Financial Services Bulletin: Federal Reserve Seeks Comment on Two Proposals
Read Perkins Coie LLP's 4/21/2011 Financial Service Bulletin regarding two proposed rules for which the Federal Reserve is seeking comment: Financial Services Bulletin (4/21/2011).
One of the proposed rules includes significant changes under Regulation Z, which implements the Truth-in-Lending Act. Under the proposed rule, creditors must determine a consumer's ability to repay a mortgage before making a loan. The proposed rule also implements certain other requirements under the Dodd-Frank Act, including a limitation on prepayment penalties.
The Board is soliciting comment on the proposed rule until July 22, 2011. However, general rulemaking authority for TILA is scheduled to transfer to the new Consumer Financial Protection Bureau on July 21, 2011. Therefore, the Board acknowledged in its press release that this Regulation Z rulemaking will not be finalized by the Board.
TILA and Regulation Z have long been a significant source of consumer lending litigation. The increased regulation of mortgages in the proposed Regulation Z amendments may lead to yet another wave of consumer protection litigation tied to residential mortgages. How impactful the amendments will be, and how they will be enforced and regulated, are important questions that will be answered in time.
