Dennis Norman
By: Dennis Norman
If you plan to obtain a mortgage to buy a home, or to refinance an existing mortgage, after July 30th you will notice changes in the process. While the changes that are being implemented are going to slow down the process I think it is time well spent as you will receive more information in advance and will have more time to digest and understand the cost of the mortgage you are about to get yourself into.
These changes come as a result of the Housing and Economic Recovery Act of 2008 (HERA) which was passed by congress in July 2008 as a sweeping and broad piece of legislation to help homeowners struggling with their mortgages as well as provide incentives to help encourage consumers to purchase a home.
Included in HERA was the Mortgage Disclosure Improvement Act of 2008 (MDIA) which made changes to the Truth in Lending Act in an effort to make the home mortgage process more transparent to the borrower and also assure they received adequate and timely disclosures.
In May, 2009, the Board of Governors of the Federal Reserve System approved the final rules that revised the disclosure requirements for mortgage loans under Regulation Z (Truth in Lending). The new rules implemented the Mortgage Disclosure Improvement Act of 2008. The following is a summary of the changes:
- expands the requirements to mortgage loans secured by anydwelling of a consumer. The requirements no longer are limited to a consumer’s “principal” dwelling. The early disclosure requirements also now cover refinancing and home equity loans.
- require delivery or mailing of the early disclosures within three business days of receiving a consumer’s mortgage loan application. A lender also must wait until at least seven business days after delivery of the disclosures before consummating the mortgage loan.
- require corrected disclosures to be delivered at least three business days before consummation if the annual percentage rate provided in the early disclosures changes beyond the tolerances provided in Section 226.22.
- prohibit a lender from charging a consumer any fee, except to obtain a credit report, until after the early disclosures have been provided.
- permit a consumer to expedite the closing of a mortgage loan subject to the early disclosure provisions to address a personal financial emergency, such as foreclosure.
- inform a consumer that he or she is not required to complete the transaction because the consumer has received the early disclosures or applied for a loan.
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