Some of the provisions in the final rule for revisions to the Truth-in-Lending Act (TILA) become effective. The requirements that become effective for all loan applications received on or after July 30, 2009 are detailed below:
Read it on our site: http://www.madisonmortgageguys.com/
The MDIA will broaden the category of application which requires early disclosure of mortgage applications which will result in the securitization of a consumers dwelling (including second and vacation homes) and applies to purchase transactions, refinances and assumptions. The language in the disclosure has been modified to include a notice to the consumer that they are not required to complete the loan agreement merely because they have received the disclosure or signed a loan application.
These requirements are not applicable to Home Equity Lines of Credit. Additionally, MDIA requires additional language for adjustable-rate loans; however, this provision is still forthcoming by the Federal Reserve.
Highlights of MIDA's new requirements include the following:
TILA disclosures apply to any closed-end extension of credit secured by the dwelling of a consumer including non-principal dwellings (second homes).
There must be a seven-day waiting period between the date the initial TIL disclosure is provided to the consumer and disbursement of the loan.
Any change to the initial APR disclosed in the original TIL that exceeds 1/8% (.125) for a regular transaction or 1/4% (.25) for an irregular transaction will require a new TIL disclosure with an additional three-day waiting period between its receipt by the consumer and disbursement of the loan.
The waiting periods will not include Sundays or any nationally recognized federal holidays.
No fees, other than a bona fide credit report fee can be charged prior to the initial TIL disclosure being provided to the consumer.
Initial Truth-In-Lending (TIL) Disclosure:
Under the new rule, estimated disclosures must be given no later than three business days after receipt of application for any consumer purpose mortgage and should include a Good Faith Estimate of Settlement Charges (GFE), Truth-in-Lending disclosure as well as a Servicing Transfer Disclosure.
Waiting Periods:
The revised rule prohibits creditors, mortgage brokers, and any other person from imposing any fee other than a bona fide and reasonable credit report fee until the consumer has received the initial disclosures. If delivered by regular mail, the disclosures are considered received 3 business days after they are mailed. Additionally, the loan cannot close (document signing) until 7 business days after the initial TIL disclosure has been mailed.
If the APR at consummation increases by more than 0.125% from the previously disclosed APR, a re-disclosure TIL must be given. The loan cannot close (document signing) until 3 business days after the re-disclosure TIL is received by the borrower.
The business day definition for the purpose of waiting periods is the same as the definition used for rescission, Monday-Saturday excluding legal public holidays.
Waiver of Seven and Three-Day Waiting Periods:
Both the seven-day and three-day waiting periods regarding TIL Statement disclosure can be shortened or waived if the extension of credit is necessary to meet a bona fide financial emergency. If re-disclosure of the TIL Statement is again out of tolerance subsequent to this waiver, the waiver is no longer effective. In order to request this waiver, a pre-printed form cannot be used. The consumer must prepare a dated written statement, signed by each consumer that will be legally obligated and entitled to receive the TIL Statement (including conveyance of homestead rights), detailing the specific emergency and specifies that request for waiver of the waiting period.
This waiver should follow regulatory requirements for waiving rescissions rights and waiving a waiting period prior to consummation of a high cost loan under HOEPA.
Dennis Hardy
Toll Free: (877) 240-5810
dennis.hardy@
http://www.madisonmortgageguys.com
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