Changes to the Truth in Lending Act took effect last month, requiring lenders to provide certain disclosures about mortgages fees and helping borrowers make better-informed loan choices. However, some in the industry believe the new regulations could create further delays in the lending process.

Previously, lenders could begin underwriting the loan the same day they received an application by charging fees to borrowers, such as paying for property appraisers. The new regulations now mandate a three-day review period for the loan documents before the loan process can begin. If the interest rate changes before the settlement date, a new set of disclosure documents must be given to the borrowers, restarting the review period.

Funding the typical mortgage on a new purchase takes approximately 45 days—at least two weeks longer than last year, according to some lenders. Delays in loan funding also can be costly to borrowers, as time on mortgage rate locks may run out.

Borrowers can lock in interest rates for as long as 60 days, and may extend the rate lock for up to three weeks—down from four weeks a year ago. The cost of each further one-week rate-lock extension costs one-quarter of a percentage point of the total loan amount.

Borrowers whose settlement dates are in jeopardy may apply for an emergency waiver of the three-day waiting period, but it is not likely to be granted, according to one lender who issues loans in 20 states.

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Filed under: Mortgage, Real Estate Market