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Mortgage lenders face an increasingly complex landscape of transparency, timing, disclosure and accuracy requirements designed to protect borrowers. Lawmakers have reacted to the foreclosure crisis by trying to ensure that consumers are more fully educated and informed about the loan agreements they're entering into.
The collective effect of these requirements is that lenders can no longer manage the dizzying array of requirements without automation and technology to manage and monitor their borrower, disclosure and loan data to a greater level of accuracy and scrutiny.
There's no shortage of published material about the new regulations and requirements, and so this column will only summarize them. Then I'll focus on how eMortgage technology solutions can address them, making the loan process more efficient and accurate while ensuring that loan originators stay compliant and avoid expensive fines.
The Mortgage Disclosure Improvement Act (MDIA) took effect on July 30, 2009. It's also known as the "3-7-3" rule, because it requires:
* The Good Faith Estimate (GFE) to be provided within three days of the borrower's application;
* Closing cannot occur for seven days after initial disclosures are provided; and
* Re-disclosure, plus a three-day additional waiting period before closing, if the final closing figures are not within specific tolerances of initial disclosure figures (like 0.125 percent for the annual percentage rate).
MDIA also prohibits originators from charging initial fees to the borrower, except for a reasonable credit report fee, until the borrower...