Truth in Lending Act Changes!

The Housing and Economic Recovery Act of 2008 included several revisions to TILA. These important revisions go into effect July 30, 2009.

The key changes effective with all applications on or after July 30, 2009 are:

1) Collection of fees: Lenders cannot collect a fee from the consumer, other than a reasonable fee for obtaining the consumer's credit history, until the consumer is in receipt of the initial TIL.

2) TIL disclosure applicability: Lenders must now provide a TIL on refinance transactions.

3) New statement added to all TIL disclosures: You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.

4) Initial TIL waiting period: A loan cannot close until seven business days from the delivery of the initial TIL. For example: Lender places loan disclosures in the mail Monday, August 3rd, the loan cannot close until on or after Tuesday, August 11th. Business days are the same used for rescission--Monday through Saturday excluding legal public holidays.

5) APR re-disclosure tolerance: After the initial TIL is given if there are any changes that effect the APR and cause the APR to go up by .125% for fixed rate products (or .25% for ARM products) a new TIL must be given to the borrower. The new waiting period is three business days after the borrower receives the revised disclosures. A borrower is presumed to have received the new disclosures within three business days if placed in the mail. This creates a six day waiting period, three days to receive the disclosures and three days waiting period.

The key is for a buyer to lock their loans early enough so new waiting periods do not effect their closing date.



This information was provided by:

Richard Watkins
Sr. Mortgage Consultant
National City Mortgage
Richard.Watkins@ncmc.com