San Diego Home Buyers and Sellers…. Be prepared for delays in closing your home sale.

Two new housing regulations are slowing the closing process. It used to be that we could close a real estate transaction in 30 days and often much faster if need be. But because of the new Truth in Lending guidelines and the debacle that is HVCC, this is rarely possible. It is important for consumers to understand the impact of this new legislation. So here’s the skinny on both:

1. Truth in Lending: The new guidelines are causing a full 7 day front end delay. Lenders are now required to send out the required good faith estimates (GFE) detailing loan costs in hard copy (in the mail!) after receiving the loan application (“early disclosure”). The date of receipt by the borrower is assumed to be 3 days after it’s been mailed. Then there’s a required review period of another 3 days. Over all this is an automatic delay of 7 days. In addition, if the APR increases or decreases by more than 0.125%, the GFE disclosure process starts over…. Now producing a very common 14 day or longer delay before docs can even begin to be drawn.

2. HVCC & AMCs: First expect delays due to scheduling of the appraisal. On conventional loans, the appraisal must be ordered through an Appraisal Management Company. The turnaround is much longer due to several reasons, including lengthened time to get the appraisal assignment accepted, out of area appraisers often being used and inexperienced appraisers due to much lower fees paid by the AMC (AMC typically keeps $200 of the $400 fee). In addition, if you decide to move to a different lender because you’ve found a better loan program, be prepared to wait for AND pay for a new appraisal as HVCC no longer allows the appraisal to be transferred from one lender to another.

San Diego Condo and Home buyers should be sure your agent is asking for longer escrow periods and attempting to avoid per diem fees from the seller. It is very possible it will take at least 37 days, and very likely longer, to close the transaction. Be prepared and know the consequences.

Tara Steinke

Agent / Appraiser

San Diego, CA

619-384-6014