Fed Approves Rule Requiring Notice When Mortgages Are Sold

Fed Approves Rule Requiring Notice When Mortgages Are Sold

photo of board room and Fed sealThe Federal Reserve Board recently approved an interim final rule implementing and clarifying a requirement that consumers be notified when their mortgage loan has been sold or transferred to a different servicer.

The actual disclosure requirement was effective immediately upon enactment of the Helping Families Save Their Homes Act in May 2009. Under that act, a purchaser or assignee that acquires a mortgage loan must inform mortgage holders of the change in writing within 30 days.

The interim final rule approved by the Fed provides guidance on how to interpret and comply with the disclosure requirements. While the final rule is effective immediately, compliance is optional for 60 days to allow time for mortgage lenders and servicers to make any necessary operational changes. During those 60 days, parties that acquire a mortgage loan continue to be subject to the statute’s requirements.

The Federal Reserve Board is also soliciting comment on the interim rule for 60 days before considering the adoption of a permanent rule. The new disclosure rule amends Regulation Z, the Truth in Lending Act, which aims to help consumers wisely use by requiring lenders to disclose costs and terms.

November 25, 2009