Truth in Lending - New Regulations and What to Expect
The Housing and Economic Recovery Act contains some new regulations for Truth in Lending disclosures for borrowers which will go into effect July 30, 2009 This helps you to understand the terms of your loan, and it's important to know how this affects your closing date.
Lenders and brokers must give you the initial Truth in Lending disclosure at lease seven business days before your closing. No closing documents can be signed earlier than seven days after the first Truth in Lending disclosure has been issued. When you interview lenders for a mortgage, have them provide you a Good Faith Estimate and a Truth in Lending Disclosure in writing.
Sometimes there are changes to loans. If these changes affect the Annual Percentage Rate on the Truth in Lending Disclosures, the lender must provide a comparison with the original. If the change raises the APR greater than .125%, the lender must provide a corrected disclosure to the borrower. Borrowers must have at least three business days to review an amended Truth in Lending Disclosure prior to closing.
No fees can be collected from the borrower except for the initial credit report, until the initial Truth in Lending Disclosure has been given. That means until they give you the disclosure, they cannot charge you up front for fees associated with the loan.
These changes benefit borrowers, and prevent lenders from adding on fees, or changing the APR at the closing table. It's important that home buyers can go to their closing confident that they know what to expect from their lender. You can find more information about these changes from the FDIC.
For more information about types of home loans please look at our information for buyers, or call us with any questions.
