Truth in Lending

The year 1996 was the 2nd consecutive year in which substantial revisions were made to Regulation Z. The Federal Reserve Board (FRB) issued regulations implementing Congress' expanded disclosure error tolerances for certain loans secured by real estate or by a dwelling and clarified which mortgage-related fees and charges must be considered finance charges. The FRB also issued additional guidance concerning congressionally mandated preclosing disclosures for certain "high-cost" and "reverse" mortgages. In addition, the FRB issued ambiguous guidance in 1996 concerning the disclosure requirements for creditor-assessed "surcharges" on such things as extended warranty or service contracts. Truth in lending litigation in 1996 focused largely on residential mortgage lending and automobile financing issues.