new changes in our industry
Post on 21-Oct-2014
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New Changes to RESPA may affect closing datesTRANSCRIPT
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Change in Our Industry
RESPA Reform, Mortgage Disclosure Improvement Act and Truth in Lending
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RESPA Reform
• RESPA (1974): Designed to help simplify the mortgage shopping process and reduce consumer settlement costs.
• RESPA Reform (2009): Designed to make the process even more transparent and understandable for consumers.
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It’s the It’s the LAW!LAW!
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New Federal Mortgage Regulations
• The Mortgage Disclosure Improvement Act (MDIA), part of the Housing and Economic Recovery Act, affects mortgage disclosures, closing dates and fees.
• MDIA represents a major shift in the way our industry does business: All lenders (including brokers) must comply.
• It affects all closed-end loans secured by real estate.
• Compliance is required by July 30, 2009.
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Expected Results
• More transparent, level and fair regulation of our industry.
• Consistent lending practices among all lenders.
• Additional controls to prevent deceptive lending practices.
• Even more consumer protection.
• Consumers that are better informed and more confident about the mortgage process.
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Key Points for Associates: Fees
• 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.
• 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.
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Key Points for Associates: Dates
• The earliest closing date is the 8th business day after initial disclosures are provided to the borrower.
• 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.
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Key Points for Associates: Dates
• If the TIL must be revised, the borrower must receive the revision at least three business days before closing.
• Note that the TIL disclosure is considered “received” three business days after mailing.
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Why Would the APR Change?
• The loan amount changes UP or DOWN.
• The loan program changes.
• Fees are higher than initially disclosed.
• Additional fees not originally disclosed must be charged.
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Changes That Will Not Affect the Truth in Lending Disclosure
• Changes in the mortgage-related fees that do not change the APR by more than 0.125 percent.
• Change in fees that are not part of the APR calculation.
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8/4Borrower “A” Meets with GSM
8/3Borrower “A” Rush Closing
8/12Borrow “A” Closing/Settlement
8/27Closing date for Borrower “B”
8/25Borrower “B” requests lower loan amt.
Wait 3 business days
8/28Borrower “B” New Closing date
August 2009
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How Do These Changes Affect You?
• When determining closing dates, allow appropriate time for disclosures.
• Set expectations with buyers, sellers, other real estate agents and builders.
Everyone must work togetherto meet the closing date!
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This applies to all new loan applications submitted on
or after July 30, 2009.
REMEMBER: