Housing and Economic Recovery Act

The mortgage industry is certainly undergoing many changes to help provide homebuyers better information when it comes to financing a home. New government regulations may impact your closing dates. The following information will help you to understand some of the new regulations and investor requirements that are taking effect—especially those that impact timelines.
There are four key elements that you will need to know:
1. If the homebuyer is financing the property, these new regulatory and investor guidelines will impact—and could even—dictate—the closing date. Historically, homebuyers and sellers would agree on a closing date, and then service providers, including lenders, would work as best they could toward meeting that date. Going forward, purchase contracts can still be written with a specific closing date in mind, but all parties need to take into account that the earliest any home purchase transaction can close is 7 business days after the homebuyer 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. Historically, upfront fees could be collected immediately at the time of application for both in person and phone applications. Moving forward, the homebuyer must receive his or her initial disclosures before upfront fees can be collected. The only exception is the credit report fee which can be collect at application.
3. The homebuyer must be provided with a copy of his or her appraisal a minimum of 3 business days prior to closing. This means that the homebuyer may receive his or her appraisal before or simultaneous to the lender receiving their copy. If the homebuyer believes the 3-business-day required period is not necessary for whatever reason, he or she has the right to waive that requirement.
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 homebuyer. The homebuyer must receive a revised TIL disclosure at least 3 business days before closing, providing the homebuyer with the time required to determine if the homebuyer is comfortable with his or her loan choice. If mailed, The TIL disclosure is considered “received” 3 business days after mailing. A more typical contract date may be 30-45 days—or possibly longer (such as with a new construction loan).
Considering that many things occur and may be changed or finalized throughout the course of the transaction, there are a number of things that can impact the homebuyer’s APR. Therefore it is critical on the front end to ensure that estimated fees are as accurate as possible. It is essential to work together to ensure timely closings—everyone plays a key role. Set realistic expectations upfront and throughout the transaction with the listing agent, the seller and the homebuyer in regards to potential closing dates. It is wise to plan for at least a 30-day close.