It is also known as the Real Estate Settlement Procedures Act or RESPA and it requires that the amount to be paid monthly on mortgages be disclosed by the creditor.
The Mortgage Disclosure Act is a federal law, and according to the Federal Register, its purpose is to ensure that consumers are protected through disclosure of the necessary information relating to mortgage loans. The act, which was passed in 1974 necessarily mandates that the lenders are to provide the borrower with information regarding certain aspects of , and costs relating to, the mortgage loan, prior to the borrower going ahead with it. The borrower will, thus, learn about the different types of mortgage loans and their characteristics, potential risks and penalties of the mortgage loan, and tips on how to protect themselves from abusive or improper lending practices.
The loan estimate is also known as a truth in lending disclosure which is a day three required by the Mortgage Disclosure Act when a borrower submits an application for a loan. These important features of the estimated loan are things like the loan amount, the annual interest rate, the monthly payments on them, and closing costs. Further to this, the lenders are required to give the borrowers closing disclosure whereby the disclosure must be given at least three days prior to the closing of the loan. They include the exact conditions that any borrower should agree upon before taking the loan while finalizing the loan process to ensure that the borrowers have read and understood all the terms. Altogether, the Mortgage Disclosure Act presupposes the additional clarity and protection of mortgage consumers.
The Mortgage Disclosure Act or MDA as it is commonly referred to is a law that regulates disclosure in mortgages.
The Mortgage Disclosure Act, or the Truth in Lending Act (TILA), is federal legislation put in place in the United States to safeguard consumers who are then in the process of applying for a mortgage. The enforcement of the Mortgage Disclosure Act is aimed at ensuring that borrowers are informed about the mortgage loan that they are likely to secure as well the cost of getting the loan. This is designed in a manner that seeks to enable the consumer gain insights required to make a proper decision when selecting the mortgage lender and the loan product.
The main purpose of the Mortgage Disclosure Act is that the lenders supplying the mortgage to the borrowers are expected to supply important disclosures to the borrowers during the different stages involved in the mortgage application process. These disclosures are the APR – an interest rate that incorporates all of the fees and the interest rates of the loan amounts; the total cost that somebody is to pay in order to receive the loans. The lenders are also bound to offer the borrowers with an initial Good Faith Estimate (GFE) if they cost the borrower for the mail particulars, closing costs, insurance, and taxes among others.
However, forшMortgage Disclosure Act, in the same vein of explaining such loan terms, loan providers are also expected to issue the borrowers with a Truth in Lending statement that contains the following details of the loan: the amount borrowed, the interest rate, amount and frequency of payment, and any penalties for delayed payments or advance payments towards the loan. This statement assists borrowers to compare and contrast the available loan offers and enables them to know the cost of getting funds from the lender.
There is a right of rescission which has been approved by the Mortgage Disclosure Act to ensure that borrowers can cancel loan contracts within three business days of signing the mortgage documents. This offers borrowers a chance to reconsider the offer they were given and look for any other tender maybe a more flexible one if the initial offer was not friendly.
