New Federal Reserve Consumer Protection Rules

A report of Los Angeles Times talks about a new Federal Reserve consumer protection rules concerning the mortgage and refinance loans for a primary or secondary home. The new collection of rules will go into effect starting July 30.

Revisions implemented to the Mortgage Disclosure Improvement Act (MDIA) include:
• Lenders are required to give an honest approximation of mortgage loan expenses:
• within 3 business days after receiving a consumer’s submission for a home loan
• and prior to any fees being collected from the consumer.
• Lenders are required to wait 7 business days after they make available the early disclosures before closing the loan.
• In the situation of a change in APR (Annual Percentage Rate), lenders are required to provide new disclosures and wait 3 more business days.

These rules regarding home loans will help the consumer to know before closing the loan about all various charges such as fees involving escrow, appraisal, document preparation, credit report, tax service, survey, state recording, notary, and others.

How these rules could affect the lenders:
• Delay and change the schedule for the settlement for home loan transactions.
• Delivery of disclosures and appraisals due to backlogging.
• Fewer instances of eleventh hour closing fees.
• Legal action between lenders and their business collaborators.
• Legal action between lenders and consumer advocates looking for termination of mortgage contracts.