By Stephen J. Ryan, Esq.
MAR General Counsel
Here are a few recent questions posed on the MAR Legal Hotline, which should provide some direction on how to deal with complex real estate issues.
Q. We have a seaside property which we advertise as “short walk to beach.” Is this discriminatory against handicapped individuals?
A. No, in 1995, HUD released a memorandum which addressed the regulations on illegal advertising to clarify the limitations. Specifically it stated that this kind of advertising is not a violation. The memo states:
“Handicap. Real estate advertisements should not contain explicit exclusions, limitations, or other indications of discrimination based on handicap (i.e., no wheelchairs). Advertisements containing descriptions of properties (great view, fourth-floor walk-up, walkin closets), services or facilities (jogging trails), or neighborhoods (walk to bus-stop) don’t violate the Act. Advertisements describing the conduct required of residents (“non-smoking”, “sober”) do not violate the Act. Advertisements containing descriptions of accessibility features are lawful (wheelchair ramp).”
For more information, visit http://www.hud.gov/offices/fheo/ library/sect804achtenberg.pdf.
Revised TILA Requirements
Q. I heard that there were new rules for lenders regarding the Truth In Lending Act (TILA). What do I need to know and what should I be telling my clients?
A. The new changes to TILA and Regulation Z, which took effect on July 30, 2009, only impact responsibilities for lenders; however, Realtors® need to understand these changes and how they may affect loan processing timeframes.
Under the Federal Reserve Board Truth in Lending Regulation (Reg Z) lenders will be subject to new disclosure requirements for mortgage loans filed on or after July 30, 2009. The new rules are complex and compliance will be a challenge for lenders. NAR has released the following information on these new rules so that Realtors® can advise clients of potential delays and the new procedures. Here are key highlights of the changes:
-The new requirements apply to all mortgages secured by a borrower’s home, including primary and second homes and refinancing. Investor loans continue to be exempt.
-Lenders must give good faith estimates of mortgage loan costs within three business days after the consumer applies for a loan (early disclosure). They may not collect any fees before the disclosure is provided, except for a fee for obtaining a credit report.
-Once the consumer receives the early disclosure, the closing may not take place until after a seven-day waiting period.
-Consumers may shorten or waive the three-day and/or seven-day waiting periods for a “bona fide personal financial emergency,” but only after receiving an accurate TILA disclosure. In the final rule’s preamble, the Fed stated that it “believes waivers should not be used routinely to expedite consummation for reasons of convenience.” The Fed decided not to insulate lenders from liability even where a consumer modifies or waives the waiting periods.
- If the annual percentage rate (APR) changes by more than 0.125 percent, the lender must provide a corrected disclosure to the borrower and wait an additional three business days before closing the loan. The APR includes not only the interest rate on the loan, but certain other costs related to settlement. Therefore, it will be important for any fees that affect the APR to be as accurate as possible, as early as possible, to minimize the need for a corrected TILA disclosure.
For more information, visit marealtor.com/government affairs.