What is the Alternative Mortgage Transaction Parity Act?

The Alternative Mortgage Transaction Parity Act (AMTPA) is a set of federal laws passed in 1982 with an aim of providing parity to state-regulated lenders providing alternative mortgage transactions. This law was passed to ensure state-regulated lenders do not face competitive disadvantages based on their compliance with state-specific mortgage regulations. In order for the states to be eligible to take advantage of the parity granted by the AMTPA, they must have a set of laws or regulations that are substantially similar to the federal provisions. The AMTPA covers a variety of alternative mortgage transactions, including adjustable-rate mortgages, interest-only mortgages, and balloon mortgages. It requires lenders to comply with both state and federal regulations when offering these products. The law also requires that these transactions be disclosed to the borrower in a comprehensive and understandable manner, and that the borrower has the opportunity to fully understand the terms of the transaction. In California, the AMTPA provides for parity to lenders offering alternative mortgage transactions. To take full advantage of the parity afforded by the AMTPA, California has implemented the California Financing Law and the Financing Law Disclosure Regulation. The Financing Law Disclosure Regulation is designed to ensure that borrowers have access to the same type of information and disclosures that they would receive with a conventional loan. The California Financing Law outlines the loan origination, servicing, and collection practices of lenders offering alternative mortgage transactions. In summary, the Alternative Mortgage Transaction Parity Act (AMTPA) was passed to ensure that state-regulated lenders are not put at a disadvantage due to complying with state-specific mortgage regulations. California has taken advantage of the parity provided by the AMTPA by implementing the California Financing Law and Financing Law Disclosure Regulation which provides borrowers with clear understanding of the terms of the transaction.

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What is the Alternative Mortgage Transaction Parity Act?

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