Back in 2009, the Mortgage Disclosure Improvement Act (MDIA) brought us the following changes to slow down the loan process and to make sure a borrower has the latest and greatest information in hand before loan closing:
- The “seven business-day delay” (from the time of initial disclosures) on consumer closed-end dwelling-secured mortgages; and,
- Required re-disclosure of an inaccurate APR to be received at least three business days prior to closing.
These changes likely caused some frustration with your borrowers and if something changed in connection with a loan, you probably found yourself testing APRs to see if you needed to re-disclose prior to closing. So whatever happened to MDIA? Did it change when TRID went into effect?
Actually, both MDIA requirements are written into the existing TRID Rule. In short, the seven-day closing delay is tied to the Loan Estimate and the three-day APR re-disclosure delay is tied solely to the Closing Disclosure. You must mail or deliver the initial Loan Estimate at least seven business days prior to closing. Note that this requirement is based on your delivery, not the applicant’s receipt. Keep this in mind when applicants ask you how fast they can get to closing. You must also mail or deliver the Closing Disclosure so that it is “in hand” at least three business days prior to closing. Since the Closing Disclosure includes the APR, it satisfies the MDIA APR re-disclosure requirement. So, there’s no requirement to re-disclose your Loan Estimate just because the APR changes. Delivery of the Closing Disclosure satisfies the MDIA requirement.
Keep in mind; however, that the APR can change for any number of reasons. You could have a valid changed circumstance that throws one or more fees out of tolerance, in which case you may want to re-disclose the Loan Estimate. If you do, you need to do so within three business days. If the APR becomes inaccurate after you’ve delivered the Closing Disclosure, you need to re-disclose it and restart your three business-day waiting period.
Want to learn more about the Loan Estimate or Closing Disclosure? We have webinars for that.