MORTGAGE DISCLOSURE IMPROVEMENT ACT (MDIA) GOES INTO EFFECT ON JULY 30, 2009
On July 30, 2009, some of the provisions of the Mortgage Disclosure Improvement Act of 2008 (MDIA) go into effect and lenders, mortgage brokers, title agents, real estate agents, and real estate brokerages need be alert as to these new federal governmental regulations. Here are the details for the MDIA:
1. Requires a seven business day waiting period prior to closing a home loan (business days are everyday except Sundays and Holidays). This means that before a borrower can close on a transaction the borrower must receive the final Good Faith Estimate (GFE) and lending statement disclosing the final Annual Percentage Rate (APR) seven days prior to closing.
2. If the final annual percentage rate APR is off by more than .125% from the initial GFE disclosure then the lender must re-disclose and wait yet another three business days before closing on the transaction.
3. The consumer has the right to cancel and not proceed with the transaction if they so choose.
4. Lenders are forbidden from collecting money for appraisals, loan applications, etc. at the time of the loan application until after 3 business days from the initial Good Faith Estimate disclosure. Lenders can only collect from the borrower the credit report fee at the time of application. No other fees are permitted to be collected at the time of application. The borrower will have to go see the lender again or send in the appraisal money after the first three business days have passed.
If you are a real estate agent or title agent you need to manage the process very carefully by:
A. Making sure that you check the initial Good Faith Estimate form for your buyers and look for discrepancies in charges like recording fees, escrows, insurance, etc. The new rules were put in place to protect consumers from being low balled one figure by a loan officer only to find out at the closing table that the fees charged were much higher. The new MDIA rules will absolutely delay closings if these steps are not followed carefully.
B. Buyers, sellers, and real estate professionals should not schedule a closing until the borrower has a clear to close letter from the lender.
For More information contact Philip Jensen at 480-682-6613 or PhilipJensen.com
