July 30, 2009 - Revised early disclosure requirements for lenders takes effect
Regulation Z is issued by the Board of Governors of the Federal Reserve System to implement the federal Truth in Lending Act. The purpose is to promote the informed use of consumer credit by requiring disclosures about it's terms and costs.
The Federal Reserve has revised the early disclosure requirements based on the Mortgage Disclosure Improvement Act
of 2008 (MDIA). The highlights of these revisions are as follows:
expand the requirements to mortgage
loans secured by any dwelling of a consumer. The requirements no longer are limited to a consumer's "principal"
dwelling. The early disclosure requirements also now cover refinancings and home equity loans.
require delivery or
mailing of the early disclosures within three business days of receiving a consumer's mortgage loan application. A lender
also must wait until at least seven business days after delivery of the disclosures before consummating the mortgage loan.
require
corrected disclosures to be delivered at least three business days before consummation if the annual percentage rate provided
in the early disclosures changes beyond 0.125 percent.
prohibit a lender from charging a consumer any fee, except
to obtain a credit report, until after the early disclosures have been provided.
permit a consumer to expedite the
closing of a mortgage loan subject to the early disclosure provisions to address a personal financial emergency, such as foreclosure.
inform a consumer that he or she is not required to complete the transaction because the consumer has received the
early disclosures or applied for a loan.
The changes are meant to protect you, the consumer, from surprises at
the closing table including increased interest rates and fees not previously disclosed.
