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Preparation of the Loan Estimate is now the lender's responsibility, though accurate input from the settlement agent is also required. Early communication and cooperation between them will lead to on-time closings.
Integrated Disclosure compliance will at times be used as an
excuse when the real cause is lenders failing to coordinate
the mortgage process with the purchase transaction.
Because variances (fee and cost changes) between the Loan Estimate and Closing Disclosure are limited by law, accurate initial disclosures are mandatory.
This is where those Changed Circumstances can come in and delay your closing if the lender's Loan Originator isn't paying attention every step of the way.
Changed Circumstances are details specific to buyers and qualifying that were / are
unknown - inaccurate - new - changed
from the initial Loan Estimate disclosure that was given to the buyer, and cause the costs previously disclosed to change.
Lenders are required to reissue modified Loan Estimates whenever valid Changed Circumstances have a bearing on buyer qualifying or financing costs.
So what might cause a Changed Circumstance that requires a new 3-day review and waiting period?
- Buyer/borrower's income, assets, or debts are not
as initially presented at PreApproval or application,
changing loan programs and interest rates for which
they qualify.
- Buyer decides to lock the loan's interest rate after
receiving the initial Loan Estimate, and available rates
are now higher than what was disclosed on LE.
- Appraisal comes in lower than contract price, changing
Loan-to-Value ratio (LTV) and now requiring Mortgage
Insurance or increasing the interest rate.
Each time a Changed Circumstance causes a revised Loan Estimate to be sent, a new 3-day review period must be given to the buyer. If re-disclosures are required and your closing date is coming up soon, extensions may be needed.
Understand that there are also numerous changes that occur between contract acceptance, loan processing, and closing that do NOT require new disclosures and 3-day review.
Only buyers and lenders can cause the Changed Circumstances that require redisclosure and additional 3-day waiting periods.
Protect yourself and your closing timeline by having a trained, responsible, and accountable Loan Originator contribute to your deal.
Let me handle the details, timing, and compliance
while you take care of your buyers and sellers.
When buyers who want to use financing are properly PreApproved, then guided all the way to closing, Changed Circumstances are minimized and properly managed.
Integrated Disclosures don't have to delay or stop your deals. I still suggest submitting offers with 30-day Financing Contingencies and "on or before" 39-day closings from effective dates for conventional financing - as long as buyers can provide requested paperwork in a timely manner.
Call me when your buyers first start looking. When they know what to expect and have the information they need, there's no reason not to hit your contract dates and arrive on time at the closing table.
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