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New Lending Regulations

In 2009, major revisions were made to two key regulations affecting the mortgage lending industry: the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).

Some of these regulatory changes will benefit the consumer greatly, while others may be a bit more confusing and will bring about both positive and negative consequences.

Revisions to RESPA have resulted in a more simplified and uniform Good Faith Estimate (GFE), which estimates the closing costs of a mortgage transaction at application, before a consumer has committed to the transaction. Thus, consumers will receive a uniform GFE regardless of where they apply for a mortgage loan, which will allow consumers to more easily shop for mortgage loans at various lending institutions. Also, to encourage shopping, you will no longer have to pay application fees to those institutions (other than a credit report) until you decide to proceed with the transaction.

 New timing requirements for the TILA will boast both positive and negative effects for consumers. On one hand, the new requirements will lengthen the amount of time before consumers receive their money for all mortgage loans. However, these requirements were designed to protect consumers from unfair, abusive, or deceptive lending practices, and they will ultimately offer greater protection to consumers in the mortgage market.

 If you have any questions regarding these changes, please contact FSB at (877) FSB-1879 or at