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Federal R eserve Bank OF DALLAS ROBERT D. M c T E E R , J R . P R E S ID E N T DALLAS, TE XAS A N D C H IE F E X E C U T I V E O F F I C E R 75265-5906 December 26, 1996 Notice 96-131 TO: The Chief Executive Officer of each member bank and others concerned in the Eleventh Federal Reserve District SUBJECT Amendment to Regulation Z (Truth in Lending) DETAILS The Board of Governors of the Federal Reserve System has published, under Regulation Z requirements, an adjustment of the dollar amount that triggers additional disclosures for certain types of mortgages. The Board is required to adjust the amount yearly based on the annual percentage change in the Consumer Price Index as reported on June 1. For 1997, the base amount has been raised to $424. The adjustment is effective January 1, 1997. ATTACHMENT A copy of the Board’s notice as it appears on page 65317, Vol. 61, No. 240, of the Federal Register dated December 12, 1996, is printed on the reverse of this Bank’s notice. 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 Department at (214) 922-5254. Sincerely yours, 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) Rules and Regulations Federal Register Vol. 61, No. 240 Thursday, December 12, 1996 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 TTLA is implemented by the Board’s Regulation Z (12 CFR part 226). On March 24, 1995, the Board published am endments to Regulation Z implementing the Home Ownership and Equity Protection Act of 1994 (HOEPA), contained in the Riegle Community FEDERAL RESERVE SYSTEM Development and Regulatory Improvement Act of 1994, Public Law 12 CFR Part 226 103-325, 108 Stat. 2160 (60 FR 15463). These amendments, which became [Regulation Z; Docket No. R-0949] effective on October 1, 1995, are Truth in Lending contained in § 226.32 of the regulation and impose additional disclosure AGENCY: Board of Governors of the requirements and substantive Federal Reserve System. limitations on certain closed-end ACTION: Notice of adjustment of dollar mortgage loans bearing rates or fees amount. above a certain percentage or amount. Generally, creditors are required to SUMMARY: The Board is publishing an comply w ith the rules in § 226.32 if the adjustment to the dollar amount that total points and fees payable by the triggers certain requirements of consumer at or before loan Regulation Z (Truth in Lending) for consummation exceed the greater of mortgages bearing fees above a certain $400 or 8 percent of the total loan amount. The Home Ownership and amount. The TILA and § 226.32(a)(l)(ii) Equity Protection Act of 1994 sets forth of Regulation Z provide that the $400 rules for creditors offering homefigure shall be adjusted annually on secured loans with total points and fees January 1 by the annual percentage payable by the consumer at or before change in the Consumer Price Index loan consummation that exceed the (CPI) that was reported on the preceding greater of $400 or 8 percent of the total June 1. See 15 U.S.C. 1602(aa). loan amount. The Board is required to The Bureau of Labor Statistics annually adjust the $400 amount based publishes consumer-based indices on the annual percentage change in the monthly, but does not “report” a CPI Consumer Price Index as reported on change on June 1; adjustments are June 1. The Board adjusted the $400 amount to $412 for 1996. The Board has reported in the m iddle of each month. adjusted the dollar amount from $412 to The Board believes the CPI-U index, which is based on all urban consumers $424 for 1997. and represents approximately 80 EFFECTIVE DATE: January 1, 1997, percent of the U.S. population, is the through December 31,1997 appropriate index to use in any FOR FURTHER INFORMATION CONTACT: adjustment to the $400 dollar figure. Michael Hentrel, Staff Attorney, The adjustment the $400 dollar figure Division of Consumer and Community reflects the adjustment reported on May Affairs, Board of Governors of the 15 (the rate “in effect” on June 1) which Federal Reserve System, at (202) 452states the percentage increase from 3667. For the users of April 1995 to April 1996. Last year, the Telecommunications Device for the Deaf Board adjusted the $400 amount to only, please contact Dorothea $412, reflecting a 3.1 percent increase in Thompson, at (202) 452-3544. the CPI-U (See 61 FR 3177, January 31, 1996). During the period from April SUPPLEMENTARY INFORMATION: 1995 to April 1996, the CPI-U increased Background by 2.9 percent. As a result, this increase The Truth in Lending Act (TILA; 15 in the CPI-U w ould cause an U.S.C. 1601—1666j) requires creditors adjustment of the $412 to $423.94. The to disclose credit terms and the cost of Board is rounding that number to whole consumer credit as an annual dollars for ease of compliance. Adjustment For the reasons set forth in the preamble, for purposes of determining if a mortgage is covered by § 226.32 if the total points and fees payable by the consumer at or before loan consummation exceed the greater of $400 or 8 percent of the total loan amount, effective January 1,1997, through December 31, 1997, the dollar amount is adjusted from $412 to $424. By order of the Board o f Governors of the Federal Reserve System, December 6, 1996. Jennifer J. Johnson, D eputy Secretary o f the Board. [FR Doc. 96-31531 Filed 12-11-96; 8:45 am] BILLING CODE 6210-01-P
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