On Friday, I received an alert from the California Association of Realtors indicating that the revisions proposed to truth in lending laws, also known as Reg. Z will be going into effect on July 30th. These rules have required that lenders disclose to buyers within a few days of application, the costs of their loans. For homeowners who are engaged in refinancing their loan, they had a three day right of recision.
The new rules, which apply to both purchases and refinances, require that lenders give early disclosures to buyers within three days of applying for a loan (not new news). Now, lenders can't charge any fees upfront (except for credit reports). On the backend, it adds a right of recision to purchases, and also requires that if the actual costs are more than 1/8th percent different, that a new truth in lending statement be issued towards the end of the deal. It adds time to the end of the transaction to give time for the consumer to decide if they want to proceed with the loan.
The good news is that Buyers and Homeowners (who are refinancing) will have good, accurate information and will be able to make informed choices. The interesting piece of this is that it may add time to the end of real estate transactions that was not anticipated earlier. I am wondering how this will fly with Sellers and Buyers anxious to finish the transaction. I can also imagine situartions where the consumer's decisions during the transaction will cause the actual costs to vary by more than 1/8th percent. For example, if the buyer decides to pay a point (one percent of the loan amount) in order to get a lower interest rate, that will change the truth in lending. Depending upon when they elect this choice, it could cause delays.
As I was looking for a good link to this new law, I found tons of commentary on the changes as they were proposed, and links that are not public. And, of course, I found someone on Facebook whose name is Regz....