Home buyers in Massachusetts should be aware of recent changes to The Truth in Lending Act. TILA or Regulation Z was originally put into place to require all lenders to provide full disclosure of all of the terms of a mortgage loan.
As of July 30, 2009 changes to these regulations will have an impact on lenders and could possibly affect loan processing timeframes. Some are estimating that the minimum time for obtaining a new mortgage may be extended to two months or more.
The new rules, designed to provide more protection to the borrowing public, are a bit complicated in their entirety, but below is a summary of the highlights of how they may affect your home purchase:
- The new requirements apply to all mortgages secured by your home and this includes any second homes.
- Lenders must provide a good faith estimate of loan costs within 3 business days of your loan application and may not collect any fees prior to this disclosure. The only exception to this is the collection of a fee for a credit report.
- The closing on your home may not take place until after a 7 day waiting period has lapsed.
- As a borrower, you may shorten or waive the waiting period only through a "bona fide personal financial emergency" and only after receiving an accurate TILA disclosure.
- If the annual percentage fee (APR) increases by more than 0.125 percent a corrected disclosure statement must be provided to you. Additionally, an extension of 3 days must be added prior to closing the loan.
- Since the APR includes not only the interest rate on the loan but also other related costs, it is important for the fees to be as accurate as possible in order to minimize the need for a corrected disclosure.
As with all new lender rules, these changes will require an adjustment period for everyone to be on the same page. This makes it all the more important that you have a qualified buyer broker in your corner, making sure that every step in the process is followed up and that you are made aware of any possible delays.
If you are going to have to reschedule the moving truck - you should at least receive ample notice.
Copyright 2009 - Claudette Millette, President, TheBuyersCounsel - 800-392-1446, E-mail
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