The Truth in Lending Act (TILA) and Regulation Z ensure adequate disclosure of the costs and terms of credit to consumers. For open-end credit, such as credit cards and home-equity lines of credit (HELOCs), creditors are required to disclose information about the initial costs and terms and to provide periodic statements of account activity, notices of changes in terms, and statements of rights concerning billing error procedures. For closed-end loans, such as mortgage and installment loans, cost disclosures are required prior to and at consummation. Special disclosures are required for certain products, such as reverse mortgages and high cost mortgages with rates and fees above specified thresholds. TILA and Regulation Z also contain rules concerning credit advertising.
Creditors are required to comply with Regulation Zâs disclosure and other requirements unless the transaction is exempt. Regulation Z generally does not apply to consumer credit transactions that exceed a threshold amount, adjusted annually for inflation. However, regardless of the amount of credit extended, Regulation Z applies to (1) consumer credit secured by real property, (2) consumer credit secured by personal property used or expected to be used as the principal swelling of the consumer, and (3) private student loans.
On July 21, 2011, rulemaking authority for TILA was transferred from the Board to the CFPB under the Dodd-Frank Act. In December 2011, the CFPB published an interim final rule establishing its own Regulation Z to implement TILA at 12 C.F.R. part 1026 that substantially duplicated the Federal Reserveâs Regulation Z. The CFPB has subsequently amended its Regulation Z to adopt rules required by the Dodd-Frank Act.
The Board proposes to modify Reg Z to account for preexisting regulatory requirements that were not included separately in prior notices and to account for the requirements of new rules issued during the past three years. A summary of the changes follows below.
First, the Board proposes to modify Reg Z to account for new required rules issued by the CFPB to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). These include:
* Combined closed-end mortgage disclosures under TILA and the Real Estate Settlement Procedures Act (RESPA),
* A requirement that creditors must run a credit check on loan originators,
* Requirements that creditors verify documents used to determine âqualified mortgageâ status,
* Mortgage payoff statement requirements,
* Revised and additional adjustable rate mortgage (ARM) disclosures,
* Periodic statements for closed-end residential mortgages, and
* Revised and additional disclosures for high-cost mortgages under the Home Ownership Equity Protection Act (HOEPA).
Second, the Board proposes to clarify and add several information collection elements for regulatory requirements that previously were accounted for as part of a more general category of information collections or were not previously included because institutions for whose burden the Board accounts did not engage in the relevant line of business to a material degree. These include:
* A requirement that creditors of open-end (not home-secured) credit have policies to comply with requirements for the timely settlement of estate debts,
* A requirement that creditors of open-end (not home-secured) credit have policies to comply with requirements to account for a consumerâs ability to repay a the debt,
* Separate disclosures for open-end (not home-secured) and open-end (home-secured) credit, and
* Reverse mortgage disclosures.
Other proposed changes to Reg Z are non-substantive and intended for clarity.
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
RegZ_20160527_omb.pdf
Open-End (Not Home-Secured) Credit: Applications and solicitations (Section 1026.60)