To: Our Valued Customers
Dated: August 3, 2009
From: Sal J. Turano
Subject: July 30, 2009 - New Federal Regulations to Affect Title Closings
Revised TILA (Truth in Lending Act) disclosure requirements took effect July 30, 2009. Under the new rules, lenders will be subject to new disclosure requirements for mortgage loans under the Federal Reserve Board Truth in Lending Regulation (Reg Z).
The new requirements apply to loan applications filed on or after July 30, 2009. For lenders, the new rules are complex and make compliance difficult. Attorneys and Real Estate Professionals should understand the basics so they can advise clients of potential delays under the new procedures.
Key highlights of the changes include:
• The new requirements apply to all mortgages secured by a borrower’s home, including primary and second homes and refinancing. Investor loans continue to be exempt.
• LENDERS MUST give good faith estimates of mortgage loan costs within three business days after the consumer applies for a loan (early disclosure).
• The LENDER MAY NOT collect any fees before the disclosure is provided, except for a reasonable fee for obtaining a credit report.
• The closing may not take place until expiration of a seven-day waiting period after the consumer receives the early disclosure.
• If the annual percentage rate (APR) increases by more than 0.125 percent, the lender must provide a corrected disclosure to the borrower and wait an additional three business days before closing the loan.
• The consumer may modify or waive both waiting periods for a documented personal financial emergency, but must receive the disclosures no later than the time of the modification or waiver.
• The APR includes not only the interest rate on the loan but certain other costs related to the lender, settlement, and title insurance, so it will be important for any fees that affect the APR to be as accurate as possible, as early as possible, to minimize the need for a corrected TIL disclosure.
Title insurers must be given the proper information to prepare the final bill including:
1. Purchase price and loan amounts (old and new money if a CEMA).
2. Documents to be recorded and page amounts
3. Title endorsements
4. How many payoffs and amounts
5. Items required to be escrowed by lender.
Title insurers may have to provide lenders with an accurate title bill, payoff amounts, recording fees, transfer tax and mortgage recording fees and mortgage tax in order to prepare the final TIL disclosure.
Early disclosures can be obtained using our closing costing calculator on our website:
www.abstractsinc.com
