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The Federal Reserve Board and the Department of Housing and Urban Development will hold a public forum to give interested parties an opportunity to present their views concerning the streamlining and reform of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).
The public forum will be held on Wednesday, July 30, from 8:15 a.m. until 4:30 p.m. in Dining Room E on the Terrace level of the Federal Reserve Board's Martin Building, located on C Street Northwest between 20th and 21st Streets. The Economic Growth and Regulatory Paperwork Reduction Act of 1996 directs the agencies to submit legislative recommendations to the Congress on how to simplify and improve consumer disclosures under TILA and RESPA if the disclosures cannot be simplified through regulatory change. The two agencies have concluded that meaningful simplification of the disclosures can only come about through statutory revisions. Interested parties unable to attend the forum or wishing to provide written views on the issues raised in the attached notice may submit comments by August 15. Comments may be submitted to either agency. The Board's notice is attached.
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FEDERAL RESERVE SYSTEM
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
AGENCIES: Office of the Assistant Secretary for Housing-Federal Housing Commissioner (HUD); Board of Governors of the Federal Reserve System (the Board) (collectively, the Agencies). ACTION: Notice of Public Forum. SUMMARY: The Board and HUD will hold a public forum concerning the streamlining and reform of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The Economic Growth and Regulatory Paperwork Reduction Act of 1996 directs the Agencies to submit legislative recommendations to the Congress on how to simplify and improve consumer disclosures under RESPA and TILA if the disclosures cannot be simplified through regulatory change. The Agencies have concluded that meaningful simplification of the disclosures can only come about through statutory revisions. In addition, some have suggested that more effective protection of consumers from adverse steering and unnecessary costs, as well as greater certainty about permitted and prohibited behavior, might be achieved through reform of other provisions of RESPA. The public forum is intended to give interested parties an opportunity to discuss their views on statutory reform with the Agencies.
DATES: Public Forum. Wednesday, July 30, 1997, 8:15 a.m. to 4:30 p.m.
ADDRESSES: Public Forum. Terrace Level, Room E of the Federal Reserve Board's Martin Building, C Street Northwest, between 20th and 21st Streets, Washington, DC. Board: Comments submitted to the Board should refer to Docket No. R-0979, and may be mailed to William W. Wiles, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW, Washington, DC 20551. Comments also may be delivered to Room B-2222 of the Eccles Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the guard station in the Eccles building courtyard on 20th Street, NW (between Constitution Avenue and C Street) at any time. When possible, comment letters should use a standard courier typeface with a type size of 10 or 12 characters per inch. This will enable the Board to convert the text into machine-readable form through electronic scanning, and will facilitate automated retrieval of comments for review. Also, if accompanied by an original document in paper form, comments may be submitted on 3� inch or 5� inch computer diskettes in any IBM-compatible DOS-based format. Comments may be inspected in Room MP-500 of the Martin Building between 9:00 a.m. and 5:00 p.m. weekdays, except as provided in 12 CFR 261.8 of the Board's Rules Regarding Availability of Information. HUD: Comments to HUD should be addressed to the Rules Docket Clerk, Office of General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street, SW, Washington, DC 20410-0500. Communications should refer to the above docket number and title. Facsimile (FAX) comments are not acceptable. Comments received will be available for public inspection and copying between 7:30 a.m. and 5:30 p.m. weekdays at the above address.
FOR FURTHER INFORMATION CONTACT: HUD: David R. Williamson, Director, Officer of Consumer and Regulatory Affairs, Room 9146, (202) 708-4560; or for legal questions, Kenneth A. Markison, Assistant General Counsel for GSE/RESPA, Grant E. Mitchell, Senior Attorney for RESPA, or Rodrigo J. Alba, Attorney, Office of General Counsel, Room 9262, (202) 708-1550. For hearing- and speech-impaired persons, these numbers may be accessed via TTY (text telephone) by calling the Federal Information Relay Service at 1-800-877-8339. The address for the above-listed persons is: Department of Housing and Urban Development, 451 Seventh Street, SW, Washington, D.C. 20410. The telephone numbers for the Agencies are not toll-free.
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SUPPLEMENTARY INFORMATION:
I. Background TILA is a comprehensive statute that covers all types of consumer credit transactions. The act's goal is to help consumers understand credit terms and shop for credit by requiring creditors to provide uniform credit disclosures. TILA is primarily a disclosure statute, though it contains some substantive provisions. TILA disclosures focus primarily on the costs imposed by a creditor and the terms of a credit obligation. The law requires the disclosure of two terms thought to be key in aiding consumers in comparison shopping for credit--the finance charge and the annual percentage rate (APR). The finance charge is intended to reflect the dollar amount of the cost of credit; the APR is the cost of the credit expressed as a yearly rate. TILA also requires, among other things, the disclosure of a payment schedule, whether a creditor will impose a penalty if a loan is prepaid, whether a loan may be assumed, and the fee for a late payment. Finally, TILA provides substantive protections for certain home-secured loans such as prohibitions on certain contract terms, and the right to cancel the transaction. RESPA was enacted in large measure to ensure that the home-buying public is afforded timely and effective information about the costs of settlement in mortgage transactions, and to eliminate kickbacks and referral fees that tend to increase unnecessarily the cost of settlement services. To achieve these goals, RESPA mandates disclosures at various points in the home financing process for transactions involving "federally related mortgage loans," which include most financial transactions creating a lien on owner-occupied residential structures. RESPA disclosures focus on the fees for services required in home mortgage transactions and require an itemization of all costs associated with settlement. RESPA also imposes certain restrictions on payments among settlement service providers (such as lenders, appraisers, and title companies). Section 8(a) of RESPA prohibits compensation for the referral of settlement service business; section 8(b) prohibits unearned fees and fee splitting arrangements. Section 8(c)(2) of RESPA, however, provides that payment may be made for ". . . goods or facilities actually furnished or for services actually performed . . . ." In December 1996, the Board and HUD jointly published for comment an advance notice of proposed rulemaking on the issue of simplifying and combining the disclosure requirements of RESPA and TILA (61 FR 69055, Dec. 31, 1996). The notice requested comment on both regulatory and statutory changes to improve the current disclosure scheme. The comments that were received covered a wide range of issues. Nearly all of the recommendations for reconciling the two regulations require legislative action (e.g. changes to the timing of disclosures under the two statutes). The remainder of the recommendations generally involved small changes that could produce only minor improvements that likely would not be worth the corresponding compliance costs for creditors associated with reprinting forms or retraining personnel. HUD is separately considering whether to propose minor simplification amendments to various RESPA-required forms. HUD will also weigh the merits of proposing such changes in light of the associated costs. On April 2, 1997, the Board published a second notice summarizing the comments and reopening the comment period to allow interested parties more time to comment on potential legislative action. (62 FR 15624) The Board determined, in consultation with HUD, that beyond the revisions that have been made over the past several years, without legislative action any additional regulatory changes would be inadequate to achieve the goal of harmonizing TILA and RESPA to any significant degree. The notice stated that the Agencies would consider holding public meetings, as was suggested by many of the commenters, to help in developing legislative recommendations. II. Public Forum At the forum, the Board's staff will present preliminary findings of a survey on consumer credit shopping that was commissioned by the Board. Each invited speaker will be given an opportunity to make a brief introductory statement. The invitees will be asked to discuss a number of topics, including (1) consumer credit shopping behavior, (2) the goals of TILA and RESPA, and whether the current statutory and regulatory scheme for home mortgage lending satisfies those goals, and (3) whether significant improvement can be made to the existing provisions of TILA and RESPA, or whether there is a need for more comprehensive reform. There will be an opportunity during the open session for other attendees to offer the Agencies their views on these issues. Oral statements in this open session should be brief to allow as many speakers as possible to offer their views. Written statements of any length may be submitted for the record, and are due by August 15, 1997.
(signed) Nicolas P. Retsinas
Nicolas P. Retsinas By order of the Board of Governors of the Federal Reserve System, July 14, 1997.
(signed) William W. Wiles
William W. Wiles |
1997 Banking and consumer regulatory policy
