New Truth In Lending aka HERA will Raise Interest Rates

On July 30th the new Truth in lending rules come into play. What they serve to do is give the buyer/borrower more time to digest information before expenditures can be charged for appraisals or loans funded for closing. What the real impact to the borrower will be is that now it'll be harder to close a loan in 30 days.

You'll be seeing it now takes 45 days to close a transaction.

The key changes are:

  • All loan disclosures must be produced within 3 business days of receiving the application back from the client
  • All disclosures must be updated and sent to the client again within 7 days prior to the closing
  • Saturdays now count as a business day.
  • No fees may be paid until the Truth and Lending Disclosure is by the bank to the borrower (not the loan officer), which means no ordering the appraisal until 3 days after the client has receive the new TIL,
  • The lender may only take a nominal credit report fee upfront.
  • The truth-in- lending form must be updated every time the interest rate changes, even an 1/8 of a percentage.
So now you see how this will delay closing, which means borrowers will have to lock for longer period (read higher rates/points). I just what to thank the politicians that thought this would someone help buyers.