The Housing and Economic Recovery Act (HERA) regulations are effective July 30, 2009.

The Housing and Economic Recovery Act amends the Trust in Lending Act (TIL), implemented through Regulation Z. It has a number of provisions including the Mortgage Disclosure Improvement Act, which changes the Truth in Lending Act requirements surrounding the early final disclosures to homebuyers and addresses the timing of when fees can be charged. The purpose of these changes is to prevent deceptive practices in the home mortgage industry and to ensure that buyers get relevant information prior to closing. This is good for Naperville area home buyers although the changes may have an impact on closing dates.

In a nutshell, the key changes are listed below:

1. Upfront fees cannot be collected by the lender (exception being credit report fee), until disclosures are received.
2. Loans can be locked at the time of application if fees have not been collected.
3. Home buyers must be provided an appraisal 3 days prior to closing
4. The final Truth in Lending must be provided to the Borrower 3 days prior to closing
5. An increase of more than .125% in the Annual percentage rate (APR) from the initial Truth in Lending Disclosure requires  (TIL) disclosures to be revised.
6. which means lenders will have to get the closing instructions to the closing attorney much earlier.

The day of a rush deal, fast closing may be gone.  The new regulations and investor guidelines redefine “Rush” to a minimum of 7 days from the date initial disclosure are issued. That is 7 days from application, 3 business days for mailing notice.