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Home > News & Events > Press Releases

Press Release
December 05, 2008

Federal Reserve seeks public comment on
proposed changes to Regulation Z (Truth in
Lending)
For immediate release
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The Federal Reserve Board on Friday proposed for public comment
changes to Regulation Z (Truth in Lending) that would revise the
disclosure requirements for mortgage loans. The revisions would
implement the Mortgage Disclosure Improvement Act (MDIA) which was
enacted in July 2008 as an amendment to the Truth in Lending Act
(TILA).
The MDIA seeks to ensure that consumers receive cost disclosures
earlier in the mortgage process. In several respects, the MDIA is
substantially similar to final rules issued by the Board in July 2008.
However, the MDIA also broadens and adds to those regulatory
requirements.
The MDIA 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. These requirements are
consistent with the Board's July 2008 final rule which applied to loans
secured by a consumer's principal dwelling. The MDIA broadens this
requirement by also requiring early disclosures for loans secured by
dwellings other than the consumer’s principal dwelling, such as a
second home.

In addition, the proposed rules would implement the MDIA's
requirements that:
Creditors wait seven business days after they provide the early
disclosures before closing the loan; and
Creditors provide new disclosures with a revised annual
percentage rate (APR), and wait an additional three days before
closing the loan, if a change occurs that makes the APR in the
early disclosures inaccurate beyond a specified tolerance.
The proposed rules would permit a consumer to expedite the closing to
address a personal financial emergency, such as a foreclosure. Under
the MDIA, the proposed rules would become effective on July 30, 2009.
The notice that will be published in the Federal Register is attached.
The public comment period ends January 23, 2009.
Federal Register notice: 63 KB PDF | HTML
Related press release:
December 17, 2008

Last Update: December 05, 2008

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