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Fed extends TILA Consumer Leasing Act
WASHINGTON (3/28/11)--The Federal Reserve on Friday officially approved amendments to Regulation Z and Regulation M that would expand consumer protection rules to address credit transactions and high-value leases. The Fed amendments implement portions of the Dodd-Frank Wall Street Reform Act. The amendments will become effective on July 21. The new rule will increase the threshold for exempt consumer credit transactions under the Truth in Lending Act (TILA)/Regulation Z from $25,000 to $50,000. The threshold for leases under the Consumer Leasing Act (CLA) and Regulation M will be increased to the same level. These thresholds will be adjusted annually starting on Dec. 31. Consumer credit transactions of up to $25,000 are currently subject to several disclosure requirements under TILA and Regulation Z. Private education loans and loans secured by real property, such as mortgages, are subject to TILA regardless of the amount of the loan. Regulation Z implements the Home Ownership and Equity Protection Act (HOEPA) by adjusting the thresholds used to determine which loans are covered under HOEPA. The CLA requires lessors to provide consumers with disclosures regarding the cost and other terms of personal property leases, such as an automobile lease. The Credit Union National Association (CUNA) in a pair of comment letters issued earlier this year urged the Fed to minimize the regulatory burdens associated with the proposal, particularly for small credit unions. CUNA has noted that the final regulations show some improvements compared to the proposed rules, such as allowing an initial extension of consumer credit to be made after account opening. This change was suggestd in CUNA's comment letters.
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