NEW Changes to Truth In Lending Act MUST READ!!!

Summary Effective for applications taken on or after July 30, 2009, the Federal Reserve Board

and Legal (“FRB”) adopts the final rule amending Regulation Z, 12 C.F.R. §§226.1 et seq. ("REG

Reference: Z"), which implements the Truth in Lending Act, 15 U.S.C. §§1601 et seq. ("TILA") and the Home Ownership and Equity Protection Act of 1994, 15 U.S.C. §§1639 et seq. Public Law 103-25 ("HOEPA").

The final rules revise the disclosure requirements for mortgage loans under REG Z. The intention is to ensure that consumers receive cost disclosures earlier in the mortgage process. The revisions to REG Z implement the Mortgage Disclosure Improvement Act (“MDIA”). On July 30, 2008, the MDIA was signed into law as part of the Housing and Economic Recovery Act of 2008 (“Public Law 110-289”).

Changes: The key changes to TILA effective in July are listed below:

· TILA disclosures are now required on all dwelling-secured, closed-end mortgage loans and applications. Previously, only certain transactions required these disclosures.

· There is a new statement that must be provided with the early TIL: “"You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."

· The “early” TILA disclosures must be delivered or placed in the mail not later than 3 business days after the creditor receives the consumer's written application, and at least 7 business days before consummation of the transaction. This is a new “waiting period.”

o For the above purpose “business days” include each day (other than Saturday or Sunday) when the head office is open to the public for carrying on substantially all our business functions.

· If the annual percentage rate (“APR”) on the “early” disclosure becomes inaccurate, by increasing or decreasing beyond established tolerance levels, the creditor must now make corrected disclosures to the consumer with a revised APR. The consumer must receive the corrected disclosures no later than 3 business days before consummation.

o The APR is considered accurate for a regular transaction if it is not more than 1/8 of 1 percentage point above or below the actual annual percentage rate.

o The APR is considered accurate for an irregular transaction if it is not more than 1/4 of 1 percentage point above or below the actual annual percentage rate

o For this purpose, the definition of business day is the “rescission” standard for business day, which includes all calendar days except Sunday and legal public holidays.

· Except for a reasonable fee for a credit report, no other fees may be collected before the consumer has received the “early” disclosure.

o If the creditor mails the disclosures, the creditor may assume the consumer has received the disclosures after midnight on the third business day following mailing of the disclosures.

o For this purpose, the definition of business day is the “rescission” standard for business day, which includes all calendar days except Sunday and legal public holidays