Real Estate

Investing in Real Estate: The Benefits of New Regulations for Home Buyers – What You Need to Know

Did you know that the “closing instructions” (the instructions that each title company must follow when closing a property) vary from state to state?

And did you know that everything is about to change when the new Uniform Closing Instructions go into effect?

These new regulations are about to change the way you can structure your real estate deals. They were designed by The American Escrow Association, The Mortgage Bankers Association, and The American Land Title and Trust Association, who decided to standardize the instructions so that the entire closing process works better.

Real estate investors interested in pre-foreclosure investing, property sales, and creative real estate solutions should be concerned about how these new regulations will restrict their ability to make a profit. However, here is a list of the benefits of these new regulations for homeowners:

Benefit 1: UCI speeds up the Single Family Home real estate buying process and makes it more profitable. For example, previously, if a retail home buyer switched lenders midway through the process, they would always lengthen the closing due to different guidelines from a different lender. The new standards would avoid such delays by providing a set of closing guidelines for ALL mortgage lenders.

Benefit 2: The ICU will reduce costs by providing efficiency. It is interesting to note that buying a luxury car that costs $ 200,000 can take an afternoon, while buying a condo that costs less takes at least 30 days. That’s due to the efficiency of standardized loan documents in the auto industry. (Although no one suggests that you try to buy a house in an afternoon!)

Benefit 3: The UCI will help protect borrowers from mortgage fraud. Specifically, there is a whistleblower clause in the UCI that charges loan professionals for informing the borrower of any suspicious transactions in transactions, and can hold them liable for not disclosing such fraudulent transactions.

Benefit 4: The UCI will help protect borrowers from identity theft.

Benefit 5: The UCI will help pave the way for automated processes in the industry, including new online electronic mortgages, and reduce operating expenses for mortgage companies.

Benefit 6: Create fiduciary responsibility for all title companies to comply with and protect mortgage companies. This would essentially force title companies to be at the forefront of defending against mortgage fraud and help protect the mortgage industry.

Once launched, the UCI will have two profound effects:

First, the committee believes that these instructions will provide consumers with standard fraud protection without the need for congressional action.

Second, (and this is where you really need to pay attention), it will mean the end of “non-traditional” offers: short sales, reverse sales, double closings, and so on. This means that there will be a shift towards conventional mortgage practices and “traditional” investment strategies.

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