Regulation Z Changes

CHANGES TO REGULATION Z 

as of July 30, 2009

Equal Housing Lender. Prospect Mortgage is located at 15301 Ventura Blvd., Suite D300, Sherman Oaks, CA 91403. Prospect Mortgage, LLC is a Delaware limited liability company licensed by the CA Dept. of Corps. under CRMLA and operates with the following licenses: AZ Mortgage Banker License #BK0903027, #BK0909362, #BK0908046, #BK0908050, #BK0908056, BK#0908057, #BK0908058, #BK0908731, BK#0903112, BK#0903912, BK#0906650, BK#0906913; To check the license status of your CO mortgage broker, visit www.dora.state.co.us/real-estate/index.htm; GA Residential Mortgage License #16984; IL Residential Mortgage Licensee #6424; MA Mortgage Lender/Broker License #MC2011; MS Licensed Mortgage Co.; MT Residential Mortgage Lender Licensee #120; NV Division of Mortgage Lending Mortgage Banker #1173 and Mortgage Broker #3095; Licensed by the NH Banking Dept.; Licensed Banker-NJ Dept. of Banking and Insurance #9932415; Operates as Metrocities Mortgage, LLC in NY (Licensed Mortgage BankerرNYS Banking Department); Operates as Metrocities Mortgage, LLC in OH (Ohio Mortgage Broker Act, Lic # MB.803629.000); OR Mortgage Lender Licensee #ML-2006; PA Dept. of Banking license #1740; RI Licensed Lender #20021343LL, Broker #20041643LB; licensed by the VA State Corp. Commission as MC-2195. This is not an offer for extension of credit or a commitment to lend. All loans must satisfy company underwriting guidelines. Information and pricing are subject to change at any time and without notice. This is not an offer to enter into a rate lock agreement under MN law , or any other applicable law. – 0509-63

Regulation Z Changes

• The Truth in Lending Act (TILA) requires that certain disclosures be provided to loan applications within three (3) business days of when an application is taken or received by Prospect Mortgage

• The TILA rules are outlined in Regulation Z• The federal government has published changes to Regulation Z, which add

new requirements for disclosures, and the timing for loan closings based on when disclosures are sent to borrowers

• Additionally, there are new rules concerning the collection of up-front fees from the applicant

Introduction

Regulation Z Changes

• The changes to Regulation Z affect ALL mortgage loans originated by Prospect from ALL business units

• The law applies to loans in all 50 states, plus the District of Columbia

• The changes take effect for all new applications taken or received on July 30th, 2009 and after

Types of Loans Covered and Effective Date of Changes

Regulation Z Changes

• The TILA and Regulation Z require that initial disclosures must be sent to the applicant within three (3) business days of the day the application is taken or received by Prospect

• Initial disclosures include the Good Faith Estimate (GFE), the Truth-in-Lending (TIL) Statement, and state specific disclosures

• The new rules require that Prospect cannot schedule the loan closing until at least seven (7) business days after the initial disclosures are mailed to the applicant

• A business day includes Saturdays, but does NOT include Sundays, and recognized Federal holidays

• Example: Initial Disclosures mailed to applicant on Monday, July 6th. Closing may not take place until Tuesday, July 14th or after.

Initial Disclosure Requirements

Regulation Z Changes

• If there are changes to a borrower’s loan program, loan terms, and/or APR, the initial disclosure package must be re-disclosed to the borrower prior to closing

• If the borrower’s APR increases or decreases by more than .125% for a fixed rate loan, or by more than .25% for an adjustable rate mortgage (ARM), the initial package must be re-disclosed

• If the initial package is re-disclosed to the borrower, Prospect cannot schedule the closing until at least three (3) business days after the borrower has received the re-disclosure

• If the re-disclosed package is mailed to the borrower, Prospect must wait three (3) business days to assume the borrower received it – then, we need to wait another three (3) business days before we schedule the closing

• Example: re-disclosure of initial package mailed to borrower on Monday, July 6th – closing may not take place until Monday July 13th or after

Re-Disclosure of Initial Documents

Regulation Z Changes

• If the re-disclosed packaged is personally delivered to the borrower by the Loan Officer, the closing may take place in three (3) business days

• Example: re-disclosure hand-delivered to borrower by Loan Officer on Monday, July 6th – Closing may take place on Thursday, July 9th or after

• E-mailing or faxing the re-disclosed package to the borrower does NOT shorten the waiting period for closing – we must still wait six 6 business days, and not three (3)

• If Prospect Loan Officers want to hand-deliver the re-disclosed package to the borrower, they will use a Courier Service to messenger the documents, so that we have independent documentation from a 3rd party company to confirm the date the borrower received the re-disclosures.

Re-Disclosure of Initial Documents cont’d

Regulation Z Changes

Thank You!

(Mike Platt) Loan OfficerDirect: 434-295-1944Cell: 434-760-2801mike.platt@prospectmtg.com