UPDATE
I received word that the Northwest Multiple Listing Service (NMLS) contract now includes an addendum that protects borrowers in regards to the MDIA laws. According to a source, the new NMLS contracts will include an addendum that states the seller will automatically extend the closing date if the extension is needed only to fulfill MDIA requirements. I have not confirmed this to be true, so stay tuned.
There’s several new regulations in the new MDIA (Mortgage Disclosure Improvement Act), but there are two major changes that every real estate agent should be aware of.
1.) You must wait at least 7 days after the initial disclosures are given to the borrower to close
If you want a fast closing deal using traditional lending methods regulated by RESPA Laws(Real Estate Settlement Procedures Act), you cannot close until 7 business days have passed after the first set of loan disclosures have been given to the borrower.
2.) If the APR (Annual Percentage Rate) on the loan increases by more than .125%, the borrower must be disclosed AND you must wait 3 days until you can close. It is very important that the lender is accurate in disclosing the APR properly.
Even experienced lenders can make a mistake resulting in an APR change exceeding .125%. Re-disclosing to the borrowers is fine, but you should be prepared for any extra time needed. At worse, if the loan docs go out and the APR is off by more than .125%, you will have to wait 3 days before the borrower can sign. Schedule extra time for each of your closings just to be safe.
Also, try to help the lender disclose an accurate APR. The APR is affected by the day of the month we close (interest-per-day) and the escrow fee.
Interest-per-Day is the interest charges for the month the transaction is closing in. If there is 20 days left in that month and the interest-per-day charge is $50 a day, the total cost is $1000. By getting a purchase price and accurate closing date to the lender quickly, this will help with all estimates being accurate.
Help keep escrow fees down by using companies that do both title and escrow (they give discounts and it also prevents the title company from charging a sub-escrow fee). If you have an escrow company you prefer to use, find out what the cost of their purchase transactions are with tax and give it to the lender immediately after the offer is accepted. If you’re using the other agent’s escrow company, get the fees from them immediately to pass on to the lender.
Related posts:
Since we’re talking about the What Do Real Estate Agents need to know about the MDIA (Mortgage Disclosure Improvement Act)? Keane Loans issue, Renters of long term apartments can usually get by with just paying the first and last month’s rent and a security deposit. This amounts to a payment that is significantly smaller than the down payment for a house, and it is comparable to the payments involved in a short-term arrangement.