Surveying Developments in Consumer Finance Regulation
A number of significant legislative changes occurred in 2009 related to consumer finance regulation.
The most significant potential change—the Consumer Financial Protection Agency Act—is still in flux as it moves through the U.S. Senate. However, the version of the CFPA passed by the U.S. House contains several provisions of which every practitioner should be aware. New regulations governing credit card products and overdraft fees will also significantly impact consumer finance practice.
See a summary of recent developments in consumer finance regulation.
Fed Issues Final Credit Card Rule
The Federal Reserve has issued its final rules amending Regulation Z, which implements the Truth in Lending Act, pursuant to the Credit CARD Act of 2009. Previous legislative efforts to expedite the effective date of the CARD Act resulted in no changes.
Among other things, the final rule, effective February 22, 2010, will:
• limit the application of increased rates to existing credit card balances;
• require credit card issuers to consider a consumer’s ability to make the required payments;
• establish special requirements for extensions of credit to consumers who are under the age of 21; and
• limit the assessment of fees for exceeding the credit limit on a credit card account.
The Fed has posted a summary of the rule changes for consumers.
Revised RESPA Mortgage Disclosures Take Effect
New regulations promulgated by the U.S. Department of Housing and Urban Development in November 2008 to revise RESPA disclosures took effect on January 1, 2010. Among other things, the new RESPA final rule requires mortgage issuers to use a new HUD-1 settlement statement and a new Good Faith Estimate. To assist compliance, HUD has issued a list of answers to frequently asked questions as well as new instructions for HUD-1 and GFE forms. HUD has also issued a revised settlement booklet to educate consumers about mortgage products and the financial impact of buying a home.
