Watch Out for Regulation Z

Just one of the many new regulations put into place by the Fed as a consumer protection, Regulation Z has the potential to create long delays in your closing. The primary component of Reg Z is the requirement for proper notification and disclosure to a borrower regard their mortgage. The regulation modifies certain provisions of the Truth in Lending Act (TILA). Lenders are required to mail good faith estimates of mortgage loan costs within three business days of receiving the application and before fees are collected. However the delays can come when everything is set for your closing and something triggers a change in your APR.

The new reg states that if your APR increases by more than .125% (which is an 1/8 of a percent) the lender is required to mail you new notice and disclosure with a required waiting period. The mailing time is 3 days, excluding Sundays and holidays, combined with 3 additional days to review the new TILA. Even if you, as the buyer, are perfectly OK with the new terms, you are required to wait the perscribed time period. So, just when you thought you were ready to move into your new home, you could be facing a 6 to 8 day delay! Better notify the movers.............