On Friday, the Federal Reserve Board issued final rules (the “Rules”) revising the disclosure requirements for mortgage loans under Regulation Z. These changes will implement the Mortgage Disclosure Improvement Act of 2008 (MDIA), which amends the Truth in Lending Act and was enacted last year as part of the Housing and Economic Recovery Act of 2008.

The new rules implement MDIA’s requirements that:

  • Creditors wait seven business days after providing early disclosures before closing the loan;
  • Creditors give good faith estimates of mortgage loan costs within three business days after receiving a customer’s application for a mortgage loan an before any fees are collected; and
  • Creditors provide new disclosures with a revised annual percentage rate (APR), and wait an additional three business days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate beyond a specified tolerance.

However, the rules will permit consumers to expedite the closing process to address personal financial emergencies, such as foreclosure.

The new rules become effective on July 30, 2009, and will apply to applications received by creditors on or after July 30, 2009 for dwelling-secured consumer loans.