The Government and Mortgage Lending

Written by betsy

Unfortunately the government has added a new regulation to our industry. As of August 1, 2009, the Mortgage Disclosure Improvement Act (MDIA) will be enacted. And this will impact you, the borrower.

Here is how the new MDIA could and can affect you:

No fees can be charged prior to receipt of initial disclosures except for reasonable credit report fee.
No fees can be charged until one day after the borrower has received the good faith, truth in lending forms and whatever other forms the lender requires to detail these changes.
Receipt and received now means signed and dated disclosures.
Borrower’s initial disclosures must have been provided at least 7 business days (we count Saturdays) prior to closing or signing. This means signed and dated as well.
Any increase or decrease of APR by 0.125% means borrower must sign re-disclosures. And they must be signed and dated 3 days prior to closing/signing.
An increase in pre-paid finance charges (all prior to funding costs) by more than $100 also requires signing and dating re-disclosures 3 days prior to closing/signing.
Most lenders will error on the safe side and will likely make the 3 days prior to signing instead of closing.

So what do all these rules mean to you, the borrower?

First and foremost, the days of closing loans in 30 days or less are, unfortunately, becoming a thing of the past. Realistically, expect to add 15 to 30 more days to closing a loan. Even if loan originators are being extra vigilant, this new act along with the new appraisal act (HVCC May 1, 2009) can add days to the process.

This could mean that even the slightest change can start the clock over again. And not once, but several times resulting in lock deadlines and purchase and sales deadlines missed.

If you are locking in your loan for 30 days or less, make sure your appraisal is done, you are in underwriting, close to being in underwriting or underwriting times are within reason, and most important, everyone is on the same page.

As a loan originator, I am here to serve you, the borrower, by making this process as easy as possible for you.

Please feel free to pass this information on to your family, friends, and colleagues. And as always, I am here to answer your and their questions or concerns.