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HERA Changes on Disclosure of TIL and Regulation Z

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By : John Le Francois    99 or more times read
Effective July 30th 2009 the following changes will affect all transactions in the mortgage industry and will affect Brokers as well as Banks. The changes will affect how to disclose the Truth and Lending and the Regulation Z the result of the “The Housing and Economic Recovery Act of 2008” (HERA) changes.

The Housing and Economic Recovery Act of 2008 (HERA)

HERA was developed to protect the mortgage consumer. The Act contains provisions that revise the Truth and Lending Act and will apply to all loan applications received on or after July 30, 2009.

Initial Truth In Lending (TIL) Disclosure

The initial TIL disclosure has been amended to require specific language to notify the consumer that they are not required to complete the loan agreement merely because they have received the disclosure or signed a loan.

Waiting Periods

Please note: For all timing requirements set forth below, “business days” are Monday through Saturday, excluding legal public holidays.

The revised rule implements waiting periods for the collection of fees and loan closing. The following waiting periods apply:

  • Creditors, Mortgage brokers, and any other person are prohibited from imposing any fee other then a reasonable credit report fee until the consumer has received the lenders initial disclosures.
  • The loan cannot close (i.e. document signing) until seven (7) business days after the initial TIL disclosure has been mailed.
  • The loan cannot close until three (3) business days after re-disclosure TIL is received (when applicable).

If the disclosure are delivered via regular mail, the disclosures are considered received by the borrower three (3) business days after they are mailed. When disclosures are delivered electronically, consistent with the E-Sign Act, the creditor may rely on evidence of actual delivery to determine when the three-business (3) day period begins. Accordingly, lenders are adapting disclosure processing to support electronic communication of the Truth in Lending. Electronic delivery of the disclosures allow for a more streamline process and provides an opportunity for better customer service.

The Annual Percentage Rate Change Provision

If the APR increases by more then 0.125% on Fixed rate loans or .250% on ARMS from the previously disclosed APR, a re-disclosure TIL must be provided to the customer. The loan cannot close (document signing ) until Three (3) business days after the re-disclosure TIL is received by the borrower.

Appraisal FEE Collection

A consumer (applicant) credit card authorization after the lenders TIL has been received.

Penalties if out of Compliance

If the previous procedures are not followed the following will take place. The loan will be canceled with the lender and appraisal will become void and the process will have to start over with a new lender. Brokers will be fined $4,000.00 and the lender will be fined .20 of the loan amount if audit shows it was out of compliance.
My name is John Le Francois and I am one of three authors for Direct Access Lending Blog. You can find more articles at You can read my customer reviews at

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