HERA Mortgage Disclosure Improvement Act- Taking effect July 30th, 2009

The motive behind this new law is to help ensure that the home financing process is transparent. The goal is to help prevent deceptive lending practices and to make sure that the borrower is provided with enough details and time to make an informed decision. If crooked loan officers and mortgage brokers haven't been weeded out already, this new law definitely will! That's the good news.  The other news is that going forward, loan officers and real estate agents will need to take into account a few mandatory timelines that will impact the processing of a mortgage application.

As of July 30th, 2009...

There will be requirements for...

 -When loan closings can be scheduled
 -When new Truth in Lending disclosures need to be provided to the borrowers
 -What counts as a "business day"
 -When fees can be collected from the borrower

What can affect the loan timeline?-Anything that will affect the APR on the Truth in Lending

 -Change in the mortgage product
 -Change in closing/signing date (which will affect the pre-paid interest)
 -Change in Loan amount
 -Unlocked Rate
 -Change in third party fees-such as the Title Company

What can loan officers and realtors do to prepare?

What this new law comes down to is this...If the APR on the Truth in Lending changes by more than 1/8th, the borrower must have 3 days to review it before closing. That intitial meeting and application becomes that much more important. It is imperative that the loan officer, realtor, and borrower communicate about a realistic settlement date and closing costs, as well as the decision of whether to lock or float. If the borrower chooses to float, they need to understand that this may delay the closing date if the interest changes from the rate on the good faith estimate and Truth in Lending.

For more information, visit www.loganutahmortgages.com