What constititues a violation of Regulation Z?

My wife and I sold and investment property and closed today. This was a “short sale”. The lien holder agreed to waive 50% of the deficit. The Loan Modification and Forbearance Agreement did not disclose the interest rate in writing. Is the lien holder in violation of Regulation Z?

Asked on June 1, 2012 under Real Estate Law, Maryland


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Regulation Z pertainins to the federal Truth in Lending Act (TILA) where the escrow company and the lender are required to to set forth the APR and other specific loan terms in writing. Regulation Z applies to setting forth to the consumer the actual interest rate in writing and what it equates to in terms of dollars and cents over the course of the loan's terms at the time the loan is obtained.

In your matter, the short sale transaction as well as the loan modification/forbearance agreement did not occur when you acquired the property. Such was afterwards. As such, Regulation Z does not apply to the loan modification/forbearance agreement under federal law.

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