The Mortgage Disclosure Improvement Act

The MDIA requires lenders to provide certain disclosures prior to the mortgage closing.

The Mortgage Disclosure Improvement Act (MDIA) was enacted in the U.S. in 2008 as an amendment to the Truth in Lending Act. The MDIA requires cost disclosures in the mortgage process. The provisions of the MDIA became effective on July 30, 2009.

Disclosures

The MDIA requires lenders to provide good faith estimates of mortgage loan costs. The disclosure must be made within three business days after receiving an application for a mortgage loan, and before fees are collected from the applicant.

Waiting Period

After disclosing the fees, the lender must wait seven business days before closing on the loan. If the annual percentage rate made in the initial disclosure is inaccurate at the time of the closing, the lender must then disclose the new annual percentage rate. After the second disclosure of the annual percentage rate, the lender must wait three business days before closing on the loan.

Expediting

The MDIA permits a borrower to expedite the closing if the borrower faces a personal financial emergency, such as a foreclosure.

References

• Board of Governers of the Federal Reserve: Press Release May 8, 2009
• RESPA Lawyer Blog: Mortgage Disclosure Improvement Act Goes Into Effect July 30, 2009