The mortgage industry has undergone some big changes lately and sellers and buyers are being impacted by some recent changes which impact the purchase and sale timeline:
HERA and HVCC - background information
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. Also, Fannie Mae and Freddie Mac
adopted the Home Valuation Code of Conduct (HVCC) to reinforce appraiser independence, valuation
protections, and enhance the overall integrity of the valuation process.
Effective May 1 2009 - HVCC - Promotes the accuracy of appraisals by shielding appraisers from undue
influence, and ensuring that borrowers have sufficient notice of appraisal
content by requiring that borrowers receive a copy of their appraisal reports no
less than three days prior to the closing of their loan absent a borrower waiver
of this requirement.
Effective July 30, 2009 - 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 Act requirements surrounding early
and final disclosures to homebuyers and addresses the timing of when fees can
be charged.
A few things to keep in mind
These new regulations will impact closing timelines. In the past, 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.
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 collected at
application.
The homebuyer must be provided with a copy of his or her appraisal a
minimum of 3 days prior to closing.
If the homebuyer believes the 3-business-day required review period is not necessary for whatever reason,
he or she has the right to waive that requirement.
Plan your closing around a minimum 35- 45 day timeline from your offer date and keep in mind the factors mentioned which could impact the timeline.
Mark Gracy The Gracy Team www.GracyTeam.com Keller Williams Realty
168 N Main Street Andover, MA 01810
Andover, MA Real Estate Consultant
Serving real estate customers on the North Shore, Merrimack Valley, MA and Southern NH
Information provided by Wells Fargo Mortgage
Information is accurate as of date of printing and is subject to change without notice. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.
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