disclosure requirements.
• Final rule updates GFE and HUD-1 instructions to incorporate the guidance in the HUD FAQs on reverse mortgages
Effective Date
Final Rule is effective October 3, 2015
Applies to applications received by a creditor or mortgage broker on or after October 3, 2015
• Except for pre-disclosure restrictions and state preemption/exemption provisions which become effective on October 3, 2015, without respect to application date, Early use of the integrated disclosures is not permitted Application and closing disclosures go together
Examples:
• If application received on October 2, 2015, provide:
• Early TIL and GFE
• Final TIL and HUD-1
• If application received on or after October 3, 2015, for most loans, provide:
• Loan estimate
• Closing Disclosure

When Does Loan Estimate Need to Be Provided?

• Loan Estimate (LE) must be delivered or mailed to consumer no later than three business days after application
• Application for LE requires from the consumer:
1. Name
2. Income
3. Social Security Number
4. Property address
5. Estimate of the value of the property
6. Mortgage loan amount sought
• If LE is mailed, rule assumes it is not received until 3 days after mailing date
• To lessen processing time some lenders will deliver in person or require receipt

A Note on Pre-Approvals

• Despite earlier questions, pre-approvals and pre-qualifications to help borrowers shop for real estate remain permitted under the TRID rule.
• Under the rule, a lender cannot require verifying documentation such as wage or tax information from the consumer in order to issue the LE.
• However, a consumer can voluntarily provide such information to obtain a pre-approval or pre-qualification.
• The six pieces of information that trigger the issuance of an LE, including specific property address, are generally not required at the pre-qualification or pre-approval stage. If they are provided, a Loan Estimate must be given to the borrower.

What’s On the Loan Estimate?

The LE is a dynamic form (changes with loan type). It generally contains:
• First page – “Shopping Form” includes: (1) information identifying borrower and loan; (2) loan terms –amount, interest rate and Monthly P & I and prepayment penalties and balloon payments, if any; (3) projected monthly P + I + escrow payments showing any increases over loan; and (4) estimated total closing costs and cash to close.
• Second page includes: (1) origination charges(lender/broker); (2) services borrower cannot shop for, e.g. appraisal; (3) services borrower can shop for, e.g., title; (4) other costs, such as, taxes, prepaid, escrow amounts; (5) total closing costs and lender credits; (6) cash to close and where applicable, adjustable payment (AP) and adjustable interest rate (AIR) table.
• Third page – series of additional disclosures regarding: total payments over five years; APR; a new disclosure, Total Interest Payment (TIP); appraisal availability to the borrower, whether the loan is assumable, requirement for homeowner’s insurance; late payment policies; refinancing not guaranteed, and the possibility of servicing transfer.

Key Issue – New Tolerances Limiting Variation from Loan Estimate  to Closing Disclosure

• Final rule tightens tolerances restricting increases from LE to CD. Rule:
• Applies “zero tolerance” or prohibits any increases in:
• Lender or broker charges
• Fees charged by affiliate of the creditor (NEW)
• Fees charged by service providers selected by the creditor for services for which consumer is not permitted to shop (i.e., where consumer must select from list of providers furnished by lender) (NEW)
• Transfer Taxes
• Applies ten percent limit overall to other third-party charges, such as non-affiliated title. There are limited exceptions to tolerances, including:
• consumer requested a change,
• consumer requests service provider not identified by the lender,
• when information provided at application was or becomes inaccurate,
• the Loan Estimate expires or other valid changes in circumstance occur.
• Not subject to tolerance – impounds, escrows, hazard insurance but good faith or best information standard applies

Revised Loan Estimate – Changed Circumstances

To revise Loan Estimate and impose increased charges creditor must provide a revised version of Loan Estimate within three business days of receiving information sufficient to establish that permitted basis for change applies. Permitted changed
circumstances include:
A. Changed Circumstances Affecting Settlement Charges
1. An “extraordinary” event outside the control of an interested party or an “unexpected” event.
2. Information Creditor relied on is inaccurate or changes.
3. New information Creditor discovers after disclosure not relied on.
B. Changed Circumstances Affecting Eligibility
• Changes to the transaction that cause fees to increase related to eligibility – Income decreases, Employment changes, Appraisals

C. Consumer Requested Changes
D. Interest Rate Dependent Changes – Float to Lock and Extensions
E. Expiration – Consumer’s Intent to Proceed not given within 10 Business Days after disclosures DELIVERED OR PLACED IN MAIL.
F. Delayed Settlement on a Construction Loan – When Settlement will occur more than 60 days after initial disclosure, stated on Initial LE, and re-disclosure occurs at least 60 days before settlement.

Who Provides and When Is CD Provided?

• The rule makes lenders responsible for delivering CD to the consumer, but the lender may use settlement agent to provide form, with lender retaining liability.
• CD must be received by consumer no later than three business days before loan consummation (closing)
• Business days for this purpose (specific definition):
• Include Saturdays
• Excludes Sunday and legal public holidays
• List of Holidays specified in 5 U.S.C. 6103(a): New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day

How to Count the Three Days

For a closing scheduled for Thursday:
• Hand deliver on Monday with confirming receipt
• Courier/Fed Ex with signed receipt showing delivery to consumer on Monday
• Place in US Mail Thursday of the previous week Electronic documents
• Same timing/evidence of receipt rules above
• If disclosures are to be provided electronically, the consumer must meet E-sign requirements:
• Consent by consumer before docs sent
• Notice of right to get disclosures in paper
• Notice of software compatibility information
• Notice of procedures to withdraw consent

Extra 3 Day Waiting Period After Providing Closing Disclosure?

• The rule requires the creditor to provide the Closing Disclosure to the borrower at least three business days before the consumer closes on loan.
• If the borrower or creditor makes certain changes between time Closing Disclosure form is provided and closing, a new CD must be generated and an additional three-business-days after receipt of the new form before closing. The following changes require re-disclosure:
• (1) the creditor makes changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods);
• (2) changes loan product; or
• (3) addition of prepayment penalty to the loan
• Less significant changes can be disclosed without an additional 3 day period. Note that the final rule is an improvement over the proposal that would have required re-disclosure for nearly all changes.

What’s On the Closing Disclosure (CD)?

Five-page form designed to be comparable to LE – First page essentially same as first page of Loan Estimate and contains: (1) information identifying borrower and loan; (2) loan terms –amount, interest rate and Monthly P & I and prepayment penalties and balloon payments, if any; (3) projected monthly P & I & escrow payments showing any increases over loan; and (4) estimated total closing costs and cash to close.
• Second page details closing costs and cash to close includes: (1) origination charges(lender/broker); (2) services borrower cannot shop for, e.g. appraisal; (3) services borrower can shop for, e.g., title; (4) other costs, such as, taxes, prepaid, escrow
amounts; (5) total closing costs and lender credits; (6) cash to close and where applicable, adjustable payment (AP) and adjustable interest rate (AIR) table.

• Fourth and fifth pages include several disclosures including: (1) whether loan is assumable; (2) whether loan has demand feature; (3) requirement for homeowner’s insurance; (4) late payment policies; (5) refinancing cannot be guaranteed; (6) potential
for servicing transfer; (7) appraisal availability to borrower; (8) APR; (9) finance charge; amount financed; and (10) new disclosure of Total Interest Percentage (TIP) that includes total amount of interest paid over loan term as a percentage of loan amount.

Who Gives the Closing Disclosure?

Under Rule, creditor is responsible for
1. Producing the Closing Disclosure (CD) and ensure the accuracy of the information. [§ 1026.38(t).]
2. Ensuring the CD is received by the consumer at least 3 business days before Consummation. [§ 1026.19(f)(1)(ii).]
While a creditor can partner with the title/closing agent to perform these tasks, it is at lender’s discretion and the lender is ultimately responsible Some lenders are providing the CD with Title Agent’s input, others are instructing the Title Agent and allowing the agent to provide.

Rule Provides Seller Disclosure and Rules for Issuance

Rule provides Seller Only CD which can be used to provide to seller or third party to protect borrower privacy.
Seller Only forms delete from Closing Disclosure:
• Borrower’s information;
• Creditor’s name and loan information;
• Loan terms table;
• Projected payments table;
• Costs at closing table;
• Borrower’s table in Summaries of Transactions table;
• Loan calculations;
• Loan disclosures;
• Other disclosures; and
• Signature lines.

Liability

Under the rule, there is a significant liability for lenders and their assignees including new liabilities for the disclosures which did not previously exist.
• Violations of the rule carry penalties of up to $1 million per day.
• Consequently, it can be expected that lenders will take a conservative view of what is allowed under the rules.
• Lenders will not permit consumers to waive the timing requirements.
• Last-minute changes to the transaction should be avoided if at all possible because of liability concerns.
• To avoid delays that could be triggered by concerns regarding liability, real estate agents should remain in close contact with lenders and closing agents throughout the transaction process.

Takeaways

• Learn the features of the new forms including the “cash to close” chart on disclosures and be prepared to answer client questions;
• Learn the new time limits and do not over promise a quick closing. Loans and purchases can be expected to take 45 days to close, at least initially;
• Back-to-back closings will need to be carefully coordinated;
• Suggest clients accept disclosures in person or electronically, if possible;
• Urge clients to provide any documents needed for loan processing ASAP;
• Avoid last minute changes or negotiations;
• Advise clients to raise questions to the lender, request any changes to the loan and arrange walkthroughs earlier in the process, and before the Closing Disclosure is issued where possible;
• Write your purchase and sale contracts with these new timelines in mind.
• Communicate with your lender and title partners as needed during the transaction to help the process run as smoothly as possible.

We at MortgageDepot.com are always up to date with compliance and if you ever need to start a working relationship with one of our loan consultants, please contact us at 800-535-0270.

To Be Determined (TBD) Pre-Approval

Get Pre-Approved while you shop for a new home. Our wholesale lenders will allow us to issue a mortgage commitment subject to a contract of sale and appraisal on the property in question. This is good news for those buyers that want to know for sure that they will be able to obtain financing once they find their property. These Pr-Approvals are actually sent out to the lender for underwriting the loan subject to a contract of sale and the appraisal on the property. Normally a broker would issue on their letterhead a pre-approval which is really not looked at by a lender but rather the loan officer who makes a decision by looking at credit and income docs. We don’t even need the address of the property we can leave as To Be Determined TBD.

Submit for TBD

  • Complete Credit Package
  • Loan Application, Credit Report, Income and Assets

Submit when Contract Accepted

  • Loan Application with property address
  • All application disclosures
  • Purchase Contract and Title Report

TBD Pre-Approval gives our borrowers negotiating power in a competitive offer situation. TBD Pre-Approval gives your Realtor confidence they will be able to close on time.

Available on Conforming, Jumbo and Government Programs  – Pre-Approval valid for 90 days.

Contact us at (800) 535-0270 to get Pre-Approved the right way or email us here.

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