Fed backs down from mortgage reform

The Federal Reserve is backing down from a slew of proposed changes to mortgage loan disclosures, saying authority in that arena will soon be transferred to the new Consumer Financial Protection Bureau.

The Fed's proposed changes to mortgage loan disclosures were over a year in the making, prompted by criticism that homebuyers often didn't understand the true cost and terms of mortgages taken out during the boom.

The situation was complicated by the fact that borrowers get two sets of federal mortgage disclosures: one addressing Truth in Lending Act (TILA) requirements, and the other satisfying requirements of the Real Estate Settlement Procedures Act, or RESPA.

The Federal Reserve has had rulemaking authority for TILA loan disclosures under Regulation Z, while the Department of Housing and Urban Development (HUD) oversees RESPA disclosures. Lenders, the real estate industry, and consumer groups have complained that having two sets of mortgage loan disclosures is confusing.

Source: Inman News