HERA Affects Buyers of Scottsdale Real Estate

New HERA regulations designed to improve mortgage disclosure take effect on July 30, 2009.  Through this legislation, buyers in the Scottsdale and Phoenix Arizona real estate markets will be better informed about the mortgage process in the future than in the past.

HERA stands for the Housing and Economic Recovery Act.  It assists borrowers by mandating full transparency.  The new rules encourage consistent lending practices among Scottsdale lenders and include controls to prevent deceptive and abusive lending practices.  Hoping to promote fair regulation of the Arizona real estate industry, all parties should benefit from the regulations.

All mortgage lenders and mortgage brokers in Scottsdale must comply with the regulation requirements.  One of them has to do with Truth in Lending (TIL).  Truth in Lending is a form mandated by federal law that specifies information that must be provided to borrowers on different types of loans.

The idea is that lenders provide one uniform set of price disclosures that are consistent from loan to loan and from lender to lender.  In theory, this would enable Scottsdale home buyers  to make apples-to-apples price comparisons across loan types and across lenders.

Mortgage companies in Arizona are looking positively about several changes heralded by HERA.

1. Saturdays will be counted as business days for all disclosure wait periods.
2. With the exception of the credit-report fee, upfront fees cannot be charged until the borrower receives the initial TIL from the lender.
3. Initial TIL is required on purchases and refinancing of primary residences and second homes and not for investment properties.
4. Initial TIL must be provided at least seven business days before the closing and signing date.
5. If the APR in increased by more than .125 percent, at least three business days before closing the TIL must be revised and reissued to the Scottsdale home buyer.

The appraisal cannot be requested until the Arizona home buyer  receives the initial TIL from the lender.  Lenders may not collect the appraisal fee until four business days after the lender issues the initial disclosure packet.  A copy of the appraisal must be provided to the borrower, although they may eliminate the three-business-day wait period by waiving their right to review it.

In today’s real estate market, escrows no longer close in 30 days.  Loans are more difficult to close and when all goes well, they take about 40-45 days.

For more information about the estate homes and luxury real estate in the area, contact the LUXE Real Estate Group at 1-888-900-LUXE.