How the new government regulations may impact your closing date:  

HVCC:  The Home Valuation Code of Conduct or HVCC became effective May 1^st, 2009.  The Purpose of this legislation was to promote the accuracy of appraisal 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 report no less than 3 days prior to the closing of their loan absent a borrower waiver of this requirement. 

HERA:  The Housing and Economic Recovery Act or HERA amends the Truth in Lending Act (TILA) and became effective July 30^th, 2009.  The amendments change the requirements surrounding early and final disclosures to homebuyers and address the timing of when fees can be charges. 

Here is what you need to know: 

1.)      The new regulatory and investor guidelines will impact – and could even dictate – the date of closing. In the past home-owners/buyers and sellers would agree on a closing date, and then your broker, lender and title company would work to meet the closing date as a deadline. Going forward, a purchase agreement or ideal close date can still be agreed on; however, the earliest any closing take place is 7 business days after the borrower is issued his or her initial mortgage disclosures from the lender.  

 2.)      Aside from a credit report fee, upfront fees cannot be collected until the initial disclosures are received.  If the disclosures are over-nighted, they are considered “received” the next business day allowing the fees to be collected on the following business day.  (Historically, there were no restrictions on when feed could be collected and they were typically collected at the time of application). 

3.)      The borrower must be provided with a copy of his/her appraisal a minimum of 3 business days prior to closing. If the homebuyer believes the 3-business day requirement review period is not necessary for whatever reason, he/she has the right to waive the requirement. 

4.)      An increase of more than 1/8^th or .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/owner with the time required to determine if the they are comfortable with his or her choice.  If mailed the TIL disclosure is considered “received” 3 business days after mailing.   Although we try to be as accurate as possible when initially disclosing APR, there are many things that can impact APR and therefore the potential for delay in closing is present.  

 ·       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

Here are some ways you can help us ensure you have a timely closing: 

•    Review the timeline and potential impacts with us and if you are purchasing a home, you can keep your Realtor or Builder informed.  It is wise to plan for at least a 30-day close.
•    When the Appraiser contacts you, try to schedule the appraisal date right away to avoid further delays.
•    Get the necessary income and other documentation that requested in a timely manner.
•    Ask questions!  If you are unsure of how something may impact the process, please ask.  You can’t over-inform us!
•    Review the appraisal delivery disclosure and determine whether or not you wish to waive the 3-business-day review period prior to closing.
•    Understand that the interest rate on you loan impacts the APR.  This means that until you lock in your rate, an exact APR cannot be determined.  Minimally plan on locking at least 10 business days prior to the date you with to close.
•    Understand that a change in mortgage product or even a change in fees by your settlement agent could impact your APR and therefore the estimated closing date.