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Informational Memorandum
Subject:Regulation Z Amendments
Date of Memorandum:01/14/1997
Expiration Date:
Signed By:Smith, Roland
FCA Contact Person:Holland, Tom
Contact Phone:703-883-4484
List of Attachments:Two Revisions

January 14, 1997 (Revised)

To: The Chief Executive Officer
All Farm Credit System Institutions

From: Roland E. Smith, Director /s/
Office of Examination

Subject: Regulation Z Amendments

The Farm Credit Administration is distributing two recent revisions to Regulation Z (12 CFR 226 et seq.), which implements the Truth in Lending Act (15 U.S.C. 1601 et seq.). The revisions, published by the Board of Governors of the Federal Reserve System, provide updated guidance to help you interpret the application of Regulation Z.

The first revision (61 FR 49237, September 19, 1996) is being distributed as an attachment to OCC Bulletin 96-62 because the OCC Bulletin includes several helpful flow charts. This revision provides new finance charge tolerances for loans secured by real estate or a dwelling, requires the inclusion of all mortgage broker fees in the finance charge, and clarifies the conditions under which other third-party fees are included in the finance charge. It also includes a revised rescission notice for refinancings and addresses disclosure treatment of fees charged for debt cancellation and guaranteed automobile protection agreements. These revisions became effective October 21, 1996.

The second revision represents the annual adjustment to the dollar amount that triggers additional disclosure for certain types of mortgages under Regulation Z. The Home Ownership and Equity Protection Act of 1994 sets forth rules for creditors offering home-secured loans with total points and fees payable by the consumer at or before loan consummation that exceed the greater of $400 or 8 percent of the total loan amount. This amount is adjusted annually based on the percentage change in the Consumer Price Index as reported on June 1. This amount was adjusted to $412 for 1996 and will now be adjusted to $424 for 1997. This change is effective January 1, 1997, through December 31, 1997.

The attached information should be retained for future reference. If you have questions about this or similar communications issued previously, please call Jerry Erickson in the Office of Examination at (703) 883-4483.