Page 3 - John Hundley 2010

Sharp Thinking

No. 29 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. February 2010
New Laws Impact Home Real Estate Sales

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By Barbara L. Forrest, Barb@lotsharp.com, 618-242-0246
Mortgage lenders, real estate agents and others involved in mortgage-
financed real estate transactions need to be aware of a host of legal
changes that are taking effect and that are designed to help provide
homebuyers better information when it comes to financing a home.

In part because these new requirements come from several sources,
misunderstanding of them is widespread. In this edition of Sharp Thinking, I
will outline some of these new regulations and requirements that impact real
estate contract formation and closing in Illinois.

In 2008 Congress adopted the Housing and Economic Recovery Act
(“HERA”) (Pub. L. 110-289, 122 Stat. 2654), the Federal Reserve Board pub-
lished amendments to the Truth In Lending (“TIL”) regulations (“Regulation Z”, 12
C.F.R. Part 226), and the Federal National Mortgage Association (“Fannie Mae”)
and the Federal Home Loan Mortgage Corp. (“Freddie Mac”) adopted the Home
Valuation Code of Conduct (“HVCC”).

Several of these had delayed-effect provisions, the application and significance of which are only
now coming to the forefront. They impact real estate closings in several ways:

► The HVCC promotes the accuracy and availability of appraisals and requires that the
borrowers receive a copy of their appraisal report no later than three business days prior to
closing of their loan, unless the borrower has signed a waiver of this requirement. (HVCC
Article II).

► Under HERA, the earliest a home purchase transaction can close is seven business
days after the homebuyer is issued his or her initial mortgage disclosures from the lender. (§
2501(a), amending Truth in Lending Act § 128(b)(2), 15 U.S.C. § 1638(b)(2)).

► Upfront fees now cannot be collected (except for a credit report fee) until
the initial TIL disclosures are received. Reg. Z, § 226.19(a)(1)(ii)-(iii). If mailed,
the disclosures are not effective until three business days after mailing.

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Barbara L. Forrest has been the Real Estate Closing Agent with The Sharp Law Firm, P.C. since 2005. In that
capacity, she typically acts as closer on some 150 real estate transactions per year. Before joining The Sharp Firm,
she was a licensed Illinois real estate agent for 13 years. Barbara is resident in our Mt. Vernon office, where she
can be reached at 618-242-0246, Barb@lotsharp.com, fax 618-242-8950. She was assisted on this article by Sharp
Thinking editor John Hundley. For further information on the Sharp Title Services division of the firm, see
www.sharptitleservices.com.

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Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
Thinking shall be construed to create an attorney-client relation where none previously has existed, nor with respect to any particular matter. The perspectives herein
constitute educational material on general legal topics and are not legal advice applicable to any particular situation. To establish an attorney-client relation or to obtain legal
advice on your particular situation, contact a Sharp lawyer at the phone number or at one of the addresses provided on page 2 of this newsletter.