Mortgage Disclosure Improvement Act (MDIA) ~ FAQ

The Mortgage Disclosure Improvement Act (MDIA) went into effect on July 30, 2009.

To assist with the compliance of this act, Direct Mortgage, Corp (DMC) has identified 3 key areas to focus on. We have also compiled a list of questions you might have, along with their answers.

  3 Key Areas of Focus  

1. When can I collect fees (other than a credit report)?
• No fee may be collected from the borrower (except for a credit report) until after the disclosures have been received, which is normally not until 3 days after the Early Disclosures have been sent.
• If you use our eSign Early Disclosures in DirectWare, the borrowers can pay other fees as soon as they have completed electronically signing the disclosures.
• If the borrower signs the disclosures in your presence you can immediately collect other fees.
2. What Triggers the Early Disclosures Requirement?
• The need to send Early Disclosures within 3 days is triggered by any of these three events:
  1. A Credit Report Order,
  2. A Rate Lock,
  3. Completion of the Loan Application in our AUS Submission Ready Wizard.
3. How long do I need to wait before the borrowers can sign closing documents?
• Before signing closing documents, a borrower must wait 7 Business Days from the date of the Initial Disclosure of Early Disclosures, or 3 business days from any Re-disclosure of the Early Disclosures – whichever is longer.
• A 3-business day waiting period (from the date the Re-disclosures are sent) will be required before closing documents can be signed if the APR changes by 0.125% or more. This is true regardless of what causes the APR to change.

 Additional Questions and Answers: 

How can I view the official interpretation of the Mortgage Disclosure Improvement Act?
You can access the Federal Register that discusses the MDIA by clicking here.

Do brokers need to use DMC's disclosures?
Yes. The MDIA places liability directly on the lender to send disclosures. Therefore, brokers must send borrower disclosures through DirectWare by sending an eSign Borrower Disclosures request (see instructions below). When disclosures are not sent to your borrowers before the expiration of a disclosure date, the loan file will be automatically withdrawn. If this occurs, a loan can be easily reinstated, which will trigger a new 3 day disclosure requirement event.

Is the borrower required to sign the disclosures sent by DMC?
We encourage all borrowers to electronically sign the disclosures. While electronically signing is not required prior to submitting the loan, it is necessary for the file to pass underwriting. Exceptions are considered on a case-by-case basis.

Electronic signatures prove borrower receipt of disclosures and allows for the immediate collection of fees, whereas sending the disclosures without signing them requires a waiting period of three days.

How soon must disclosures be sent following a trigger event?
Disclosures must be sent within 3 days of a disclosure or re-disclosure trigger event. If disclosures are not sent within 3 days of a trigger event, the loan will be automatically withdrawn.

What triggers the initial disclosure requirement?

1. A Credit Report Order; Or,
2. A Rate Lock; Or,
3. Completion of the Loan Application in our AUS Submission Ready Wizard.

1. Changes to the APR of 0.125% or more – by rate or by fees – regardless of whether the change is up or down; Or,
2. Loan Application updates:
• Subject Property address update. This applies only after the AUS wizard has been completed at least once; Or,
• Borrower Change – adding or removing a borrower. This applies only after the AUS wizard has been completed at least once; Or,
3. Reinstating a withdrawn loan.

What happens if a disclosure or re-disclosure is not sent within the required time?
When disclosures are not sent to your borrowers within the 3-day disclosure requirement, the loan file will be automatically withdrawn. If this occurs, a loan can be easily reinstated, which will trigger a new 3 day disclosure requirement event.

When is a loan automatically withdrawn?
A loan is automatically withdrawn when:

1. A compliance requirement deadline is not met
2. A loan has been inactive 30 days, or
3. Three (3) days after a lock has expired, or has been manually cancelled.

What happens to the rate lock when a loan is withdrawn?
If a loan is withdrawn, it must be reinstated before three days after the loan has been withdrawn - otherwise the lock will be cancelled.

How is a loan reinstated?
It is simple to reinstate a loan that was withdrawn. Simply click the reinstate loan link. This is accessed from the Loan Application >> Tracking Tab, the Loan Pulse area in the Loan Choices screen, or in the Disclosure Tracking form (found in the left-side menu under "More Tools").

The Reinstatement of a loan will trigger a new 3 day disclosure requirement event.

Is it possible to have redisclosures automatically sent to the borrowers?
Yes. Once you both the loan officer and all borrowers have eSigned any previous eDisclosure, and should there be any future disclosures required, DirectWare® is programmed to automatically re-disclose and generate an eSign request on your behalf.

Is a re-disclosure event triggered if the APR goes down?
Yes. A re-disclosure event is triggered if the APR changes by at least 0.125%, whether the change is an increase or a decrease in the APR.

If I make a change to a fee, how will I know if a re-disclosure is necessary?
DirectWare will prompt you whenever fee changes are about to trigger a re-disclosure. You will be asked if you want to proceed or cancel before triggering a disclosure event.

Is there a place in DirectWare to view the loan's APR?
Yes. Simply click the "Disclosure Tracking Form" link located in the left-side menu under "More Tools". When the form opens, the loan's current APR will be located in the upper left-hand corner of the screen as shown below.

What are all the fees that affect the APR?
DirectWare will prompt you whenever fee changes are about to trigger a re-disclosure. You will be asked if you want to proceed or cancel before triggering a disclosure event.

Here is a list of fees considered pre-paid finance charges (PFC). Note that these are all fees paid by the borrower and can affect the APR.

Application Fee	Assignment Fee	Assumption Fee
Attorney Fee	Commitment Fee	Courier Fees
Escrow Waiver Fee	Flood Certification w/life of loan	Funding Fee
Inspections for Construction	Wire Fees	Loan Discount Fee
Loan Origination Fee	Mortgage Broker Fees	Mortgage Insurance Premiums
Per diem Interest	Processing Fees	Administration Fees
Underwriting Fee	Settlement/Closing Fees	Tax Life of Loan Certification
Tax Service Fee

Will you notify me before a disclosure event is triggered?
Yes. Prompts appear in DirectWare any time a disclosure or re-disclosure event is about to be triggered. You can then decide to proceed or to cancel before triggering a disclosure event. This helps you stay in compliance with the MDIA.

How will I know how much time I have before disclosures or re-disclosures have to be sent?
The Disclosure Tracking Form in DirectWare will show you each time a disclosure event was triggered, the date required to maintain Reg Z and RESPA compliance, the date fulfilled, etc.

Is there any additional help you provide related to disclosure?
Yes. Our closers and funders will notify you if a disclosure date is about to expire, or if a waiting period needs to be satisfied.

How do I send Disclosures?
When you are ready to send disclosures, simply send an eSign Borrower Disclosures request to your borrower(s). You can find the link in LoanChoices™ in the left-hand menu under "More Tools".

The required Early Disclosure email that is sent to the borrower is part two of two emails sent to the borrower when sending the eSign Borrower Disclosures invitation. The email has the required disclosures attached and password protected with the signers' social security number.

This email makes it extremely easy for you to send the required disclosures, and will save you money as you do not have to print or mail the disclosure documents.

We encourage all borrowers to electronically sign the disclosures. While electronically signing is not required prior to submitting the loan, it is necessary for the file to pass underwriting. Exceptions are considered on a case-by-case basis.

Electronic signatures proves borrower receipt of disclosures and allows for the immediate collection of fees, whereas sending the disclosures without signing them requires a waiting period of three days.

How are the disclosures signed with eSignatures?
The emails that are received upon sending an eSignature request contain a link and PIN that will initiate an identity authentication process where you and the borrowers will be asked a few questions to identify yourselves. Upon completion of the authentication, the borrowers can update their contact information. They will then adopt a signature style and complete an eSign consent form. Next, they simply navigate through the disclosures and sign at the appropriate places by clicking the "Sign" icon.

Is there a way to collect fees sooner from borrowers?
Yes. Allowable fees can be collected from borrowers immediately upon the completion of our eSigned Early Disclosures, providing a seamless & compliant way to collect from your borrower.

Practice using eSignatures with your pre-qualifier loan within DirectWare^®.
Simply click on the red text that says "Pre-qualifier Loan" after logging in. Then click the menu item on the left that says "eSign Borrower Disclosures", highlighted in yellow. You'll be able to practice with this eSign process as much as you want by using the reset buttons at the bottom of the e-Signature Invitation screen.

Automation: Please note that our systematic & automated processes are designed to assist in Early Loan Disclosure Compliance – but should never be used to replace the need for a Loan Officer to review, comply, and adhere to all loan compliance requirements.

Contact Broker Support with additional questions: 800-924-3884 or BrokerSupport@DirectCorp.com