The mortgage industry is making big changes again. In an effort to help Consumers better understand the key features, cost and risks of the mortgage loan for which they are applying, the disclosure forms are being revamped.
These changes titled the TILA-RESPA rule are effective as of August 1, 2015.
You can read more about this on the the Consumer Financial Protection Bureau (CFPB) website: www.consumerfinance.gov/regulatory-implementation/tila-respa/
Below are a few excerpts from the Consumer Financial Protection Bureau website:
“First, the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL) have been combined into a new form, the Loan Estimate (LE). Similar to those forms, the new Loan Estimate (LE) form is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying, and must be provided to consumers no later than the third business day after they submit a loan application. Second, the HUD-1 and final Truth-in-Lending disclosure (final TIL and, together with the initial TIL, the Truth-in-Lending forms) have been combined into another new form, the Closing Disclosure (CD), which is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. This form must be provided to consumers at least three business days before consummation of the loan.”
“The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The forms also provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time.”
Hopefully these changes will help ease the confusion of the old disclosures.
David Mully has been in the mortgage industry for 26 yrs. He writes for a national mortgage website: www.mortgageloan.com/contributors and is the President and CEO of Lender Insider. He formerly worked as a mortgage loan officer for several years as well as in the business-to-business sector of the mortgage industry. He also wrote a column in several newspapers and online for more than 6 yrs. titled “Mortgage Search”. His Blog can be accessed on his website:lenderInsider.com
This is the 2nd part in a series of articles on this topic. The series and other mortgage related articles can be accessed on Dave’s blog located on his website: www.lenderinsider.com
What type of home mortgage are you looking for? The answer to this question should determine which mortgage loan officer you shop for and ultimately select. Finding a good mortgage loan officer that is skilled in the mortgage program you are seeking, should be your top priority.
Most consumers shop for “low mortgage rates” and a lender. But they usually don’t consider which loan officer they will end up working with when selecting a lender. Especially when shopping online.
For example, you do a search for “mortgage rates”. And hundreds of lenders pop up vying for your business. Sifting through this list can be overwhelming in determining who you decide to contact. And once you select a few lenders, you really have no idea who the loan officer will be on the other end that contacts you back.
And if you drill your search down further and search for “FHA mortgage rates”, many FHA lenders pop up. But you still don’t know who the loan officer will be with these lenders. The same is true with any mortgage program search you conduct. It could be for a conventional mortgage, jumbo mortgage, VA mortgage, 30 yr. fixed mortgage, first time home buyer mortgages, refinance mortgage, HARP mortgage, reverse mortgage etc..
The average consumer focuses on shopping for a mortgage lender. But most times does not consider if the lender is proficient at originating, processing and ultimately closing the type of mortgage they are seeking.
My point is this, if you are looking for a jumbo mortgage (Minimum $417k in most states) and just focus on finding a jumbo lender, who’s the loan officer you will be working with? There are many different type lenders who do jumbo mortgages. Banks, Mortgage Brokers, Credit Unions etc. Find a loan officer who understands the jumbo guideline requirements.
A lender who offers low jumbo mortgage rates may not be good at actually processing this type of mortgage. Yes that’s right, lenders all the time offer mortgage programs that their loan officers may not be good at handling.
It takes a certain skill set by a loan officer to originate and process certain type mortgage programs. The last thing you want to do is shop for a lender based on mortgage rates. The interest rate is useless if you can’t get the loan processed and closed in a timely manner.
So if you know what type of mortgage you are seeking, find a loan officer that has experience in that type of mortgage. Mind you, it is not strictly the loan officer that you should base your decision on, but a combination of the lender and the loan officer together.
For example, if you are looking for an FHA mortgage, you do need a lender that is good at FHA mortgages first and foremost. But don’t stop there. Once you find a good FHA lender you then need to interview the loan officer on what experience they have with FHA mortgages.
Trust me, there is a lot of skill and experience required in today’s mortgage lending environment to be good at originating and processing any mortgage program.
A loan officer’s experience with certain type mortgage programs is very important. For example, if you are self-employed and a business owner, you will have tax returns that need to be evaluated. If the loan officer is not skilled at evaluating tax returns you could be in for a long frustrating process.
In summary, shop for a good loan officer that understands and has experience with the type of mortgage program you are seeking. Don’t be afraid to interview them and learn about their background. Finding a good mortgage loan officer will help make your mortgage experience a good one.
David Mully has been in the mortgage industry for 26 yrs. He writes for a national mortgage website: www.mortgageloan.com/contributors . He is the President and CEO of Lender Insider. He has formerly worked as a mortgage loan officer for several years as well as in the B2B sector of the mortgage industry. He formerly wrote a column in several newspapers and online for 6 yrs. titled “Mortgage Search”. His Blog can be accessed on his website: lenderInsider.com
New mortgage disclosures coming soon. TILA-RESPA changes effective Aug 1st, 2015:
This will affect Consumers, Real Estate companies and Title companies. For consumers at least, it will be a positive change. One large aspect of this change is that Consumers will now be able to view their HUD closing statement 3 days in advance, instead of sometimes receiving the HUD statement at the last minute.
This article is from the FTC and has many resources and educational information on mortgage shopping:
I found this article to be very good. It is what I have been saying the last few years on how the loan officer job has changed and the challenges they face:
David Mully has been in the mortgage industry for 26 yrs. He is the President and CEO of Lender Insider. He has formerly worked as a mortgage loan officer for several years as well as in the B2B sector of the mortgage industry. He formerly wrote a column in several newspapers and online for 6 yrs. titled “Mortgage Search”. His Blog can be accessed on his website: lenderInsider.com
This is the 1st part in a series of articles on this topic. The series and other mortgage related articles can be accessed on Dave’s blog located on his website: www.lenderinsider.com
When shopping for a mortgage, many people overlook the role of the loan officer. But a good loan officer is essential. He or she is the “stick that stirs the drink,” so to speak. The quarterback, the one that controls the entire process.
A good loan officer knows how to make things happen, how to meet deadlines, how to get you the best rate and lowest possible closing cost. They know how to utilize their resources in every step of the process including, processing, underwriting, closing, appraisal and title. A good loan officer knows the value of having a good working relationship with everyone that touches the process.
Mortgage shopping is not as easy these days. The internet has given consumers a vast amount of choices to say the least. Obtaining a referral from realtors or friends, or searching online for the best mortgage rate, is not what it once was. With so many choices, do you feel overwhelmed?
In my opinion, it is smarter to shop for a mortgage if one focuses on finding a good loan officer. Most consumers focus on finding a lender with the lowest rate. But what kind of loan officer will you end up with?
A good lender with a good rate is nothing without a good loan officer to work with (and a good loan processor, more on that later). What good is the best rate and closing cost if you can’t close on time? And it does happen, where you get to the closing, and the rate and cost you were promised are now higher.
Ask the loan officer how long they have been with the company? How long have they been a loan officer? Depending on the type of mortgage you are seeking, ask them if they have experience with that type mortgage?
This is very important as many loan officers may be good at originating Conventional mortgages but might have limited experience originating FHA mortgages. There are many examples I could sight here, but I will expand on this in future articles.
Mortgage shopping can be difficult enough, make it easier by focusing on shopping for a good loan officer. A good loan officer would not work for a lender that does not offer competitive rates and closing cost. A good loan officer will increase your chances of having a hassle free experience, and get you to the closing table in a timely manner.
The credentials of a loan officer are important, so you need to learn what those are. Are they skilled at evaluating tax returns? Are they Tech savvy? Today’s loan officer needs to be well adept at the technical requirements of originating a mortgage. The software systems (LOS) that lenders use are more complex today than they ever have been. If they’re not good at managing this aspect and being good at multitasking, you will not get the service you deserve. Again, there is much to write about on this area and I will expand on this in future articles.
A good loan processor is also very important. Most likely you will be working directly with the processor in completing the process and satisfying any and all conditions prior to closing. So ask the loan officer about his or hers processor. How long have they been working with that processor? A good working relationship between the loan officer and processor can make everything go more smoothly. Remember time is money and your mortgage rate lock is only good if you close your mortgage within the rate lock period.
In summary, finding a good loan officer can make your mortgage experience a much better one. Interview potential loan officers and make this your focus. Everything else will fall into place if you do this. I’ll drill down more into the various aspects of a good loan officer in future articles.
David Mully has been in the mortgage industry for 26 yrs. He writes for a social media company and a national consumer mortgage website: www.mortgageloan.com/contributors . He is the President and CEO of Lender Insider, a consulting firm. He has formerly worked as a mortgage loan officer for several years as well as in the B2B sector of the mortgage industry. He formerly wrote a column in several newspapers and online for 6 yrs. titled “Mortgage Search”. His Blog can be accessed on his website: lenderInsider.com. David’s direct ph: 248.767.1950 or email: email@example.com
Find a good mortgage loan officer: This is more important then finding a lender. A good loan officer will offer a competitive rate and closing cost and get you to the closing table with less hassle or surprises. A good loan officer will be working for a good lender. My 26 yrs in the mortgage industry has given me the knowledge on knowing what constitutes a good loan officer. The type of mortgage you are seeking will be important on who you select. Dave Mully 248.767.1950 www.lenderinsider.com firstname.lastname@example.org