In May 2009, the Helping Families Save Their Homes Act was enacted, which included a statutory amendment to the Truth in Lending Act (TILA). This statutory amendment requires that a purchaser or assignee that acquires a mortgage loan must provide certain required disclosures in writing to the consumer within 30 days of the acquisition.
The Federal Reserve Board published interim rules in November 2009, which were effective immediately, to provide compliance guidance and greater certainty. See Reg. Z, § 226.39. The Board recently announced final rules to implement the amendment to TILA. Any new owner affected by these changes may continue to follow the November 2009 interim rules until January 1, 2011, the mandatory compliance date for the final rules.
The final rules ensure that consumers know who owns their loan and who can address certain issues, such as payment disputes and loan modifications. The final rules require new owner of a consumer’s loan to send the consumer a disclosure within thirty days of acquisition of the loan. The disclosure must identify the loan that was transferred and include:
- The new owner’s identity, address, and telephone number;
- The date the loan was transferred;
- Contact information that the consumer can use to reach an agent authorized to act on behalf of the owner; and
- Where the transfer of ownership is or may be recorded in public records, or, alternatively, that the transfer of ownership has not been recorded in public records as of the date of the disclosure.
The new owner may, at its option, also provide any additional information regarding the transaction. The Board did not provide a form for this disclosure.
The final rules provide further explanation of the amendment. The disclosure can be provided electronically, so long as the consumer has consented and the notice complies with the Electronic Signatures in Global and National Commerce Act (“E-Sign Act”), 15 U.S.C. § 7001, et seq. The date the loan was transferred can be either the date of acquisition recognized in the books and records of the acquiring party or the date of acquisition recognized in the books and records of the transferring party. Additionally, the disclosure can be mailed to the consumer who is primarily liable if there are multiple consumers liable on the obligation. Further, if multiple owners acquire the loan, only a single notice is required. Similarly, if a mortgage loan is acquired by one owner, then subsequently transferred to another owner, a single disclosure may be provided on behalf of both entities so long as the disclosure satisfies the timing and content requirements applicable to each entity.