WASHINGTON (CN) – The Federal Reserve Board wants more comprehensive disclosures from lenders when consumers apply for closed-end credit secured by real property or a consumer’s residence.
Disclosures provided at application would include a Board-published one-page “Key Questions to Ask About Your Mortgage” document that explains potentially risky loan features, and a Board-published one-page “Fixed vs. Adjustable Rate Mortgages” document.
Transaction-specific disclosures required within three business days would summarize key loan terms, calculation of the annual percentage rate, and the finance charge. Consumers would receive a “final” Truth in Lending Act disclosure at least three business days before consummation. In addition, the proposed revisions would prohibit payments to mortgage brokers and loan officers that are based on the loan’s terms or conditions, and prohibit steering consumers to transactions that are not in their interest to increase revenue.
In a related action, the Board also proposes similar disclosures for open-ended credit agreements and home equity lines of credit secured by real property or the consumer’s residence. The proposal would limit the ability of a creditor to terminate a home equity line of credit for payment-related reasons; a creditor could do so only if the consumer failed to make a required minimum payment more than 30 days after the due date for that payment.
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