Starting August 1st of this year, the Mortgage industry at large will be operating a little differently… specifically, operating MORE SLOWLY.
August first is when the Mortgage Disclosure Improvement Act becomes enforced. Now like many government regulations, its reason for existence is quite noble and good. The reason they have this is to protect borrowers from having their loan terms changed at the last minute, and forcing them to sign paperwork on a loan they didn’t agree to.
Of course, we’ve all heard horror stories and as a lender, my main objective is to manage the expectations of my borrowers as well as possible, and have things go exactly as I say they will go. Most good lenders are re-disclosing when needed, and NOT changing key terms of the loan at closing.
But the MDIA dictates 2 things:
1. There will be a minimum holding period of 7 days between loan application, and funding. The absolute quickest a loan can now fund is 7 business days.
2. Any change in APR greater than .125% will not only require that Good Faith Estimates and REG-Z Truth in Lending disclosures be re-issued (which has always been the requirement), but also funding cannot take place sooner than 3 days after this re-disclosure now.
So if your loan amount changes, if your floating rate changes, if you decide to pay or not pay points, if you switch programs along the way, if you negotiate a new sales price, if you re-negotiate any seller concessions to closing fees…. etc. Any of these COMMON occurances in the process will potentially add 3 business days to your loan process FOR EACH OCCURANCE.
So for anyone looking to get into the market for the first time, or the first time in a few years, you should plan for a minimum contract closing period of 45 days. Of course we can shoot to close sooner, but its always easier to close sooner, than to renegotiate a contract extension.
There is also a wait period to review the appraisal but that can be waived, these other changes are mandatory.