There are changes to the disclosure rules on fixed rates products. Since WSB provides you with the required documents we will take care of this but you need to let your clients know they will be getting disclosures several times between the time you take the application and the time we close the loan.
Here are some of the issues:
The questions and answers below have been compiled to help you better understand the Mortgage Disclosure Improvement ACT (MDIA).
Q. When do the MDIA rules go into effect?
A. The new rules are effective for applications dated on or after July 30, 2009.
Q. How does the new Mortgage Disclosure Improvement Act impact applications taken/received prior to July 30, 2009?
A. Applications with a property address taken/received prior to July 30, 2009 are not impacted by MDIA.
Q. What is the effective date for wholesale applications?
A. The effective date is the date of broker’s application. MLHL will not be required to provide the initial TIL for MDIA compliance for applications received by brokers prior to 07/30/09. However, all applications received prior to 07/30/09 by the broker must close on or before 09/30/09.
Q. Does MDIA apply to purchases and refinance transactions?
A. Yes, the same rules apply to both.
Q. Does MDIA apply to a HECM ARM?
A. No. MDIA is only applicable to Closed-End transactions. Currently, the HECM Fixed is the only Closed-End product offered by MLHL.
Q. Who has to receive the initial or corrected Truth-in-Lending Disclosure Statement?
A. The initial Truth In Lending Disclosure Statement must be provided to all buyers(s) (purchase transaction) AND all owner(s) of record in title to the subject property (refinance transaction) at each individual applicant/owner's mailing address, (delivered or placed in the mail).
Q. If owners of record are transferring interest of property, are they required by MDIA to receive initial and re-disclosed TIL’s?
A. No.
Q. If a party to the transaction is relinquishing ownership to the property, must a Truth-in-Lending disclosure be provided to them?
A. No.
Q. How do you determine when a borrower has actually received the Initial or corrected Truth-in-Lending?
A. A TIL is considered to be received by the borrower (3) three business days after delivery regardless of the method of delivery with the exception of face-to-face hand delivery. (Regular mail, overnight mail, courier, electronic transmission all use (3) business days.) The TIL is considered received the same day it is delivered for face- to- face hand delivery as long as a copy of the signed disclosure dated the same day as delivery is in the file.
Q. How do you determine when the (3) business day waiting period begins?
A. For all delivery methods, except face-to-face hand delivery, the waiting period begins three business days after delivery. Face- to- face delivery is only allowed on an exception basis and in these cases, the waiting period begins immediately as long as a copy of the signed disclosure dated the same day as delivery is in the file.
Q. How long after receipt of the initial TIL (early disclosures) do we have to wait to close a loan?
A. MDIA requires a (7) seven business day waiting period after the early disclosures are delivered or placed in the mail before a closing can occur. Therefore, closing may occur on the seventh business day, as long as there are no changes to the loan terms that effect the APR by .125% or more.
Q. How do I determine if a corrected TIL is required?
A. To determine if a corrected TIL is required
· Compare the APR on the last TIL provided to the borrower to the APR now – or-
· Complete the Truth-In-Lending Compliance Worksheet (completion of this form is mandatory prior to closing)
If the APR is over or under by .125% (1/8th of 1%), a corrected TIL is required. If the corrected TIL is mailed, the closing can occur on or after the 6th business day after the corrected TIL is mailed to all borrowers. If the corrected TIL is delivered in person, the closing may occur on or after the 3rd business day after delivery.
Q. Should I re-disclose a corrected TIL more than once?
A. A corrected TIL is required when the APR changes by more than .125% (1/8 of 1%). The closing may occur on or after the 6th business day after the corrected TIL is mailed to all borrowers.
Q. What things can cause the APR to change?
A. If fees change (up or down) or the initial rate used to disclose the loan is different than the locked rate at closing or the loan amount changes, the APR will be impacted. However, a corrected TIL is only required if the APR changes by more than 1/8th of 1% or more.
Q. How much of a change to the GFE Fees does it take to effect the APR by more than 1/8 of 1%?
A. It depends on the loan amount. For instance, on a $300,000 value it takes about a $3,500 increase or decrease in fees to change the APR. On a $150,000 value, it takes about $1,600.
Q. If a corrected TIL is required, how long after receipt of the corrected TIL do we have to wait to close a loan?
A. MDIA requires a (3) three business day waiting period after borrower receipt of the corrected TIL before a closing can occur. Therefore, closing may occur anytime on the third business day after receipt, as long as the (7) seven business days waiting period has also expired.
Q. Can a corrected TIL be sent with-in the (7) seven business day waiting period from when the initial disclosures are issued?
A. Yes, the required re-disclosure can be sent within the first (7) seven day waiting period.
Q. What is considered a business day?
A. A business day is considered “All days except Sundays and designated federal holidays.”
Q. Can loan documents be printed prior to the expiration of the mandatory waiting periods?
A. Yes, but the closing date must be after waiting period has expired. The date closing documents are executed is the key.
Q. Is the (3) three business day right of rescission still in effect?
A. Yes, the right of rescission is still in effect for refinances and certain purchase transactions. The loan can close (7) seven business days after any TIL re-disclosure is issued, then the right of rescission period begins. The loan can fund after the rescission period expires.
Q. What if the broker collects an appraisal fee prior to the mandatory waiting period on an application taken by the broker after 07/30/09?
A. In order for the loan to close, any fee collected prior to the mandatory waiting period cannot be collected from the borrower or charged to the borrower in any form of a fee on the HUD.
Q. Can the broker pay for the appraisal prior to the mandatory waiting period?
A. No, the broker cannot pay for the appraisal until after the mandatory waiting period.
Q. For wholesale transactions, if the application is dated on or after July 30th, but the appraisal was ordered prior to July 30th, do MDIA mandatory waiting periods apply?
A. If the appraisal was ordered prior to July 30th and the loan closes on or before September 2, 2009, MDIA mandatory waiting periods do not apply.
Note
And, the term, ‘business days,’ excludes Sundays and federal holidays.
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