On July 30, 2008, the U.S. Congress enacted the Housing and Economic Recovery Act of 2008, which included amendments to Regulation Z – Truth in Lending Act, known as the Mortgage Disclosure Improvement Act of 2008 (MDIA).
MDIA requires early, transaction specific disclosures for mortgage loans secured by dwellings other than the consumer’s principal dwelling and requires waiting periods between the time when disclosures are given and consummation of the mortgage transaction. The requirements of the MDIA became effective in July 2009. The final rule amending Regulation Z requires creditors to make good faith estimates of the required mortgage disclosures, and deliver or place them in the mail, no later than three business days after receiving a consumer’s application for a dwelling-secured closed-end loan. Consummation can occur on or after the seventh business day after the delivery or mailing of the disclosures. If the annual percentage rate (APR) disclosed in the good faith estimates changes beyond a specified tolerance for accuracy, creditors must provide corrected disclosures, which the consumer must receive on or before the third business day before consummation of the transaction. The rule allows consumers to expedite consummation to meet a bona fide personal financial emergency.
If the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency, the consumer can modify or waive the seven-business-day waiting period or the three-business-day waiting period after receiving the required disclosures. The consumer must give the creditor a dated written statement that describes the emergency, specifically modifies or waives the waiting period, and bears the signature of all the consumers who are primarily liable on the legal obligation. Printed forms for this purpose are prohibited.