What the Dodd-Frank Act Means to Buyers & Sellers

Mortgage laws and guidelines have changed a lot after the Dodd-Frank Act. In fact, new mortgage rules and standards now have a noticeable effect on both buyers and sellers.

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I wanted to revisit the topic of mortgages so that buyers have an idea of what to expect in today's market. 

The Dodd-Frank Act brought a lot of changes to the mortgage industry in the last couple of years, and most of them were implemented this year. This affects you, the consumer, in terms of the time it takes to close a home loan. Before the act, a mortgage usually took about 20 to 30 days to close, whereas today, it's closer to 30 to 45 days. Some of the government-backed loans like VA loans or FHA loans are stretching out even longer.

If you're a buyer, you'll want to get your lending issues resolved as early in the process as you can so your lender can move quickly once you go under contract. On the seller side, you can also expect delays. Typically, agents write contracts with a 30- to-45 day closing, and if the lender runs into any difficulties getting it approved, we end up having to push them out a bit.

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You want to get lending issues resolved ASAP to avoid delays.

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Make sure you coordinate with your agent so that neither of you encounters any surprises like having to move out of the house earlier or later than you originally thought.

Another issue in the mortgage world that's affecting both buyers and sellers is appraisals. With new government regulations, lenders don't reach out directly to appraisers anymore; instead, they go through a central clearing house so that the lender can't affect the results of the appraisal. 

Appraisers are backed up as well. Normally, they have a 10-day window from the time they're ordered to respond back with the appraisal. With the volume of activity we're having right now, the appraisers are also backlogged. That 10-day period is now closer to a 12- to 15-day norm.

If you're thinking about buying or selling a home or you have any questions about mortgages and how they've changed, give us a call. We'd be happy to help you in any way we can.