Regulation Z, the Truth in Lending Act (TIL) does not sound like an interesting topic over dinner, however it is vital in consumer protection when purchasing a home with a mortgage.
The new requirements apply to loan applications filed on or after July 30, 2009. Lenders will be subjected to new disclosure requirements for mortgage loans. The new rules are complex and compliance will be a challenge for lenders.
Here are some highlights of the changes:
- The new requirements apply to all mortgages secured by a borrower’s home, including primary and second homes and refinances. Investor loans continue to be exempt.
- Lenders must give good faith estimates of mortgage loan costs within 3 business days after the consumer applies for a loan (early disclosure). The lender may not collect any fees before the disclosure is provided, except for a reasonable fee for obtaining a credit report.
- The closing may not take place until expiration of a 7 day waiting period after the
consumer receives the early disclosure. - If the annual percentage rate (APR) changes by more than 0.125 percent, the lender
must provide a corrected disclosure to the borrower and wait an additional 3 business days before closing the loan
The Truth In Lending Regulation has always been complicated and wide encompassing, however these new rules are aimed to protect the consumer further, however they can cause problems. Which is why it is vital to select an experienced Real Estate agent and team.
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