Good evening! I wanted to post a quick note tonight to let you all know what I’ve been working on for most of this working week so far. The Mortgage Disclosure Improvement Act, or MDIA, was enacted as a rider to one of the many stimulus-related bills that have cleared congress this year, and will be implemented on July 30th. The act brings with it significant changes to disclosure paperwork that are intended to make consumer choice among mortgage sources more competitive, and, for the most part it should succeed there. It also contains certain procedural changes that will have a significant effect on timing of most future transactions.

Specifically, MDIA requires that borrowers not be charged any loan-related fees other than a credit report fee until they have received truth-in-lending disclosures for the mortgage. This is a positive change, as I know I have lost loans in the past to other lenders who were charging more, but not disclosing it, because those borrowers felt obligated by rate lock or appraisal fees they had paid in advance. That won’t be happening any more.

Under MDIA, it is unlikely that any lender will order an appraisal service until this disclosure requirement has been met. At present, infrastructure exists to allow that obligation to be met in 3-4 business days, but this will add more time to each homebuyer’s commitment process. Because of this, I am recommending that offers subject to financing be written with a minimum of 30 days to commitment and 45 days to closing. It is my hope that this will allow us to continue to deliver on-time commitments and closings whenever possible.

MDIA also contains provisions for re-disclosure in the event of a change in loan terms outside tolerances. This could affect closing scheduling, but I anticipate this component of the change to be of significantly smaller impact to day-to-day operations than the appraisal component.

Thus, I have been quite busy this week assuring my clients their loans will be safe through this transition. I thank you for your patience through this, and for your continued support. Please don’t hesitate to contact me should you have any questions about this, or anything else going on in mortgage land.

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates, and an Adjunct Professor of Finance with the University of New Haven and Roger Williams University. He can be reached by commenting on this article, or by cell at (401) 263-8655.