The MDIA-Mortgage Disclosure Improvement Act of 2008 was implemented as a way to protect consumers during mortgage loan transactions. Some of the provisions of the Act took effect on July 30, 2009, and they provide clear rules and guidelines that must be followed by lenders.
One of the most profound effects that the MDIA has had on consumers is that it has provided more time before the closing of a mortgage loan. The Act states that seven business days must go by between the time that the lender provides the borrower with the TIL or truth in lending statement and mortgage loan closing. The Act states that any day except Sundays and holidays is considered a business day. Therefore, Saturdays are now included as a business day by the Mortgage Disclosure Improvement Act.
Another important provision of the MDIA is that changes in APR, annual percentage rate, of .125% or more, and changes in ARM of .25% or more will now result in re-disclosure by the seller. Consumers are given a further waiting period of three business days from the time of re-disclosure. The intent is to give borrowers time to review the truth in lending statement and make sure that they are getting exactly what they agreed upon with the lender.
At any time during the mortgage loan transaction, consumers are given the right to cancel and back out. The Act provides that consumers are under no obligation to complete the mortgage loan transaction. Furthermore, the initial and final TIL must include the following phrase: You are not required to complete this agreement merely because you received these disclosures or signed a loan application.
Another effect that the MDIA has had is that lenders are forbidden from collecting appraisal or loan application fees before the TIL is delivered. This change was added so that consumers could be protected from having to pay disproportionate fees before they receive the terms of the loan and disclosure.
The only fee that you should be prepared to pay for is the credit report fee, and this fee must be reasonable. Lenders have to pay for credit reports, and the Act provides for recovery of the fees that lenders have to pay to the credit reporting agencies. Fees for credit reports depend on whether you are a single or joint borrower, and they also depend on the CRA, but they generally run anywhere from $12 to $35.
The general effect that the Mortgage Disclosure Improvement Act has had upon consumers is that it provides further protection by allowing consumers more time to consider mortgage loan terms. it also provides consumers with the right to back out of any mortgage loan transaction.
However, there could be complications if time is extended and there is an offer to purchase contract signed with a seller with set time periods. Buyers are always advised to make the offer to purchase contingent upon being able to secure financing. In order to avoid any complications that could put the earnest money deposit at risk, it is always better to get pre-approved for a mortgage loan and ensure that the money for the purchase is available.
![[Valid RSS feed]](http://www.realestateproarticles.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites