Fed Issues Final New Credit Card Rules
The Federal Reserve yesterday issued a press release and highlights detailing its final rules revising regulation AA, revising regulation DD, and revising regulation Z. The new rules significantly alter the current regulations governing card issuers' payment billing cycles, allocation of payments, interest rate increases, security deposits and fees, credit card holds, and firm offers of credit. The new rules also make significant changes to overdraft protection linked to deposit accounts, including imposing an opt-out provision, eliminating overdraft charges resulting from debit holds, and changing required overdraft fee disclosures.
The revised regulation AA and regulation Z take effect on July 1, 2010. The revised regulation DD takes effect on January 1, 2010. Separately, the Fed seeks public comment on proposed amendments to Regulation E governing electronic funds transfers.
The Office of Thrift Supervision also announced and detailed the similar new rules for its regulated entities, as did the National Credit Union Administration.
Fed Seeks Public Comment on MDIA TILA Revisions
Last week, the Federal Reserve released its latest proposed revisions to Regulation Z, the Truth In Lending Act, to implement the July 2008 Mortgage Disclosure Improvement Act ("MDIA"), enacted as part of the Housing and Economic Recovery Act of 2008. The comment period for the proposed rule closes on January 23, 2009.
Among other things, the proposed rule implements the MDIA's requirements that lenders give good faith estimates within three business days of receiving an application for a mortgage and before collecting any fees, other than credit report fees. The MDIA broadens the Fed's July 2008 final rule by extending these requirements to homes other than a borrower's principal dwelling. The proposed rule also requires lenders to wait seven days to close a loan after providing the disclosures. The proposed rule also requires new disclosures of a revised annual percentage rate, and to wait three days before closing the loan if the APR changes in the interim beyond a minimum amount.
The proposed rule would become effective on July 30, 2009.
