Truth in Lending Act

Agencies Issue Proposal on Method to Adjust Thresholds for Exempting Certain Consumer Credit and Lease Transactions

On July 22, 2016, the Federal Reserve Board and the Consumer Financial Protection Bureau issued a proposal with respect to the method that will be used to “adjust the thresholds for exempting certain consumer credit and lease transactions from the Truth in Lending Act and Consumer Leasing Act”. Comments on the proposal will be due thirty days from the date of publication in the Federal Register. Release.

Senators Introduce SAFE Lending Act

On April 7, 2016, several Democratic Senators introduced the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act, SAFE 2016, which is designed to change the manner in which certain short-term unsecured consumer lending is conducted. The legislation would amend the Truth in Lending Act to establish additional requirements on lenders making certain “small-dollar consumer credit transactions,” where small-dollar transactions are defined as loans of $5,000 or less.

Introduced in advance of forthcoming Consumer Finance Protection Bureau (CFPB) payday lending regulations, SAFE 2016 sets up an interesting legislative and regulatory dynamic.  There is the obvious issue of the extent to which the legislation will be inconsistent with the new CFPB’s regulations. But there is also a fierce legislative fight brewing, as many members of Congress – including other Democrats – have already expressed support for the manner in which many payday lenders conduct business.

Agency Proposed Rule on Appraisals for Higher-Risk Mortgages

On August 15, the Fed, CFPB, FDIC, FHFA, NCUA, and OCC issued a proposed rule to establish new appraisal requirements for “higher-risk mortgage loans”.  The proposed rule would implement amendments to the Truth in Lending Act enacted by the Dodd-Frank Act, which classify mortgage loans as higher-risk if they are secured by a consumer’s home and have interest rates above a certain threshold.  Comments must be submitted by October 15.  Joint Release.  Proposed Rule.    

Fed Increases Reg Z and Reg M Dollar Thresholds

On June 13, the Fed amended Regulation Z, which implements the Truth in Lending Act, and Regulation M, which implements the Consumer Leasing Act, by increasing the dollar threshold for exempt consumer credit and lease transactions under both regulations from $50,000 to $51,800. These adjustments will be effective on January 1, 2012. Fed Release. Regulation Z Amendment. Regulation M Amendment.

Fed Adjusts Fee-Based Trigger for Additional Mortgage Loan Disclosures

On June 13, the Fed published its annual adjustment to the amount of fees triggering additional disclosure requirements under the Truth in Lending Act and HOEPA for home mortgage loans with rates or fees above a certain amount. The dollar amount of the trigger has been adjusted to $611, and will be effective starting on January 1, 2012. The adjustment does not affect rules for “higher-priced mortgage loans” adopted by the Fed in July 2008. Fed Release. Fed Rule.

Fed Will Not Finalize Reg Z Rulemakings

On February 1, the Fed announced that it does not expect to finalize three pending mortgage lending rulemakings under Regulation Z, which implements the Truth in Lending Act (TILA), prior to the transfer of authority for such rulemakings to the Consumer Financial Protection Bureau in July 2011. Fed Release.

Fed Interim Rule Amending Reg Z

On December 22, the Fed approved an interim rule amending Regulation Z, which implements the Truth in Lending Act (TILA). The interim rule clarifies certain aspects of a September 24, 2010 interim rule in response to public comments. The September interim rule implements provisions of the Mortgage Disclosure Improvement Act which amended TILA to require mortgage lenders to disclose examples of how a loan’s interest rate or monthly payments can change. Those statutory amendments will become effective on January 30. Fed Release.