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Agencies Propose Changes for Determining TILA Exemption

hands-writingThe Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, and the Consumer Financial Protection Bureau (CFPB) have jointly issued a proposal detailing the methodology that will be used to determine the thresholds at which certain small loans will be exempt from the Truth in Lending Act (TILA). The agencies are seeking public comment on their proposal.

The three agencies proposed rules amending interpretations for regulations implementing Section 129H of the Truth in Lending Act, which adds special requirements for higher-priced mortgage loans or “higher risk mortgages.” The final rules for implementing these requirements were jointly issued by the OCC, the Fed, the CFPB, the FDIC, the National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA) in January 2014.

Those rules issued two and a half years ago included requiring creditors to obtain a written appraisal based on a physical visit to the interior of the home before a high-priced mortgage loan is approved.

An exemption for loans of $25,000 or less was included in the rules for implementing these appraisal requirements; the rules provide that the exemption threshold will be adjusted based on inflation—specifically, to reflect increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CIP-W), according to the agencies.

The agencies are proposing a new method for calculating the exemption threshold that will keep pace with the CIP-W and clarifies that if there is no increase in the CIP-W during a given year, the exemption threshold should not be adjusted from the prior year.

Comments on the proposed rule are due 30 days after it is published in the Federal Register, which the agencies said they expect shortly. To comment on the proposal, email regs.comments@occ.treas.gov.

Click here to view the agencies’ proposal.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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