Say Goodbye to Your Rabbit Ears

Say goodbye to your rabbit ears… never again to be adorned with fistfuls of aluminum foil twisted in obscure ways to pull in the perfect TV signal…

Truthfully, most everyone removed rabbit ears from their living room décor years ago… Despite this, the PSAs over the past 6 months – about the change to digital – have been non-stop.

The Housing and Economic Recovery Act of 2008 was passed at about the same time the digital signal PSAs started. Also referred to as HERA, the provisions contained in the Act will change the way of conducting Real Estate business much like digital changed the way we receive TV signals. The following may serve as a PSA to everyone involved in the purchase of a home in the future.

As with many congressional acts, the HERA provisions are designed to protect consumers. This includes giving borrowers more time to review the information about their loan and to feel comfortable about their loan choice before moving forward. All lenders must work within the following provisions:

  • Fees – If a mortgage loan application is not taken in person (where the disclosures can be handed to and reviewed with the borrower), the borrower cannot pay the appraisal (and/or application) fee until the 8th business day from the day of application.  The time lag allows for the printing, mailing, receipt and review of the loan disclosure documents by the borrower. Once the fee is collected, the property appraisal can be ordered.
  • Appraisal – The borrower must be provided a copy of the property appraisal no later than 3 business days prior to the closing date.
  • TIL (Truth-In-Lending) – Four business days prior to closing, the final TIL must be provided to the borrower. If, after the final TIL is mailed,  the APR (Annual Percentage Rate) on the TIL changes by more than 1/8th of 1% of the loan amount, a new final TIL must be prepared and mailed to the borrower. The closing date may not be earlier than the 4th business day from the print date of the new final TIL.

How will this affect all of us?

  • Lenders will need more time to complete the loan application, disclosure and approval process…
  • Closing agents will need more time to prepare final HUDs and TILs…
  • Borrowers will need more time to obtain loan commitments from their lenders, and Realtors will need to seek longer loan commitment deadlines and closing dates for their borrowing customers…

In the words of one veteran loan officer, “the days of the 1 week loan closing have gone the way of the rabbit ears… long gone”.

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