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Updated almost 14 years ago on . Most recent reply
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Is There an 8 day law for Loan Officers to hold the buyer's info before processing?
Has anyone heard of a law that says a Loan Officer must hold the Buyer's Information for 8 days before they can attempt to close it?
A friend of mine has been trying to close his home for months and is basically having trouble with buyers getting approved for the loan. Either its on the buyers end and they're unable to qualify or the Loan Officer isn't able to move quick enough and the buyer has to walk away.
In this situation, we have a buyer who is ready to move and from what I hear, they're able to get qualified. It's just that now my friend was told by their new Loan Officer that they must hold onto the buyer information for 8 days before they can process for closing. They said it was a new law.
I've never heard anything like this and I'm wondering if it could be some sort of stall tactic, so they can process other loans that they feel are priority.
If I should know the answer to this, then please pardon my ignorance for today. lol :cool:
Most Popular Reply
I know I'm a little late here, but YES, there is a regulation that loans cannot close until 7 business days after the disclosures have been provided to the borrower.
It is mandated under the Truth in Lending Act and is separate from the requirement that we provide the Good Faith and TIL within 3 days of application.
There is nothing the lender can do about this. Blame the Feds.
The major reason for the 7 day rule was to stop lenders from rushing borrowers to closing - the very thing you asked about. Back in the day, many lenders (like Ameriquest) were guilty of rushing loans through w/o proper disclosure and processing just so they could take the borrower off the market. It was awful for many borrowers. Sometimes, they didn't even get the title search done. Or the appraisal wasn't completed. Then they would try to correct all this stuff on the back end - if ever. Title companies doing a title search behind an earlier Ameriquest loan often found a ton of headaches. I had a few borrowers who could not close their new loan at all because title issues could not be cleared up.
We are not holding onto applications. I assure you we have no incentive to do that. We're just following the law.
Read here:
http://activerain.com/blogsview/1179558/changes-to-the-truth-in-lending-act-and-regulation-z
Or read it on the FDIC site:
http://www.fdic.gov/news/news/financial/2009/fil09026.html