OCM MDIA PROCEDURES
Effective: July 30, 2009
The Mortgage Disclosure Improvement Act (MDIA), effective July 30, 2009, revised the operations of mortgage
brokers and lenders. Specific loan documentation requirements will greatly affect the scheduling of closing
loans. One Choice Mortgage (OCM) has established the following procedures to guide our staff and brokers
to accommodate these changes.
This is required on all loans originated on or after July 30, 2009. There is no impact on loans originated
prior to July 30, 2009. EXCEPTION : if the initial origination RESPAs (valid only for 90 days) become expired,
a new origination disclosure package is required and the new regulations will apply, including the initial waiting
Truth-in-Lending Statement Revised to Include Statement of No Obligation
MDIA requires brokers and lenders to correct their Truth-in-Lending disclosures to include the following
statement: "You are not required to complete this agreement merely because you have received these
disclosures or signed a loan application." The statement must be grouped together with the Good Faith
Estimates of the disclosures otherwise required by Regulation Z Section 226.18.
The statement must be clear and consipcuous (reasonably understandable and legible) and segregated
from information that is not directly related to the disclosures under Regulation Z Section 226.18.
What this means:
If the Initial Truth-in-Lending disclosure does not include this language it is in violations of rules and
regulations. Loan approval cannot be granted until the language is included and disclosed to the
borrower(s). This may require re-disclosure with applicable waiting periods.
Fee Collection Acknowledgment
Only a credit report fee can be charged to the borrower until a TIL/GFE/Transfer of Servicing Agreement
and Mortgage Broker Agreement have been provided to the borrower. The earliest date a borrower can
pay for charges other than a credit report fee is the 4th business day after the origination date (as long
as the borrower has received the above disclosures).
OCM recommends the borrower executes the Fee Collection Acknowledgment Form to indicate they
have not been charged any fee, with the exception of the credit report fee, until they have received an
initial TIL disclosure package. We have an example of this form available on our website for brokers
to duplicate onto their Loan Origination System (LOS) or company letterhead.
If it is apparent to OCM that a broker collected fees prior to disclosures being received means the deal
is DEAD. We cannot close a loan that is not in compliance with this regulation as well as other federal,
state and local laws and regulations.
The Initial Seven-Business-Day Waiting Period
Under the MDIA, the loan originator must deliver or place in the mail the initial disclosures required under
Regulation Z Section 226.19(a)(1)(i) no later than seven business days before the loan is consummated.
OCM interprets consummation to occur on the signing date, that is, the date that the borrower signs
loan documents. For purposes of defining a "business day," OCM considers Monday-Saturday to be
business days. Sundays and federal legal holidays are not considered to be business days. See the
federal legal holiday chart listed on page 4.
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Initial Seven-Business-Day Waiting Period condition
Your OCM Underwriter will audit the initial disclosures, under Regulation Z Section 226.2(a)(13), and will
identify the earliest closing date which the borrower can sign loan documents.
All loans submitted to OCM will have the following condition added:
"WARNING: Borrower cannot sign loan documents until _______________, the date which is at
least seven business days after the initial disclosure delivery date of ________________."
The APR Threshold Variance Audit
If the initial or previously disclosed APR becomes inaccurate above the threshold, the borrower must
receive corrected disclosures. An APR is inaccurate by either 0.125% between the last disclosed APR
compared to the final disclosures, then the borrower must receive corrected disclosures.
Broker credits DO NOT affect the APR measurement.
If the APR Audit Fails; Re-Disclosure is Required
If the calculated APR varies above the Last Disclosed APR by +/- than 0.125% the Broker must provide
corrected disclosures, and the borrower must receive them no later than three business days before the
If the calculated APR audit fails, the following condition will be added:
"WARNING: Loan APR of __________% varies from the last disclosed APR of __________% by more
or less than (0.125%), the borrower must receive revised disclosures at least 3 business days
prior to signing loan documents."
What this means:
Depending on your method of re-disclosure, your OCM Underwriter will notify you of the earliest closing date
available. See scenario examples listed below:
REDISCLOSURE SCENARIO #1:
Face-to-Face, Email or Fax; the loan cannot close until the 3rd business day after "proof the borrower
received corrected disclosures." For counting purposes, the day of redisclosure does not count. The next
business day starts the counting clock. Then the loan is able to close on the 4th business day.
OCM must receive evidence the borrower has received the new disclosures;
For Face-to-Face or Fax option OCM must receive the signed disclosures prior-to-docs.
For Email option OCM must receive evidence that the borrower received the new disclosures via email paper
trail and return acknowledgment of the new APR from the borrower. The Broker will then provide OCM with
redisclosed blanks and the borrower will be required to bring their signed redisclosed docs to closing.
OCM recommends the borrower acknowledge the new APR on the Email Acknowledgment Form and return
it via email (Note: this form does not require a signature… the borrower must enter the new APR).
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REDISCLOSURE SCENARIO #2:
Regular Mail; the loan cannot close until the 7th business day. Under MDIA, this allows 3 business days
for mail delivery and 3 business days for the borrower to review the new disclosures. Then the loan is able
to close on the 7th business day. The Broker will then provide OCM with redisclosed blanks and the
borrower will be required to bring their signed redisclosed docs to closing.
REDISCLOSURE SCENARIO #3:
Latest Disclosed APR; if the loan APR does not vary from the last prior disclosed APR by more than the
applicable threshold, then the scheduled/allowable loan closing date won't change. If the loan APR varies
from the last prior disclosed APR (including a redisclosed APR) then the waiting periods re-apply to the loan
and the scheduled/allowable loan closing date will have to change according to the additionally required
Waiver of Waiting Period:
Under MDIA, the borrower is permitted to waive the seven business day waiting period after they receive
their initial disclosures, and/or the three business day waiting period after they receive corrected disclosures,
in cases of a"bona-fide personal financial emergency." Regulation Z explains this rule regarding the waiver of
the waiting period is similar to the waiver requirements for rescission rights and the waiting period under the
Home Ownership Equity Protection Act (HOEPA) for high-cost mortgages.
There are circumstances where the borrower may want to close their loan earlier; see the following examples:
1 To avoid foreclosure on a property the borrower is NOT currently living in.
2 A borrower may have a medical or financial emergency unrelated to foreclosure; such as:
a. medical emergencies requiring prepayment for services before a procedure may be
accomplished (i.e., gastric bypass or lapband surgery not covered by insurance).
b. uninsured or underinsured accidents.
c. weather related occurrences.
d. deadlines imposed by insurance companies.
e. legal proceedings.
f. natural disaster emergencies which require more rapid access to loan funds
(i.e., FEMA designated areas).
A borrower must present the request in writing explaining fully the situation to be considered (cannot be on a
typed request; must be handwritten by the borrower - meaning no template request made by broker on the
behalf of the borrower). Documentation to support the request must be presented by the borrower. Each
circumstance listed above will have evidence of documentation that OCM will require PRIOR to considering
ALL DECISIONS DECISIONS BY OCM UNDERWRITING STAFF TO GRANT OR DENY SUCH REQUEST
IS FINAL -- NO EXCEPTIONS!
NOTE: if a previous waiver of waiting period was granted, and now additional redisclosure is required,
then the waiver approval is null and void and cannot be requested again.
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Federal Legal Holidays:
The following ten legal public holidays (holiday observance dates are ignored for this purpose) do not count
as a "buisness day."
1 New Year's Day, January 1
2 Martin Luther King, Jr. Birthday, the 3rd Monday in January
3 Washington's Birthday, the 3rd Monday in February
4 Memorial Day, the last Monday in May
5 Independence Day, July 4
6 Labor Day, the 1st Monday in September
7 Columbus Day, the 2nd Monday in October
8 Veterans Day, November 11
9 Thanksgiving Day, the 4th Thursday in November
10 Christmas Day, December 25
Frequently Asked Questions:
Q1: Do the timing requirements for the issuance of the initial disclosures and re-disclosure, and fee
collection apply to investment properties?
A: No. These requirements only apply to primary residences and 2nd home transactions.
Q2: When a phone application is taken, can a post dated check, credit card or other payment info
be collected and held until upfront fee payment is collected?
A: No. Fees or payment information cannot be collected prior to the allowed collection date, which
is a minimum of 4 business days after the initial disclosures are mailed (if mailed) or before the
applicant received the initial TIL disclosure if it is not mailed.
Q3: If a broker orders an appraisal prior to collecting fees -- can this appraisal order continue, appraisal
delivered and used to evaluate the loan?
A: Yes. If the broker pays for the appraisal upfront and does so at their own risk. If the borrower
decides not to proceed with the transaction once they get the TIL, then can be under no obligation
to reimburse the broker for the cost of the appraisal.
Q4: If two borrowers are applying for a loan, and only one person is present at the time of application,
can upfront fees be collected at the time that the one borrower is present?
A: Yes. If there is more than one borrower, the initial disclosures may be made to any borrower who
is primarily liable for the obligation.
Q5: Does the regulation only impact purchase transactions, or are refinances subject to the same
A: Both purchases and refinances are impacted.
Q6: Who is required to authenticate the email acknowledgment to start the fee collection process?
A: Only the primary borrower needs to acknowledge and return the email to start the process.
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Q7: Can OCM accept an appraisal that was performed for another lender?
A: Yes, OCM wil accept a "transferred" appraisal and loan as long as no other fees are collected or
imposed until the borrower receives the TIL disclosure. The file will need to be adequately
documented that the initial TILA process was complied with the original lender. Evidence of the
borrowers initial disclosures from the other lender will be required.
Q8: What happens if it is apparent to OCM that the broker collected fees prior to the borrower
receiving a copy of the initial TIL?
A: If this is apparent, the loan will be rejected and not able to close with OCM. We cannot close a
loan that is not in compliance with this regulation as well as other federal, state and local laws
What Loans are Excluded from MDIA?
Home Equity Lines of Credit are not applicable to MDIA and there have been no changes at this time.
Who Can I Contact in case of Other Questions:
You may contact your Account Executive:
Joe Houk 414-659-1482
Jason Schultz 414-313-6243
Chad Heller 608-347-2131
Marcus Korth 414-975-5218
Or in-house representative:
Donna Thompson 414-831-4363 direct line