The Housing and Economic Recovery Act amends the Truth In Lending Act and takes effect July 30th, 2009. Wells Fargo just issued a fact sheet. Here are the most important points:
- The earliest any home purchase transaction can close is 7 business days from when the homebuyer is issued their initial mortgage disclosures from their lender.
- Other than a credit report fee, no other upfront fees can be collected by the lender until the day after the homebuyer receives their disclosures. Effectively, this means that the appraisal will be delayed by 2-5 days.
- The homebuyer must receive a copy of their appraisal a minimum of 3 days prior to close of escrow.
- Any increase of more than 0.125% in the Annual Percentage Rate from the initial Truth In Lending Disclsoure requires a revised TIL Disclosure to be issued to the homebuyer at least 3 business days before closing.
Basically, more 30-day escrows are likely to turn into 35-day escrows. Buyers need to make sure they are protected if closing runs late. Sellers need to expect unexpected delays…especially if they are trying to time the sale of their old home with the purchase of a new one.
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