Hill Slowinski • Real Estate: Blog: July 2009

To Discourage Rush Closings, Reduce Last Minute Rescues, and Cut Down Closing Table Changes

Both buyers and sellers need to be aware of the changes brought about by the HVCC (see article below) and the Housing and Economic Recovery Act (HERA), which goes into effect July 30, 2009.  HERA is intended to better inform the consumer, slow down the settlement process, and ensure more accuracy and transparency in the lending terms. 

HERA requires that a lender must provide two initial disclosures to the customer -- the Truth in Lending (TIL) statement and the Good Faith Estimate -- before the lender can collect any fee to process an application for a loan.  The lender can then collect the application fee, but he cannot order an appraisal before the fee is collected.  The customer must receive the disclosures from the lender at least seven business days before closing. 

Further, if the Annual Percentage Rate increases by more than 0.125% from that stated in the initial TIL statement, the customer must receive from the lender at least three business days before closing a Pre-Closing TIL statement, which is the final binding TIL statement.

It is wise to plan for at least a 30-day close. Here are 4 things you can do to help keep the process on track:

1. Obtain a credit-checked preapproval before you start to shop for a home. (Applying in person, instead of over the phone or Internet, may help expedite the process.)
2. Upfront and throughout the process, review the timeline and potential impacts with your home mortgage consultant so you can keep your REALTOR or Builder informed.
3. Review the initial disclosure packet you receive. It contains important details about your loan transaction.  Make sure to pose any questions to your home mortgage consultant.
4. Review the appraisal delivery disclosure and determine whether or not you wish to waive the 3 business-day prior-to-close review period.

Hill Slowinski, licensed in DC, MD, and VA

W.C. & A.N. Miller Realtors, A Long & Foster Company

4701 Sangamore Road,  Bethesda, Maryland  20816

Cell: 301-452-1409  Direct: 301-320-8430  Ofc: 301-229-4000

         Email: hslowinski@longandfoster.com or Hill@HillSlowinski.com

Available for ANY Home at ALL Income Levels

How do you buy a house in need of repair and finance the repairs all at the same time? 

Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made.  A high cost interim loan is often used to finance repairs or renovations. Now there is an alternative.

Now it is possible to for anyone to finance a new home purchase and needed renovations in one settlement transaction.  FHA 203K financing and renovation loans are designed with renovation in mind. They can be streamlined (under $35,000) or standard (over $35,000) and can be secured with one application, executed in one closing, and repaid with one monthly payment.  The benefits include:

• Great way to leverage financing of homes with potential
• Buyers can make progress where seller s (or banks for REO properties) cannot make repairs
• Buyers can create potential equity in promising properties                

The loans can provide up to 110% of home purchase price (up to the after-improvement appraisal value).  Examples of qualified improvements include:  roof, HVAC, plumbing fixtures, painting, new windows, disabled access, moving non-load-bearing walls, carpet, tiles, floors, waterproofing, septic system, wells, and lead paint stabilizing.  No major rehabilitation no new construction, no landscaping.

203K Streamlined Loan is a limited repair program - a cosmetic improvement based loan.  It applies to owner occupied purchase of 1-4 units only.  Total renovation amounts of up to $35,000 (including approximately $1500 of administrative costs) are available.  Renovations must enhance livability, health, and safety of the owner and can improve cost effective energy conservation.  No luxury items can be funded.  Renovations must meet HUD and FHA requirements.   No HUD consultant is required and there is no minimum repair amount.  Work must start within 30 days of closing

The 203K Standard Loan is available for work with a $5000 minimum and a total over $35,000.  This loan  allows structural changes and requires 10%-20% as a contingency reserve. HUD compliance is required and one Inspection must occur before withdrawals.  Properties must be at least one year old and have been completed all at one time, and not part of a stalled or incomplete development.  Work must begin within 30 days of settlement and be completed within 6 months.

Contact me for more information on the benefits and advantages this financing can provide. 

For more information, see: http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm

Hill Slowinski, serving clients in DC, MD, and VA

W.C. & A.N. Miller Realtors, A Long & Foster Company

4701 Sangamore Road,  Bethesda, Maryland  20816

Cell: 301-452-1409  Direct: 301-320-8430  Ofc: 301-229-4000

Email: hslowinski@longandfoster.com or Hill@HillSlowinski.com

What the Home Valuation Code of Conduct (HVCC) Means to You

Both sellers and buyers must be aware of the Home Valuation Code of Conduct (HVCC) legislation recently enacted in response to the mortgage crisis brought on by lenders who took unacceptable risks.  This is a legislative effort to create consistent business practices among lenders and to protect consumers.  There are new timeframes regarding appraisals and underwriting, and my efforts are to ensure my clients a smooth settlement in a complex process, as we can no longer expect expedited settlement or appraisal processing.

HVCC went into effect May 1, 2009.  The HVCC creates a firewall between lenders and appraisers and applies to Fannie Mae and Freddie Mac mortgages only.  HVCC requires appraisers to mail appraisals at least seven days before settlement and provide them for buyer review at least three days before closing.  If any financial adjustment to the sales contract is requested or expected by the buyer, e.g., following a home inspection or walk through, the appraisal must go back to the underwriter to determine if the adjustment affects the appraisal and affects the home's value.  

The coordination of timing between completion of the appraisal, approval of the appraisal and home valuation by underwriting, and removal of an appraisal or financing contingency must be carefully managed.  The timeframe to expect for a smooth transaction now is settlement 30-60 days after contract ratification.  These changes will slow the frequency of last minute closings and limit eleventh-hour rescues of deals.  Any late changes to sales contracts in the days just before settlement will affect appraisals and will result in delayed closings.

Hill Slowinski, licensed in DC, MD, and VA

W.C. & A.N. Miller Realtors, A Long & Foster Company

4701 Sangamore Road,  Bethesda, Maryland  20816

Cell: 301-452-1409  Direct: 301-320-8430  Ofc: 301-229-4000

         Email: hslowinski@longandfoster.com or Hill@HillSlowinski.com