In an effort to protect buyers from predatory lending practices, our government has now created another set of rules. These new regulations will more than likely have buyers, sellers, Realtors, lenders, and attorneys pointing fingers of blame when a closing does not happen on "time".
Below are a list of the new regulations:
1) The earliest any home purchase transaction can close is 7 business days after the home buyer is issued his or her initial mortgage disclosures from the lender.
2) Upfront fees cannot be collected by the lender (except for a credit report fee) until the initial disclosures are received. If the disclosures are overnighted, they are considered "received" the next business day-(excluding Saturdays) allowing the fees to be collected on the following business day.
3) The home buyer must be provided with a copy of his or her appraisal a minimum of 3 business days prior to closing.
4) An increase of more than .125% in the Annual Percentage Rate (APR) from the initial Truth in Lending Disclosure (TIL) requires the TIL disclosure to be revised and reissued to the home buyer. The home buyer must receive a revised TIL disclosure at least 3 business days before closing, providing the home buyer with the time required to determine if the home buyer is comfortable with his or her loan choice. If mailed, the TIL disclosure is considered "received" 3 business days after mailing.
Items that could affect the APR - causing the disclosure to be revised and reissued:
• Unlocked rate
• Change in loan amount
• Product change
• Rate re-lock due to market improvement
• Change in closing date
• Changes to fees, inclusive of settlement agent fees
Item #4 has the most potential to create unexpected chaos and delay closings.
The link below gives more information about the new HERA regulations.
https://www.wellsfargo.com/downloads/pdf/mortgage/HERA_HOEPA_Retail_FINAL_E.PDF
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