The Truth-In-Lending Disclosures

The HERA Act has new rules that will go into affect on July 30th. The act is amending the Truth-in-Lending disclosure surrounding early and final disclosures for homebuyers. Here are some of the changes; Saturdays will now be considered a business day for disclosure timing. Business days will include all calendar days, except for Sundays and Federal holidays. The second change will be the timing of the closing. A borrower will need to wait 7 business days from the time they receive the initial mortgage disclosure. Thirdly, if APR (Annual Percentage Rate) increases by at least an 1/8%, then all new Truth-in-Lending disclosures must be provided to the borrower. The borrower will be given 3 business days to receive them and 3 business days to return them. The borrower will need to wait at 6 least 6 business days to close, after re-disclosure. Lastly, there is a change to the collection of fees. The only fee that can be charged before the Truth-In-Lending disclosure is the credit report fee. They are allowing the borrowers 3 business days to receive the disclosures. You can collect the appraisal fee on the fourth business day. These apply to primary and second homes, not to investment properties. There will be no more “rush” closings, because if you have to re-disclose, you will be closing on the 7^th business day from re-disclosing. Because APR’s can be tough to calculate, one thing that is coming from this, is that title companies are offering a fixed flat-fee for their services to make the process more streamline and reduce any changes later on to the APR.