Fed Raises Fee Trigger for TILA and HOEPA Disclosures

The ""Federal Reserve"":http://www.federalreserve.gov is raising the dollar amount of mortgage fees that triggers additional disclosure requirements under the Truth in Lending Act (TILA) and the Home Ownership and Equity Protection Act (HOEPA).

On Monday, the central bank's board of governors ""published its annual adjustment"":http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110613d1.pdf to the rule, bumping the[IMAGE] [COLUMN_BREAK]

amount of the fee-based trigger up 3 percent to $611, effective January 1, 2012. Currently that threshold is set at $592.

The Federal Reserve board is required to adjust the dollar amount that triggers requirements for certain home loan disclosures every year, based on the annual percentage change reflected in the consumer price index.

The adjustment does not affect the rules for ""higher-priced mortgage loans"" adopted by the board in July 2008, the central bank explained. 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 or 8 percent of the total loan amount, whichever is larger.

The statute requires creditors to comply with the HOEPA requirements when points and fees are more than this designated limit.