HOME BUYERS AND THEIR AGENTS NEED TO UNDERSTAND IMPACT OF HERA
This information was provided by Peggie Shiei at SunTrust Mortgage
Information for you about the government's Housing and Economic Recovery Act (HERA)
New HERA regulations may affect your borrowers' closing expectations.
A new government regulation is going into effect on July 30, 2009. This regulation requires all mortgage lenders to provide Truth in Lending (TIL) disclosures to borrowers according to a defined schedule. This schedule may alter your borrowers' closing date expectation. The regulation is in the best interest of our borrowers, so it's important we all understand and implement it thoughtfully and consistently. In addition, we all need to work together to ensure the changes that will result from this regulation are understood by our borrowers.
Loans cannot close until at least seven days have passed from date of application.
Mortgage lenders must issue the initial TIL disclosure at least seven business days before loan consummation (document signing). Regardless of how the initial TIL is provided to the borrower, closing documents cannot be signed earlier than seven business days after the initial TIL has been issued.
Changes start the three-day clock again.
If there are any changes to the loan parameters that affect the Annual Percentage Rate (APR) on the TIL, the resulting APR must be compared to the latest TIL provided to the borrower. If there is an increase greater than .125% in the APR, the lender must provide a corrected TIL to the applicant. Fees considered to be finance charges that are used in the APR calculation include but are not limited to discount points, lender fees, Life of Loan flood certification coverage, settlement agent or attorney fees. Borrowers must be provided three business days to review this amended TIL prior to loan closing.
Fees can't be collected until disclosures are received.
The regulation prevents the collection of all fees from the borrower, except the expected cost of the credit report, until the initial TIL has been received by the borrower. This may delay appraisal orders or orders for other essential services; therefore it's very important we work together to set your borrowers' expectations for closing accordingly. If the initial TIL is delivered to the borrower face-to-face, fees for these services can be collected at that time.
The changes this regulation will bring are positive ones for our borrowers. This new regulation strives to ensure borrowers have a clear understanding of the financial obligation they are about to assume. We look forward to working with you to make sure borrowers have ample opportunity to review their loan documents, are well informed about the details of their real estate transaction before consummation, and remain confident in their home financing decision.
We represent home buyer clients on an exclusive basis in the Maryland suburbs of Washington DC and nearby counties. firstname.lastname@example.org
We represent home buyers and sellers as their exclusive agents in the Maryland suburbs of Washington DC.
Roy Kelley & Associates
Associate Broker, RE/MAX Realty Group
Client Assistance: 301-670-8996
Recipient of the RE/MAX International Lifetime Achievement Award - 2008