Financing in California>Question Details

Nanyme, Other/Just Looking in California

What is the purpose of the Creative Financing Disclosure Act?

Asked by Nanyme, California Mon Dec 17, 2007

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I haven't done any research yet on your question, but I did hear the news blurb about National tightening of lending rules. In answering another question (link below) , I think I understand a little better why CA is proposing the creative financing disclosure. I'll also borrow from another person's answer that I can't find to give them the proper credit or exact wording. I believe they quoted a NAR survey that said CLOSING is the most important factor, NOT price.

In CA, the financing contingency usually isn't lifted until after closing. I have decided that is is a hostage negotiation.
0 votes Thank Flag Link Wed Dec 19, 2007
Ruthless, Other/Just Looking in 60558
Wow, I'm in IL and haven't heard about this. I try to avoid political discussions but this really caught my eye. I'm sure the PURPOSE is to weed out SCAMS or unscrupulous people which are becoming more common in real estate financing. Or it could be to provide appraisers with accurate data regarding the TRUE purchase price when you factor in things like incentives. However, as someone who has used creative financing more times than I can to admit, the problem I see in a "Disclosure Act" is defining "creative".

Let's say someone uses an incentive of "zero percent interest for the life of the loan." This incentive would dramatically change to TRUE value of the purchase price. But if a bank is willing to lend me money for the true value of the home and I get creative to come up with my down payment via legal means, whose business is it other than the lender?

That's my 2 cents.
0 votes Thank Flag Link Mon Dec 17, 2007
Ruthless, Other/Just Looking in 60558
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