The FRB published an interim final rule that implements a recent amendment to the Truth in Lending Act requiring new creditors to provide certain disclosures to borrowers upon the sale or assignment of their mortgage loans no later than 30 days after the acquisition date. Under the interim rule, any person or organization that acquires legal title to more than one existing mortgage loan in any 12-month period must provide the disclosures, regardless of whether that person or organization originates mortgage loans. In addition, the interim rule clarifies that disclosures are required when mortgage loans are transferred to a different legal entity, even when the transfer is a result of the original holder of the loan being subject to a merger, acquisition, or reorganization. The interim rule, however, provides an exception to the disclosure requirement for creditors that transfer or assign the loan to another party before the 30-day period lapses. The FRB notes that this exception is meant to prevent the confusion that could result if consumers receive information from creditors that no longer own their mortgage loans. The rule is effective immediately upon publication in the Federal Register. Compliance with the rule is optional until 60 days after the rule is published in the Federal Register, at which time public comments on the interim final rule are due. Click here for the rule.
Alert November 17, 2009