Truth in Lending Changes Coming!

The new Truth in Lending Regulation (Reg Z) changes take effect for loan applications filed on, or after July 31st, 2009.

Three main changes are:
- The requirement of the lender to give a Good Faith Estimate within 3 business days of the loan application.
- If the APR increases by more than 0.125 percent from the early disclosure amount, the lender must provide a corrected disclosure and wait an additional 3 business days before closing the loan.
- The lender may not collect any fees before the disclosures are provided, except for a reasonable credit report fee.

It is important to understand that the APR can be affected by something seemingly innocuous. These can include a change in contract terms, an unlocked interest rate, a change in closing date, a change in the loan amount, a loan product change, and changes to fees including settlement fees. If any of these items occur too close to the scheduled closing date, we may run into issues with the closing timing.

My advice:
The changes aren't really burdensome, but they have the potential to delay closings. It is important that we pay close attention to changes in contract and loan terms from start to finish.