Financial Services

A New Requirement in Regulation Z Notice of New Owner of a Debt

January 8, 2010

By Susan N. LeDuc, CRCM, Regulatory Specialist

On May 20, 2009, the President signed into law the Helping Families Save Their Homes Act of 2009. Among other things, this law amended the Truth in Lending Act to require the delivery of a "Notice of New Owner" to a borrower if the note in a consumer mortgage (secured by the principal dwelling of the consumer) loan transaction is sold, transferred or assigned to a new owner. An Interim Final Rule (and a request for public comment) was published in the Federal Register on November 20, 2009 at 74 FR 60143. This Interim Final Rule amended the Truth in Lending regulation (Regulation Z; 12 CFR 226.39) and was effective immediately upon publication; however, compliance is optional until January 19, 2010.

Section 404 of the Act requires that borrowers be notified by the new owner or assignee within 30 days from the date the mortgage loan is sold, transferred, or assigned to a new owner. The notice must include information identifying the new owner (including address and telephone number), the date of transfer, how to reach an agent of the new owner, the location where transfer of ownership of the debt is recorded, and any other relevant information. The "Notice of New Owner" can also instruct the borrowers to continue to make payments to the same servicer and same address based on their current instructions from the Servicer. Please review the Regulation and the Official Staff Commentary for 12 CFR 226.39 for complete details.

Please note that this new "Notice of New Owner" disclosure should not be confused with the "Notification of Transfer of Servicing" required under RESPA. The "Notice of New Owner" discloses a new owner of the debt; the "Notification of Transfer of Servicing" discloses a new servicer of the loan.

Return to Financial Services articles
Return to Resources index