MDIA/HERA: Reg-Z Changes & Their Impact

Preserving the 30 Day Closing

Jamie WoodsSARA Mortgage & Financial,

LLC(603)-965-8241

Licensed by the NH Banking Dept

HERA: Housing & Economic Recovery ActAmends the Truth in Lending Act (TIL) implemented

Through Regulation Z. Has a number of provisions including

the Mortgage Disclosure Improvement Act (MDIA) which changes the requirements surrounding early & final disclosures to home buyers obtaining mortgage financing and also addresses the timing of when fees

can be charged.

Effective July 30, 2009.

• HOW THE CHANGES ARE SURE TO IMPACT THE 30 - 45 DAY P&S PROCESS AS WE KNOW IT

• HOW TO AVOID COMPLICATIONS & EXTENSIONS AS A RESULT OF THE NEW LAWS

• WHAT EFFECT WILL THE CHANGES HAVE ON THE LENDERS AND WHAT WILL OCCUR

• NEW MILESTONES

Key Elements of the MDIA Act:

• No closings may occur at all until a minimum 7 business days after the buyer is issued his or her disclosures*

• Upfront fees cannot be collected (except credit) by the originator/loan officer until the initial disclosures are received by the buyer

• The buyer must be provided a copy of their appraisal a minimum of 3 days prior to closing. This can be waived by customer.

• An increase (and in some cases a decrease) of more than .125% on the buyer’s APR requires a complete re- disclosure and results in another mandatory borrower observation period

•Disclosures are the set of papers a mortgage applicant receives from the lending party outlining the details, costs, fees & terms of the mortgage they have applied for. The buyer is required to observe, sign and return these papers prior to the commencement of mortgage underwriting.

ENABLING CONTINUED GROWTH & ENSURING SMOOTH TRANSACTIONS• Correct disclosure of fees by loan officer at initial application• Locking the buyer’s interest rate early on• Knowing which lenders & programs allow electronic receipt• Title company properly prepares & reconciles HUD at onset• Loan officer on alert to completion of milestones• All parties effectively communicate

WHAT CAN CAUSE BUYER’S APR TO CHANGE:

• Unlocked rate (very important!)• Change in loan amount (what can cause change in loan amount?)• Failure or error in buyer’s cash to close figure • Loan product change• Change in closing date• Change to fees, including settlement fees

WHAT CAN I, THE REALTOR DO?

• Persuade the buyer to be prompt• Ally yourself with resourceful & knowledgeable lending sources • Remember that many (lending sources) will botch numerous closings due to unpreparedness• Understand & embrace that these changes are about protecting the customer (put on a smiley face!)• Set realistic expectations up front with the other agent, the seller and of

course, the buyer. Though SARA Mortgage can still arrange 14 day closings in more than half the purchases, it is wise to plan for a 30 day close. Under promise & over deliver!

• Help by encouraging the early loan lock and frequent communication with loan rep.

- WHICH BANKS & LENDERSARE THE MOST READY?

- WILL SOME LENDERS OR PROGRAMS BE FASTER THAN OTHERS? DOES EMAILING TAKE DAYS OFF THE CALENDAR?

- USE A LICENSED NEW HAMPSHIRE MORTGAGE BROKER WHO UNDERSTANDS ALL OF THEM!

THE 10 SARA MORTGAGE PROMISES ON EVERY TRANSACTION:

1. To ensure the correct & prompt disclosure of buyer rate, loan type, costs & fees AT APPLICATION

2. To visit your buyer, take the application and collect signed TILs IN PERSON

3. To encourage the buyer EARLY LOAN LOCK4. To communicate the completion of each milestone to the buyer

AND YOU5. To always NOTIFY the buyer and you of issues, challenges or

delays such as the need for re-disclosure.6. To help your buyer understand the time line and anything that can

impact their closing date such as change in APR.7. To ensure that any third party fees that impact the APR are

ACCURATE8. To “PRE-DISCLOSE” to every buyer and ensure they fully

understand 9. To never rush or persuade your buyer into deciding on any initial

loan or any potential loan changes10.To continue to attend each and every closing to ensure your

buyer’s questions and potential issues are always handled

Q. DO THESE CHANGES APPLY TO INVESTMENT HOMES? A. No. Only primary residences and second (vacation) homes being financed by anyone other than the seller.

Q. WHAT IS CONSIDERED A BUSINESS DAY? A. It varies depending on the lender used. Some count

Saturdays.

Q. IF A BUYER NEEDS NEW DISCLOSURES SENT DUE TO AN APR INCREASE WHEN IS THE EARLIEST A LOAN CAN CLOSE?

B. Provided the other milestones are complete it will vary depending on the lender used. Wells Fargo, for example requires 3 days for the mailing of the new disclosures and 3 days for the buyer to review them, enabling a closing on the 7th day. Other lenders allow for the buyer’s confirmation of email receipt for this and other milestones. Ask your loan officer for each case.

Q. WILL INSPECTION DEADLINES BE EFFECTED?

A. From the lenders and policy maker’s stand point the inspection is voluntary. When and at what stage a buyer conducts his or her home inspection is not effected by these Reg-Z revisions

Q. WILL 30 DAY CLOSINGS STILL OCCUR?A. Yes! The brokers that are the most well-connected with lenders and understand how

this will all work will still arrange purchase mortgages for qualified buyers on acceptable properties in under 30 days!

Q. Can appraisals still be conducted within the first few days? A. Yes. We will pre-order the appraisal the moment the application is received.

Q. Will my buyers still be able to get pre-approved? Can lending decisions still occur on purchase mortgages with out the appraisal being complete and submitted? A. Yes. SARA Mortgage & Financial will do its due diligence on pre-approving buyer’s credit, income and payment prior to the determination of property value

Remember, we at SARA Mortgage LOVE happy buyers and we are 100% committed to meeting the buyer’s expectations! We are always on stand-by to answer questions from your buyers and of course, you!

- SARA Mortgage & Financial understands that time is of the essence!

For additional info contact:

Jamie WoodsSenior Loan Officer

SARA Mortgage & Financial, LLC“Unlocking Wealth for Families…”

PO Box 365 5 Market Pl

Hollis, NH 03049Office: (603)-816-0255 Cell: (603)-965-8241

http://activerain.com/blogs/jpsunshineLicensed by the NH Banking Dept