Posted by Vince/KS on 10/2/09 3:05pm
Msg #305940

New regulations have interesting affect

Last night it was the same old story for a closing - but with a new twist. This one was a purchase where the closing was scheduled in the LO’s office. Half the docs arrived an hour before the closure with assurance the remainder would follow soon. Then I get an apology from the TC asking if we can move the closing back a half hour they were still waiting on the TIL. The TIL?

So, I called the LO and he said it should be available any moment and the borrower was waiting. So, I also explained I was about 25 minutes away but would print the remainder and be enroute as soon as the final docs were printed and released if he felt confident this was still going to work out.

Well, 15 minutes later the loan officer called and explained that the TIL had changed by more than an one eighth and therefor the borrower would be required to have a new notification issued for at least a 48 hour period to review the change. Apparently the seller had agreed to pay a few more of the original closing costs and that changed the APR on the TIL by more than the regulations allow. The LO had argued with his institution that the APR was better, not worse, but they held firm. So, now the borrower is unhappy with: the government, the loan officer and the realtor (and re-scheduled for next week)...

Reply by Linda_H/FL on 10/2/09 3:20pm
Msg #305941

"the TIL had changed by more than an one eighth and therefor the borrower would be required to have a new notification issued for at least a 48 hour period to review the change"

Yep...my understanding, unless it's been changed again, is that a change in the APR of 1/8 of a point results in new disclosures and either 3 day wait or 7 day wait - I've been told both.

This is the first time I've heard it come into plat at closing.

Reply by Linda_H/FL on 10/2/09 3:21pm
Msg #305942

Sorry - "plat" = "play"....:) n/m

Reply by MikeC/NY on 10/2/09 4:33pm
Msg #305946

7 days after initial discloures are provided...

.. and every time the APR changes by more than 1/8 point, it's an additional 3 business-day wait.

I agree with the LO - if the rate change is more favorable to the buyer, the 3-day rule should be waived - but then again this is the government we're dealing with...

Reply by Linda_H/FL on 10/2/09 4:41pm
Msg #305951

Re: 7 days after initial discloures are provided...

"7 days after initial disclosures are provided.... and every time the APR changes by more than 1/8 point, it's an additional 3 business-day wait"

Then the guy at my bank has it backwards...no surprise there...

Reply by MikeC/NY on 10/2/09 4:51pm
Msg #305952

Re: 7 days after initial discloures are provided...

It's confusing everyone. And the timing couldn't be worse - the market is actually starting to pick up here.

Brace yourselves - it's going to be a zoo at the end of November. The $8000 tax credit for first-time buyers expires on 11/30 (unless Congress extends it, and that's iffy right now). In order to qualify for the credit, the deal MUST close no later than 11/30. Add these new regs to that deadline, and this is just a train wreck waiting to happen...

Reply by MW/VA on 10/2/09 3:30pm
Msg #305944

That's a bummer. The regs are designed specifically so people don't get caught in a bait & switch w/costs. It's going to be a real PIA when it comes to purchases. That delay is going to mess things up pretty bad.

Reply by CopperheadVA on 10/2/09 4:23pm
Msg #305945

I'm no expert on the new regs, but I thought a new review period was only required if the APR was HIGHER, not lower. I'm surprised there's no waiver for this like there is for the appraisal.

Reply by Linda_H/FL on 10/2/09 4:36pm
Msg #305947

You could be right, Linda - I was chatting with the LO at my own personal bank about the new regs just before they went into effect and he was the one who told me ANY change to the APR of 1/8 point or greater required new disclosures and triggered a new disclosure period - now he said 7 days but I've heard some say on the boards it's 3 so I'm not sure...I thought initial disclosures had to be provided within 3 days after application then subsequent disclosure periods were 7 days (he also predicted these new regs would create an absolute nightmare).

His words, not mine.

Reply by PAW on 10/2/09 8:27pm
Msg #305977

You are correct according to the MDIA

The wording in the Mortgage Disclosure Improvement Act are pretty clear:

Re-disclosure is needed if during the process the APR is 1/8 or .125% greater than early disclosure. The lender may send the disclosure to the borrower by mail or in person. The new revised disclosure has a waiting period of at least 3 days prior to consummation (closing).


If the APR decreases, no early re-disclosure is required. And the "waiting period" is 3 days, not 7.


As a side note, I notice the MDIA calculates the 7 day period different than the 3 day period:

o Three and seven business day periods count all days except Sunday and Federal Holidays.

§ For the seven day waiting period, the day the disclosure is mailed or delivered in person counts as day 1 in the count.

§ For the three day waiting period for corrected TIL disclosure, the day after the disclosure is delivered counts as day 1 in the count.

§ Corrected disclosure that is mailed requires a three day mailing period before the start of the 3 day waiting period starts. This allows time for client to receive and review the disclosure, and then have the 3 days to think about if they want to proceed – waiting period.

§ The three mailing days does not recognize Sundays and Legal Holidays when mail is not delivered.

§ If the disclosure is mailed, and there is proof of receipt in less than the three day mailing period, the 3 day waiting period may go by the confirmed receipt date. A Loan Originator may want to deliver the disclosures or have the borrower come into the office to obtain the borrowers signature to start the waiting period promptly.

Reply by BobbiCT on 10/3/09 9:33am
Msg #306012

Lower APR change triggers "wait" ...

I've been to a number of seminars with attorneys & brick-and-mortar bankers. The APR trigger is a PIA killer and there is no waiver if the APR is Lower. That's the complaint from bankers, brokers and closing attorneys. If it's a purchase and at the last minute (say day or two before the Scheduled closing) the Mortgage Broker switches to a different lender that offers LESS EXPENSIVE aka "more favorable terms for the borrower" rather than terms that result within the APR tolerance, the borrower has to WAIT ... resulting in a closing being rescheduled. Two things: Either a last minute issue comes up and borrower isn't eligible for original loan product and terms or borrower is eligible for and WANTS more favorable (less costly) terms.

What's a loan/mortgage officer to do? Tell his customer, "Sorry, you've got to pay more today rather than wait 3 days to get a lower cost deal over the 30-year life of the loan."

Reply by PAW on 10/3/09 10:08am
Msg #306013

Re: Lower APR change triggers "wait" ...

I don't think so, Bobbi. As I said in a previous post:

The wording in the Mortgage Disclosure Improvement Act are pretty clear:

Re-disclosure is needed if during the process the APR is 1/8 or .125% greater than early disclosure. The lender may send the disclosure to the borrower by mail or in person. The new revised disclosure has a waiting period of at least 3 days prior to consummation (closing).

If the broker finds a better (i.e. lower APR) product, then re-disclosure is required, but there is not a 3-day waiting period. (Assuming that the waiting period from the initial disclosure has expired.)

Reply by ME/NJ on 10/2/09 4:37pm
Msg #305948

No wonder business is slow..lol

Half the TCs I deal with the numbers change last minute to make the deal work. Plus add someone in the pipeline (banks)wait till the day of the closing to release the paper work. Hmmm idea release it sooner to avoid the issues.

Reply by CopperheadVA on 10/2/09 4:38pm
Msg #305949

Sept 2009 was my slowest month since Dec 2007...

I'm dying here!!!!

Reply by Claudine Osborne on 10/2/09 9:09pm
Msg #305986

Re: Sept 2009 was my slowest month since Dec 2007...

Does this mean that Dec 1st closings will cease??

Reply by Linda_H/FL on 10/2/09 10:04pm
Msg #305995

Re: Sept 2009 was my slowest month since Dec 2007...

No...I think it probably means first home buyers closing in December are gonna be really ticked off when they file their taxes in 2010 and realize they can't take the credit cuz they didn't close soon enough....can just hope realtors didn't lead them to believe they'd still get the credit.

Why they wouldn't extend that through end of tax year is beyond me...