Mortgage companies scrambling to meet new Truth in Lending requirement

08 Jun Mortgage companies scrambling to meet new Truth in Lending requirement

An over-looked Truth-in-Lending Act rule that goes into effect July 30, 2009 has mortgage companies scrambling. The new rule requires timely delivery of the good faith estimate on home purchases, refinancings, and home equity loans. Applications taken after July 29th require lenders to deliver the good faith estimate “GFE” to the borrower within three business days AND they cannot collect any fees before delivery – except for the credit report. The new rule also requires lenders to “wait seven business days after they provide the early disclosures before closing the loan,” according to the Federal Reserve Board. If the financing charges or APR (annual percentage rate) changes, the lender must provide a new disclosure with the revised APR “and wait another three business days before closing the loan.” The three-day waiting period can be waived by consumers in emergency situations – such as a foreclosure. The rule was approved by the Fed on May 8, 2009.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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