Truth In Lending Changes Take Effect July 30, 2009

Real Estate Agent with RE/MAX Realty Affiliates

Truth In Lending Changes Take Effect July 30, 2009

Predatory lending practices played a large role in the recent global economic collapse. Those practices included funding loans with falsified information, hidden costs and charges. They also packaged subprime loans as prime loans and resold them to international investors. The resulting negative ramifications have been felt globally as the investments proved to be not what they appeared to be ... for the investor and the borrower. That has resulted in an assortment of laws and/or guidelines, Federal and State, intended to protect the consumer and the investor the latest of which takes effect on July 30th.

The new Truth in Lending Regulation (Reg Z) changes take effect for loan applications filed on, or after July 30, 2009. The new requirements apply to all mortgages secured by a primary or second home. Investor loans are exempt. Two main changes are the requirement of the lender to give a good faith estimate of loan costs within 3 business days after the loan application (early disclosure), and the lender may not now collect any fees before the disclosure is provided, except for a reasonable credit report fee.

More Reg Z changes: a) The escrow may not close until after a 7 day waiting period following the consumer's receipt of the early disclosure., b) If the annual percentage rate (APR) increases by more than 0.125 percent from the early disclosure amount, the lender must provide a corrected disclosure and wait an additional 3 business days before closing the loan. It is important to understand that the APR not only includes the interest rate on the loan, but certain other settlement costs. c) The consumer may modify or waive both waiting periods for a documented personal financial emergency, with some restrictions.

It is important to understand that the APR can be affected by something seemingly innocuous, but with the potential for major consequences. These can include an unlocked interest rate, a change in the loan amount, a product change (the loan product), rate re-lock due to market improvement, change in closing date, and changes to fees including settlement fees. Each of these items can occur innocently enough during the course of an escrow and, if too close to the scheduled closing date, can wreck havoc with the closing timing. Sample simple problem- if you put a home equity loan on during the transaction the initial disclosure period starts all over. With a home equity line of credit there is no impact.

Our advice: The changes aren't really burdensome, but they have the potential to delay escrows. It is important that everyone - borrower, Realtor, and lender - all pay attention to the details from the onset of the loan process to the funding. Minor changes can cause several days of delays. Delays can result in missed closing dates which can mean not only not moving on the weekend that you have arranged for with your friends and work, but can also mean a breach of contract that could cause you to lose the property in certain circumstances. All parties must be diligent in their efforts and communication on the loan and escrow process to minimize aggravation.

Getting a new loan? Better plan on at least a 30 day escrow period, and be diligent during the process. The longer the process goes the more opportunity there is for a "stick to meet your spokes". As changes occur during your escrow make sure of their consequence, if any, on your loan process.

When it comes to choosing professionals to assist you with your real estate needs ... Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472.,

Lisa Wetzel and Jim Valentine are the authors of this blog. Lisa, Jim and Jessie are experts in Carson Valley, Carson City and the tri-county area of Douglas County, Carson City and Lyon County. Call our team anytime at 775-781-5472 or 775-781-3704. To Search for Homes go to: of visit our website at


Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Lisa Wetzel 07/08/2009 02:42 AM
  2. Jessie Wetzel 07/08/2009 02:44 AM
  3. Christianne O'Malley 07/08/2009 03:08 AM
Mortgage / Finance
Nevada Carson City County
RE/MAX Active Rain Bloggers
Nevada/Las Vegas REO, Fourclosure, Short Sale Specialist
Club Chaos
predatory lending
truth in lending
regulation z
carson city
carson valley
lisa wetzel
jim valentine
carson city homes

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Bridget Cella
Re/Max Connection - Sewell, NJ
e-Pro, Realtor

I see you got a couple reblogs already - good for you and thanks for sharing this must know news!

Jul 08, 2009 02:47 AM #1
Christianne O'Malley
RE/MAX Realty Affiliates - Reno, NV
Exceptional Service - Delivering Results in Reno!

Thanks for the info Jim! I will be reblogging it too!

Jul 08, 2009 03:08 AM #2
Edward & Celia Maddox
The Celtic Connection Realty - Queen Creek, AZ

In Arizona, the negotiator on Short Sales has to be under the brokerage.  Makes sense if you think about it.

Your Queen Creek Real Estate Specialist

Jul 08, 2009 03:28 AM #3
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thanks for sharing the information. I will read it again.

Jul 08, 2009 11:13 PM #4
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495


The consumer may modify or waive both waiting periods for a documented personal financial emergency, with some restrictions.

The consumer has this right in AZ right now for the 3 day right of recission on a refinance, but many banks won't accept a waiver under any circumstances.

Mike in Tucson

Jul 09, 2009 01:51 AM #5
Jim Valentine
RE/MAX Realty Affiliates - Gardnerville, NV

Bridget and Christianne - Glad you liked it and can help inform others.

Edward and Celia - I'm not sure I understand - which brokerage? 

Gita - My pleasure.  We'll all have to learn and live with this. 

Mike - Thanks for the information.  It is really good to know what occurs in neighboring states as often our legislators mimic them in their infinite wisdom.  It is frustrating to see consumer protection laws hurting the consumers they are protecting.  I don't believe the new TIL guidelines are harmful - in fact they will help protect from the shady lenders that hide or change fees at the closing and then watch the desperate borrower close anyway.

Jul 09, 2009 02:41 AM #6
Lisa Wetzel
RE/MAX Realty Affiliates - Carson City, NV

Jim - Always on the cutting edge!  Thanks for keeping us up to date.  Like our own personal clipping service!  Have a great day!

Jul 14, 2009 10:01 PM #7
Marchel Peterson
Results Realty - Spring, TX
Spring TX Real Estate E-Pro

Jim, I just did a Google search for this and you ARr post came up number 1.  I have some clients who are getting a lower interest rate but if this had been in affect it would not have happened. ARE WE GOING NUTS OUT THERE!!!

Jul 21, 2009 12:57 PM #8
Jim Valentine
RE/MAX Realty Affiliates - Gardnerville, NV

Glad you found me Marchel.  Are we going nuts ... it would seem like it.  I am stunned how difficult the new rules and regs are making sales.  They say they want housing to recover but they are doing everything they can to prevent it from doing so while hurting the consumers along the way.  Nuts?  I would say so.

Jul 22, 2009 12:38 AM #9
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