REVISED TRUTH-IN-LENDING REQUIREMENTS OFFER PROTECTION, But Could Delay Closings!
NEW REGULATION Z EARLY DISCLOSURE LAWS TAKE EFFECT JULY 30TH!
Have you ever sat down at the closing table when buying your new home, and found that many of the mortgage loan terms - including your interest rate and fees - have increased from what you calculated they would be?
Over the years, I can identify dozens of closings here in Chicago.
Buyer clients represented by our Team were taken aback by heavy loan processing fees, increased origination fees, and, in some cases, higher interest rates than were originally disclosed in the Federally-Required Good Faith Estimate, provided shortly after the original loan application was completed. Amidst the dozens of papers that need to be signed at a home closing, the buyers often begrudgingly agreed to the new, less-favorable terms.
Effective July 30, 2009, this can't happen anymore! (See the FDIC Website for a summary of the changes, as explained in Federal Institution Letter FIL-26-2009).
Approved enhancements to Regulation Z - the Federal Truth-In-Lending Disclosure Law - take effect later that month that require extensive early disclosure of revised loan terms, far in advance of closing. If changes occur too close to the pre-scheduled closing time, the closing would need to be delayed to allow for proper advance notice of the changes in terms.
The changes apply to mortgage loans on most primary and secondary residences, and would impact both first and second mortgage liens. The main requirements -
- The Loan Process, including ordering of the appraisal, must not begin before the borrower provides written agreement of all loan terms.
- No Loan Application Fees, with the exception of a reasonable charge for the initial credit check, can be assessed until proper initial disclosure is made, and accepted by borrower signature.
- After the Truth-In-Lending Disclosure is provided to the borrower, a mandatory 7 Business Day Waiting Period is required before closing can occur.
- Re-disclosure is required should the borrower's interest rate increase by 1/8% or more from the initial quote (1/4% or greater on an Adjustable Rate Mortgage, or ARM). The resulting revised Truth-In-Lending (TIL) Statement requires a minimum 3-Day Waiting Period (6 Days if sent by mail, rather than delivered in-person).
Late changes in terms, and the resultant closing delays as required by the new law, might delay many moves, and add stress to an already-stressful home purchase process.
DEAN MOSS & DEAN'S TEAM CHICAGO
