Continuing our series of commonly asked questions at closing, we asked Houston-based Attorney Ambria Wilmore for her insight on refinancing a home using the (f)(2) or “conversion” loan option:
What are some common questions do you get concerning (f)(2) conversions?
A common issue related to (f)(2) conversion loans is confusion over the 12-day notice. If you recall, home equity (a)(6) loans require a certain disclosure provided to the borrower 12 calendar days prior to closing. Similarly, (f)(2) conversion loans require a disclosure given 12 calendar days prior to closing, but this disclosure must also be provided to the borrower within three (3) business days of application or modified application. It is critical that lenders ensure compliance with both the front-end and back-end timing requirements of the issuance of this notice.
Check back next week for our final question: Does BMG offer any additional resources to help lenders comply with these requirements?