Changes taking Place! Summary of HERA/MDIA implementation

The industry continues to undergo change. The most recent of the changes was what they are calling MDIA. This stands for Mortgage Disclosure Improvement Act. This is a sub component of the Housing and Economic Recovery Act, also known as HERA. HERA impacts the HVCC or Home Valuation Code of Conduct that was implemented in May and affected how appraisals were ordered and done. MDIA, HERA, and HVCC are all so confusing are they not. They continue to develop all these little abbreviations that mean something and each is a Federal Guideline that is overlayed by the wholesalers that we work with. An overlay is an additional requirement laid over the federal guide for that wholesaler. WOW!

So what things should you be aware of and how do they impact you as a consumer? The following are five major changes of the HERA disclosures:

1. Saturday is now a business day
2. Upfront fees cannot be collected until the borrower “receives” the initial Truth in Lending from the lender . The only exception is the credit report fee
3. Initial Truth in Lending now required  on all purchase and refinances on primary residences and second homes
4. Initial Truth in Lending must be received seven days prior to the closing/signing date
5. An increase in APR by greater than .125% requires re-disclosure of the Truth in Lending at least three days before the closing/signing date. If mailed the Truth in Lending is considered “received” 3 business days after mailing.
   

The said new changes went into effect on July 30th, 2009. This was a bill that was signed and passed in 2008. It is my “Opinion” that it is another plan that was not well thought out and will lead to some growing pains ut was done with the right intentions. We will all get used to the plan and it will be virtually painless.The bottom line was to make lending:

• More Transparent
• prevent deceptive lending practices by making more obstacles and checkpoints
• protection against abusive lending practices for borrowers
• Consistent lending practices among all lenders
• Borrowers are more informed and more confident about the mortgage process

A few more things to be aware of are the borrower must receive a copy of the appraisal 3 days prior to the close/sign date. The appraisal cannot be ordered until three days after the initial disclosures have been sent to the borrower. Borrowers do have the option to waive the right to receive a copy of the appraisal. At this point HVCC applies to conventional loans but please be aware that this may extend to all types of loans in the near future.

Call your Loan Officer for clarification on this subject.