Yesterday, pursuant to the Mortgage Disclosure Improvement Act of 2008 (MDIA), the FDIC issued a Financial Institution Letter (FIL-26-2009) that reflects new changes to the Truth in Lending Act and its implementing regulation, Regulation Z. In 2008, the Federal Reserve Board approved revision to Regulation Z, on closed –end mortgage early disclosure requirements that were to become effective on October 1, 2009. These revisions have since been superseded by the enactment of the MDIA.

  • TILA has been revised to reflect MDIA amendments that:
  • Expand TILA’s application to mortgage loans secured by “a” dwelling of a consumer as opposed to limiting application to a consumer’s “principal” dwelling;
  • Require delivery of the early disclosures within three business days of receiving a consumer’s mortgage loan application;
  • Prohibit a lender from charging a consumer any fee, expect for a credit report, until after the early disclosures have been provided;
  • Permit a consumer to expedite the closing of a mortgage loan subject to the early disclosure provisions to address a personal financial emergency, such as foreclosure; and
  • Inform a consumer that he or she is not required to complete the transaction because the consumer has received the early disclosures or applied for a loan.

Compliance with the revised requirements becomes mandatory on July 30, 2009.

The FDIC also supplemented the letter by attaching a chart that compares the 2008 and 2009 revisions.