Voices of Real Estate National Association of REALTORS® 2009 Leadership Team
August 7, 2009
Source: National Association of REALTORS®
New Truth In Lending RegulationPosted by Ron Phipps, 2009 NAR First Vice President
One of the benefits of membership is the important information that REALTORS® share with each other about the latest regulatory changes affecting the industry. I wanted to share with you an important new change to the Federal Reserve Board Truth in Lending Regulation (Reg Z). The new requirements apply to loan applications filed on or after July 30, 2009. Lenders will be subjected to new disclosure requirements for mortgage loans. The new rules are complex and compliance will be a challenge for lenders.
REALTORS® will want to learn the basics so we can advise our clients of potential delays and the new procedures. Having this information, is part of our effort to re-enforce your position as a primary information source in the sales process.
Here are key highlights of the changes:
- The new requirements apply to all mortgages secured by a borrower's home, including primary and second homes and refinancings. Investor loans continue to be exempt.
- Lenders must give good faith estimates of mortgage loan costs within 3 business days after the consumer applies for a loan (early disclosure). The lender may not collect any fees before the disclosure is provided, except for a reasonable fee for obtaining a credit report.
- The closing may not take place until expiration of a 7 day waiting period after the
- consumer receives the early disclosure.
- Consumers may shorten or waive the 3‐day and/or 7‐day waiting periods for a "bona fide personal financial emergency," but only after receiving an accurate TILA disclosure. In the final rule's preamble, the Fed stated that it "believes waivers should not be used routinely to expedite consummation for reasons of convenience." The Fed decided not to insulate lenders from liability even where a consumer modifies or waives the waiting periods.
- If the annual percentage rate (APR) changes by more than 0.125 percent, the lender
- must provide a corrected disclosure to the borrower and wait an additional 3 business days before closing the loan. The APR includes not only the interest rate on the loan but certain other costs related to settlement, so it will be important for any fees that affect the APR to be as accurate as possible, as early as possible, to minimize the need for a corrected TILA disclosure.
To read more about the new rule, NAR's Government Affairs Washington Report has more detailed information. Some industrious REALTORS® are sending information regarding Regulation Z to their clients and customers as well as current 'for sale by owners,' in the effort to show the FISBOs why they need representation.
Each step of the way it gets more complicated requiring more knowledge and experience: knowledge and experience that we as REALTORS® have and bring to task. As soon as your up to speed on the new rule, drop me a comment and let me know how it is affecting your business. I would really like to hear what our members have to say. - Ron Phipps, 2009 NAR First Vice President
Posted on July 30, 2009 04:16 PM