The following is an email that was sent to me from another broker that I thought you might find interesting:
After showing condos over the weekend, the pre-approved buyers made their selection and were ready to write a contract. So I did what I always do when preparing to write an offer, I called the loan officer to discuss closing costs and obtain a copy of the pre approval amount to submit with the offer. Only this time I was told this practice would soon be going away! YES, the times they are a changing once again. As if enough has not changed with the finance industry, here comes something else that we as REALTORS will need to get used to.
Those pre approvals that we obtain beforehand (which are pretty worthless) are going away. It seems that new regulations with RESPA will soon prohibit loan officers from giving out pre approval amounts in the future and they could be on their way out. I am a REALTOR not a loan officer and I am just re-stating what I was told and kind of grasp the reasoning behind this change because if a loan officer gives out an approval for a specific amount they can be held to that amount–it has to do with new RESPA regulations.
As to when banks and mortgage companies begin to adhere to this is anyone’s guess and each will decide when to do so on their own. I just got a heads up today as it was explained to me that this might be the last time I receive a printed pre-approval letter for my contract amount. So if you are not in the habit of speaking with the loan officer before writing an offer or finding out if the buyer is pre approved, you may want to do so because in the future we are just going to have to go with a “verbal” confirmation of the pre-approval amount.
Credit to Marilyn Boudeaux