Early in 2008, the Board of Governors of the Federal Reserve (Fed) proposed changes to its rules under the Truth in Lending Act (TILA) - Regulation Z. The rule seeks to protect consumers from unfair and deceptive acts and practices. Under the proposal, some protections would be directed only to higher priced mortgages (essentially subprime loans), some protections would be directed to all loans and some protections to high-cost Home Ownership and Equity Protection Act (HOEPA) loans.
The proposed rule would provide protections by establishing a new category of "higher-priced mortgage loans" defined as closed-end consumer credit transactions secured by the consumer's principal dwelling where the Annual Percentage Rate (APR) on the loan exceeds the rate on a Treasury security with a comparable maturity by 3%. This would include purchase loans, refinancings of such loans, and home equity loans, but would exclude loans for vacation properties, open-end home-equity plans, reverse mortgages, or construction-only loans.
MBA has long supported better and more timely disclosures to consumers as well conceived disclosures empower consumers to make the best choices and foster market competition to provide consumers the best products at the best prices.
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