Let’s Pass Another Law to Potentially Delay Escrow Closings
Yup, starts tomorrow, folks.
Effective July 30, 2009, if the APR on an initial Good Faith
Estimate is no longer accurate (within a 0.125% range) at close of escrow, a
lender must generally provide a residential borrower with a new disclosure and
a three-day right to rescind before consummating the loan. REALTORS® are
forewarned that, because of this new three-day waiting period, a lender's
failure to timely provide corrected disclosures has the potential of delaying
funding of the loan and close of escrow.
This new requirement is part of the Mortgage Disclosure
Improvement Act (MDIA) implementing new loan procedures to protect borrowers
and foster greater transparency in mortgage lending. For loan
applications submitted on or after July 30, 2009, the new MDIA changes to the
Truth In Lending Act are generally as follows:
- Applicability: The new MDIA rules pertain
to federally-related mortgage loans covered under RESPA and secured by a
consumer's dwelling. The rules apply to both purchase and refinance
loans. - Early Disclosures: A lender must provide a
borrower with an initial Good Faith Estimate within three business days of
receiving the borrower's written loan application as specified. For
this provision, a "business day" is generally defined as a day
on which the lender's offices are open for business. - Upfront Fees Restriction: Neither a lender nor any
other person may impose an upfront fee on the borrower (except for credit
report) until the borrower has received the early disclosures in person
or, if mailed, three business days after the early disclosures are
mailed. For this rule, a "business day" is defined as all
calendar days except Sundays and legal public holidays as specified. - Seven-Day Waiting Period: A lender must wait seven
business days after providing the early disclosures before consummating
the loan. For purposes of this waiting period, a "business
day" is defined as all calendar days except Sundays and federal legal
holidays as specified. A borrower may waive the waiting period in
writing in case of personal financial emergency, such as an imminent
foreclosure sale. - Re-disclosure Requirement: If the final Annual
Percentage Rate (APR) at loan consummation varies more than 0.125% (or 1/8
of one percent) from the initial APR on the early disclosures of a regular
transaction, the lender must provide the borrower with a corrected
disclosure at least three business days before the loan is
consummated. For purposes of this waiting period, a "business
day" is defined as all calendar days except Sundays and federal legal
holidays as specified. - Three-Day Waiting Period: For corrected disclosures,
a lender cannot consummate a loan until three business days after the the
borrower receives the corrected disclosure in person. If the
corrected disclosure is mailed, the borrower is deemed to have received it
three business days after it is placed in the mail. A borrower may
waive this waiting period in writing in case of a bona fide personal financial
emergency, such as an imminent foreclosure sale.
The new MDIA rules and regulations are
set forth at 74 Federal Register 23,289 (May 19, 2009).
Realtor, Marathon Man, "Man of a Thousand Voices".
