No matter where you are in the United States, settling a real estate transaction is about to become a little more complex, especially if you’re trying to close quickly.
Certain requirements of the Mortgage Disclosure Improvement Act (MDIA) of 2008 will go into effect on July 30. Here are a few things that everyone, including buyers, sellers, realtors, attorneys and lenders will need to keep in mind.
- No settlement can take place until seven (7) days after a borrower is given his loan disclosures by the lender. This means lenders will need to be on top of getting out Truth-In-Lending (T-in-L) disclosures in an expeditious manner because of the impact on other parts of the loan process.
- Upfront fees (like appraisals) cannot be collected by a lender until borrowers receive their T-in-L disclosures. Since most of the disclosures are mailed to borrowers, the industry considers their documents received three (3) business days after mailing. In essence, an appraisal won’t be ordered until four days after loan application and when the lender has a check to pay for the expense.
- A copy of the appraisal must be received by the borrower at least three days before closing.
- If the Annual Percentage Rate (APR) changes by more than .125% (either up or down) a new T-in-L must be provided to the borrower three (3) days before closing if done in person and six (6) days before closing if mailed. Changes that might affect the APR include but are not limited to such things as changing interest rates, buying rates down, paying additional points and changing closing dates.
- Don’t expect to be able to side-step these new requirements because it’s an inconvenience to your closing date. Reasons like I’m going on vacation, I can’t get off work or I don’t feel well will not be accepted for waiving these rules.
The bottom line is that these new laws meant to protect the consumer will more than likely make it less possible for lenders to accommodate last minute requests from borrowers.
