Fed Seeks Public Comment on MDIA TILA Revisions
Last week, the Federal Reserve released its latest proposed revisions to Regulation Z, the Truth In Lending Act, to implement the July 2008 Mortgage Disclosure Improvement Act ("MDIA"), enacted as part of the Housing and Economic Recovery Act of 2008. The comment period for the proposed rule closes on January 23, 2009.
Among other things, the proposed rule implements the MDIA's requirements that lenders give good faith estimates within three business days of receiving an application for a mortgage and before collecting any fees, other than credit report fees. The MDIA broadens the Fed's July 2008 final rule by extending these requirements to homes other than a borrower's principal dwelling. The proposed rule also requires lenders to wait seven days to close a loan after providing the disclosures. The proposed rule also requires new disclosures of a revised annual percentage rate, and to wait three days before closing the loan if the APR changes in the interim beyond a minimum amount.
The proposed rule would become effective on July 30, 2009.
Sweeping Housing Bill Expected to Become Law
President Bush recently signaled that he will sign the Housing and Economic Recovery Act of 2008, H.R. 3221, which passed the Senate on July 26, 2008 after passing the House last week. Among other things, the massive aid package, aimed at shoring up the troubled housing market, includes $300 billion for homeowners to refinance their mortgages into government-backed loans through the Federal Housing Administration. An estimated 2.5 million households are facing possible foreclosures this year.
The bill also provides emergency financing capacity for mortgage titans Fannie Mae and Freddie Mac, two government-sponsored enterprises which own or guarantee nearly half the nation’s $12 trillion in outstanding home mortgage debt. The bill also creates a new regulator with expanded authority to oversee the two mortgage giants.
The final version of the bill also includes hotly contested provisions for a new low income housing tax credit, new tax exempt bonds for housing, and a new housing trust fund.
