If you have not heard, the latest Dodd-Frank law will go into affect on August 1st. As with most new Dodd–Frank laws, the details are still being worked out. Right now, here are the sketchy details:
- Prior to loan docs being drawn, there will be an automatic 3 business day period where NOTHING will be happening. The docs will be ready to send to title, the buyer will be ready to sign, the lender will be ready, along with the buyers agent, to go to title to sign, and there we will all sit, waiting for the 3 days. If anything on the document that is replacing the HUD (yes, the HUD is going away on August 1st), changes during this period, a new 3 day waiting period begins.
- Lenders will no longer be able to get minimal information and then issue a pre-qualification letter. Prior to the letter being issued, buyers will be required to sign lender disclsoures and provide additional information.
- Along with the HUD, the Truth in Lending is going away. They are being replaced, but with totally different docs. The opinion of one lender is that the HUD is vastly improved, but the Truth in Lending? Not so much.
So, what’s the lesson in all of this? First of all, I know there are many more details I am not yet aware of that are coming. Secondly, it is a time to start setting expectations. This may mean more time in escrow. It will certainly mean buyers agents should advise their clients to work with a lender earlier so when the Pre-Qual or Pre-Approval are needed, they can be provided. All will be well if we can let our clients know what may happen.