July 30, 2009

The above act went into effect on July 30.  Here is what you need to know:

1.   Suppose you are involved in a residential purchase/sale.  The contract calls for a quick closing, or the Borrower decides at the last minute that he wants to finance part of the purchase price, or changes his mind about the amount or type of loan, or delays making up his mind until shortly before the closing.

2.   Under the MDIA, the loan cannot be closed until seven days after the Lender receives the loan application and issues the initial Truth in Lending Statement to the Borrower.

3.   If for some reason the final fees and charges in connection with the loan (which would include certain title and settlement related charges) push the loan's APR greater than 1/8 of a percent over the original estimate of the APR set forth in the Truth in Lending Statement delivered to the Borrower, than a corrected Truth in Lending Statement has to be issued with the proper APR; and

4.   The Lender then has to wait three business days after the Borrower has received the updated disclosure before the closing can take place.

What can realtors do:

1.   Where you have a deal that will be financed, set realistic expectations about the amount of time it will take to get the deal closed;

2.   Discuss the situation with settlement agents you use to avoid unnecessary delays.  Any third party fees that impact the APR need to be fixed ahead of time.  If they change, and as a result the APR is increased by more than 1/8 of a percent, the Lender has to redisclose, which may delay the closing;

3.   Make sure that the settlement agent and the Lender are in communication as early in the process as possible; and

4.   Make sure home buyers understand they need to lock in their loan program and their rate well in advance because both of those may impact their APR, possibly necessitating a redisclosure and a delay of closing.

There are obviously a lot more details to this, but the above will give you the idea.  If you need legal advice, consult with your lawyer.

As always, Premier Title will do its level best to provide you with accurate estimates of all settlement-related charges including those that may impact the APR.  Since we do not charge “junk fees,” those will, of course, not be a problem.

For further information, including informational articles on this subject, call Premier Title at 561 650-0505, or email rbaker@gunster.com.