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Will it become a thing of the past?

With the new RESPA rules of 2010, it looks like escrows of 45-60 days may become the new norm, if a loan from a financial institution is involved. RESPA is the Real Estate Settlement Protection Act administered by HUD.

As always, in an effort to simplify things and make them clearer… these new rules, intended to protect the consumer, will require, among other things, that the loan originators re-issue a Good Faith Estimate (GFE) to the client if changes or variances occur from the original GFE. In addition, the GFE must now include any and all potential charges that the buyer may be subject to, even ones that are paid by the seller as standard practice.

Of course, we all agree, and strongly support the belief, that the client needs to know about any and all issues related to their loan and their purchase. The effect on the escrow period comes into play with the requirement that the consumer be given 10 business days after re-issue of the new GFE. 10 business days equates to 2 weeks, at best.

It will be interesting to see how these new rules are interpreted and implemented by the various lending institutions over time. Putting additional pressure on the escrow time period are last year’s new rules and regulations regarding appraisals and appraisal reviews. These appraisal changes have an impact, with many transactions, on the length of time needed for an escrow to close.

For now- do not be surprised, whether you are the buyer or seller, if you find the required time to close a transaction growing longer. As your agent, I will guide you through these continually changing issues so that your transaction is a smooth one.

Lynn Bates, North Coast Realtor including Morro Bay, Los Osos, Cayucos, Cambria, Keith Byrd’s Real Estate Team, 805 458-4409.

Written by Keith Byrd - Go to Keith's Website/Profile