A new government regulation is in effect as of July 30th, 2009. This regulation requires all mortgage lenders and brokers to provide Truth In Lending (TIL) disclosures to borrower's according to a defined schedule. Although the regulation is in the best interest of the borrower, this schedule may alter your borrower's closing date expectation.
Lenders and Brokers must issue the initial TIL disclosure at least seven business days before the loan document is signed. Regardless of how the TIL is provided to the borrower, closing documents cannot be signed earlier than seven business days after the initial TIL has been issued. Therefore...loans cannot close until at least seven days have passed from date of application.
If there are any changes to the loan parameters that affect the Annual Percentage Rate (APR) on the TIL, the resulting APR must be compared to the latest TIL provided to the borrower. If there is an increase greater than .125% in the APR, the lender must provide a corrected TIL to the applicant. Fees considered to be finance charges that are used in the APR calculation include but are not limited to discount points, lender and broker fees, Life of Loan flood certification coverage, settlement agent or attorney fees. Borrowers must be provided three business days to review this amended TIL prior to loan closing. This means changes will start the 3 day clock again.
Here is a real world example...
Seven day time frame example:
*Monday August 3rd - Signed and dated TIL and GFE received;
*Wednesday- August 12th = First available closing date
Three day time frame example - when we are out of tolerance and must re-disclose:
*Monday August 3rd - Re-disclosures sent to Borrower(s)
*Friday August 7th = First available closing date after re-disclosure
Contact your mortgage broker or lender for further information.
Labels: 2009, disclosure, HERA, Housing and Economic Recovery Act, lender, mortgage, TIL, truth in lending
