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In 1968, Congress enacted the Truth in Lending Act (TILA) to increase economic stability and competition among consumer credit providers by increasing awareness among consumers about the true cost of credit. One of the purposes of TILA is to mandate meaningful disclosure of credit terms, which enables consumers to make informed decisions about the lenders and credit offers they choose.

Under the Federal Reserve Board Truth in Lending Regulation (Reg Z), lenders are subject to a new set of disclosure requirements. These new requirements apply to loan applications filed on or after July 30, 2009.

The new rules are complex, and compliance will be a challenge for lenders. REALTORS® should learn the basics so they can advise clients of the new procedures and any potential delays they might encounter.

Additional Resources

NAR Video: Closings Face TILA Disclosure Changes
Federal Reserve Board Final Rule and Staff Commentary (Federal Register, May 19, 2009) (PDF: 112KB)
Mortgage Bankers Association Summary of New Requirements (PDF: 51KB)