The Housing and Economic Recovery Act (HERA) Has Gone Into Effect

Today's big news is the new federal regulations regarding real estate mortgage closings.

The fours key elements you need to know:

1. If the homebuyer is financing the property, these new regulatory and investor guidelines will impact and will dictate the closing date.

2. Upfront fees cannot be collected by the lender (except for credit report fee) until initial disclosures are received.

3. The homebuyer must be provided with a copy of their appraisal a minimum of 3 business days prior to closing.

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 their loan choice.

Potential impacts to the APR:

• Unlocked Rate
• Change in loan amount
• Product change
• Rate re-lock due to market improvement
• Change in closing date
• Changes to fees, inclusive of settlement agent fees


The combination of these items will make anything less than 30 days closing very difficult and 45 days is a more likely scenario. Now more than ever the buyer, lender, real estate agent and title agent will need to communicate and cooperate to ensure a successful and timely closing.

For a more detailed handout outlining the new mortgage process and timeline email bill.swanson@cbshome.com.