Fed Adjusts Fee-Based Trigger For Mortgage Disclosures

The Federal Reserve Board (FRB) has published its annual adjustment of the dollar amount of fees that triggers additional disclosure requirements under the Truth in Lending Act and the Home Ownership and Equity Protection Act of 1994 (HOEPA) for home mortgage loans that bear rates or fees above a certain amount.

The dollar amount of the fee-based trigger has been adjusted to $592 for 2011, based on the annual percentage change reflected in the Consumer Price Index that was in effect on June 1.

The adjustment is effective Jan. 1, 2011. This adjustment does not affect the rules for ‘higher-priced mortgage loans’ adopted by the FRB in July 2008. Coverage of mortgage loans under the July 2008 rules is determined using a different rate-based trigger.

HOEPA 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% of the total loan amount, whichever is larger.

SOURCE: The Federal Reserve Board


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