I took a wonderful class last week presented by First Interstate Bank and Wyoming Title and Escrow, regarding the HUD and Good Faith Estimate changes that took place at the first of the year.  There are still quite a few questions that need answers . . . answers that only time will provide.  One thing is for sure; this is going to change our transactions.

Of the many new changes this year; one of the major changes with the new HUD is that all fees must be listed within 3 days of loan approval.  For example, any appraisal fees, lender required inspection fees, even the title insurance policy.  In Idaho it is typical for a Seller to pay this fee, but the new HUD must have it shown on the buyer’s side; meaning that it will show as both a credit and debit for a buyer at closing.  It is feared that changes like the latter will lead to confusion . . . the exact opposite of the desired changes in the HUD.

For many fees listed on the Settlement Statement, there are zero tolerances, which means a bank or lender will have to eat that cost if they are exceeded and for the rest, there are percentage limitations.  For each change, a new Settlement Statement must be issued, and accepted by the purchaser, with a 3 day wait period (exclusive of Sunday).

What is the bottom line for Buyers and Sellers?  Timing.  With the new HUD law changes and the implementation last year of the HVCC (Home Valuation Code of Conduct) our closings will likely take 45 to 60 days at the soonest.  Why the changes in timing?  Basically, when a buyer applies for a loan a lender will have 3 days to provide a HUD.  The buyer will then have to accept that with a 3 day waiting period (an intent to proceed).  At that time all title work is ordered and the appraisal is ordered.  Appraisals are now taking longer due to HVCC.  At that time if there are any changes to the HUD, (for instance a change in interest rate, or sales price after inspection) a new one is prepared and must go through the 3 day waiting period.

As you can tell, the process is complicated, and lenders themselves are still getting a grasp on the changes.  Does this mean it isn’t worth it to try and purchase now?  No!  With the $8,000.00 first time buyer tax credit (and the $6,500.00 tax credit for previous owners) coupled with low interest rates and great prices, now is still a good time to buy.

Please feel free to call or email me with any other questions you might have, I would be happy to speak with you or provide contact information to local lenders or title companies to answer specific questions.