Fed Approves Mortgage Sale Disclosure Rule
On November 16, 2009, the Federal Reserve Board approved an interim final rule amending Regulation Z, 12 CFR 226, establishing a new requirement for notifying consumers of the sale or transfer of their mortgage loans. Specifically, the rule amends Section 131(g) of the Truth in Lending Act (TILA), to implement Section 404(a) of the 2009 Helping Families Save Their Homes Act, and requires a purchaser or assignee that acquires a mortgage loan to provide the required disclosures to the consumer in writing no later than 30 days after the date on which the loan is sold or otherwise transferred or assigned. The new disclosure requirements apply whether the acquisition occurs as a result of a purchase or other transfer or assignment, but a person is covered by the rule only if the person acquires legal title to the debt obligation.
Significantly, Section 404(a) and the interim final rule apply to persons that acquire mortgage loans without regard to whether they also extend consumer credit by originating mortgage loans. However, the interim final rule applies only to persons that acquire more than one mortgage loan in any 12-month period. The interim final rule is effective immediately, but compliance is optional for 60 days from the date of publication.
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