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Some Lenders Implement New Rules Early

Saturday, July 7, 2012,  is the official deadline for submitting mortgage applications under the old high-ratio mortgage rules. Lenders and insurers are not open Sunday, July 8, so that day is a write-off.

Despite the July 7 deadline, a handful of lenders are implementing the new rules early.

First National (the country’s biggest non-bank lender) and Radius Financial will enforce the new rules starting July 3. ICICI Bank will start effective July 6.

We’ll probably hear more such announcements in the next few days.

One lender we spoke with explained that early adopters simply want to “ensure deals get approved prior to cutoff date.”

Mortgage-rule-deadline-“We all anticipate lots of deal flow,” he says. High-ratio “deals have to get approved by the insurer prior to July 9 (to qualify under the old rules).”

Insurers are allowing no exceptions to the deadlines.

If an application comes in too close to the cutoff, underwriters might not have enough time to review the file and submit it to the insurer.

In addition, insurers sometimes need a few days to get clarifications from lenders and clients, and/or manually appraise a property.

June is already the busiest time of year for closings. This pre-rule rush just adds to lender and insurer workloads.

As a result, if you want to be approved under the old guidelines, don’t waste time. Monday, July 2 is a holiday so get your completed application submitted to a lender by this Saturday, June 30 to have the widest selection of lender options and best chance at approval. (July 4 is the absolute latest we’d recommend.)

All three insurers and many lenders will be working Saturday, June 30 and July 7.

Rob McLister, CMT