Comment Call Regarding Proposed Amendments to the Home Mortgage Provisions of Regulation Z

CUNA
January 24, 2008 | COMMENTS

The Federal Reserve Board (Fed) has issued proposed amendments to Regulation Z and the official staff commentary that will establish new protections for consumers from unfair or deceptive home mortgage lending and advertising practices. The Home Ownership Equity Protection Act (HOEPA) provides the Fed with the authority to issue these rules.

The proposal would establish a new category of “higher-priced mortgages,” which would include those with annual percentage rates (APRs) that exceed the yield on Treasury securities of comparable maturity by at least three percentage points for first-lien loans, or five percentage points for subordinate-lien loans. This threshold should include nearly all subprime loans. For these loans, the proposal will require lenders to consider the borrower's ability to repay the loan, require verification of income and assets, impose limits on prepayment penalties, and require escrow accounts for taxes and insurance.

For most other mortgage loans, including the “higher-priced mortgage loans,” the proposal will restrict yield spread premiums, prohibit certain servicing practices, prohibit lenders from coercing appraisers, prohibit certain misleading and deceptive advertising, and require Truth in Lending Act (TILA) disclosures within three days after the mortgage application is submitted and before fees are charged, except for a credit report fee. You can access the entire proposal on the internet by clicking here.

Comments on the proposal are due by April 8, 2008. Please submit your comments to CUNA by March 18, 2008. Please email your comments to CUNA Senior Vice President and Deputy General Counsel Mary Dunn at mdunn@cuna.com or to Senior Assistant General Counsel Jeff Bloch at jblock@cuna.com.