The Federal Reserve
said Tuesday it would not finalize three disclosure rules under Regulation Z before transferring rulemaking authority to the Consumer Financial Protection Bureau
Reg Z is the regulatory statute, which went into effect
over the weekend, that implements the Truth in Lending Act. Through it, the Fed was granted the authority to write new rules how terms in a mortgage loan would be disclosed to consumers. But, according to the Dodd-Frank Act, rulemaking authority under TILA will be granted to the still forming CFPB when the bureau opens its doors July 21. Though, a director has yet to be appointed
Two of the proposals were issued in August 2009 and the other in September. Within the three proposals are rules on how, among other things, lenders explain to consumers their rights to rescind certain loans. The rule would have also clarified the responsibilities of the creditor if the consumer did. The September rule also includes changes to how terms for reverse mortgages and modifications are disclosed, and detailed changes to how these products are advertised and sold.
The Fed received more than 5,000 comments from industry players regarding these delayed rules.
The central bank made its decision because such changes to TILA and the Real Estate Settlement and Procedures Act would have been subject to further revisions by the new bureau. Under Dodd-Frank, the CFPB is required to combine the TILA and RESPA disclosures and issue a proposal 18 months after the transfer date on that combination.
"In light of that mandate, and the upcoming transfer date, the board has carefully evaluated whether there would be public benefit in proceeding with the rulemakings initiated with the board's August 2009 and September 2010 proposals at this time," the Fed said.
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