Taking effect on last Thursday, July 30, 2009, the Federal Reserve Board has enacted some new requirements about Truth in Lending Regulation Z or as some might call it, “Truth-In-Confusion.”

Are any new requirements, including this recent lender disclosure, without complexities and arduous delays?  Highly unlikely.  A few things stick out that are worth mentioning in this blog.

Let’s discuss the early disclosure expectations.  If the annual percentage rate changes by 0.125 (an eighth of a point), then the lender must provide a corrected disclosure to the borrower and wait an allotted period of time before the closing of the loan. 

Personally, I’ve read the Truth in Lending Regulation Z, and I’ve spoken to some people who work in the lending industry.  Confusion persists. 

The Truth in Lending Regulation states, “the closing may not take place until expiration of a 7-day waiting period after the consumer receives the early disclosure.”  When receiving Good Faith Estimates, commonly, lenders are great about calculating these statements when considering good faith plus mortgage loan costs.  But when taking into consideration third party fees, such as title costs, many lenders are not as proficient when figuring out these particular expenditures.  And as a result, I believe it will become commonplace to see glaring errors on the Good Faith Estimates, either higher or lower than the plumb line of an eighth of a point.

When this occurs, the TILA requirement demands a corrected disclosure to the borrower and the waiting period of an additional three business days before closing the loan.  However, some lenders interpret the miscalculation of the Good Faith Estimate of a varying amount of 0.125 to mean that a corrected statement is required as is with the early disclosure requirement, giving way to the initial provision of a waiting period of 7-days before closing the loan. 

I expect we’ll find out which waiting period actually applies as the process unfolds.

Regardless, it’s going to be mandatory for the Colorado Springs Realtor to be on top of the transaction process more thoroughly with the lender.  In actuality, this protocol of having detailed preparation before closing offers more precise financials for the buyer and the investor.  However, I anticipate further bureaucracy and expected delays for the closing of loans and thus, expect to see delayed possession times of Colorado Springs Real Estate property for the consumer.

For additional blogs from the perspective from our Colorado Springs Realtors, please click on to www.selleygroup.com.