Wednesday, July 22, 2009

Mortgage Disclosure Improvement Act (MDIA)

The Mortgage Disclosure Improvement Act (MDIA) goes into effect July 30, 2009. Do you know what it is? How it affects you and your buyers? Cindy McCarty from Coldwell Banker Home Loans provided us with some following key points.

Key Provisions:

1. The lender must provide or mail an initial TIL disclosure within 3 days after receiving the customer's application.

2. The lender must deliver or mail a TIL disclosure at least 7 business days before closing.

3. A final, accurate TIL must always be provided at closing.

4. If the annual percentage rate (APR) increases more than 0.125%, the borrower must receive a revised TIL at least 3 business days before closing.

Why might the APR increase?

  • Interest rate changes
  • Loan amount increases
  • Type of loan changes
  • Fees charged increases
  • Loan-to-value (LTV) increases

Things to consider:

When writing a purchase contract, remember that the earliest possible day that closing can occur is 7 business days after the lender issues the initial TIL.

Set customer expectations about closing timelines and, whenever possible, plan for a closing date that provides enough time to accommodate the additional waiting period required if the APR increases by more than 0.125%.


Example #1:

8/3/09: Application taken
8/4/09: Initial TIL delivered

Example #2:

8/3/09: Application take
8/4/09: Initial TIL delivered
8/10/09: Customer locks rate, which increases the APR by more than .125%; revised TIL sent to customer.
8/13/09: Customer receives new TIL

Note: These examples are assuming Coldwell Banker Home Loans/PHH is the lender. It is entirely possible that other lenders will interpret the MDIA language differently.