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#1221761 - 07/24/09 12:38 AM New Reg Z - (released 7/23/09)
Rocky P Offline
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When are they going to stop!

http://www.federalreserve.gov/newsevents/press/bcreg/20090723a.htm

Release Date: July 23, 2009
For immediate release

The Federal Reserve Board on Thursday proposed significant changes to Regulation Z (Truth in Lending) intended to improve the disclosures consumers receive in connection with closed-end mortgages and home-equity lines of credit (HELOCs). These changes, offered for public comment, reflect the result of consumer testing conducted as part of the Board's comprehensive review of the rules for home-secured credit. The amendments would also provide new consumer protections for all home-secured credit.

"Consumers need the proper tools to determine whether a particular mortgage loan is appropriate for their circumstances," said Federal Reserve Chairman Ben S. Bernanke. "It is often said that a home is a family's most important asset, and it is the Federal Reserve's responsibility to see that borrowers receive the information they need to protect that asset."

To shop for and understand the cost of credit, consumers must be able to identify and understand the key terms of the mortgage. In formulating the proposed revisions to Regulation Z, the Board used consumer testing to ensure that the most essential information is provided at a suitable time using content and formats that are clear and conspicuous.

"Our goal is to ensure that consumers receive the information they need, whether they are applying for a fixed-rate mortgage with level payments for 30 years, or an adjustable-rate mortgage with low initial payments that can increase sharply," said Governor Elizabeth A. Duke. "With this in mind, the disclosures would be revised to highlight potentially risky features such as adjustable rates, prepayment penalties, and negative amortization."

Closed-end mortgage disclosures would be revised to highlight potentially risky features such as adjustable rates, prepayment penalties, and negative amortization. The Board's proposal would:

* Improve the disclosure of the annual percentage rate (APR) so it captures most fees and settlement costs paid by consumers;
* Require lenders to show how the consumer's APR compares to the average rate offered to borrowers with excellent credit;
* Require lenders to provide final Truth in Lending Act (TILA) disclosures so that consumers receive them at least three business days before loan closing; and
* Require lenders to show consumers how much their monthly payments might increase, for adjustable-rate mortgages.

The Board will also work with the Department of Housing and Urban Development to make the disclosures mandated by TILA, and HUD's disclosures, required by the Real Estate Settlement Procedures Act, complementary; potentially developing a single disclosure form that creditors could use to satisfy both laws.

In developing the proposed amendments, the Board recognized that disclosures alone may not always be sufficient to protect consumers from unfair practices. To prevent mortgage loan originators from "steering" consumers to more expensive loans, the Board's proposal would:

* Prohibit payments to a mortgage broker or a loan officer that are based on the loan's interest rate or other terms; and
* Prohibit a mortgage broker or loan officer from "steering" consumers to transactions that are not in their interest in order to increase the mortgage broker's or loan officer's compensation.

The rules for home-equity lines of credit would be revised to change the timing, content, and format of the disclosures that creditors provide to consumers at application and throughout the life of such accounts. Currently, consumers receive lengthy, generic disclosures at application. Under the proposal, consumers would receive a new one-page Board publication summarizing basic information and risks regarding HELOCs at application. Shortly after application, consumers would receive new disclosures that reflect the specific terms of their credit plans. In addition, the Board's proposal would:

* Prohibit creditors from terminating an account for payment-related reasons unless the consumer is more than 30 days late in making a payment.
* Provide additional protections related to account suspensions and credit-limit reductions, and reinstatement of accounts.

The Federal Register notices are attached. The comment periods end 120 days after publication of the proposals in the Federal Register, which is expected shortly.
Last edited by Southern Banker; 07/24/09 12:44 AM. Reason: added link
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#1221797 - 07/24/09 12:01 PM Re: New Reg Z - (released 7/23/09) Rocky P
DeeQ Offline
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I know, I am having nightmares! crazy
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#1221814 - 07/24/09 12:37 PM Re: New Reg Z - (released 7/23/09) DeeQ
Book Nerd Offline
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And the draft is over 600 pages long! cry
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#1221823 - 07/24/09 12:42 PM Re: New Reg Z - (released 7/23/09) Book Nerd
waldensouth Offline
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FINALLY ABOVE the gnat line
Well, with those limitations on terminations - previously we've frozen the line if they stop paying on other loans with our bank - it will greatly discourage banks from offering HELOCs to anyone other than the very best customer. It will also be an effective deterrent from opening a HELOC instead of a closed end loan trying to get around the other Reg. z rules.
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#1221869 - 07/24/09 01:27 PM Re: New Reg Z - (released 7/23/09) Book Nerd
Rubaiyat Offline
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Originally Posted By: Laffy Taffy
And the draft is over 600 pages long! cry


There are TWO drafts over 600 pages long! One is for closed end and one is for HELOCs. I have already laughed out loud 4 times just seeing some of the stuff on the first page of each document I've looked at.

Crazy isn't even the right word . . .
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#1221876 - 07/24/09 01:31 PM Re: New Reg Z - (released 7/23/09) Rubaiyat
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Don't read it: just agree to it. Come on, the people are demanding this. We have to get this done--NOW.

grin
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#1221894 - 07/24/09 01:48 PM Re: New Reg Z - (released 7/23/09) Sinatra Fan
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My computer crashed just trying to open a file that big! Almost 700 pages!!!

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#1221935 - 07/24/09 02:16 PM Re: New Reg Z - (released 7/23/09) Sinatra Fan
Dan Persfull Offline
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Originally Posted By: Sinatra Fan
Don't read it: just agree to it. Come on, the people are demanding this. We have to get this done--NOW.

grin


Don't even get me started on these idiots!!!!!!


PS. I hope each of you plans on writing a comment letter concerning these changes. If we don't speak up and just leave it to the "mega" banks and the consumer groups to respond then we as community banks don't stand a chance. And if your bank is seriously considering leaving the consumer mortgage lending business because of these changes then they should be made aware of it. I don't think they have any idea what the impact of these changes will be. They are going to have a tremendous impact on the availability of credit for the "small" markets because there are many community banks that will not have the resources or the man power to implement these changes and remain competitive in the market.
Last edited by Dan Persfull; 07/24/09 02:25 PM.
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#1222074 - 07/24/09 03:51 PM Re: New Reg Z - (released 7/23/09) Dan Persfull
RR Joker Offline
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What is the real hoot is the timing for comments...we'll be so busy getting ready for Phase II of the October 1 changes, we won't have time to work on comment letters...well timed on their part..don'tcha think?
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#1222186 - 07/24/09 05:09 PM Re: New Reg Z - (released 7/23/09) Dan Persfull
Rocky P Offline
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Dan Persfull "Don't even get me started on these idiots!!!!!!

People voted for change and in Washington, we have some of the best politicians that money can buy!
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#1222191 - 07/24/09 05:14 PM Re: New Reg Z - (released 7/23/09) RR Joker
pjs Offline
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Originally Posted By: RR joker
What is the real hoot is the timing for comments...we'll be so busy getting ready for Phase II of the October 1 changes, we won't have time to work on comment letters...well timed on their part..don'tcha think?


You're right!
I'll see what I can do next week when I am off. I can devote some time to reading it and trying to come up with some "professional" comments.

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#1222213 - 07/24/09 05:30 PM Re: New Reg Z - (released 7/23/09) Rocky P
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Originally Posted By: Southern Banker
People voted for change and in Washington, we have some of the best politicians that money can buy!



Welcome to politics - "CHICAGO-STYLE". wink
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#1222233 - 07/24/09 05:49 PM Re: New Reg Z - (released 7/23/09) pjs
AuditorK Offline
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Originally Posted By: pjs
I can devote some time to reading it and trying to come up with some "professional" comments.


It'll be a challenge to provide professional comments and not use a lot of four letter words! mad

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#1222581 - 07/24/09 09:59 PM Re: New Reg Z - (released 7/23/09) AuditorK
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What is the earliest date that a final rule could possibly become effective? I realize that this is subject to a lot of variability, but in a worst case scenario, what date could we be expected to comply? I'm just planning ahead.

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#1222583 - 07/24/09 10:00 PM Re: New Reg Z - (released 7/23/09) AuditorK
#Just Jay Offline
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we were discussing that as well today... especially considering how fast CCARD was pushed through eek
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#1222620 - 07/24/09 11:05 PM Re: New Reg Z - (released 7/23/09) #Just Jay
Tigg Offline
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Looking for My Happy Place....
Let's see, every time Fed puts out a rule, Congress puts through a LAW the makes the process go that much faster. If history is any indication, I would say:

Next week.

grin (Just trying to lighten things up. smile )
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