The Federal Reserve Board recently amended Regulation Z, effective July 20, 2009, to conform Regulation Z to the requirements of the Mortgage Disclosure Improvement Act of 2008. The purpose of the amendment is to enable consumers to know, prior to closing, what their closing fees and charges will be. The new 3 – 7 – 3 disclosure model is intended to address this problem. This amendment applies to primary home and vacation homes. It also does not allow a lender to charge any fees, other than for a credit check for a consumer prior to the consumer being provided with the initial Truth-in-Lending Disclosure.
What does the new 3 – 7 – 3 disclosure model mean?
- A lender must provide a good faith estimate within three business days after receiving a buyer’s application for a mortgage. Business days include Monday – Saturday, excluding Sundays and legal holidays.
- A lender must wait seven business days after providing the good faith estimate before a closing can take place.
- If a lender needs to make more than a minor change to the annual percentage rate (defined as any change more than 1/8% from that which was initially disclosed), the lender must provide new disclosures to the buyer no later than three business days before closing.
- A buyer can waive these waiting periods only if the buyer has a personal financial emergency, like a foreclosure.
How do the changes affect REALTORS?
While the mortgage loan originator is responsible for complying with the above dates, REALTORS should pay attention to contingency and closing dates. If the lender revises APR too close to the closing, the closing date will need to be postponed to allow for the required review. If the closing date is “time is of the essence” for either the buyer or the seller, make sure to keep track of the mortgage loan originator to avoid delays.
Click here for more information:
http://federalreserve.gov/newsevents/press/bcreg/20090723a.htm |
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