Coastal Real Estate and Lifestyles

Let me start by saying, I know this is a dry subject, but if you’re in the market, you want to know this stuff.  So grab a coffee or glass of wine and read it, including the good linked articles…

Getting a loan in the current economic environment.   If you plan to borrow any money from a lender to complete your purchase, you will quickly realize that it is not the same loan process of a year or two ago.  A few consideration points…

1)  Will you use a mortgage broker, direct lender, mortgage banker?  They’re the money person who will play an integral part in getting your escrow to a successful close, not to mention determining your monthly payment.  What are the differences and how will those differences affect what is best for you?  Ask questions until you feel comfortable.

Mortgage broker - A mortgage broker works with many lenders, perhaps hundreds, to locate the best loan product for your needs.  Some may favor certain lenders; you can ask why if they say they mostly work with one or two.

Direct lender - some borrowers go directly to the bank they currently do business with as a starting point.

Mortgage banker - A mortgage banker accesses only that lender’s portfolio of programs.

Two important changes related to the getting a loan took affect this year:

1)  Mortgage Disclosure Improvement Act of 2008 (MDIA) as part of the Housing and Economic Recovery Act (HERA) took effect on July 30, 2009.  In a nutshell:

• Timely delivery of the Good Faith Estimate (GFE) following loan application.
• Mandatory three day review period for loan documents.
• New disclosures required if your interest rate changes (not sure how much it has to change).
• Rate locks can be extended up to 3 weeks, down from 4 weeks.
• The cost of a one week rate lock extension is one-quarter of a percentage point of the loan amount.
• Another 3-day waiting period may be required during escrow if the annual percentage rate (APR) on the loan increases by at least an eighth of a percentage point.

Our local in-house lender, Susan O’Driscoll provided this PDF handout:  MDIA Information Sheet

New York Times 8/16/09:  New Law May Cause Delays for Borrowers 

2) Home Valuation Code of Conduct (HVCC) took effect May 1, 2009. (i.e. the new appraisal process)

• The code does not require or prohibit use of foreclosure data as comps.
• A lender may order appraisals directly from an appraiser.
• A lender may not accept an appraisal prepared by an appraiser that was ordered by a Mortgage Broker.
• The borrower may not pay the appraiser directly for the appraisal.
• The lender must provide the copy promptly upon completion of the appraisal, but no less than three business days prior to closing. (by “closing” they mean the signing of the loan docs).
• Appraisers and Realtors are able to communicate with each other; “Realtors can often be a source of data in the market in which the subject property is located. ” quoted from Fannie Mae 2009 HVCC FAQ July 2009 (link below).

Local market side note - the appraisal for a Montara property where I was representing the buyer came in over list price and over the offer price.  The lender was Wells Fargo; the appraiser they sent was from Fremont.  I provided him with not only local comps, but first hand information about the houses and locations.  He was planning to use a Clipper Ridge neighborhood house for this ocean view Montara house.  He seemed grateful for the local info… also called twice to get clarification on comps before finalizing the appraisal.

July 2009 update to HVCC FAQs.

Examiner.com 6/26/09:  Home Valuation Code of Conduct

The Big Picture 8/19/09:  Home Appraisal Reform:  WSJ vs NYT