MDIA - Mortgage Disclosure Improvement Act

Portions of the Mortgage Disclosure Improvement Act, or MDIA, was enacted by the US Government on July 30th. What this means to you, the mortgage borrower is that you are required to be more informed before committing to a mortgage loan. Put simply, MDIA is a new policy designed to protect you from unscrupulous mortgage lenders, and to ensure that you have time to make informed decisions.

The first thing MDIA is designed to do is to ensure that you receive your disclosures (Good Faith Estimate and Truth in Lending) before paying any fees. The truth in lending document shows what your Annual Percentage Rate (APR) is for the proposed loan, the APR is calculated based on your mortgage rate plus certain closing costs and any upfront interest due. Your APR will almost always be higher than your mortgage note rate because the APR factors in closing costs. If you receive a truth in lending where the APR and mortgage note rate are the same, beware as the provider of the truth in lending is not including closing costs in your APR which is a direct violation of federal laws.

To help clear up MDIA, we have provided a summary of the key points to the policy;

1) Upfront fees (with the exception of reasonable credit report fees)– cannot be collected by any mortgage lender, bank or broker prior to you receiving your initial Good Faith Estimate (GFE) of closing costs and Truth in Lending (TIL) statement. If anyone asks you for payment of any sort before you receive your disclosures they are in violation of MDIA.

2) Seven day waiting period – from the time initial disclosures are mailed (including email), a mandatory seven business day waiting period is required prior to a loan closing. This is designed so that you have adequate time to review your disclosures and be sure that the loan is right for you and your family.

3) Corrected Disclosures – if the final APR for your loan is .125% higher for a fixed rate loan or .250% higher for an adjustable rate loan, your mortgage provider is required to provide you with updated disclosure documents. Once these have been provided to you, a new three business day waiting period is required. Once again this is designed to ensure that you have adequate time to make an informed decision. Please note, if the corrected disclosures are not signed and returned to the mortgage provider, the waiting period would be six business days instead of three.

Many institutions have voiced concern about MDIA, however goodmortgage.com embraces this new act as we believe it allows consumers to have a better understanding of the costs associated with their new loan. Goodmortgage.com primarily uses email to transmit our initial disclosures to you, once you have received them we encourage you to review them and if you are satisfied to send us a return email with the APR written in from the initial truth in lending so that we can ensure you understand the details of your loan. Only then will our associates ask for any form of payment, and only then would we be able to lock your loan