Fed's Reg Z Rule Leaves 'Ambiguities,' Says Law Firm
Despite an interim final rule approved by the Board of Governors of the Federal Reserve, "ambiguities" remain regarding the notice that must be given mortgage borrowers within 30 days of their loans being sold or transferred for securitization, according to global law firm K&L Gates. Section 404 of the Helping Families Save Their Homes Act of 2009, which requires written notice of the transaction, took effect in May without clear guidelines, K&L Gates said. The Fed's interim final rule enforces the requirement under the Act, called Regulation Z, by clarifying the scope of the disclosure requirement. "Section 404 does not expressly authorize the Board to issue regulations interpreting its scope, but the Board nevertheless decided to issue the Interim Rule under its general [Truth in Lending Act] rulemaking authority," K&L Gates said in an alert. But several ambiguities remain, despite the regulations on Section 404's scope. The interim final rule does not clearly address whether Mortgage Electronic Registration System (MERS) registration needs to be included in the notice, for example. HousingWire previously reported on the interim final rule, which was released around the same time that eight federal regulatory agencies released a final model privacy notice form that aims to make it easier for consumers to understand how their information is collected and shared among financial institutions. Write to Diana Golobay.