Legislative Alert – Regulation Z

On August 26, 2009, the Federal Reserve proposed substantial rule changes to Truth in Lending.  The public and those impacted within the lending industry now have a 120-day comment period (which ends December 24, 2009) to register support or opposition, and to make suggestions.  Once this comment period expires, the Federal Reserve will review the input and finalize the rule.

This extensive and sweeping set of proposed changes to Regulation Z would, among other things, directly impact how loan originators are compensated. 

Proposals include:

• Prohibit any originator compensation to be paid from YSP proceeds if the compensation is based on the terms of the loan (including loan amount);
• Prohibit any YSP if the borrower pays origination points.

Currently, your CAMB Government Affairs Regional Vice-Chairs are analyzing the proposed rule.  Our CAMB position and action plan, including suggested language for member comments to the Fed, will be developed based upon this review. 

The proposed rules can be found at http://edocket.access.gpo.gov/2009/pdf/E9-18119.pdf
(See page 43408 and pages 43279 through 43285.)