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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: | |
| Office: | OE |
| Signed By: | McKenzie, Thomas |
| FCA Contact Person: | Stephens, David |
| Contact Phone: | 703-883-4412 |
| List of Attachments: | Attachment (99 KB PDF) |
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 cohnj@fca.gov; and/or David Stephens, Office of Examination, at (703) 883-4412, or by e-mail at stephensd@fca.gov.