Market Reports
Important Message from First Sterling Mortgage Services
Important Notice About New Law
On July 1, 2008 the Governor's new "Anti-Predatory Lending Database" law will take effect. This means that ANY applicant purchasing an owner occupied residential 1-4 unit home in Cook County may have to attend a 2 hour home buyer counseling course and come to the closing with a certificate proving same or THE TITLE COMPANY CANNOT ALLOW THEM TO CLOSE.
Counseling will be required for the reasons:
(A)
1) For all first time home buyers.
2) For anybody refinancing their principal residence.
and
(B) If the loan includes one or more of the following:
1) Interest only loan
2) Negative amortization (option-arms)
3) Pre-payment penalty loans
4) Adjustable rate loans up to 3 years
5) Total points and fees paid are 5% or more of loan amount
Note: If one standard from group (A) and at least one standard from group (B) are present, then the buyer MUST get counseling, prior to closing.
Although there are still some ambiguities within the law as it stands now, it will be enforced by the title companies and lenders. Furthermore, there will be a cost of $300 for this counseling. Although the cost will be borne by the mortgage broker, you can be assured that the fee will be passed on to the borrower through higher closing costs.
BUT THERE IS GOOD NEWS!
Exempt from this new law are the buyers and home owners who transact their mortgage business through federally chartered banks, such as Guaranty Bank, the parent company of First Sterling Mortgage Services, LLC. Borrowers can avoid any needless delays and added costs by applying for a mortgage with First Sterling Mortgage Services, LLC!
This law was signed early last year and it hasn't really been talked about until very recently. This indicates that there is still a lot that needs to be put into place by July 1, 2008. Therefore, one can assume that there will be much confusion, mishandling and possibly even delays in Cook County closings, as title companies try to figure out if the borrower counseling is needed for every transaction. To avoid this confusion at time of closing, First Sterling Mortgage Services will be sending exemption forms to our closings, and the counseling won't be an issue.
This law only affects Cook County closings at this time, but the state is looking at it as a pilot program that will eventually be rolled out to the whole state.
We will keep you posted of further developments or clarifications.
Jay Skwierawski
President
First Sterling Mortgage Services, LLC
737 North Michigan Avenue, #1900
Chicago, IL 60611
312.268.7601
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