Guess What? Regulation Z Already Changed
Brokers must know the critical amendments, which took effect two months sooner than expected
By Laura Marquez-Garrett and Miriam Cho, attorneys, Foster Pepper PLLC
The latest amendments to Regulation Z, which implements the Truth in Lending Act (TILA),
contain an element of surprise in their
start date. Originally expected to take effect this coming Oct. 1, the amendments
went live on July 30.
The reason for the hurry is to keep up
with new legislation. In July 2008, President George W. Bush signed into law the
Housing and Economic Recovery Act of
2008, considered the one of the most-sig-nificant pieces of housing legislation in decades. Among the myriad changes in the
housing act is amendment of TILA via the
Mortgage Disclosure Improvement Act of
Congress amended the MDIA — enacted as part of the housing act — in connection with enactment of the Emergency
Stabilization Act of 2008 this past Oct. 3.
The Regulation Z changes are meant to
implement MDIA’s amended provisions.
The Regulation Z amendments’ stated
goal is to increase consumer awareness
and involvement in the loan process. They
purport to accomplish this by creating
brief waiting periods after disclosures are
provided but before loan consummation,
requiring additional disclosures and imposing restrictions on charging fees before
making the requisite TILA disclosures.
Although the Regulation Z revisions
are not extensive, brokers must familiarize themselves with the new rules or else
find themselves subject to liability.
do not change the application of TILA,
which still applies to loans for the purchase
or construction of a residence, refinances
and home-equity loans. TILA’s disclosure
requirements do, however, now apply to
loans secured by any consumer dwelling,
not just principal dwellings.
Good-faith estimate (GFE): ■ A GFE still
must be provided within three business days
after the creditor receives the consumer’s
written application. But now the creditor
must wait at least seven business days before
completing the transaction.
Revised GFE: ■ Revised GFEs also are subject to the Regulation Z revisions. A revised
GFE must be provided if the annual percentage rate disclosed becomes inaccurate (as
defined by the act), and corrected disclosures that include all changed terms must be
provided. There is now a three-day waiting
period between disclosure of the revised
GFEs and completing the transaction.
Notice to consumers: ■ Original and revised GFEs must contain the following
statement: “You are not required to complete this agreement merely because you
have received these disclosures or signed a
On the Web
Federal Reserve Board notice and
official commentary regarding
implementation of Truth in Lending Act
Here is an overview of the changes, categorized by key phrases and terms.
Any consumer dwelling: ■ The revisions
Major changes, categorized by key
phrases and terms, include:
Any consumer dwelling ■
Good-faith estimates (GFEs) ■
Revised GFEs ■
Notice regarding completion ■
Definition of a business day ■
Emergency exception to waiting ■
Laura Marquez-Garrett and Miriam Cho are attorneys
with Foster Pepper PLLC ( www.foster.com) and work on
mortgage-industry matters, including the representation of
mortgage lenders and brokers in litigation and regulatory-compliance matters. E-mail Marquez-Garrett at Marql@
foster.com and Cho at Chomi@foster.com.
Business day: ■ Business days are defined
as “a day on which the creditor’s offices are
open to the public for carrying on substantially all of its business functions.” The term
also refers to all calendar days, except for
Sundays and legal public holidays.
Continued on Page 26
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