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Regulation Z: CFPB Releases the Final Rule

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The Consumer Financial Protection Bureau (CFPB) has published a “final rule” setting new Truth in Lending Act (TILA) regulations — but only an interim final rule.

The new TILA interim final rule is about the same as the existing TILA final rule, or Regulation Z, except that the new version replaces references to the Federal Reserve Board and the board’s website with references to the CFPB and the CFPB website.

“Notably, this interim final rule does not impose any new substantive obligations on regulated entities,” CFPB officials say in a preamble.

The CFPB is issuing the interim final rule to implement provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act that require it to revise the Fed’s Regulation Z, which implements the federal Truth in Lending Act (TILA).

The Dodd-Frank Act also created the CFPB. The CFPB started its life operating inside the U.S. Treasury Department but is officially an arm of the Federal Reserve Board.

Fed officials decided in February to let the CFPB take charge of revising Regulation Z.

Regulation Z now prohibits a creditor from making a higher-priced mortgage loan without regard to the consumer’s ability to repay the loan.

The Fed released a proposed TILA rule that would expand the scope of the ability-to-repay requirement to cover any consumer credit transaction secured by a dwelling, excluding niche market credit arrangements, such as timeshare plans and reverse mortgages.

The proposed rule includes some references to Dodd-Frank Act provisions that refer to private credit insurance products, such as credit disability insurance.

The proposed rule could have expanded credit life and credit disability cost disclosure requirements.

The new interim final rule does not include any expansion of disclosure requirements or other substantive changes. Although the interim final rule will take effect Dec. 30, requirements that companies change references to the Fed to references to the CFPB in credit forms will not take effect until Jan. 1, 2012, officials say.

Comments are due Feb. 21, 2012.

Similarly, comment app. G–5.viii provides that, until January 1, 2013, issuers using model forms G–10(A) and G–17(A) may use existing references to the Board and its Web site instead of the references to the Bureau and its Web site contained in those models. Thus, by January 1, 2013, certain categories of creditors will need to make one-time revisions to certain credit and charge card disclosure forms.