The Truth in Lending Act became law in 1968. Its stated purpose was to promote the informed use of consumer credit by requiring disclosures about loan terms and costs. Unfortunately, over the years, these disclosures have become meaningless and confusing. For example, consumers who obtained a mortgage loan with an interest rate of, say, 6 percent learned -- often at settlement, when they received the disclosures -- that the annual percentage rate, or APR, was 6.25 percent.

Why the difference? Because to calculate APR, a lender has to include more than just the interest rate. If the lender charges points or collects fees at settlement, this affects the calculation. If you are borrowing $300,000 but the lender charges $750 in fees, you really are borrowing only $299,250; thus the APR -- the yield to the lender -- is higher.

More significantly, the Truth in Lending statement is often provided to the borrower only on the day of settlement. Clearly, this defeats the purpose of disclosure. How can you shop and compare mortgage loans if you are already at the settlement table? If you don't like the APR, you may be in default of your purchase contract should you decide to look for another loan and don't close on that date.

The new rules are quite simple, and they apply equally to principal residences and second homes:

-- Your lender must provide you with early disclosures (the Truth in Lending disclosure and the good-faith estimate) within three business days after you make a loan application.

-- If you apply for a loan over the phone (or via the Internet), you can be required to pay only a credit-report fee. Other fees can be collected only after the lender has received signed disclosure documents. If you apply in person, the lender can collect other fees, but only after you have received -- and signed -- the disclosures.

-- You cannot be required to close on the loan (that is, go to settlement) sooner than seven business days after your receipt of the required disclosures.