Congress passed the Mortgage Disclosure Improvement Act.

It states that a mortgage company must wait seven days from the date the initial Good Faith Estimate and Truth in Lending Statement are provided to the buyer before closing.  This will prevent some buyers from being victimized by predatory lenders, but will impact the time needed to close a loan.  If the loan is not locked immediately or if it relocked at a higher rate, the buyer must wait a minimum of three to seven days to close, depending on the way the disclosures were delivered.  This also applies if additional finance charges are incurred after initial disclosures were sent over 1% of the loan amount.

Typically, a mortgage company or bank will provide a Good Faith Estimate near the beginning of the the mortgage and home buying process.  This allows the borrower/home buyer to understand, more completely, the costs involved with purchasing a home.  However, it is common practice among some less than savory lenders to procrastinate about providing the Good Faith Estimate to the borrower/home buyer until almost the last minute.

Why?

Many lenders don’t want their clients to know how much they’re charging or, more likely, give themselves the ability to change fees and interest rates at the last minute — sometimes as late as the day of closing.

This new law should put the lid on shady lenders.  Now, the home buyer will have a chance to see what the costs involved in purchasing the house are and the particular costs associated with the lender they have chosen.