The new Mortgage Disclosure Improvement Act (MDIA)of 2009 goes into effect today. It is designed to prevent borrowers from getting incorrect information at application and then being surprised at closing with un expected and undisclosed fees. the main provisions of the act are:
No fees other than a credit report fee may be charged up front.
An appraisal fee cannot be charged for 3 days after receiving a good faith estimate and Truth in Lending Statement(TIL).
A mandatory 7 day waiting period is required for the borrower to examine the fees.
If the Annual Percentage Rate changes by more than .125%, a new disclosure is required and a 3 day waiting period is required. The law also requires 3 business days for mailing the new Truth in Lending Statement.
This is supposed to keep the borrower from being surprised by unscrupulous lenders who will low ball a good faith estimate in order to get the loan, but then charge what ever they feel like at close. Many times borrowers have felt pressured to go ahead and sign when they should have gotten up at closing, and refused to sign until they got a good explanation of the charges.
It has been hard competing with unethical lenders, usually out of state or online only, who do this. I think the small waiting period is more than worth the protection it offers borrowers.
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