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Federal Reserve Bank OF DALLAS ROBERT D. M c T E E R , J R . DALLAS, TEXAS presid en t AND CH I EF E X E C UT I V E O F F I C E R 75265-5906 July 24, 1997 Notice 97-64 TO: The Chief Executive Officer or Branch Manager of each financial institution and others concerned in the Eleventh Federal Reserve District SUBJECT Public Forum Concerning the Streamlining and Reform of the Truth in Lending Act and the Real Estate Settlement Procedures Act DETAILS The Board of Governors of the Federal Reserve System and the Department of Housing and Urban Development will hold a public forum to give interested parties an opportunity to present their views concerning the streamlining and reform of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The public forum will be held on Wednesday, July 30, from 8:15 a.m. until 4:30 p.m. in Dining Room E on the Terrace level of the Federal Reserve Board’s Martin Building, located on C Street Northwest between 20th and 21st Streets. Interested parties unable to attend the forum or wishing to provide written views on the issues raised in the attached notice must submit comments by August 15, 1997. Please address comments to William W. Wiles, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washing ton, D.C. 20551. All comments should refer to Docket No. R-0979. ATTACHM ENT A copy of the Board’s notice as it appears on pages 38489-91, Vol. 62, No. 138, of the Federal Register dated July 18, 1997, is attached. For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of 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) M ORE INFORM ATION 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, Federal Register / Vol. 62, No. 138 / Friday, July 18, 1997 / Proposed Rules 38489 FEDERAL RESERVE SYSTEM 12CFR Part 226 [R e g u la tio n Z; D o c k e t N o. R -0 9 7 9 ] DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Part 3500 [R e g u la tio n X; D o c k e t N o. F R - 4 2 5 7 - N - 0 1 ] Truth in Lending Act and Real Estate Settlement Procedures Act; Simplification and Improvement of Consumer Disclosures Office of the Assistant Secretary for Housing-Federal Housing Commissioner (HUD); Board of AGENCIES: 38490 Federal Register / Vol. 62, No. 138 / Friday, July 18, 1997 / Proposed Rules Governors of the Federal Reserve System (the Board) (collectively, the Agencies). ACTION: Advance notice of proposed rulemaking; public forum. The Board and HUD w ill hold a public forum concerning the streamlining and reform of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The Economic Growth and Regulatory Paperwork Reduction Act of 1996 directs the Agencies to submit legislative recommendations to the Congress on how to simplify and improve consumer disclosures under RESPA and TILA if the disclosures cannot be simplified through regulatory change. The Agencies have concluded that meaningful simplification of the disclosures can only come about through statutory revisions. In addition, some have suggested that more effective protection of consumers from adverse steering and unnecessary costs, as well as greater certainty about permitted and prohibited behavior, might be achieved through reform of other provisions of RESPA. The public forum is intended to give interested parties an opportunity to discuss their views on statutory reform with the Agencies. DATES: Public Forum. Wednesday, July 30, 1997, 8:15 a.m. to 4:30 p.m. Comments: Persons unable to attend the forum or wishing to provide written views on the issues raised in this notice may submit comments by August 15, 1997. ADDRESSES: Public Forum. Terrace Level, Room E of the Federal Reserve Board’s Martin Building, C Street Northwest, between 20th and 21st Streets, Washington, DC Comments: Comments may be submitted to either agency. Board: Comments submitted to the Board should refer to Docket No. R— 0979, and may be mailed to William W. Wiles, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW, Washington, DC 20551. Comments also may be delivered to Room B-2222 of the Eccles Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the guard station in the Eccles building courtyard on 20th Street, NW (between Constitution Avenue and C Street) at any time. When possible, comment letters should use a standard courier typeface with a type size of 10 or 12 characters per inch. This w ill enable the Board to convert the text into machinereadable form through electronic scanning, and w ill facilitate automated retrieval of comments for review. Also, SUMMARY: if accompanied by an original document in paper form, comments may be submitted on 3 V2 inch or 5 V4 inch computer diskettes in any IBMcompatible DOS-based format. Comments may be inspected in Room M P-500 of the Martin Building between 9:00 a.m. and 5:00 p.m. weekdays, except as provided in 12 CFR 261.8 of the Board’s Rules Regarding Availability of Information. HUD: Comments to HUD should be addressed to the Rules Docket Clerk, Office of General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street, SW, Washington, DC 20410-0500. Communications should refer to the above docket number and title. Facsimile (FAX) comments are not acceptable. Comments received w ill be available for public inspection and copying between 7:30 a.m. and 5:30 p.m. weekdays at the above address. necessary to accomplish this objective, the Agencies are directed to submit legislative recommendations to the Congress. TILA is a comprehensive statute that covers all types of consumer credit transactions. The act’s goal is to help consumers understand credit terms and shop for credit by requiring creditors to provide uniform credit disclosures. TILA is primarily a disclosure statute, though it contains some substantive provisions. TILA disclosures focus primarily on the costs imposed by a creditor and the terms of a credit obligation. The law requires the disclosure of two terms thought to be key in aiding consumers in comparison shopping for credit—the finance charge and the annual percentage rate (APR). The finance charge is intended to reflect the dollar amount of the cost of credit; the APR is the cost of the credit expressed as a yearly rate. TILA also requires, among other things, the FOR FURTHER INFORMATION CONTACT: disclosure of a payment schedule, Board: Sheilah A. Goodman or Kyung whether a creditor w ill impose a penalty if a loan is prepaid, whether a loan may Cho-Miller, Staff Attorneys, Division of be assumed, and the fee for a late Consumer and Community Affairs, payment. Finally, TILA provides Board of Governors of the Federal substantive protections for certain Reserve System, at (202) 452-3667 or home-secured loans such as (202) 452-2412; for the hearing prohibitions on certain contract terms, impaired only, Diane Jenkins, Telecommunications Device for the Deaf and the right to cancel the transaction. RESPA was enacted in large measure (TDD), at (202) 452-3544. to ensure that the home-buying public is HUD: David R. Williamson, Director, afforded timely and effective Officer of Consumer and Regulatory information about the costs of Affairs, Room 9146, (202) 708-4560; or settlement in mortgage transactions, and for legal questions, Kenneth A. to eliminate kickbacks and referral fees Markison, Assistant General Counsel for that tend to increase unnecessarily the GSE/RESPA, Grant E. Mitchell, Senior cost of settlement services. To achieve Attorney for RESPA, or Rodrigo J. Alba, these goals, RESPA mandates Attorney, Office of General Counsel, disclosures at various points in the Room 9262, (202) 708-1550. For home financing process for transactions hearing- and speech-impaired persons, involving “federally related mortgage these numbers may be accessed via TTY loans,” which include most financial (text telephone) by calling the Federal transactions creating a lien on ownerInformation Relay Service at 1 -8 0 0 occupied residential structures. RESPA 877-8339. The address for the above disclosures focus on the fees for services listed persons is: Department of Housing required in home mortgage transactions and Urban Development, 451 Seventh and require an itemization of all costs Street, SW Washington, D.C. 20410. The associated with settlement. RESPA also telephone numbers for the Agencies are imposes certain restrictions on not toll-free. payments among settlement service providers (such as lenders, appraisers, SUPPLEMENTARY INFORMATION: and title companies). Section 8(a) of I. Background RESPA prohibits compensation for the On September 30, 1996, the Economic referral of settlement service business; Growth and Regulatory Paperwork section 8(b) prohibits unearned fees and Reduction Act of 1996 (Pub. L. 104-208, fee splitting arrangements. Section 110 Stat. 3009) became law. Section 8(c)(2) of RESPA, however, provides 2101 of that act directs the Board and that payment may be made for “ * * * HUD to simplify and improve the goods or facilities actually furnished or disclosures given in a home mortgage for services actually performed * * In December 1996, the Board and transaction subject to TILA and RESPA, HUD jointly published for comment an and to create a single disclosure that advance notice of proposed rulemaking w ill satisfy the requirements of both on the issue of simplifying and statutes, if possible. If legislation is Federal Register / Vol. 62, No. 138 / Friday, July 18, 1997 / Proposed Rules combining the disclosure requirements of RESPA and TILA (61 FR 69055, Dec. 31,1996). The notice requested comment on both regulatory and statutory changes to improve the current disclosure scheme. The comments that were received covered a wide range of issues. Nearly all of the recommendations for reconciling the two regulations require legislative action (e.g. changes to the timing of disclosures under the two statutes). The remainder of the recommendations generally involved small changes that could produce only minor improvements that likely would not be worth the corresponding compliance costs for creditors associated with reprinting forms or retraining personnel. HUD is separately considering whether to propose minor simplification amendments to various RESPA-required forms. HUD will also weigh the merits of proposing such changes in light of the associated costs. On April 2,1997, the Board published a second notice summarizing the comments and reopening the comment period to allow interested parties more time to comment on potential legislative action. (62 FR 15624) The Board determined, in consultation with HUD, that beyond the revisions that have been made over the past several years, without legislative action any additional regulatory changes would be inadequate to achieve the goal of harmonizing TILA and RESPA to any significant degree. The notice stated that the Agencies would consider holding public meetings, as was suggested by many of the commenters, to help in developing legislative recommendations. II. Public Forum Although TILA and RESPA both regulate mortgage transactions, they differ in fundamental ways. In crafting legislative recommendations, the Board and HUD believe that it is important to examine the goals of RESPA and TILA, and what problems this dual—but not identical—statutory scheme presents. Therefore, the Board and HUD w ill hold a joint public forum on July 30, 1997, to help the Agencies in their consideration of issues to be addressed in the legislative recommendations. The forum w ill be held at the Board’s offices in Washington, D.C. The Agencies have invited speakers representing industry and consumer interests to participate in the discussion, which w ill be followed by an open session for other members of the public to express their views. At the forum, the Board’s staff will present preliminary findings of a survey on consumer credit shopping that was commissioned by the Board. Each invited speaker w ill be given an opportunity to make a brief introductory statement. The invitees w ill be asked to discuss a number of topics, including (1) consumer credit shopping behavior, (2) the goals of TILA and RESPA, and whether the current statutory and regulatory scheme for home mortgage lending satisfies those goals, and (3) whether significant improvement can be made to the existing provisions of TILA and RESPA, or whether there is a need for more comprehensive reform. There w ill be an opportunity during the open session for other attendees to offer the Agencies their views on these issues. Oral statements in this open session should be brief to allow as many speakers as possible to offer their views. Written statements of any length may be submitted for the record, and are due by August 15, 1997. Dated: July 14, 1997. N icolas P. Retsinas, Assistant Secretary for Housing-Federal Housing Commissioner. By order of the Board of Governors of the Federal Reserve System, July 14,1997. W illiam W. W iles, Secretary o f the Board. [FR Doc. 97-18940 Filed 7-17-97; 8:45 am] B IL L I N G C O D E 6 2 1 0 - 0 1 - P (V i) B IL L I N G C O D E 4 2 1 0 - 2 7 —P (V 2 ) 38491
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