On this crazy stormy day I attended a Real Estate Bar Association seminar in Marlborough, Massachusetts in the face of Tropical Storm Sandy... To my dismay I learned about the new HUD-GFE-TIL that may be rolling out in the near future and it sounds like a disaster. Suffice to say in a self-acknowledged futile attempt to explain what the APR is to the public, regulators will require the lender or settlement agent to provide a final HUD to the consumer three days before closing. No change in the HUD over $100 will be tolerated. If there is a change over $100 the figures must be re-disclosed with another 3 days period before closing. Get ready for major delays. As a settlement agent I can tell you that $100+ last minute changes are routine given the uncertainty of our closing dates, changes in Seller plans, availability of payoff, municipal credits/charges, last minute disclosures regarding adjustments for rented fixtures, rent, security deposits, oil, and walk through credits, costs can easily swing $100 one way or the other. To delay the closing three days for any of these issues can easily cost the Buyer many time that $100 that is causing the delay (just imagine an out of state Buyer finds they must stay in a hotel room for 3 business days to re-set the closing day) and now $101 costs the Buyer $600. . .
If regulators really want to help the public they should stop regulating the parts of the closing that were never broken. Title insurance and recording costs are what they are. Attorney fees have remained ridiculously low for all 17 years I have been in practice. I still charge $650 for a purchase, just like I did when I started. None of the vendor fees : title, mortgage plot plans, or overnight fees have changed in years. What has changed are the costs of delays to consumers as banks have become over regulated. The horse left the barn long ago. Slapping 10 locks on the barn door now is a waste of time. The abuses that we all witnessed with lenders charging outrageous fees, for outrageous no income, no doc loans based on outrageous valuations have ceased as of 2008. Four years later a major overhaul of the settlement statement and additional disclosures is of no real use. It will cost the vendors and lenders millions to comply with complete overhauls in procedures and software. Worse it will cost the consumers and lenders in penalties for not closing on time.
If regulators want to educate the consumer and give them real choices, they should re-vamp the TIL, make it easier to understand and call it the "Take this and compare the APR with 5 competitors form" and require lenders to provide it at closings for residential loans at the time of application. That is all that regulators need to do to have the greatest effect in consumer choice and education regarding fees. The APR should reflect the lender's fees only in order to provide clear choice and so as not to cause confusion as Lenders manipulate the proposed APR which would include vendor fees the latter of which by their very nature are not "knowable" until the Buyer is committed to complete the closing with their Lender. It is too late to switch Lenders 3 days before closing. . . so what are these regulators really trying to do here? They are trying to play "gotcha!" with the banks at the expense of the consumer!
I intend to post again with more data - just a rant for now . . . stay safe in this storm!!!!