Realtors® have a fiduciary duty to your clients to keep confidential information
confidential.
The second wave of new requirements recently passed which will affect
Realtors® are those concerning the new lending laws. The TILA, the HOEPA and
Regulation Z were recently amended to increase the protections to borrowers. These
laws are quite complex and lengthy, but the important thing for Realtors® to understand
is that there are specific time periods which lenders must follow when processing loans.
These time frames may impact a closing and require it to be postponed. In some
instances, this could result in a failed closing.
Generally speaking, these new laws pertain to all residential home loans which
are secured by the home and are subject to RESPA. These would include home
refinances, loan assumptions, and new mortgages. The goal behind the new laws is to
provide the consumer with greater disclosures, more time in which to review the
disclosed information and greater flexibility in comparing one lender’s offer to another.
The main provisions which Realtors® need to familiarize themselves are the time
frames to which lenders are now subjected. Under the new requirements, lenders are
required to provide consumers with good faith estimates within three business days after
they have applied for the loan by either delivering them to the consumer or placing them
in the mail. In addition to this three business day requirement, the lenders are NOT
permitted to charge or collect ANY fees other than a reasonable fee for conducting a
credit check, until these initial good faith estimates have been received by the consumer.
Once the initial good faith estimates have been received by the consumer, there is
another mandatory waiting period under the new requirements. The lender cannot

consummate (i.e., close) the loan for seven business days following delivery of the initial
disclosures. This could slow the process for the rapid closing loans which some agents
and clients have conducted in the past.
If there are any changes in the annual percentage rate (APR) from the amount
listed on the initial disclosures to the ones in place at the time of closing, then corrected
disclosures may be required which would start another waiting period. The APR includes
the interest rate as well as other costs of the loan. If the APR at closing is more than 1/8
of a percentage point (0.125) above or below that originally quoted, then new disclosures
are required. This is true in regular, traditional transactions. In irregular transactions
(think ARM transactions, balloon payments, etc), corrected disclosures are required if the
APR has changed more than ¼ of a percentage point (0.25) above or below that of the
original disclosures. If corrected disclosures are required, then there is another three
business day waiting period for the new disclosures to be delivered and then an additional
seven business day waiting period following that. This could stop a closing in its tracks
and could delay it for an additional 10 business days! If you need to extend the closing
and all parties agree, you can use TAR Form F7 (Closing Date/Possession Date
Amendment).
Another important thing to keep in mind is that under these new regulations, there
are TWO different definitions of business days. For the three day initial disclosure rule
following application, business day is defined as “days on which a creditor’s offices are
open to the public for carrying on substantially all of its business functions.” 74 Fed Reg.
23289, 23291 (Nat 19, 2009). This could be difficult to calculate, because depending
upon the financial institution, Saturdays may or may not be included. To further

complicate matters, there is a different definition of business days when referring to the
seven business day waiting period before the loan can be closed. For this calculation of
time, a business day is defined as “all calendar days except Sundays and the legal
holidays specified in 5 USC 6103(a), such as New Year’s Day, the Birthday of Martin
Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.” Id., 23300-01.
Please make sure that you understand these differences.
It is possible for the consumer to waive these required waiting periods, but this
practice is not expected to be the norm. Consumers can waive EITHER the three day
waiting period or the seven day waiting periods after the original disclosures have been
made, but only to meet a “bona fide personal financial emergency”. What constitutes a
“bona fide personal financial emergency” will be determined on a case by case basis and
it will be difficult to establish. In order to request such a waiver, the consumer must
provide the lender with a dated, written statement which explains the emergency,
specifically waives the waiting period or modifies it in some way, and is signed by ALL
of the consumers who will be primarily liable on the debt.
The bottom line on all of these changes is that the date of closing may be longer
than originally expected in order to comply with all of the new requirements. You should
speak with your clients to make them aware of this possibility and “build in” additional
time if your transactions involves a Fannie Mae or Freddie Mac transaction (HVCC) or
any residential home loan which uses the home as security and is subject to RESPA.
Please keep in mind that if the transaction does not close by the closing date specified in
the contract, it will require the approval of BOTH parties in writing to extend the closing

date or the contract will die. All it takes is one side to refuse to extend the closing and
the deal is over.
– Submitted by TAR’s Legal & Ethics Hot Line Attorneys