2022 Boise Idaho Real Estate Blog

The Mortgage Disclosure Improvement Act -- July 30, 2009

Main Boise Home Loans

A major change regarding time it takes to close a mortgage transaction has been implemented...for those of you EVER planning on pursuing mortgage financing in the future.

Dear BuildIdaho.com Reader:

The Mortgage Disclosure Improvement Act (MDIA) that went into effect on July 30, 2009, will make major changes to the timing and disclosure of mortgage financing terms to homeowners/homebuyers. Without going into all of the details of the act, I will highlight and summarize the key elements of the law:

TIME NEEDED TO CLOSE

The new guidelines will affect (and possibly decide) the closing date for a transaction. Although a purchase/sale contract may specify a closing date, the earliest ANY mortgage closing may occur is after midnight of the seventh (7) business day after the borrower has acknowledged the initial mortgage disclosures. Saturdays, with the exception of Federal holidays, count as business days for the purposes of disclosing in this manner.

UPFRONT FEES

Upfront fees cannot be collected (except for a credit report fee) until the initial disclosures are received by the borrower.

UPWARDLY REVISED APR

If the Annual Percentage Rate (APR) from the initial Truth-In-Lending (TIL) disclosure goes up by more than .125% during the loan process, a revised Truth-In-Lending disclosure must be issued to the borrower. If this happens, the borrower must receive the revised TIL disclosure at least three (3) business days before the note signing date.

The main impact that borrowers will feel as a result of this will be in time to close IF closing costs and fees that affect APR are under-disclosed.

The main question I have answered with regard to MDIA is, "Can last-minute/rush deals still be accommodated?" The answer is NO...the MINIMUM number of days to sign a transaction is seven (7) business days after receipt/acknowledgment of initial disclosures. And again...the seven days assume that fees are accurately disclosed on the initial TIL. If on final documents, the final APR increases by more than .125%, then another three business days must pass before signing can occur.

This three-day period MAY NOT BE WAIVED.

Some of you may be wondering, "Well, Eric...what's the big deal? I wouldn't expect to sign within seven days anyway?" That may be true, but the scenario in the paragraph above is what you need to worry about...fees being under-disclosed initially. If your fees and corresponding APR between initial and final docs goes up by more than .125%, you CANNOT sign your final loan docs until after midnight on the third business day has passed from redisclosure of the higher fees and APR. That can become a huge deal if your rate lock expires during this three-day waiting period.

 
Posted by Eric Leigh at 8/5/2009 2:48:00 PM

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