Mortgage Disclosure Improvement Act - Friend or Foe

Oh, the MDIA. Now that this is in full force, no consumer could possibly get bamboozled. The powers that be have come to the rescue. Among other details (obviously), this Act mandates a 7 day minimum waiting period between disclosing the details of a transaction via the Truth In Lending and closing on the mortgage.

This sounds reasonable I suppose; but, why? Are they really expecting that because one HAS to wait 7 days to close they are less likely to be taken advantage of. Even it that is the case, this is another example of the 99% being potentially inconvenienced for the 1%. Now, one of the primary purposes is that if the APR increases by more than .125% of what was originally disclosed, the details have to be redisclosed and the 7 days starts over. So sure, it could protect someone from closing on a loan that has surprises at the end. But, it has ALWAYS been the case that if someone is surprised at the end of the loan, they do NOT HAVE to close on the loan. They could have walked away. It is understood that MDIA will take some of the pressure off the borrower in these situations, but they may still ultimately have to make a difficult decision - go figure.

If you are picking up on the frustration and sarcasm, you're right on. The thing is, due to the way we've always done business, these types of legislative mandates (of which there are more coming in the near future) do nothing but create inconveniences. EG:

- we have a wonderful client who came in to do a streamline refinance. These can be done very quickly for various reasons; and this client wanted and needed to get it done quickly. Well, we had the client in and disclosures signed on the 19th of October. The disclosures the investor has to send out were sent on the 20th, and this loan was fully approved and ready to close on the 26th, which would have meant it could fund on October 30th - Perfect! But wait, because of MDIA, it could not be closed until October 28th, 7 full days from the 20th. This meant the loan would not fund until Nov 2nd - a problem because it's an FHA loan and the borrower would end up paying interest for November to both the lender being paid off (a rule specified by HUD) AND the new lender. So, we have postponed the closing until the end of November. The legislation designed to "protect" the consumer has again simply inconvenienced them.

All that said - thank you for allowing the vent session - we will continue to adhere to the rules we are governed by and be diligent in providing the best experience imaginable for our clients.