This is important whether you’re a home buyer, seller, or agent; on July 30th 2009, the new Housing and Economic Recovery Act (HERA) laws will go into effect. And Wells Fargo Bank states that this could impact your closing date, so read on.
Question: What will the new law do?
Answer: It will require all mortgage lenders and mortgage brokers to help prevent deceptive lending practices and protect customers by helping them become more informed.
Question: What are the new requirements?
Answer: Wells Fargo states three; the first one includes more dates and deadlines. There will be new timeframes for when certain disclosures are issued and when fees are collected. Secondly, there will be a minimum number of days for a consumer to review their loan options prior to closing. Third, a re-disclosure of the Truth in Lending for any increase greater than .125% in the Annual Percentage Rate.
Question: How will they impact home purchase transactions?
Answer: According to the act, all parties need to take into account that 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. As a responsible Realtor, we should confirm that the buyer received the initial mortgage disclosure from their lender.
Question: What should a buyer know?
Answer: A buyer should be aware that no upfront fees are to be paid until they have received the disclosures. This excludes the credit report fee. Also, a buyer should receive a copy of the appraisal a minimum of three days before closing. In my opinion, any delays with receiving the disclosures and signatures, will delay a closing. Wells Fargocontinues to explain that buyers should obtain a credit-checked pre approval before they shop for a home. Review the timeline and potential impacts with your home mortgage consultant so you can keep your Realtor informed. It is wise to plan for at least a 30 day closing. And I think that’s fast these days.
Question: What’s a Realtor’s advice?
Answer: Research your lenders!!! Interview more than one! Find a mortgage broker who has honest and responsible lending practices. Ask your Realtor or friends for a referral. Know that these new regulation and investor requirements are in place to ensure you have time to consider your loan choice and feel confident to move forward!