We received the following compliance question and wanted to share the answer with you, along with our advice. We hope you find the information useful, and we welcome your questions and comments. (To leave a comment, scroll to the bottom of the page, type your comment in the box, and click Submit Comment.)

Question: Can Brokers Provide the Initial TIL Statement? Does “Creditor” mean Broker?

Answer: According to Federal Reserve Board staff, the answer is NO except for table-funding.

• “Creditor,” as defined in Regulation Z Section 226.2(17), means the lender whose name appears on the mortgage note and to whom initial loan payments are owed. Therefore, the seven-business day waiting period does not commence until delivery of the Initial Truth In Lending Statement bearing the name of the lender on the note. Early disclosures given in the name of the broker (or a pre-existing creditor who cannot complete the loan transaction) do not satisfy MDIA requirements. Moreover, under new Regulation Z rules, no advance fee may be collected from the consumer other than a credit report fee by either the lender or any third party until after the creditor has delivered the Initial Truth In Lending Statement or three business days after it has been mailed. 12 CFR 226.19(a)(1)(ii).

• Reg Z. TILA 226-17(a)

• Form of disclosures. (1) The creditor shall make the disclosures required by this subpart clearly and conspicuously in writing, in a form that the consumer may keep. The disclosures required by this subpart may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq.). The disclosures required by §§ 226.17(g), 226.19(b), and 226.24 may be provided to the consumer in electronic form without regard to the consumer consent or other provisions of the E-Sign Act in the circumstances set forth in those sections. The disclosures shall be grouped together, shall be segregated from everything else, and shall not contain any information not directly related³⁷ to the disclosures required under § 226.18 or § 226.47.³⁸ The itemization of the amount financed under § 226.18(c)(1) must be separate from the other disclosures under § 226.18, except for private education loan disclosures made in compliance with § 226.47.

• Reg Z. TILA 226.2 17(i)

• Creditor means: (i) A person (A) who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments (not including a down payment), and (B) to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract.

Our advice: MCA advises all lenders working with broker/TPO partners to issue a TIL when the application is received by the lender. Issue a TIL within 3 days of receiving the application and clearly indicate when and how the TIL was sent to the borrower. MCA also advises lenders to start the 7 day waiting period as required by MDIA the day the lender issues the TIL. Any fees collected by the broker/TPO or lender received prior to the issuance of the TIL by the lender is a violation of TILA.

We welcome your comments below.

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