Christian Debt Recovery

Til Debt Do Us Part Budget

January 7th, 2010 |

Author: Gavin

Mortgage Disclosure Improvement Act – What you Need To Know

As of July 30, 2009, portions of the Mortgage Disclosure Improvement Act of 2008 will be put into effect. Lenders, title agents, mortgage brokers, real estate brokerages must be aware of how these new government regulations affect their business and processes.

The MDIA enacts a new 3/7/3 rule, which requires a seven-day waiting period once an initial disclosure is provided before closing a home loan. Before a borrower can close a transaction, the borrower must receive the initial Truth in Lending (TIL) statement, which discloses the final Annual Percentage Rate (APR) and the initial Good Faith Estimate (GFE), seven days prior to closing. This means a number of changes to the closing process go into effect. These changes include:

If the final APR differs by more than .125% from the initial GFE disclosure, the lender must issue a new GFE disclosure and wait another three days before closing on the transaction. While the law was written to protect borrowers from large increases in rates between the rate disclosure and closing, this rule also applies if the rate improves, effectively lowering the cost. In theory, if you are trying to close at a particularly volatile time, with rates see-sawing back and forth, it would be possible for these delays to go on endlessly. While this seems unlikely, do know it is possible to experience a brief delay in the process, even if it is due to a shift in rates in your favor.

During the 3 day waiting period, the consumer has the right to cancel the transaction. They may choose not to proceed at this point for any reason and will not suffer a penalty for doing so.

As of July 30, lenders are prohibited from collecting money for appraisals, loan applications or other services prior to the TIL’s delivery. The only fee a lender may collect prior to the delivery of the TIL is the credit report fee. No other fees may be collected at the time of application.

When the first and final TIL is received by the consumer, the following language must be written clearly on it: “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

For a real estate agent or title agent, this new change means you must manage the closing process very carefully. Be sure to check the GFE and TIL form for each of your buyers and look for any discrepancies. The new rules were put in place to protect consumers from being a low figure by a loan officer, only to find higher fees on paper when at the closing table. The new MDIA rules will delay closings if steps are not followed carefully.

Buyers, sellers and real estate professionals should plan to schedule the closing after the borrower has completed the required seven day waiting period as required by the initial TIL.

The complete set of rules and changes may be read here:

http://www.federalreserve.gov/reportforms/formsreview/RegZ_20090519_ffr.pdf

For more information regarding getting approval for your loan please visit us online for more credit and debt information.

About the Author

Mick Bernard is a Credit Consultant from Scottsdale, AZ. His company Credit Strategies is helping consumers clean up their credit nation wide. For more credit tips visit us at http://www.onlinecreditstrategies.com/blog/

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