Fed approves mortgage disclosure final rules

May 12, 2009 – The Federal Reserve last week approved revisions to Regulation Z, which will require, among other actions, that credit unions provide good faith estimates within three days after receiving a member’s application and before any fees are collected from the member.
 
These changes to Regulation Z implement the Mortgage Disclosure Improvement Act, which was enacted in July 2008 as an amendment to the Truth in Lending Act. Credit unions must comply with the new provisions by July 30. The MDIA seeks to ensure consumers receive cost disclosures earlier in the mortgage process.
 
Credit unions, under the MDIA, will also be required to wait seven days after providing GFEs to members before closing on mortgage loans. Additionally, the rules will require credit unions to provide a revised annual percentage rate, and wait an additional three business days before closing the loan, if a change occurs that makes the APR in the GFE inaccurate beyond a specified tolerance. The rules also allow members to expedite the closing in order to address a personal financial emergency.
 
In a comment letter sent in February, NAFCU Associate Director of Regulatory Affairs Tessema Tefferi recommended that the Federal Reserve adopt a single definition for “business day.” Such a move, he noted, would ease credit union’s compliance with the rule while making it easier for consumers to understand their rights.
 
In addition, he asked the rules state that the lender is not responsible for determining whether an actual emergency exists or for verifying such emergencies.
 
The rules are slated to be published in the Federal Register.