Regulation Z requires that creditors disclose the assumption policy that will apply to any residential mortgage transaction. 12 CFR 1026.18(q). The phrase “residential mortgage transaction” is defined as “a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained in the consumer’s principal dwelling to finance the acquisition or initial construction of that dwelling.” 12 CFR 1026.2(a)(24).  Consequently, the assumption clause should be included for any loan subject to Regulation Z’s disclosure requirements — loans made to purchase or construct the consumer’s principal dwelling.

If you have unintentionally omitted the assumption policy disclosure, we recommend following the cure provisions in the Truth in Lending Act (TILA). Section 130 permits institutions to correct inadvertent errors if done “within sixty days after discovering an error . . . [but] prior to the institution of an action under this section or the receipt of written notice of the error from the obligor, [and] the creditor or assignee notifies the person concerned of the error and makes whatever adjustments in the appropriate account are necessary to assure that the person will not be required to pay an amount in excess of the charge actually disclosed, or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower.” 15 USC 1640(b). While this section is frequently used to correct errors in disclosing finance charges and the APR, it also applies to “any failure to comply with any requirement imposed under this part [ B ] or part E” (including the disclosure requirements in 15 USC 1631 of part B). 15 USC 1640(b). In addition, your institution cannot be held liable for “bona fide” errors, which include printing errors and computer malfunctions. 15 USC 1640(c).