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.

 

Lawmakers Close to Deal on New Federal Consumer Financial Protection Bureau

June 23, 2010:  The Los Angeles Times reports that Senate and House negotiators are close to reaching agreement on the creation of a new consumer protection agency as part of the financial services overhaul legislation working its way through Congress and expected to be presented to President Obama for signature within the coming weeks.  According to the report, lawmakers are working out a compromise that would mostly exempt car dealers from the new agency's oversight.  Legislators have reportedly agreed to house the independent agency at the Federal Reserve.