Revised Truth in Lending Disclosure Requirements Take Effect

Real Estate Agent with Prudential Homesale Services Group

Effective July 30. 2009, the Federal Reserve Board Truth in Lending Regulations have become more stringent.  The new requirements apply to all mortgages secured by a borrower's home, including primary and second homes and refinancings.  Investor loans continue to be exempt.

Here are key highlights of the changes, all of which are designed to protect consumers:

  • Early Disclosure-  Within three business days after the consumer applies for a loan, lenders must give good faith estimates of mortgage loan costs. 
  • Disclosure Prior to Collecting Lender Fees- The lender may not collect any fees before the disclosure is provided, with the exception of a reasonable fee for obtaining a credit report.
  • Seven-day Waiting Period-  The closing may not occur until expiration of a seven-day waiting period after the consumer receives the Early Disclosure.
  • Bona Fide Emergency Waiver Provision-  Documented financial hardships may warrant an exception to this rule, after the consumer receives the Early Disclosure.
  • Corrected TILA Requires Additional waiting period- If the annual percentage rate (APR) changes by more than 0.125%, the lender must provide a corrected disclosure and wait an additional three business days before closing on the loan.

As REALTORS®, we need to be aware of these changes to the TILA legislation in order to advise clients of potential delays in loan processing and settlements.  The days of a "quick turn-around" for a mortgage loan and settlement are gone.  When preparing a Purchase Sales Agreement on behalf of buyer clients, or reviewing an offer on behalf of our home owner , these extended time lines need to be addressed, especially when trying to coordinate two transactions on the same day.

Some of the variables affecting the APR, in addition to interest rate, are  lower credit scores, increase in closing costs such as appraisals, PMI fees, higher than expected pre-paids, and higher loan principal, for example.

If you would like more information on this topic, check out this web sie:


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Pat Tasker
Shorewest Realtors - Germantown, WI
Your Milwaukee Metro Area Agent (WI)

What is the purpose of the waiting period?  It doesn't give them the right to bail, as the newer/higher rate might still fall within the maximum rate set forth in the offer...

We just had our first delayed closing in our office due to this....and what purpose did it serve, except a delay and a lot of scrambling for all parties to re arrange movers, utilities, closing statements etc...

Aug 31, 2009 02:19 PM #1
Karen Cooper
Karen Cooper | Sr Retail Loan Originator ! NMLS # 223305 | 360 Mortgage Group LLC Austin Texas - Leander, TX
Helping Homeowners w/Home Loans in 27 US States

Roseann - I'm finding the new rules have little/no effect on my closings. The way I've always disclosed and re-disclosed continues to work under the new guidelines. But, that being said, I don't do many "gotta close in 2 weeks" transactions, so the standard 30-45 day escrow period works just fine.

Sep 01, 2009 05:18 AM #2
Roseann Annis
Prudential Homesale Services Group - Camp Hill, PA

Pat and Karen, our in-house mortgage specialist has prepared handouts about TILA and HVCC for all our agents.  Educating buyers and sellers about the waiting period will be important. If mortgage processors can alert our client to possible delays within two or three weeks prior to the original closing date, that will be very helpful.  Thanks for your comments!

Sep 01, 2009 02:10 PM #3
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