The Federal Reserve Board on Thursday May 7, 2009 approved final rules that revise the disclosure requirements for mortgage loans under Regulation Z (Truth in Lending).
The Mortgage Disclosure Improvement Act seeks to ensure that consumers receive cost disclosures earlier in the mortgage process.
The Mortgage Disclosure Improvement Act requires creditors to give good faith estimates of mortgage loan costs (“early disclosures”) within three business days after receiving a consumer’s application for a mortgage loan and before any fees are collected from the consumer, other than a reasonable fee for obtaining the consumer’s credit history.
In addition, the rules would implement the Mortgage Disclosure Improvement Act’s requirements that:
- Creditors wait seven business days after they provide the early disclosures before closing the loan.
- Creditors provide new disclosures with a revised annual percentage rate (APR)
- Creditors wait an additional three business days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate beyond a specified tolerance.
The rules would permit a consumer to expedite the closing to address a personal financial emergency, such as a foreclosure.
