[Federal Register Volume 64, Number 214 (Friday, November 5, 1999)]
[Rules and Regulations]
[Page 60335]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29003]


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FEDERAL RESERVE SYSTEM

12 CFR Part 226

[Regulation Z; Docket No. R-1051]


Truth in Lending

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice of adjustment of dollar amount.

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SUMMARY: The Board is publishing an adjustment to the dollar amount 
that triggers Regulation Z (Truth in Lending) requirements for certain 
mortgages bearing fees above a certain amount. The Home Ownership and 
Equity Protection Act of 1994 sets forth rules for home-secured loans 
in which the total points and fees payable by the consumer at or before 
loan consummation exceed the greater of $400 or 8 percent of the total 
loan amount. The Board has annually adjusted the $400 amount based on 
the annual percentage change reflected in the Consumer Price Index that 
is in effect on June 1. The adjustment for 2000 is $451.
EFFECTIVE DATE: January 1, 2000.

FOR FURTHER INFORMATION CONTACT: Michael Hentrel, Staff Attorney, 
Division of Consumer and Community Affairs, Board of Governors of the 
Federal Reserve System, at (202) 452-3667. For the users of 
Telecommunications Device for the Deaf only, please contact Diane 
Jenkins at (202) 452-3544.

SUPPLEMENTARY INFORMATION:

Background

    The Truth in Lending Act (TILA; 15 U.S.C. 1601-1666j) requires 
creditors to disclose credit terms and the cost of consumer credit as 
an annual percentage rate. The act requires additional disclosures for 
loans secured by a consumer's home, and permits consumers to cancel 
certain transactions that involve their principal dwelling. TILA is 
implemented by the Board's Regulation Z (12 CFR part 226).
    On March 24, 1995, the Board published amendments to Regulation Z 
implementing the Home Ownership and Equity Protection Act of 1994 
(HOEPA), contained in the Riegle Community Development and Regulatory 
Improvement Act of 1994, Pub. L. 103-325, 108 Stat. 2160 (60 FR 15463). 
These amendments, which became effective on October 1, 1995, are 
contained in Sec. 226.32 of the regulation and impose additional 
disclosure requirements and substantive limitations on certain closed-
end mortgage loans bearing rates or fees above a certain percentage or 
amount. As enacted, the statute requires creditors to comply with the 
HOEPA rules if the total points and fees payable by the consumer at or 
before loan consummation exceed the greater of $400 or 8 percent of the 
total loan amount. TILA and Regulation Z provide that the $400 figure 
shall be adjusted annually on January 1 by the annual percentage change 
in the Consumer Price Index (CPI) that was reported on the preceding 
June 1. (15 U.S.C. 1602(aa)(3) and 12 CFR 226.32(a)(1)(ii)). The Board 
adjusted the $400 amount to $441 for 1999.
    The Bureau of Labor Statistics publishes consumer-based indices 
monthly, but does not ``report'' a CPI change on June 1; adjustments 
are reported in the middle of each month. The Board uses the CPI-U 
index, which is based on all urban consumers and represents 
approximately 80 percent of the U.S. population, as the index for 
adjusting the $400 dollar figure. The adjustment to the CPI-U index 
reported by the Bureau of Labor Statistics on May 15, 1999, was the 
CPI-U index ``in effect'' on June 1, and reflects the percentage 
increase from April 1998 to April 1999. The adjustment to the $400 
figure below reflects a 2.3 percent increase in the CPI-U index for 
this period and is rounded to whole dollars for ease of compliance.

Adjustment

    For the reasons set forth in the preamble, for purposes of 
determining whether a mortgage transaction is covered by 12 CFR 226.32 
(based on the total points and fees payable by the consumer at or 
before loan consummation), a loan is covered if the points and fees 
exceed the greater of $451 or 8 percent of the total loan amount, 
effective January 1, 2000.

    By order of the Board of Governors of the Federal Reserve 
System, acting through the Secretary of the Board under delegated 
authority, November 1, 1999.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 99-29003 Filed 11-4-99; 8:45 am]
BILLING CODE 6210-01-P