In the government’s never ending quest to make consumers safe from “unscrupulous” lenders, the latest activity has to do with new Truth-In-Lending (TIL) requirements, known as Reg Z. Surprisingly, this one appears to be something that will actually help consumers, unlike the recently enacted HVCC (Home Value Code of Conduct). Consumers getting a mortgage loan should not be surprised at closing with additional costs and/or interest rate changes because of the new requirements of the Mortgage Disclosure Improvement Act (MDIA).

The main points of the program change have to do with notification of the borrowers when changes are made to the loan costs. For instance, if a consumer had already paid for their appraisal before they got their Good Faith Estimate (GFE) and TIL and were surprised that the interest rate or the charges were higher than expected, they might opt to continue the application because they were already invested in the process. Under the MDIA, the money for an appraisal (or anything else but a credit report) cannot be collected until the consumer is informed of the costs of the loan with a GFE and TIL.

 Also, if costs or interest rate change during the loan process and it makes a .125% or greater increase in the APR, this disclosure must be made at least 6 days prior to closing if those disclosures are mailed. No more last minute, sign or you lose the lock, surprises.  The borrower must have 3 days to review the change and that means that with 3 day mailing time, we have 6 days total. “Bait and Switch” has always been a problem with a few bad apples in the industry. This should, hopefully, eliminate that practice. One concern that I have is that customers will be asked to backdate a change in the TIL so that they can close “on time.”  If you are asked to do this, IT IS WRONG!

One other thing this will probably do is make face-to-face meetings with your Mortgage Consultant more prevalent as time frames are getting compressed through disclosure requirements.  The new TIL will also have a statement that says: “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.” So, check with different lenders, but remember that if things change, you are entitled to new disclosures to review. Also, when I referred to “days” above, I was referring to business days that include Saturday but not Sunday or holidays.

If you want an honest up-front GFE and TIL that “probably” won’t change, give me a call at 541-342-7576/541-221-3455 Cell or e-mail me. I say probably because there are things that I cannot control, like the appraised value or the inspections, either of which can make a change in loan amount and costs. Otherwise, I always guarantee my fees will not change unless it is out of my control.

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