PARAMOUNT MORTGAGE - LENDER'S BLOG

September 17th, 2009 5:20 PM
Deadline looms for first-time homebuyers

St. Louis, MO - First-time homebuyers are entering the final days before the $8,000 Federal Tax Credit deadline expires at the end of the day on November 30, 2009.

That deadline is 74 days away or just a short ten and a half weeks for those buyers to complete a home buying transaction that typically takes anywhere from 30 to 45 days to close. And that's only if there are no problems.

You'll want to add an extra two week cushion to that schedule "in case problems pop up, whether it be issues with the title, the quality of the house, the seller accepting your offer or even credit issues with the borrower that must be resolved before the transaction proceeds," states Ken Wiseman, broker-owner Reno Rancho Realty Broker.

On top of the normal delays that can occur, new regulatory guidelines that became effective July 30, 2009 specify mandatory wait times before a mortgage loan can close. The Mortgage Disclosure Improvement Act (MDIA) requires that the earliest a borrower can close is on the eighth day after initial loan disclosures have been issued.

Changes in the APR (Annual Percentage Rate) outside of allowed tolerances or loan terms or fees that change during the processing of a mortgage will automatically trigger a new Truth-In-Lending (TIL) disclosure. An additional three day wait will ensue.

"We see a perfect storm brewing," states H. John Frank, Jr., President of Paramount Mortgage in St. Louis, Missouri, "where these first-time homebuyers who've been sitting on the fence undecided about whether or not to purchase a home suddenly realize in a panic that there may not be enough time to close on their dream home to meet the deadline. They'll be faced with different sets of time constraints throughout the home purchasing process that must be followed."

"The entire real estate industry including Realtors, appraisers, title companies and lenders could be faced with an unprecedented demand to push last minute deals through the system," continued Frank, Jr. "For those who hold a glimmer of hope that the Congress will extend the deadline, they should look again at the 'Cash for Clunkers' program. It was a very popular and successful stimulus program, but expensive and ultimately was not renewed."

A New York Times article published Wednesday claims "As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected in February."

First-time homebuyers under the greatest pressure to complete their home buying transaction are ones depending upon the Missouri Housing Development Commission's (MHDC) Tax Credit Advanced Loan (TCAL) program. MHDC's TCAL provides an interest-free loan up to $6,750 for their down payment.

Don Brinker, Homeownership Manager with MHDC, expects to cut off application submissions on or around October 15, 2009 in order to process the anticipated backlog of files before the deadline. This action will in effect end the popular MHDC TCAL program.

Link: Deadline Looms
Posted by Customer Service on September 17th, 2009 5:20 PMPost a Comment (0)
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