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Impact of the mortgage disclosure improvement act

Impact of the Mortgage Disclosure Improvement Act

The process of getting a mortgage has been changed and these changes are for those who plan on buying a house. It is important to be aware of such aspects in the real estate world. The changes that have been made were put into effect by the Mortgage Disclosure Improvement Act. The lenders, real estate agents and the borrowers should definitely know what this law entails.

On July 30, 2009, the Mortgage Disclosure Improvement Act was put into motion. The act basically, helps and safe guards the borrowers, giving them time to make the right choice about signing a loan agreement. The borrower can go over the conditions of the loan before he signs any agreement for it.  Besides that, it also keeps the borrowers safe since there are various fees and paperwork which is involved in the mortgage loan process. The MDIA will keep a borrower from being taken advantage of.

It is also very important that the lenders and anyone else, who is involved with the loan process, become aware of the guidelines and be familiar with the Mortgage Disclosure Improvement Act. Whoever is involved in this process should be transparent and obey the rules in the disclosure, before a loan agreement can be signed.

The Mortgage Disclosure Improvement Act has many positive impacts for the home buyer. Down below are four main positive aspects of the MDIA.

Waiting Period- Before the borrower can go through with the loan process; there is a seven- day waiting period. This period starts when the Truth in Lending (TIL) and Good Faith Estimate (GFE) have been delivered or mailed.

Re-Disclosure- If the Annual Percentage Rate happens to decrease or increase above rate of .125% there will be a new Truth in Lending Act. This will keep the borrower in the loop.

No Charges- There are no charges until the initial TIL and GFE is received. These must be reviewed by the one who is borrowing. The only fee that you will occur is the charge for the disclosure of your credit report.

Say “No”: The disclosure form has a statement which states, “You are not required to complete this agreement merely because you have received the disclosures or signed a loan application.” If you are not happy with the conditions of the loan, you are not obligated to go through with it.

Although there are many impacts that are positive in the MDIA, there are also other aspects to think about.

1. Since there is a three and seven day- waiting period, there is a hold up in the closing process. This only involves business days and does not include Sundays and legal holidays.

2. Waiting periods can also cause delays for the lenders because appraisals or the locking-in rates cannot take place until- after the three day waiting period. Even if the buyer gets the disclosures on the same day, no transaction will be granted or honored until the waiting period is through.

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