The Mortgage Disclosure Improvement Act - takes effect July 30th, 2009 - Changes to be aware of

The Mortgage Disclosure Improvement Act takes effect July 30th, 2009 and changes the way
Truth-In-Lending (TIL) is disclosed.

• There must be a 7-day waiting period between the date the initial TIL disclosure is provided and disbursement of the loan.

• There must be a 3-day waiting period between the date a final/re-disclosed TIL is received and the disbursement of the loan.

• No fees, other than a bona fide credit report fee can be charged prior to the initial TIL disclosure being provided.

• Both final/re-disclosed and initial TIL disclosures shall contain the following statement:
“You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

NOTE BY MEDFORDHOUSE: it will be interesting to see what this new format will do to the closing timeline for borrowers and for sellers to be aware of. There may be flexibility in the seller & buyers timelines needed in the short term while the lenders, attorneys and other closing related professionals develop proceedures to address these changes.

This was shared with me by:
Janet StermanMortgage Services Consultant │ Dynamic Capital Mortgage
Primary (617) 413-1323 │ eFax: (617) 663-6015 │ email:


The waiting period only refers to the DISCLOSURE of the Truth-in-Lending (TIL) document, not the final TIL documents signed at closing. The idea is to clearly state in writing loan changes due to a rate change or change in financing costs. If the changes on a loan application varies the APR by more than 0.125%, the TIL from must be re-disclosed to the borrower.

Borrower is buying a $200,000 property on an FHA loan with 3.5% down. The initial application and disclosure package does not include Upfront Mortgage Insurance Premium (UPMIP) financed into the loan. The loan amount is $193,000 and the note rate is 5.75% with 0 points on this application. The initial disclosure package the TIL discloses the APR to be 6.271%.
One week prior to closing (Monday 8/27) the borrower (buyer) elects to (1) finance the UFMIP and (2) pay 1 point ($1,930) to reduce the interest rate. The loan amount is now $196,377, thus changing the APR to 5.916%. The TIL must be re-disclosed no later than Tuesday 8/21.

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