I have a short sale approved by bank last Friday and the bank needs the deal closed in 3 weeks.

I went to Wells Fargo Home mortgage and started my first application there.    The rate is ok but the fees are higher than what some local brokers have quoted.    Anyway, the lady who handled my application at Wells Fargo told me  there are some new federal mortgage regulation just came out in late July (started around 28 & 29) that will add some delay to the mortgage application process (the bank has to give the buyer a few days to wait and they can't move ahead until that period passes.)    She also mentioned that rule will change again on Aug 15 so the buyer can sign a form to waive that waiting period to speed up the process. 

Anyway, she made it sound like that it's almost impossible to use a broker to complete this deal in 3 weeks because of the recent rule changes.   (and most brokers are not aware of the federal regulation changes at the bank.)    So in the end, I can’t even trust my local broker even they told me the deal can be closed in 3 weeks.

Since I can’t find such federal rule changes online, just want to check here to see if things I have been told at Wells Fargo holds any truth?  It will make me feel better that going with the bank is my only logical choice here.    

Look up HERA 2008, it changes so that their are a 4 day time frame from application to when you can collect fees, a 7 day period from when you disclose until you can close and a 7 day period after appraisal is given to the consumer until close.Any change to APR of .125 or more requires  a new disclosure and waiting period.

Everyone is digesting this but the delays are real

If the banker at Wells approved your deal before the 31st, I would stick with her and just try to negotiate the numbers. By assigning the loan number before this date she grandfathered you in to the old rules. I do not believe that in light of the changes, anyone could guarentee a closing in that time frame and feel good about it. Working under the old rules could be her best asset.

If she did not approve and assign a loan number before the 31st...I wish you luck but you will probably need to ask for an extension of the contract.

Best of Luck!!

Thanks, my loan was approved on the 31st at Wells.    Just feel so rushed when I did everything on the same day the bank accepted my short sale offer.   My realtor asked me to get my mortgage application started that day, so I rushed into the bank 2 hours before they close without shopping the rates & fees at all.    

The rule changed on 7/30/2009. You are going to have to deal with the change with either a Lender or a Broker now. Since it is so new neither the lender or the broker can guarantee your results since so much of the law is still being sorted out. You will be part of the experiment. keep us posted please we want to know how things proceed and how quickly.

This new rule does favor a retail lender because they can collect funds for appraisal, etc the same day the TIL is issued (at application).  The reason that brokers are at a disadvantage is that if the lender being used issues the disclosures by mail then there is a 4 day waiting period before fees can be collected (from the time the lender mails the disclosures not the time that you make applications).  However, if the broker is closing in their own name then the end lender is relying on the broker's disclosures and they can collect fees at application.  There are other strategies that the broker may be able to use to shorten the process, it depends upon the lender that they are using and their requirements.  

Kai,

Brokers are well aware of the changes I can assure you, we've been getting notices from all of our lenders about the new laws.  These changes could slow things down a little, but really in most cases it just means you can't close earlier than 7 days after the initial disclosures are sent (not usually a problem), and if we have to re-disclose those documents (if the APR on the initial disclosures are not accurate and have increased by a set amount) then the waiting period is only 3 days after that.  There's also the upfront fee time period we have to wait for, but for a purchase loan we don't usually ask for anything upfront so no issue there.

There's a greater chance of it longer than expected because of increased applications due to low rates and low home prices and lenders being backed up then because of these new laws.  They might cause some last minute headaches if the APR changes, but that won't prevent anybody from getting started on your loan and if they're not baiting and switching then the APR shouldn't change enough to warrant a re-disclosure (in most cases).

I just closed a loan last week that was a short sale and it took a day under 3 weeks.  I normally wouldn't promise we could get it done in 3 weeks in this day and age, but you have just as much chance if you go with a broker or if you go to the retail side. 

A good broker is aware of all the laws, and would not make the promise unless he or she felt confident. The delays are real, yes . . . but a retail lender is no more able to "promise" that a broker will fail than the broker is able to promise a timeline, and in doing so is showing her colors. You should not be pressured to accept a higher fee on this loan.

If your loan is already approved, I would agree with the above - negotiate the fees but stay put. Play hard ball. There is no reason for a retail bank and a broker to be THAT different in price unless the loan is very small. You should be able to get a cheaper loan.

Bottom line, though . . . anyone closing in 3 weeks is going to be stressed by it. If you love the home and it is at a good sale price, close where you can . . . perhaps at a slightly higher rate in exchange for no closing costs. If you do not pay any costs, you can shop to refinance your loan shortly after the purchase on your own timeline . . . getting the best deal in the long run.

Bryan,

I would have to disagree. I am a retail banker and we are not allowed to collect fees any sooner than on the wholesale side. The way my employer is applying the rules requires us to wait 8 mailing days to collect any upfront fees. This will be reduced to 7 days on the 15th when we initiate overnight mail for all disclosure packages.

From what I have read here and from my conversation with other retail bankers, we are all truly playing be similiar rules. The only benefit we have been given is that applications taken prior to the 31st are not effected, I would assume this is also the case on the broker side. In all honesty if a consumer is looking for speed alone, brokers may have an advantage right now as our turn times are not the two to four days I see listed on wholesale rate sheets that I still get from my time on your end!

I am telling all of my clients to ask for 45+ days on any new contracts.

It will be an interesting couple of months!

Ok, Here is my progress with the lender after 1 week.    My loan was approved on the spot last Friday, I signed all the paperwork face to face,  locked the rate, and paid the application fee (around $550 for the appraisal) all right there on the same day.     The bank has already sent in their appraiser this week. (won't get the final report & appraisal price  until next week)    They give me another week to shop for home insurance.

I did not get anything in the mail and not sure about all the mailing delays you guys are talking about here.   Can I assume that I saved a lot of time  by  signing all the paperwork face-to-face (which is what she insisted) with the lender directly?       

Overall, I am happy with the progress with my lender so far.   She charged me their 'standard fee' at Wells Fargo ( 1% origination fee, 550 application fee(appraisal), 500 processing fee + all the unavoidable third party fees)    Are you guys sure a lender has the power to lower their so-call 'standard' fees listed by their bank?    With my loan amount, I can save few grands going with a broker who charges a flat fee  compare to lenders that charges by percentage. (Anyhow, I assume it is too late for me to re-negotiate fees with my lender at this point. )

Get a quote from someone else.  Don't pay any additional "application fees".  If you can find a better deal, which you should be able to do, tell the current lender and offer them the opportunity to reduce thier fees.