New Lender Disclosure Rules Take Effect on July 30

On July 30, 2008, the Federal Reserve Board published a final rule amending Regulation Z, implementing the Truth in Lending Act (TILA) and the Home Ownership and Equity Protection Act (HOEPA).

These require creditors to give consumers transaction-specific cost disclosures within three days of application for home mortgage loans. The disclosures must be provided before the consumer pays any fee, other than a fee for obtaining the consumer’s credit history.

Also on July 30, 2008, the Congress enacted the Housing and Economic Recovery Act of 2008, which included amendments to TILA, known as the Mortgage Disclosure Improvement Act of 2008 (MDIA).

Among other things, the MDIA requires a seven day waiting period between the time when disclosures are given and consummation of the mortgage transaction.

If the annual percentage rate provided in the good faith estimates changes beyond a specified tolerance for accuracy, creditors must provide corrected disclosures, which the consumer must receive on or before the third business day before closing.


The new requirements apply to loan applications filed on or after July 30.

REALTORS® will want to learn the basics of these new rules so they can advise clients on the new procedures, which are complex and expected to be a challenge for lenders.

Lenders in Boise are still scrambling to get practical explanations and procedures to meet the July 30 deadline.

ACAR is committed to providing the most current information about how to operate in this new lending environment....Stay tuned.