New RESPA Laws Go Into Effect - Mortgage Disclosure Improvement Act

On July 30th, 2009 the Mortgage Disclosure Improvement Act was passed into law in order to provide a greater level of protection and disclosure for potential mortgage borrowers. This act has been implemented in stages, with the final sections taking effect on January, 1st 2010.

How will this affect you as a home buyer besides meaning you have even more paperwork to sign at closing? Well the answer is mainly it can change the entire time line of the closing. One of the main changes is that when a lender has to make changes to the terms of the loan such as rate, or closing costs, etc they have to reissue the good faith estimate (GFE) and the buyer must take 3 business days to review the new GFE. So if for some reason there was a change at the closing table, the closing would be automatically pushed back 3 days. You can see how this could potentially cause big problems at closing.

The main point to remember for Buyers as well as Agents is the 3/7/3 rule
1. "You are not required to complete this agreement merely because you have received thse disclosures or signed a loan application" Must be stated clearly on the Truth In Lending (TIL)

2. The buyer must wait 7 business days after receiving the initial disclosures to close on the loan. So the buyer must receive the GFE and the TIL which must disclose the final Annual Percentage Rate (APR) at least 7 days prior to closing.

3. Lenders can collect no fee's other than the credit report fee (loan App fee's, Appraisals, ETC) until the TIL has been delivered, and if it has been delivered by mail, they must wait 3 business days to do so.

4. If the final APR deviates from the initial GFE by more than .125% the TIL must be re-disclosed and the 3 business day waiting period starts over.

These new regulations make it more important than ever that you have a Realtor who is a full time professional agent who is able to understand and guide you through the entire home buying process. If you can find one who also used to be a very successful loan officer that would be even better (hint, hint). Having the right agent can mean the difference between moving into your new home or having all your furniture stuck in the back of a moving truck for 3 days in the hotel parking lot.

Straight from HUD
HUD Government News Release