Disclosure rules will change on July 30. Are you ready?

The bottom line: Disclosure reform is coming July 30. Restrictions on fee collection, more stringent issuing requirements and new waiting periods could impact lenders in a big way. Electronic disclosures can help you limit the impact, cut costs and stay compliant.

July 30 is approaching fast, and with it enhanced disclosure requirements resulting from the Mortgage Disclosure Improvement Act (MDIA). The changes are intended to protect borrowers from unfair and deceptive mortgage practices. The industry is working diligently to understand the new requirements, what impact they will have on business and how best to respond to them. Like many lenders, you might be wondering about the best way to comply and what changes you need to make. Here are some of the changes that will affect how you disclose: The initial Truth in Lending disclosure must be sent to the borrower within three business days of application and at least seven business days before consummation. If the initial disclosure is out of tolerance, the borrower must receive a final disclosure at least three business days before consummation. Except for the credit report fee, lenders may not charge any fees before the borrower has received the initial disclosure. If disclosures are mailed, the consumer is not deemed to have received it until three business days after mailing. If not properly managed, these changes could cause delays that could push the closing date into the next month, give borrowers more time to shop around, prevent you from collecting fees and, in some cases, cost you the loan. Lenders who rely on paper-based processes are at a disadvantage. Electronic disclosure helps you stay compliant Electronic disclosure delivery can help you stay ahead of the game when it comes to compliance. Not only does it cut the cost of delivery, it also significantly accelerates fee collection. When you mail the disclosure, you must factor three days into the schedule before you can assume that the borrower has received it. But with electronic disclosures, receipt confirmation is practically instantaneous. You can use the electronic confirmation as proof of receipt, which enables you to collect fees almost immediately. In many cases, you can collect the application fee while on the phone with the borrower. These points of efficiency are just a couple reasons more and more lending executives are interested in electronic disclosures. Eliminating the waiting period means there’s less risk of losing the customer or changing the closing date, and collecting the fee makes it more likely the borrower will commit to the loan. What’s more, electronic disclosures are a great way to get started taking the paper out of all lending processes. Even in cases where disclosures cannot be delivered electronically, you can still automate your process. Because eLynx offers both electronic and paper fulfillment, there’s no need for separate electronic and paper processes – which means greater efficiency for you and more consistency for the borrower. Contact eLynx today at 800.466.5969 to incorporate electronic disclosures into your workflow!