LESS PAPERWORK WHEN BUYING A HOME? Stay Tuned!
PROPOSED REVISED FORM WOULD MAKE LOAN TERMS EASIER TO UNDERSTAND, BEFORE YOU SIGN!
If you've ever purchased a home, you know that you often have to use the ink in more than one pen, and exercise your wrists to build strength for the task. The mountain of required paperwork is ENORMOUS!
Well, a new proposal from The Department of Housing and Urban Development (HUD) wouldn't necessarily reduce the number of pages you need to review and sign - but it would make your loan terms far easier to comprehend, far in advance of your home closing.
For many years, all lenders have been required to provide prospective buyers with a Good Faith Estimate of Closing Costs - and send this document for borrower review immediately after the loan application is taken. Borrowers, for a long time, have complained that charges are not clearly spelled out, are too vague, and vary widely once they get to the closing table.
The new GFE would use a simpler yes/no format to define whether the loan had a balloon payment, or whether it was fixed-rate or adjustable. It would also group all closing fees into one of three categories - those that can change at closing by a large amount, those expected to vary no more than ten percent, and those charges that will not increase.
Here, in Chicago, many of our clients often complain at closing that their previiously-provided Good Faith Estimate Forms from their lenders are way off at closing. Some even weren't sure of their locked loan rate, or even whether the loan terms were fixed or adjustable. These facts are all certainly provided - but far harder to spot - in the form currently used.
Many facing foreclosure or short sale felt the original loan terms were not clearly and completely communicated to them up-front by the Lender's Representative.
HUD spokesman Brian Sullivan feels the changes are long due! Reforms were proposed six years ago, and before - but the forms involved for purchasing real estate have largely been the same for 34 years, when the original Real Estate Settlement and Procedures Act (RESPA) took effect.
Sullivan is hoping for quick approval of the new procedures by Congress, The Bush Administration, and the Mortgage Loan Industry - he fears a new presidential adminstration taking office next year might suggest long delays and revisions.
See Mary Umberger's column in last Sunday's Chicago Tribune for more information.
DEAN MOSS & DEAN'S TEAM CHICAGO
