The Dodd-Frank Act
The loan process has changed a lot over the years. Many of our agents have been doing loans since the early nineties, so we have seen first-hand all the changes our industry has gone through. Before the market crash of 2008 the mortgage industry did not have a standard of doing business, rather, it was based on human decision and knowledge of the financial markets. After the crash of 2008, the Dodd-Frank act was passed and that changed everything about the way the loan process takes place today. Since 2010, the Dodd-Frank act has been systematically putting rules and regulations in place so that now every process of the loan application has a rule and regulation.
This has made loans much less risky for the investors and the economy, but has also made the loan process very tedious and difficult to get through. It has also left many Americans out of homeownership due to the rigidity of the loan process. Recently, there has been an emphasis on the non-qualified mortgages to attempt to open up more options for those clients who have been left out of the loan process due to income documentation.
The first step in the loan process is the application and credit report. Your loan specialist at times may seem like he is asking for more information than necessary, but please remember Dodd-Frank requires a lot of documentation to close a loan. It is against the law according to Dodd-Frank, to give a loan to a borrower on his primary residence without establishing the ability to repay the loan. This is regulated by the Federal Government and they decide what documentation is acceptable. So please be patient and remember it is the government that has decided what we have to do to close a loan.
The last thing we want to inform you about in the loan process is two disclosures that we have to provide to you that may seem intimidating but are for your benefit. The loan estimate and the closing disclosure are two recent forms that have been introduced as part of the Dodd-Frank act. The loan estimate is the disclosure that is provided to you with your application. This lists all the fees as and explains if a service can be shopped for or not. This can’t vary by more than ten percent from the closing disclosure. The closing disclosure lists all the fees again and requires a three day waiting period before you can sign the final loan documents. This has made the process a little bit longer, but was introduced to hopefully give the consumer a better understanding of what financial tool they are buying. Please don’t be intimated with all the documentation you will have to provide or sign. We have a commitment to all our customers to answer and explain anything and everything all through the loan process up to and even after the closing of your loan. Our customers can call us at any time when they have questions. We will always be there to help. As before mentioned, many of our loan specialist have been doing loans for twenty years and have helped the same customers as well as their children with financing through the years. We have kept our customer loyalty by being knowledgeable and acting with the highest integrity. So any question, if we don’t know the answer, we will get it for you.