Nick’s posterous

HERA/HOEPA - Background Information

In 2008, the Home Ownership and Equity Protection Act (HOEPA) and the Housing and Economic Recovery Act (HERA) were passed by Congress, and the Federal Reserve Board published the regulations under the Truth in Lending Act. These regulations were written to provide more transparent, level and fair regulation of the real estate industry; to add additional steps to help prevent deceptive lending practices; and to protect consumers by making them more informed - and therefore more confident- in their home financing choices.

HOEPA - Effective July 30, 2009

Amends the Truth in Lending Act (TIL), implemented through Regulation Z.  Has a number of provisions including the Mortgage Disclosure Improvement Act, which changes the Truth in Lending Act requirements surrounding early and final disclosures to home buyers and addresses the timing of when fees can be charged.

Four key elements you need to know

1. If the home buyer is financing the property, these new regulatory and investor guidelines will impact-and could even dictate-the closing date. 

Historically, home buyers and sellers would agree on a closing date, and then service providers - including lenders - would work as best they could toward meeting that date. Going forward, purchase contracts can still be written with a specific closing date in mind, but all parties need to take into account that the earliest any home purchase transaction can close is 7 business days after the home buyer is issued his or her initial mortgage disclosures from the lender. If the application is taken by phone - and everything went perfectly, the earliest closing date would be 7 business days after application. (Note: At Wells Fargo Home Mortgage, Saturdays, with the exception of federal holidays, do count as a business day for the purpose of disclosures only.)

2. Upfront fees cannot be collected by the lender (except for a credit report fee) until the initial disclosures are received. If the disclosures are overnighted, they are considered "received" the next business day-allowing the fees to be collected on the following business day.

Historically, upfront fees could be collected immediately. Starting July 30, 2009, upfront fees can be collected immediately when the application is taken in person and the home buyer receives his or her initial disclosures. The only exception is the credit report fee which can be collected at application.

3. The homebuyer must be provided with a copy of his or her appraisal a minimum of 3 business days prior to closing.

To help expedite the process, Wells Fargo Home Mortgage has elected to have a copy of the appraisal issued directly to the homebuyer - and the homebuyer must receive the appraisal at least 3 business days prior to the mortgage closing. This means the homebuyer may receive his or her appraisal before or simultaneous to the lender receiving their copy. If the homebuyer believes the 3-business-day required review period is not necessary for whatever reason, he or she has the right to waive that requirement.

4. An increase of more than .125% in the Annual Percentage Rate (APR) from the initial Truth in Lending Disclosure (TIL) requires the TIL disclosure to be revised and reissued to the homebuyer.  The home buyer must receive a revised TIL disclosure at least 3 business days before closing, providing the homebuyer with the time required to determine if the homebuyer is comfortable with his or her loan choice. If mailed, the TIL disclosure is considered "received" 3 business days after mailing.

Considering that many things occur and may be changed or finalized throughout the course of the transaction, there are a number of things that can impact the homebuyer’s APR. Therefore it is critical on the front end to ensure that estimated fees are as accurate as possible.

The Nevada Homestead Act:  Today doesn't mean you can squat on 160 acres of public land and eventually own it, rather it is a means to protect equity in your home against seizure, forced sale by general creditor claims, and judgments that might be entered against you.  The amount of protection was recently increased in Nevada to $550,000.

Here's how it works:  You must own or be buying your home in order to file a Declaration of Homestead. The home must be your principle residence, not a rental or investment property.  It doesn't matter whether you are single, married or an unmarried head of household.  

Be aware that a homestead will not protect you if the judgment or lien is for:  Taxes, the mortgage or deed on the home or mobile home, improvements made on the home or mobile home, mechanics liens and other liens on the home or mobile home, any debt or obligation you willfully and voluntarily incur. 

To protect your property:  All you need to do is: Obtain and fill out a Nevada Declaration of Homestead form, sign it before a notary and print your name beneath your signature, Record it at the County Recorder's office of the county in which the property is located.  There is a nominal recording fee.  You can record your homestead at almost any time, even if you have already lost a lawsuit or had a judgment entered against you.

My Advice:  Filing a Declaration of Homestead is easy and is such a valuable tool that we recommend all Nevada homeowners utilize this very inexpensive means to protect their home equity.   

FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.

Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.

The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning.

Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.

There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.

In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today.

The first-time homebuyer tax credit was enacted last year--and improved upon earlier this year--to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven't owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.

Homes on Market:  13,340

Townhome/Condo/Manu:  4,088

All Units in Escrow:  11,053

All Units Sold in 2009:  11,912

Note:  We are on track for a total 2009 year of 35,736 Resales which will break the record for resales sold in Vegas!