A buyer takes over an existing residential mortgage with the lender's written agreement, keeping the 4.25% rate and the remaining 22-year term.
Correct Answer
A) New Regulation Z disclosures are owed, as this is a new transaction
Where a creditor expressly agrees in writing to accept a new consumer as the primary obligor on an existing residential mortgage, the assumption is a new transaction and triggers disclosures. Other choices: unchanged terms are exactly the situation the rule covers; a rate change notice belongs to adjustable rate servicing; and the duty does not wait on the rate moving. See 12 CFR 1026.20(b). Source: 12 CFR 1026.20(b)
Why This Is the Correct Answer
Where a creditor expressly agrees in writing to accept a new consumer as the primary obligor on an existing residential mortgage, the assumption is a new transaction and triggers disclosures. Other choices: unchanged terms are exactly the situation the rule covers; a rate change notice belongs to adjustable rate servicing; and the duty does not wait on the rate moving. See 12 CFR 1026.20(b). Source: 12 CFR 1026.20(b)
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