The Veridian Blog

The Truth-in-Lending ("TIL") Act was signed into law in 1968 as Title 1 of the Consumer Credit Protection Act.  The aim of "Regulation Z" was to protect consumers in the lending arena by promoting the informed use of credit and to help consumers who are shopping for credit to compare terms offered by various creditors. 

In July 2008, Regulation Z was amended to protect consumers specifically in the newly defined category of "higher-priced mortgages" that includes virtually all closed-end subprime loans secured by a person's principal dwelling.  Part of these revisions included the Mortgage Disclosure Improvement Act (MDIA).  MDIA became law on March 11, 2009  and sets forth the following requirements:

1. Must provide TIL disclosure within 3 business days of application and at least 7 business days before consummation.  It will now be impossible to break our company record of 7 days from application to close!

2. If the initial TIL disclosure is "out of tolerance", the consumer must receive a final TIL disclosure at least 3 business days before consummation

3. If mailed, the consumer will be deemed to receive the disclosure 3 business days after mailing

4. No fee may be imposed on the consumer before receipt of the initial TIL disclosure, except a reasonable credit report fee

5. These waiting periods may only be waived by the consumer if there is a bona fide personal emergency

6. Both the initial and final TIL disclosures must include the following notice: "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application"

Most of these new disclosure rules do not impact our business (it's scary to think how some may have operated in a fashion that would have triggered such rules).  So far, the most potentially burdensome new rule is the additional waiting period that is imposed if the TIL is "out of tolerance", in other words, if the initial TIL estimate was inaccurate.  "Out of Tolerance" can mean a variance of anywhere from 0 to 10%, and depends if there has been a valid "Changed Circumstance" or not.