August 2009

A perpetual letter of credit (LOC) does not last as long as you might think.  In physics “perpetual motion” is movement that goes on forever.  Commercial law is less ambitious.  Under U.C.C. § 5-106(d), a “perpetual” LOC expires after five years.  To further complicate the issue, a recent case from the

So you finally got a buyer for your house after having it on the market for nine months. As frosting on the cake the buyer says she can close within a week. 

Great! Right? Well, if your buyer made her mortgage loan application on or after July 30, 2009, it may take a little longer.

 

On July 30, Federal Reserve System rules (http://edocket.access.gpo.gov/2009/E9-11567.htm) went into effect implementing the Mortgage Disclosure Improvement Act of 2008 (MDIA). The rules – -applicable to purchase, construction and refinance situations – – impose various waiting periods between the time a transaction specific disclosure is made by the lender and the time when the residential loan transaction can close. The rules apply to all institutions engaged in closed-end, dwelling-secured lending for consumer purposes that is subject to RESPA.

 

The rule was going to go into effect in October 2009, but the date was moved up by the Fed two months in mid-May. Home equity lines of credit are excepted from the rule and are instead subject to separate rules for “open-end” credits. Different rules also apply for timeshare interests. Continue Reading Hurry Up and Wait