Great blog, Adrian! Thanks for the information!
The Federal Mortgage Disclosure Improvement Act (MDIA) goes into effect on 8/1/09. This new Act applies to all applications dated 8/1/09 forward. The easiest way to understand the concept of MDIA is to think of it this way. Purchase loan borrowers now have the same protection as a refinance borrower, meaning the Act basically creates a rescission period of 3 days for purchase loans.
What is happening here is the Federal Government is making sure purchase borrowers cannot get "jammed at the table" with new fees and feel forced to close. The borrower now has 3 days to understand any fee changes before they close, just like the 3 day rescission period for refinances. This new Act is designed to ensure that the consumer is aware of the fees and will eliminate the practices of unethical Lenders that under disclose the closing fees in hopes of getting the deal.
You may consider standardizing your Admin fees on your real estate transactions. Often, the admin. fees change from deal to deal and are not charged on all cases. I don't always know what your fees are, or if they are being charged, until we receive a preliminary HUD-1 from the Title Company. This could be a potential problem that would cause a settlement to be delayed. It is imperative that we disclose these fees up-front so there will be no settlement delays. There is no way around this. This is a Federal Law. I will be asking about the Realtor Admin. fees on all deals referred by my Realtors going forward. This way we will not have to delay settlements. Please call me with any questions, and I look forward to working with you to ensure a smooth, stress-free transaction.
Here are some of the particulars that pertain to your real estate transactions.
If there are ANY changes (changes that trigger re-disclosure are below) made to the initial GFE and TIL that cost the borrower more money than what was originally disclosed, then I must re-disclose a new GFE and TIL, have these signed by the borrower, and then the loan MUST wait 3 DAYS to close.
Here are the changes that trigger the new Act:
-Loan Discount Fees
-Appraisal Re-Inspection Fees
-Credit Report Fees
-Flood Cert. Fees
-Tax Service Fees
-Transfer and Recordation Fees (Stamps as well)
-Realtor Admin. Fees (charged to the borrower) **********(See comments above)
Thanks for your time.