Hera Mortgage Disclosure Improvement Act
Many new government laws and other changes are occurring in the mortgage industry to help ensure the home
financing process is transparent and understandable to customers, like you. Compliance with these new requirements
is mandatory for all mortgage lenders and mortgage brokers, with the goals to help prevent deceptive lending
practices and to make sure-as a borrower-you are provided with the details and time you need to make more
informed decision about the home financing product you choose.
The details that guide loan processing time lines
Historically, for a home financing transaction, the closing dates were determined by the buyer and seller. Going
forward, consumers (who are obtaining a mortgage) and their REALTORS® need to take into account a few
mandatory time lines that impact the processing of the mortgage application.
For example, some of the new legislation that takes effect July 30, 2009, provides requirements for:
- When loan closings can be scheduled
- When new Truth in Lending disclosures need to be provided to consumers
- What counts as a “business day”
- When fees can be collected from the borrower
This means that consulting with your mortgage professional up front about potential closing dates is critical toward
setting expectations for all of the parties involved. Minimally, you should plan on a least 30 days to complete the
loan process from initial application.
What can affect the loan time line?
A change in any of the following during the process could impact your Annual Percentage Rate (APR) and therefore
your estimate closing date:
- Last minute closing cost credits by seller
- Change in mortgage product
- Change in closing/signing date
- Change in loan amount
- Unlocked rate
- Change in fees by third parties-such as your settlement agent
- The interest rate on your loan impacts the APR.- This means that until you lock your rate, an exact APR cannot be determined
What you can do to help keep the process on track
Review the time line and potential impacts with your mortgage professional up front and throughout the loan
process so you can keep your REALTOR® or builder informed. It is wise to plan for at least 30 days to complete the
Obtain a credit-checked pre approval before you start to shop for a home.
Review the initial disclosures your receive. Initial disclosures include the Truth in Lending (TIL) which discloses in
writing the terms and conditions of a mortgage, including the APR and other charges so that you are clear about the
details of the transaction before moving further. We are here to help you work through this process and answer any
questions you may have.