Borrower Protections/New Disclosures

Posted on July 23, 2009. Filed under: Guidelines, Industry News | Tags: , , |

In late 2008, the Home Ownership and Equity Protection Act (HOEPA) and the Housing and Economic Recovery Act (HERA) were passed by Congress, and the Federal Reserve Board published the regulations under the Truth-in- Lending Act.   These are important changes meant to protect consumers and changes that will dramatically effect the timeline of the mortgage process.

Limited examples of changes are below:

  • Upfront fees cannot be collected by the lender (except for a credit report fee) until the initial disclosures are received. If the disclosures are sent overnight, they are considered “received” the next business day, allowing the fees to be collected on the following business day.
  • 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 re-issued to the homebuyer.  The home buyer 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.

The main thing to be aware of as a purchaser is that the process of closing a loan is now managed by requirements that look out for your interests.  It may take a bit longer to complete the process, but is worth it.  Here is another article that describes it well

These changes take hold for applications originating after July 29th, 2009.


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