Atlanta Real Estate Blog

New government regulations - HERA/HOEPA - may impact closing dates

Effective:July 30, 2009

Whether you are a home buyer or investor, the following Truth In Lending (TIL) changes now in effect will significantly impact how you do business.  

The Home Ownership and Equity Protection Act (HOEPA) and the Housing and Economic Recovery Act (HERA) were passed by Congress in 2008. 

Effective for all new mortgage applications starting July 30^th, 2009 the HERA/HOEPA regulations are in effect.   What does this mean for you?

 If you are financing the purchase of property, these regulatory and investor guidelines will impact – and could even dictate – the closing date.

The earliest any home financing transaction can close is 7 business days after the lender issues your initial mortgage disclosures to you.

Summary of the New Truth In Lending Rules

•  Saturdays count as business days
  

• With the exception of a credit report fee, lenders cannot charge the borrower upfront fees until the borrower receives the initial TIL (Truth in Lending Disclosure) from the Lender.  (This could delay the lender in ordering the appraisal).
  

• Initial TIL is now required on all purchases and refinances of primary residences and second homes.
  

•  Initial TIL must be provided at least seven business days before the close/sign date.
  

• An increase in APR by more the .125% requires re-disclosure of the TIL by the lender at least 3 business days before closing.  If mailed, the TIL is considered “received” 3 business days after mailing, making the total disclosure time 6 business days before closing.
  

• The property appraisal must be completed and mailed to the borrower at least 7 days before the desired close date.  This allows for the day it is dropped into the mail, 3 full business days for mailing/receipt, and then the required 3 business days for the borrower to review.
  

Click here to see a sample calendar on how the TIL and Appraisal disclosures work from application date to closing.   The calendar assumes that there are no Underwriting delays and the appraisal comes in at the sales price!

Tags:Truth In Lending act, TIL, lender, home buyer, home seller, investor, property appraisal, mortgage application, disclosures, underwriting, HERA/HOEPA regulations, upfront fees, appraisal fees, earliest close date, sample closing calendar,  ATLShortSales.com