Have you heard of HERA yet? You will if you buy a home after August 1, 2009. Housing and Economic Recovery Act (HERA)
Posted by: Vince Kingston
on Jul 28, 2009 
Bureaucrats rejoice! HERA and all her colorful bureaucracy is finally here! HERA stands for the Housing and Economic Recover Act, new sweeping regulations that go into effect August 1st. The new regulations apply to all transactions (except investment properties), all lenders, and all loan types (FHA, Conforming, USDA, VA, etc.) and will impact, if not outright dictate the closing date. Combined with the new HVCC appraisal regulations and it may be challenging to close transactions in 30 days unless everything is executed perfectly and there are no appraisal, property, or borrower delays, including borrowers responding immediately to same day requests for signatures and same day receipt by lender of purchase agreements. Since this rarely happens in real life it could mean longer close times.
The good news is that as long as buyers, sellers, and listing/buying agents are aware of the timing requirements of the new regulations, they will know to expedite all paperwork in order to facilitate timely closes.
To simplify, per HERA the appraisal cannot be ordered until 3 business days after the lender mails out the initial disclosure package. However for the lender to do this, they must have all initial disclosures, loan documents, and purchase agreement in hand. Since this typically can take up to a week to gather all required docs, fully executed purchase agreement, and signatures just to submit to underwriting, and then it can take 24-48 hours after submission for underwriting to get it in their queue before they mail the disclosures out, it can easily be a full two weeks before the appraisal can even be legally ordered even if there is very little delay upfront. A little focus and coordination between all parties will ensure these regulations don’t consistently extend close dates.
The two headed monsters of HERA and HVCC are rearing their ugly heads and already causing headaches in an already battered real estate industry. They were implemented in the name of protecting consumers although the regulations are so dense and anti-consumer (especially in the case of HVCC which actually increase costs and risk for borrowers) its hard to argue they are positive developments.
However the good news is that these regulations don’t make it more difficult for folks to qualify for a loan. I continue to fund loans every month, particularly for first time homebuyers. Its just business as usual, with another layer of bureaucracy. You can always contact me at 971-221-8525 or vince@vincekingston.com with any questions.
Tel: (971) 221-8525