Home Economic Recovery Act and Regulation Z Will Help Protect Home Buyers

Home Economic Recovery Act and Regulation Z Will Help Protect Home Buyers

There has been a lot of buzz about the Home Economic Recovery Act and Regulation Z. This regulation is an additional layer of the revamped FDIC Truth In Lending laws designed to protect consumers by forcing lenders to disclose detailed information prior to the consumer. The new provisions, prompted by the Credit CARD Act of 2009 and directly related to home loans and credit cards, will hopefully help prevent the recent housing market downturn from happening again.

These additional protection steps will help consumers make wiser financial decisions about their home loans and help reduce the number of predatory lenders out there. Consumers will be better armed with accurate knowledge and details concerning potentially devastating and harmful home buying decisions and deals.

A large part of the current state of the US housing market is a result of uninformed buyers purchasing homes they simply could not afford. Many of these buyers feel that they were taken advantage of and victimized by lenders just trying to turn a profit. Thanks to industry-wide zero-interest, no money down loans being made to individuals that did not have the ability to realistically pay their mortgages down the road.
By making substantial efforts and passing necessary legislation, lawmakers will promote a housing market where the buyer will be better educated, protected and held responsible for their actions. By involving better educated consumers in the home loan process, all housing markets can possibly reduce the number of foreclosures that resulted from bad lending decisions.

As stated by Reserve Chairman Ben S. Bernanke, "Consumers need the proper tools to determine whether a particular mortgage loan is appropriate for their circumstances.” Chairman Bernanke added, “It is often said that a home is a family's most important asset, and it is the Federal Reserve's responsibility to see that borrowers receive the information they need to protect that asset,".

This is great news for the consumer. Some of the provisions include:

Lenders must provide buyers with initial truth-in-lending mortgage cost disclosures within three business days of the application. If they don’t, you can terminate the deal.

Lenders can't collect any fees, other than for a credit check, until after you receive the initial disclosure.

Lenders have to provide you with a copy of the real estate appraisal three business days before the scheduled closing date.

A final truth-in-lending disclosure is due three business days before closing.
The lender can't close the loan until at least seven-days after applicants have or mailed the initial disclosure.

Creditors have to provide an additional loan cost disclosure if there is a change or modification that makes to APR go over a certain amount. You get an additional 3 days to review these changes before closing the loan. Go to www.tombrewerjr.com for more information.