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Informational Memorandum
Subject:Annual Adjustment of Fee-Based Trigger for Additional Mortgage Loan Disclosures
Date of Memorandum:09/19/2008
Expiration Date:
Signed By:McKenzie, Thomas
FCA Contact Person:Stephens, David
Contact Phone:703-883-4412
List of Attachments:Attachment (99 KB PDF)

Informational Memorandum
September 19, 2008 To: Chairman, Board of Directors
Chief Executive Officer
All Farm Credit System Institutions

From: Thomas G. McKenzie, Director and Chief Examiner
Office of Examination

Subject: Annual Adjustment of Fee-Based Trigger for Additional Mortgage Loan Disclosures

On August 5, 2008, the Federal Reserve Board (FRB) published its annual adjustment of the dollar amount of fees that trigger additional disclosure requirements under the Truth in Lending Act for home mortgage loans that bear rates or fees above a certain amount. The fee-based trigger was adjusted to $583 for 2009 based on the annual percentage change reflected in the Consumer Price Index that was in effect on June 1, 2008. The adjustment is effective January 1, 2009. The FRB’s notice is attached below.

This adjustment does not affect the new rules adopted by the FRB in July 2008 for "higher-priced mortgage loans." Coverage of mortgage loans under the July 2008 rules is determined using a different rate-based trigger. (We informed you of these new rules by Informational Memorandum dated August 1, 2008).

The Home Ownership and Equity Protection Act of 1994 restricts credit terms such as balloon payments and requires additional disclosures when total points and fees payable by the consumer exceed the fee-based trigger (initially set at $400 and adjusted annually) or 8 percent of the total loan amount, whichever is larger.

If you have any questions about this Informational Memorandum, please contact Jennifer A. Cohn, Senior Attorney, Office of General Counsel, at (703) 883-4028, or by e-mail at; and/or David Stephens, Office of Examination, at (703) 883-4412, or by e-mail at

Attachment (99 KB PDF)