HERA - How it Impacts Your Next Mortgage Transaction

The Housing and Economic Recovery Act, HERA, is part of the Mortgage Disclosure Improvement Act, MDIA passed into law in July of 2008.  The HERA component just recently went into effect at the end of this past July.  The MDIA was the act that also brought us HVCC, the Home Valuation Code of Conduct, which has changed the way most appraisals are ordered.

HERA helps to better educate consumers during a mortgage transaction.  It is specifically designed to eliminate the chance for borrowers to be surprised at the closing table when the loan they are signing for is not the one they thought they had agreed to.  It creates a greater level of transparency in the real estate industry.

Here are the highlights of HERA, which apply to both purchase and refinance transactions:

1. No upfront fees, except a fee for a credit report, can be charged to a borrower until they have received an initial Truth-In-Lending, TIL.
2. A borrower has at minimum 7 business days, which include Saturdays, to review the initial TIL before the loan documents can be signed.
3. A change in APR of more than .125% requires the lender to re-disclose and provide a new TIL.  The borrower has 3 days to review the re-disclosed TIL before they can sign loan papers.

HERA will mean your next mortgage and real estate transaction may take a bit longer than you are used to, especially if something changes during the process that requires re-disclosure.  HERA is raising the bar and forcing many lenders to provide a level service that we at Resident Lending Group have been providing for years.  We’ve always sat across the table from our clients when they sign their loan papers to insure that they are getting the loan we told them we would get for them.  So, we embrace these changes because we believe they will create more overall health in our industry.

Building relationships with our clients to provide successful home ownerships.