HERA and HVCC Guidelines
Frequently Asked Questions (FAQ)
Answers to Frequently Asked Questions (FAQ) about the Housing Economic Recovery Act (HERA), Truth-In-Lending Act (TILA), Mortgage Disclosure Improvement Act (MDIA), and the Home Valuation Code of Conduct (HVCC). These new government guidelines have been adopted by Fannie Mae and Freddie Mac.
Does the new legislation change home loan applications taken before these guidelines go into effect?
If the purchase property was documented before May 1, 2009, the application is not subject to HVCC. Likewise, if the purchase property was documented before July 30, 2009, the application is not subject to HERA.
Are purchases of investment properties covered under the same requirements?
Purchases of primary residence and second homes are the only transactions to which these regulations apply at this time.
If submitting your loan application in person, can fees be collected at that time?
Yes. In fact, your loan could close faster if you submit your loan application in person.
Is it possible for the lender to hold credit card information, a post-dated check, or another form of payment until it is permissible to collect upfront fees if the application is taken over the phone?
It is not permitted for payment information for upfront fees to be collected before the appointed collection date. Upfront fees are allowed to be collected on the next business day after initial disclosures are obtained. Disclosures can be issued and upfront fees can be collected on the same day as an in person application.
Is it possible to collect fees paid by the seller before established collection time (the next business day after initial disclosures are received by the homebuyer)?
No fees (except for the credit report) may be collected by the lender on behalf of the homebuyer until the initial disclosures are received by the homebuyer. Any fee commonly covered by the seller (such as the appraisal fee) or any other party may not be collected until that time.
Are disclosures affected if after the initial application the homebuyer adds a home equity loan or a line of credit?
There is not an affect if the homebuyer adds a home equity line of credit. However, if the homebuyer adds a home equity loan, the initial disclosure time period begins again, and it is required that the same disclosure requirements be followed for the home equity loan.
How will the loan process be affected if there is a delay in collecting the homebuyer’s upfront fees?
The loan process more than likely will be delayed if the lender is unable to collect the upfront fees as soon as they are permitted to do so. Required services such as the appraisal can be put on hold until those fees are collected.
What triggers the re-disclosures of the initial APR?
Re-disclosure is required if the APR at the time of consummation increases from the last disclosed APR by more than: 1⁄8 of 1 percentage point in a regular transaction; or 1⁄4 of 1 percentage point in an irregular transaction (ie. ARM loan).
If still in the seven (7) business day period of the initial Truth-In-Lending disclosure, can a TIL re-disclosure still be issued?
If the APR at the time of consummation increases from the APR disclosed earlier by more than: 1⁄8 of 1 percentage point in a regular transaction; or 1⁄4 of 1 percentage point in an irregular transaction (ie. ARM loan) and a re-disclosure of the Pre-Closing TIL is required, it can be released and sent out within the first seven (7) business day time frame. The three (3) business day rule would still apply as well.
Are rush transactions still possible?
In the loan process, especially now more than ever, it’s best to have time on your side. Still, the most that can be asked for, in the perfect scenario, is for a loan transaction to close in a minimum of seven (7) business days after the initial disclosures are mailed.
How soon may the closing happen after the final Truth-In-Lending disclosure is received?
Three (3) business days must be allowed for the mailing of the TIL; an additional three (3) business days must be provided for the homebuyer to approve their loan scenario. The closing may be held on the third business day after receipt of the TIL.
If you are considering a new home purchase, The Leaman Team will keep you alerted to interest rate changes. The team continually monitors rates. For clients interested in a new home purchase or refinancing, the team alerts them of interest rate changes so they are ready at the best time to lock in your mortgage rate.
The Leaman Team wants to make sure your questions are answered. Please call The Leaman Team today to discuss your home financing: (800) 301-3405 or email Team@MaxLeaman.com.