Effective May 20, 2009 a New Notice is Required to be Given to Consumers Under the Federal Truth in Lending Act Within 30 Days After the Sale, Transfer or Assignment of a Mortgage Loan.

The Helping Families Save Their Homes Act of 2009

On May 20, 2009, the President signed The Helping Families Save Their Homes Act of 2009. The new law contains a number of provisions, including amendments to the HOPE for Homeowners Program, protections for servicers of mortgage loans who modify mortgage loans, and extensions of the credit facilities from the U.S. Treasury to the Federal Deposit Insurance Corporation. Section 404 of the Act amends the Truth in Lending Act (TILA) to require that a new notice be given to consumers within 30 days after the sale, transfer or assignment of the consumer’s mortgage loan.

Notice Requirement Effective on May 20, 2009

The new notice requirement became effective on May 20, 2009 and applies to any sale, assignment or transfer of a mortgage loan occurring on or after May 20, 2009.

Civil Liability and Attorneys’ Fees for Failure to Comply

The new requirement has real teeth because Section 404 also amends Section 130(a) of TILA to provide that the failure to give the notice can result in liability for actual and up to $2,000 statutory damages per violation, plus plaintiff’s reasonable attorneys’ fees. Class action lawsuits can also be brought for systematic violations, subject to a $500,000 cap.

Section 404 Requirements

Section 404 of the Act amends Section 131 of TILA to add a new subsection (g) which provides that, in addition to other disclosures required by the TILA, not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of the transfer. The notice must include the identity, address and telephone number of the new creditor; the date of the transfer; how to reach an agent or party having authority to act on behalf of the new creditor; the location of the place where transfer of ownership of the debt is recorded; and any other relevant information regarding the new creditor.

Definition of Mortgage Loan

For purpose of the new notice, the term “mortgage loan” is defined to include any consumer credit transaction that is secured by the principal dwelling of the consumer. Therefore, it applies to first mortgage loans, subordinate mortgage loans, home equity loans and any other credit transaction that is secured by the principal dwelling of the consumer.

Obligation on Purchaser, Assignee or Transferee

The obligation to give the notice is on the purchaser, assignee or transferee of the mortgage loan and not the seller of the mortgage loan.

I am looking for the form ????Anyone???

Where are you finding the data you have? Each time I search I come up with the extension of the temporary deposit insurance.

The FRB has not issued anything under Reg. Z to address this TILA amendment. The ABA and other trade associations have asked the FRB for guidance. I believe this is a form you will have to create. I'm sure forms vendors will come up with something.

Fannie Mae just issued a bulletin that said that they will take responsibility for providing the notice for loans that they purchase.

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/ll0509.pdf

Fannie Mae posted some sample notices. You can access them from the following web page.

https://www.efanniemae.com/sf/guides/ssg/relatedservicinginfo/borrowernotice.jsp

OBA general counsel stated that is applies to those who PURCHASE the loans. If you don't purchase loans, it wouldn't apply to your bank and that this form is total seperate from the transfer of servicing rights found in RESPA.

This is the letter ABA and several trade organizations submitted as a request for clarification. It has a .pdf attached that says it is interim interpretations from the Federal Reserve Board. I can't tell if it is legit since it is only posted with this ABA letter and on the CBA website. I could not find it on the Fed's website.

http://www.aba.com/aba/documents/News/FedLetter6409.pdf

We are planning to add the required information to our welcome letter until further guidance is released.

Since most of the information is already contained in the Notice of Assignment, Sale or Transfer of Servicing Rights, would it be wrong to include an additional statement in that document regarding the location or place where transfer of ownership of the debt is recorded? What does this mean anyway??

I believe I have answered my own question if the interpretation of "Location of Recording" is correct. There may need to be different notices for the different counties and states where mortgages are recorded. This is such overkill when we already have a Transfer Notice under RESPA. We have recently acquired all deposits and borrowings of a failed bank and I assume this notice requirement applies to us as the "new creditor". Thoughts anyone?

I think that it would apply - you'll have 30 days from the day of "purchasing" the loans.

Agreed that this is overkill! I was so focused on getting ready for July 30th Reg Z changes that I almost missed this one! Luckily got our notices out and worked out the new process. We'll be including this notice in the same envelope as our Notice of Assignment, Sale or Transfer of Servicing Rights.

What language did you use for the location of recorded debt?

We used: "The security instrument (mortgage or deed of trust) that secures the repayment of your promissory note is recorded in the public land records for" (enter subject property county)

This would mean different notices for different counties, correct, using the county name where the mortgage is currently recorded?

We lend in many counties & states but are able to "drop" the subject property county & state from our mortgage origination system onto the document so we use the same notice.

Thanks so much for your input.