Big industry changes are coming tomorrow on July 30th when some of the provisions of the Mortgage Disclosure Improvement Act of 2008 (MDIA) go into effect and lenders, mortgage brokers, title agents, real estate agents, and real estate brokerages need be alert as to these new federal governmental regulations.

Take a look at some changes that could affect your purchase or refinance:

1. All mortgage lenders and brokers be required to provide Truth in Lending (TIL) disclosures to borrowers according to a defined schedule. This may alter the borrowers' closing date expectation.

2. The 3/7/3 Rule requires a seven-business day waiting period once the initial disclosure is provided before closing a home loan (business days are everyday except Sundays and Holidays). This means that before a borrower can close on a transaction the borrower must receive the initial Good Faith Estimate (GFE) and initial TIL statement disclosing the final Annual Percentage Rate (APR) seven days prior to closing.

3. Changes start the 3-day clock again. If there are any changes to the loan parameters that affect the Annual Percentage Rate (APR) on the TIL, the resulting APR must be compared to the latest TIL provided to the borrower. If there is an increase greater than .125% in the APR, then lender must provide a corrected TIL to the applicant. Fees considered to be finance charges that are used in the APR calculation include but are not limited to discount points, lender and broker fees, life of loan flood certification coverage, settlement agent or attorney fees. Borrowers must be provided three business days to review this amended TIL prior to loan closing.

4. Fees cannot be collected until disclosures are received. The regulation prevents the collection of all fees from the borrower, except the expected cost of the credit report, until the borrower has received the initial TIL. This may delay appraisal orders or orders for other essential services.

Here are three examples of the "3/7/3 Rule" of the MDIA:

Example A

1. August 1st the loan application is taken;
2. August 2nd the initial TIL is sent in the mail;
3. August 10th the closing can occur on this day or after this day if the initial TIL was received and the APR was within the .125 of the final TIL.

Example B

1. August 1st the loan application is taken;
2. August 2nd the initial TIL is sent in the mail;
3. August 4th the borrower's interest rate changes causing the APR to change more than .125 (1/8th) percent which triggers a re-disclosure of another TIL;
4. August 5th the revised initial TIL is mailed to the borrower. The borrower can close on the transaction at the earliest on August 13th (add a day to account for Sunday).

Example C

1. August 1st the loan application is taken;
2. August 2nd the initial TIL is sent in the mail;
3. August 20th the borrower's interest rate increases causing the APR to change by more than .125 (1/8th) percent which triggers a re-disclosure of another TIL;
4. August 20th a revised initial TIL is mailed to the borrower;
5. August 23rd the borrower receives the revised initial TIL in the mail;
6. August 26th (unless it falls on a Sunday then the 27th) the borrower can close on their residential real estate transaction and sign the mortgage documents on this day or later if the final TIL doesn't once again change by .125 otherwise you can start the entire process all over again.

Final Note: While these changes may cause delays to the closing process, the new regulation strives to ensure borrowers have a clear understanding of the financial obligation they are about to assume.