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What Does Regulation Z Cover?

Allison Beatty
LoanBiz Columnist

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As you shop for a mortgage or home equity loan, ask lenders about Regulation Z. This important regulation helps protect consumers by requiring disclosure of many financing fees. Here is an overview of what it covers.

What Is Regulation Z?

In essence, Regulation Z is the regulation that started the Truth in Lending Act. Regulation Z is a Federal Reserve regulation that helps consumers in credit and other financial transactions.

Regulation Z Coverage

Regulation Z covers individuals or businesses that offer to extend credit to consumers on a regular basis. This covers many mortgage lenders, as they are in the business of providing consumer loans. To be covered, the loans have to include a finance charge or be payable by more than four installments and the credit has to be for personal, family or household reasons.

Credit Cards and Regulation Z

Certain provisions apply to credit cards even if the credit is not subject to a financing charge and is not payable in more than four installations. Also credit cards used for business purposes may be covered.

What is the Truth in Lending Act?

The Truth in Lending Act provides consumer safeguards for mortgage and other credit transactions. Lenders are required to give you written disclosure regarding credit costs, finance charges and other fees. The Truth in Lending Act also requires that lenders disclose the annual percentage rate you'll pay on a mortgage, home equity loan or other financing. You also have the right to cancel certain credit transactions and dispute credit billing questions.

These important regulations help make the mortgage shopping a more open process. For more information, contact a local mortgage lender for details.

Source
FDIC

About the Author
Allison E. Beatty is a syndicated real estate writer who has been writing home improvement columns for 15 years.

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