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Circular Letters

Circular Letter 5635

August 16, 2004

To: All Member Banks and Others Concerned in the Third Federal Reserve District

Attention: Chief Executive Officer and Chief Compliance Officer



The Board of Governors of the Federal Reserve System has published its annual adjustment of the dollar amount that triggers additional disclosure requirements under the Truth in Lending Act for home mortgage loans that bear rates or fees above a certain amount.

The dollar amount of the fee-based trigger has been adjusted to $510 for 2005 based on the annual percentage change reflected in the Consumer Price Index that was in effect on June 1, 2004.

The Home Ownership and Equity Protection Act of 1994 restricts credit terms such as balloon payments and requires additional disclosures when total points and fees payable by the consumer exceed the fee-based trigger (initially set at $400 and adjusted annually) or 8 percent of the total loan amount, whichever is larger.

The Federal Register notice, published August 16, 2004, is available here PDF Icon (116 KB, 3 pages).

Date: The adjustment is effective January 1, 2005.

For Further Information: Minh-Duc T. Le, Senior Staff Attorney, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452-3667. For users of Telecommunications Device for the Deaf (“TDD”) only, contact (202) 263-4869.