New Changes In Our Industry


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New Changes to RESPA may affect closing dates

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New Changes In Our Industry

  1. 1. Change in Our Industry RESPA Reform, Mortgage Disclosure Improvement Act and Truth in Lending
  2. 2. RESPA Reform <ul><li>RESPA (1974) : Designed to help simplify the mortgage shopping process and reduce consumer settlement costs. </li></ul><ul><li>RESPA Reform (2009) : Designed to make the process even more transparent and understandable for consumers. </li></ul>
  3. 3. It’s the LAW!
  4. 4. New Federal Mortgage Regulations <ul><li>The M ortgage D isclosure I mprovement A ct (MDIA), part of the Housing and Economic Recovery Act, affects mortgage disclosures, closing dates and fees. </li></ul><ul><li>MDIA represents a major shift in the way our industry does business: All lenders (including brokers) must comply. </li></ul><ul><li>It affects all closed-end loans secured by real estate. </li></ul><ul><li>Compliance is required by July 30, 2009. </li></ul>
  5. 5. Expected Results <ul><li>More transparent, level and fair regulation of our industry. </li></ul><ul><li>Consistent lending practices among all lenders. </li></ul><ul><li>Additional controls to prevent deceptive lending practices. </li></ul><ul><li>Even more consumer protection. </li></ul><ul><li>Consumers that are better informed and more confident about the mortgage process. </li></ul>
  6. 6. Key Points for Associates: Fees <ul><li>As of July 30, 2009, no fees (except for a credit report fee) can be collected by the mortgage broker/originator until the initial disclosures are received by the borrower. </li></ul><ul><li>If disclosures are mailed they are considered “received” three full business days after mailing, allowing the fees to be collected on the fourth business day. </li></ul>
  7. 7. Key Points for Associates: Dates <ul><li>The earliest closing date is the 8th business day after initial disclosures are provided to the borrower. </li></ul><ul><li>An increase or decrease of more than 0.125 percent in the Annual Percentage Rate (APR) from the initial Truth in Lending disclosure (TIL) requires that a revised TIL disclosure be issued to the borrower. </li></ul>
  8. 8. Key Points for Associates: Dates <ul><li>If the TIL must be revised, the borrower must receive the revision at least three business days before closing. </li></ul><ul><li>Note that the TIL disclosure is considered “received” three business days after mailing. </li></ul>
  9. 9. Why Would the APR Change? <ul><li>The loan amount changes UP or DOWN . </li></ul><ul><li>The loan program changes. </li></ul><ul><li>Fees are higher than initially disclosed. </li></ul><ul><li>Additional fees not originally disclosed must be charged. </li></ul>
  10. 10. Changes That Will Not Affect the Truth in Lending Disclosure <ul><li>Changes in the mortgage-related fees that do not change the APR by more than 0.125 percent. </li></ul><ul><li>Change in fees that are not part of the APR calculation. </li></ul>
  11. 11. 8/4 Borrower “A” Meets with GSM 8/3 Borrower “A” Rush Closing 8/12 Borrow “A” Closing/ Settlement 8/27 Closing date for Borrower “B” 8/25 Borrower “B” requests lower loan amt. Wait 3 business days 8/28 Borrower “B” New Closing date August 2009
  12. 12. How Do These Changes Affect You? <ul><li>When determining closing dates, allow appropriate time for disclosures. </li></ul><ul><li>Set expectations with buyers, sellers, other real estate agents and builders. </li></ul>Everyone must work together to meet the closing date!
  13. 13. <ul><li>This applies to all new loan applications submitted on or after July 30, 2009. </li></ul>REMEMBER: