NEW YORK (Reuters) - U.S. mortgage application activity plunged last week from an eight-month high as a rule change on loan disclosure slowed the processing of loan requests, a mortgage industry group said on Wednesday.
The Mortgage Bankers Association said its index on mortgage application volume in the week ended Oct. 9 fell to 387.0, down 27.6 percent from the prior week.
The decline was the steepest percentage drop since the week of Jan. 25, 2009 when it tumbled 38.75 percent.
The sharp pullback reversed prior week's 25.5 percent surge in advance of a rule change from the federal Consumer Financial Protection Bureau, which entails replacement of two mortgage disclosure documents with two new forms.
The rule is known as the TILA-RESPA Integrated Disclosures rule also known as TRID.
"Application volume plummeted last week in the wake of the implementation of the new TILA-RESPA integrated disclosures, which caused lenders to significantly revamp their business processes, and as a result dramatically slowed the pace of activity," MBA's chief economist Mike Fratantoni said in a statement.
(Reporting by Richard Leong; Editing by Chizu Nomiyama)
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