Questions and Answers

A residential mortgage transaction is a credit transaction subject to Truth-in-Lending where the creditor takes a lien on the consumer's principal dwelling to finance the acquisition or initial construction of the dwelling.

If a transaction is a residential mortgage transaction, then the following rules apply.  First, certain charges are excluded from the finance charge under Section 4(c)(7).  In addition, the transaction is exempt from the right of rescission, under both the open-end and closed-end rules. In closed-end credit, the creditor must disclose whether or not a subsequent purchaser of the dwelling may be allowed to assume the remaining obligation on its original terms.  Additional disclosures may be required at the time of the assumption. And finally, ff the residential mortgage transaction is also subject to RESPA, the creditor must provide a good-faith estimate of disclosures within three business days of receiving the application.