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Federal R eserve Bank OF DALLAS ROBERT D. M C T E E R , J R . DALLAS, TEXAS PRESIDENT AND C H I E F E X E C U T I V E O F F I C E R MafCh 5 1996 75265-5906 Notice 96-26 TO: The Chief Executive Officer of each member bank and others concerned in the Eleventh Federal Reserve District SUBJECT Adjustment of Dollar Amount DETAILS The Board of Governors of the Federal Reserve System has published an adjustment of the dollar amount that triggers additional disclosure requirements under Truth in Lending for mortgage loans that bear fees above a certain amount. The Home Ownership and Equity Protection Act of 1994 bars credit terms such as balloon payments and requires additional disclosures when total points and fees payable by the consumer exceeds $400 or 8 percent of the total loan amount, whichever is larger. The Board must adjust this amount each year based on the percentage change in the Consumer Price Index as of June 1. The dollar amount has been adjusted from $400 to $412. ATTACHMENT A copy of the Board’s notice as it appears on page 3177, Vol. 61, No. 21, of the Federal Register dated January 31, 1996, is attached. MORE INFORMATION For more information, please contact Eugene Coy at (214) 922-6201. For additional copies of this Bank’s notice, please contact the Public Affairs Departm ent at (214) 922-5254. Sincerely yours, 7&WLJ9. . For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank o f Dallas: Dallas Office (800) 333 -4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Federal Register / Vol. 61, No. 21 / W ednesday, January 31, 1996 / Rules and Regulations SUPPLEMENTARY INFORMATION: Background The Truth in Lending Act (TILA; 15 U.S.C. 1601—1666j) requires creditors to disclose credit terms and the cost of consumer credit as an annual percentage rate. The act requires additional disclosures for loans secured by a consumer’s home, and permits consumers to cancel certain transactions that involve their principal dwelling. The TILA is implemented by the Board’s Regulation Z (12 CFR part 226). On March 24,1995, the Board published amendments to Regulation Z implementing the Home Ownership and Equity Protection Act of 1994 (HOEPA), contained in the Riegle Community Development and Regulatory Improvement Act of 1994, Public Law 103-325,108 Stat. 2160 (60 FR 15463). These amendments, which became effective on October 1,1995, are contained in § 226.32 of the regulation and impose new disclosure requirements and substantive limitations on certain closed-end mortgage loans bearing rates or fees FEDERAL RESERVE SYSTEM above a certain percentage or amount. Creditors are required to comply with 12 CFR Part 226 the rules in § 226.32 if the total points [Regulation Z; Docket No. R-0915] and fees payable by the consumer at or before loan consummation exceed the Truth In Lending greater of $400 or 8 percent of the total loan amount. The TILA and AGENCY: Board of Governors of the §226.32(a)(l)(ii) of Regulation Z provide Federal Reserve System. that the $400 figure shall be adjusted ACTION: Notice of adjustment of dollar annually on January 1 by the annual amount. percentage change in the Consumer SUMMARY: The Board is publishing an Price Index (CPI) that was reported on adjustment to the dollar amount that the preceding June 1. See 15 U.S.C. triggers certain requirements of 1602(aa). Regulation Z (Truth in Lending) for The Bureau of Labor Statistics mortgages bearing fees above a certain publishes consumer-based indices amount. The Home Ownership and monthly, but does not “report” a CPI Equity Protection Act of 1994 sets forth change on June 1; adjustments are rules for creditors offering homereported in the middle of each month. secured loans with total points and fees The CPI-U is based on all urban payable by the consumer at or before consumers and represents loan consummation that exceed the approximately 80 percent of the U.S. greater of $400 or 8 percent of the total population; the CPI-W is based on loan amount. The Board is required to urban wage earners and clerical workers annually adjust the $400 amount based and represents about 30 percent of the on the annual percentage change in the population. The Board believes the Consumer Price Index as reported on index representing the broader June 1. The Board has adjusted the population of U. S. consumers—the dollar amount from $400 to $412. CPI-U—is the appropriate index to use EFFECTIVE DATE: January 1,1996. in any adjustment to the $400 dollar figure. FOR FURTHER INFORMATION CONTACT: Michael Hentrel, Staff Attorney, The adjustment to the $400 dollar Division of Consumer and Community figure reflects the adjustment reported Affairs, Board of Governors of the on May 15 (the rate “in effect” on June Federal Reserve System, at (202) 452 1) which states the percentage increase 3667. For the users of from April 1994 to April 1995. During Telecommunications Device for the Deaf that period the CPI-U increased by 3.1 only, please contact Dorothea percent which would cause an Thompson at (202) 452-3544. adjustment of the $400 to $412.40. The 3177 Board is rounding that number to whole dollars for ease of compliance. Adjustment Effective January 1,1996, under § 226.32(a), a home mortgage loan is covered by § 226.32 if the total points and fees payable by the consumer at or before loan consummation exceed the greater of $412 or 8 percent of the total loan amount. The adjustment will be codified in the official staff commentary to Regulation Z. By order of the Board of Governors of the Federal Reserve System, January 25,1995. W illia m W . W iles, Secretary o f the Board. [FR Doc. 96-1859 Filed 1-30-96; 8:45 am] BILUNG CODE 6210-01- P
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