Latest Lending Rules

Here is the latest on the new lending rules enacted and in place as of 1 August:

In 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 regulations were written to provide a more transparent, level and fair regulation of the real estate industry; to add additional steps to help prevent deceptive lending practices; and to protect consumers by making them more informed --and therefore more confident--in their home financing choices.
HERA - Amends the Truth in Lending Act (TIL) implemented through Regulation Z. Has a number of provisions including the Mortgage Disclosure Improvement Act which changes the Truth In Lending requirements surrounding early and final disclosures to home buyers and addresses the timing of when fees can be charged.
HERA applies to:
* ALL Loans registered on July 30, 2009 and thereafter
* ALL Primary Residence and Second Home Transactions
* ALL Purchase and Refinance Transactions
HERA changes:
*Collection of Fees - No fees, other than an actual and reasonable credit report fee, may be collected prior to the borrower’s receipt of the initial disclosure from the lender. Disclosures are considered “received” three full business days after mailing.
*The borrower must be provided a copy of the appraisal a minimum of three business days before closing. The appraisal is considered “received” three business days after mailing.
* Business days for HERA timing purposes include Saturdays and exclude Sundays and Federal Holidays.
*The absolute minimum number of days to be able to close a transaction once HERA is implemented is 7 business days from initial TIL Disclosure.
*An APR increase of more than .125% from the initial TIL requires re-disclosure of the new and final APR via the TIL disclosure a minimum of 6 business days prior to the closing date.