New Truth in Lending Rules:
Summary of: The New Mortgage Disclosure Improvements Act
Effective: All applications taken after July 30, 2009
Remember the new rule with “3/7/3”
3 days after application – An initial Truth-In-Lending (TIL) statement must be provided no later than 3 business days after receipt of the loan application. This means the lender must provide a statement estimated closing costs with three day of applying for a loan.
7 business days after initial application – Waiting period – the borrower is not permitted to close until at least seven business days have passed since the TIL was placed in the mail or provided to the borrower.
3 business days prior to closing – Waiting period – the borrower must receive an accurate Annual Percentage Rate (APR) on their TIL at least 3 business days prior to closing. If it was provided before that period of time, because the loan terms were locked in earlier in the process, no new TIL is required if there is no change to the APR or the change is less than 1/8th of a percent.
If the final loan terms cause the TIL / APR to be understated by more than 1/8th of a percent, a revised TIL with an accurate APR must be provided to the borrower so that they receive it at least three business days prior to closing. It must be in their hands at that time, and they may close on the 3rd business day after that day.
What this means to you? All parties to a real estate transaction must be advised of these new timing requirements, which will limit rush closings and could even delay closings.