New Changes to Regulation Z

Dear Mortgage Lenders:

On Friday, December 5, 2008 the Federal Reserve proposed several very important changes to Regulation Z that if adopted would become effective on July 30, 2009.  The period for public comment to the proposed changes ends on January 23, 2009.

The proposed changes are as follows:

  • The early Truth-in-Lending disclosure given to the loan applicant within 3 business days of application would apply to any transaction secured by a “dwelling” , not just the applicant’s principal dwelling.  This expanded coverage of the early TIL disclosure would include the applicant’s second/vacation home.  The new rule would not apply to rental properties because they are “business” properties and business/commercial loans are not subject to Truth-in-Lending.
  • The loan maynotclose for at least 7businessdays after the applicant has received the early TIL disclosure.  If the loan terms change before closing, the lender must redisclose the TIL and the closing cannot take place for at least 3 business days.
  • The applicant may waive the 7 business day delay (and the 3 business day delay following changes in loan terms) for a “bona fide personal financial emergency”, such as a pending foreclosure.  The applicant must give the lender a dated written statement describing the emergency and specifically waiving the waiting periods.
  • The early disclosure must contain the following statement:

You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

These proposed new early TIL disclosures do not apply to Home Equity Lines of Credit (HELOCs).

To read the proposal in detail, visit the Federal Reserve website at and look under the “News and Events” section for their December 5, 2008 announcement.

If you have any questions about this proposed change to Reg. Z, please contact Karen or me at the office at (210) 828 5844.





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