The TILA or Truth In Lending Act of 2009 dramatically alters the rules that lenders must follow during the application and disclosure process of originating loans. The new rules for the Truth in Lending Act amended disclosure requirements, sets waiting periods, and institutes fee disclosure requirements that are even more strict than they have been in the past.
Lenders will not be able to close a loan until 7 business days following the mailing or delivery of the initial disclosures. Also, if the Annual Percentage Rate that has been mailed/delivered changes by more or less than .125% or $100 then the lender is required to re-disclose or provide the borrower with corrected initial disclosures no later than 3 business days prior to the closing. There is an option to waive these waiting periods, but you have to prove a valid emergency so it is not very likely that will be a vast exception to the rule. Another drastic change comes with this act as well, but this time it is the redefined “Business days”. Saturday is now included as a “business” day where previously it was not. Sunday is the only non-business day now. This can sometimes be difficult because many firms are not open on weekends regardless of this new redefinition.
Also, lenders will not be able to collect any fees upfront until after the signed TIL is received or after a three-day waiting period. This will not and has not ever been an issue for our clients however because we don’t ever charge upfront fees anyway.
For VA homeowners and those who wish to get a new VA loan it will affect you in one way more than anything else – time. You will be waiting much longer than you would have been before. For some reason, the Federal Reserve believes that apparently loans are being closed too fast and in that “fast paced” scenario people aren’t able to make decisions on their refinance in what we feel is a regular amount of time. However, it isn’t all bad. Because it lengthens the timeline it may also help those persons who are not quite as familiar with the refinance process. This allows them to become more acquainted, and comfortable with the process in its entirety and through that, they become even more educated.