Regulations Z and M Exemptions Adjusted to $51,800
August 30, 2011
The Dodd-Frank Act raised the threshold for consumer credit transactions that are exempt from the Truth in Lending Act and Consumer Leasing Act from $25,000 to $50,000. Earlier this year the Federal Reserve Board issued rules implementing these changes (the “April 4 Rules”).
See CBA’s Regulatory Compliance Bulletins, Regulation Z Exemption Adjusted Pursuant to Dodd-Frank Act and Regulation M Exemption Adjusted Pursuant to Dodd-Frank Act, both dated March 29, 2011. The Dodd-Frank Act also required that the threshold be adjusted annually in accordance with changes to the Consumer Price Index.
Pursuant to that authority, the Board is now issuing final rules increasing the thresholds of both regulations based on the annual percentage increase in the CPI as of June 1, 2011 from $50,000 to $51,800 effective January 1, 2012.
Remember that, with respect to open end accounts subject to Regulation Z, if a creditor makes an initial extension of credit or a firm written commitment that exceeds the threshold in effect at that time of account opening, the account remains exempt regardless of a later increase in the threshold amount. (See Comments at 3(b)-2 of Regulation Z).
A closed end credit that exceeded the threshold amount in effect at the time of consummation also remains exempt regardless of a subsequent increase in the threshold amount. (See Comments at 3(b)-3).
Similarly, if an existing lease is exempt from Regulation M because the total contractual obligation exceeds the threshold amount in effect at the time of consummation, the lease remains exempt regardless of a subsequent increase in the threshold amount. (See Comment 2(e)-9 of Regulation M).
The information contained in this CBA Regulatory Compliance Bulletin is not intended to constitute, and should not be received as, legal advice. Please consult with your counsel for more detailed information applicable to your institution.
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