Keep Up To Date On New Mortgage Regulations - Things Are Not Getting Easier!

1. A U G U S T 2 0 0 9
The New Mortgage Regulations
How they may affect your closing date and how to expedite your transaction
The Housing and Economic Recovery the contract, but the earliest any home
Act of 2009 (HERA) is a wide-ranging purchase transaction can close is 7 days
piece of legislation that strengthens and after the homebuyer receives the initial
modernizes the regulation of govern- mortgage disclosures from the lender.
ment-sponsored enterprises Fannie Mae
2. With the exception of the credit
and Freddie Mac, along with the Federal
report fee, the lender cannot collect
Home Loan Banks.
upfront fees until the initial disclosures
Part of HERA imposes sweeping changes have been received. Disclosures that
in the lending industry, placing greater are overnighted are considered “received”
focus on consumer protection. HERA the next business day (except Saturdays),
aims to assure borrowers are better allowing fees to be collected the following
informed about the loan process and business day.
better protected against deceptive lend-
Historically, lenders could collect upfront
ing practices.
fees immediately at the time of applica-
These changes, effective July 30, 2009, tion for both telephone and in-person
will have a direct impact on how applications. Now, the buyer must receive
Realtors structure their transactions initial disclosures before any fees can
and how lenders keep the consumer exchange hands. The single exception
informed of loan charges through stricter is the credit report fee, which can be
disclosure requirements. collected at the time of application.
Four Key Elements If a lender takes an application in person
and delivers the disclosures at that time,
Joe Hubert 1. If the home buyer is financing the
the fee can be accepted at that time as
Office 720-529-1616 property, the new regulatory and
Cell 303-550-7989 well.
investor guidelines will impact and
jhubert@ltgc.com
perhaps even dictate the closing date. 3. The homebuyer must receive a
5690 DTC Blvd. copy of his appraisal a minimum of
Suite 650E
In the past, the parties to the transac-
3 business days prior to closing.
Englewood, CO 80111 tion agreed upon a closing date and all
Office 303-770-9596 service providers, including the lender, A homebuyer who believes the required
Fax 303-290-9040 worked to meet that date. After July 30, 3-business-day review period is not
www.LTGC.com a closing date may still be written into

2. Page 2 necessary may waive that requirement in • Write a 30- to 45-day contract.
The New Mortgage writing.
• Help your buyers understand the
Regulations
4. Any increase of more than .125% relationship between their interest rate
in the Annual Percentage Rate (APR) and their APR. Increases greater than
from the initial Truth in Lending .125% to the APR will require a new
Disclosure (TIL) requires that the TIL disclosure and additional time to the
Disclosure be revised and reissued to process.
the homeowner.
• Encourage buyers to lock their interest
The homebuyer must receive the revised rate and fees as soon as possible and
TIL Disclosure at least 3 business days a minimum of 10 days before closing.
before the closing. If the TIL is mailed, it An exact APR cannot be determined
is considered “received” 3 business days until the interest rate is locked.
after the mailing.
• Set realistic expectations up front and
It is typical for many details to change communicate throughout the transac-
during the course of the transaction, tion with the listing agent, the seller,
including the APR, which can delay the buyer, and the lender regarding
the closing. The APR can be impacted potential closing dates.
by many details of the market and the
• Choose a title company that under-
transaction, including an unlocked rate,
stands the new regulations and has
a change in the loan amount, a change
processes in place to help meet them.
to a different loan product, a rate re-
Land Title works proactively with all
lock because of market improvement, a
lenders to provide preliminary HUDs
change in closing date, and changes to
and/or accurate closing fee sheets to
fees associated with the transaction. If
expedite the new mortgage process.
the closing date is critical, it is imperative
that the lender ensure that the estimated • Provide your Land Title closing team
fees are as accurate as possible. all lender information as early in the
process as possible.
Top 10 Ways to Expedite
Your Closing • Communicate, communicate,
• Make sure your buyers obtain pre- communicate.
approval before they begin shopping for
• Contact your Land Title Guarantee
a new home.
Company Sales Representative if you
• Have your buyers work with their lender are interested in attending an informa-
one-on-one, and preferably in person, tional class about the new regulations.
to obtain and provide all documenta-
Disclaimer: This publication is designed to provide accurate and
tion required to expedite the lending authoritative information in regard to the subject matter covered. It is
distributed with the understanding that the publisher is not engaged in
process. Even a single, seemingly rendering legal, accounting, or other professional service. If legal or
accounting advice or other expert assistance is required, the services of
unimportant document can delay loan a competent professional should be sought.
approval. © Copyright, 2009, Land Title Guarantee Company