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1.2.9 The Mortgage Disclosure Improvement Act

In July 2008, Congress amended TILA with the Mortgage Disclosure Improvement Act to require early disclosures for extensions of credit secured by a dwelling.103 Early disclosures, in the same format as the final TILA disclosures, must be provided for all closed-end loans secured by a “dwelling of a consumer,” whether or not a principal dwelling. Disclosures must be delivered three business days after application (the current law for purchase mortgage transactions), but no less than seven business days before closing. If the APR on the disclosures given seven days before closing is inaccurate beyond the tolerances, the creditor must provide corrected disclosures at least three business days before closing. Congress also enhanced mortgage disclosure by requiring a notice advising consumers that they need not complete the transaction simply because they received the disclosure and, more significantly, by requiring disclosure of the maximum payment for loans where the regular payment is variable. These changes are discussed at greater length at Chapter 4, infra.

The FRB’s rule implementing these provisions, other than the maximum payment disclosure, became effective July 30, 2009.104 The FRB issued an interim rule on the maximum payment disclosure on September 24, 2010.105 Three months later, it published several clarifying amendments to the interim rule.106 Creditors were allowed, at their option, to comply with the interim rule for applications received as of October 25, 2010, and compliance is mandatory for applications received on or after January 20, 2011.107 The Mortgage Disclosure Improvement Act also increased the range of statutory damages for closed-end mortgage-related transactions from $200 to $2,000, up to $400 or $4,000.108


  • 103 {103} Housing and Economic Recovery Act of 2008, Pub. L. No. 110-289, §§ 2502(a), 122 Stat. 2654 (July 30, 2008) (to be codified at 15 U.S.C. § 1638(b)(2)); 74 Fed. Reg. 23,289 (May 19, 2009); 75 Fed. Reg. 58,470 (Sept. 24, 2010) (rule regarding disclosure of rate and payment examples, including the maximum rate and payment).

  • 104 {104} 74 Fed. Reg. 23,289 (May 19, 2009).

  • 105 {105} 75 Fed. Reg. 58,470 (Sept. 24, 2010).

  • 106 {106} 75 Fed. Reg. 81,836 (Dec. 29, 2010) (clarifying requirements regarding 5/1 ARMs, interest-only loans, and negative amortization; leaving effective date unchanged).

  • 107 {107} 75 Fed. Reg. 58,470 (Sept. 24, 2010).

  • 108 {108} See § 11.6.3, infra.