Tips to survive the recent TILA changes effective July 30

Let me preface the next paragraph by saying that Patriot Bank Mortgage is committed to the success of your business! We have been embracing changes as they happen, so that we can ease the transitions and complexities of the real estate industry as we know it today.

Now, for the news. On the heels of the HVCC (appraisal) changes we saw May 1, we now have disclosure changes that affect how mortgage companies will have to disclose to consumers. HERA (The Housing and Economic Recovery Act) was passed by Congress and the Federal Reserve to provide a more transparent, level and fair regulation of the real estate industry. These additional steps (effective July 30, 2009) are to help avoid deceptive lending practices:

The earliest a home purchase transaction (with a loan) can close is 7 BUSINESS days after the homebuyer is issued his initial truth in lending disclosure from the lender. M- Sat are considered business days. ·

Application fees cannot be collected until the initial disclosures are received (this could delay appraisals being ordered) ·

ANY change to the loan amount (ex. Sale price), days of interest, or fees (that all affect the Truth in Lending disclosure) , will trigger a new 3 day disclosure and waiting period until the transaction can close. Hence, last minute changes to the contract, or change in closing date from initial application, ‘could’ (not always) impact the closing date.

Tips to ensure timely closings: ·

• Set realistic expectations with listing agents, seller and buyer for potential closing dates)- 30 days min . is a ‘wise’ choice·
• Be sure the lender and title company are in contact as early as possible in the transaction. Title and mortgage need to work together on fees/disclosure , etc more than ever.·
• Be sure homebuyers understand that if their loan is not locked until later toward closing (if they choose to float), this could impact the APR, and therefore trigger new disclosure 3 day period, therefore delaying closing. Borrowers should NOT expect to be able to float down their rate or switch lenders last minute. This would trigger close date changes for sure.·
• Be in constant contact with the lender, and ensure title/lender have a ‘preliminary’ HUD 4 days prior to closing, in case a new TIL disclosure required.·
• Make changes to the contract (lowering price, seller credits, etc) is done as EARLY as possible, and that lenders have those amendments asap, so they can redisclose early.

In the Chronicle, July 15, business section, Scott Burns had a wonderful article titled ‘Buying a Home Takes a Miracle’. He sums it up nicely in the last paragraph : “There is no way you can accumulate enough paper to substitute for human judgement. The No Paper System did not work, It created the housing crisis. The Infinite Paper system that replaced it doesn’t work either. It will extend the crisis. Scott, those are wise words. Only time will tell. We have no choice, Jennifer, but to embrace this change, and hit it head on with changing the way we do business. We must be more tenacious than ever, and encourage team work more than ever as well.