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When Is A Mortgage Lender Required By Law To Redisclose The Loan?

By Stacy Williams

Understanding your Rights: When Is a Mortgage lender required by Law to Redisclose the Loan? Mortgage lenders must abide by certain rules.

Mortgages are complex agreements. They are privy to many changes and modifications as the industry changes. Being an informed consumer is always in your best interest especially when it comes to borrowing money for your home.

The Law

The Real Estate Settlement and Procedures Act is a federal law that governs the real estate and mortgage industry. Mortgage lenders are required to redisclose the loan under certain circumstances as outlined in this act. Borrowers should be aware that this law exists and make efforts to understand their rights as well as know the responsibilities of the lender as well as those that they must abide by as a borrower.

When is a mortgage lender required by law to redisclose the loan?
If the annual percentage rate changes or increases after initial disclosure.
If the APR changes by more that .125% on loans considered prime or more than .25% on loans considered subprime.
If an annual percentage rate is added to the credit terms.
If a variable rate is added to the credit terms following an original disclosure.
At the time of settlement or consummation of the loan.

Changes to the Laws

Laws change frequently. Addendums are added and changes made and borrowers may be the last to know. When is a mortgage lender required by law to redisclose the loan is a common question from many borrowers. Keeping up with these changes is almost impossible for lenders as well as borrowers. It is more important to know where to get these regulations should you need them and knowing that you can reference information as you need to. The Mortgage Disclosure Improvement Act went into effect in July of 2009. Working with your lender or attorney to best understand these regulations and what they mean for your mortgage is the best offence for a borrower.

Related posts:

1. What Is Title Insurance For A Mortgage Loan And Why Is It Required?
2. Why Is The APR So Much Higher Than My Mortgage Interest Rate?
3. How Much Of A Down Payment Is Required For An ARM Loan?
4. What Questions Should I Ask A Mortgage Lender?
5. What Questions Should I Ask A Mortgage Lender?

3 Responses to “When Is A Mortgage Lender Required By Law To Redisclose The Loan?”

1. Daron Greenstein says:

   March 28, 2010 at 5:34 pm

   I tried getting a loan from a big bank but they kept turning me down because I had a history of checkered credit. It made me realize banks don’t operate like in the olden days when you could walk in and have your loan processed quickly.
2. Russ Cokel says:

   March 30, 2010 at 4:41 pm

   It is much wiser to invest than borrow. Borrowing money can cause a decrease in cash flow. Some people are fond of borrowing money from many cash out-lets, leading to bankruptcy. Too much of lending also leads to a decrease in cash flow. That’s the reason why banks have lending limits.
3. avoiding foreclosure says:

   April 4, 2010 at 12:02 am

   This is a fantastic post! (I am coming back to reblog this one in a bit… ) Have a great Easter!