MDIA (The Mortgage Disclosure Improvement Act) went into effect on July 30th 2009. How this effects you as a consumer is very important to your process in purchasing a home. The MDIA affects those who are preparing to finance their purchase through a home loan. First, The MDIA amends the Truth in Lending Act. The bank that is financing your loan can only require a reasonable fee for a credit-report check before your Truth in Lending is received. After the TIL is received they can accept payment for any other fees (ex. Property appraisals). The Lender is obligated to send you initial disclosures within 3 business days (Monday through Friday, not including Holidays). Moreover, 7 business days (including Saturday not Holidays) must pass before the loan can go to closing. In addition, if the loan APR increases or decreases by more than .125% another re-disclosure must be sent to the customer and 3 business days must go by before the loan can go to closing (includes Saturdays not Holidays). Furthermore, all 7 day and 3 day can be cleared by a waiver that demonstrates a ‘Bona fide financial emergency.’ The financial emergency clause is not clearly defined in the MDIA, but all borrows must sign the waiver in order to process the request.

To help explain what can cause the APR to increase or decrease here are some examples:Origination Fee, Loan Discount Fee (a change in interest rate might require an increase or decrease in this fee), Credit Report, Final Inspection Fee, Mortgage Broker Fee, Tax Service Fee, Processing Fee, Underwriting Fee, Wire Transfer Fee, Flood Certification, Automated Underwriting Fee, Doc Prep Fee, Closing or Escrow Fee, Attorney Fee (Lender only), Pest Inspection, Private Mortgage Insurance/ Mortgage Insurance Premium/ Funding Fee and, of course any change in Loan Amount.

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