Staff Accounting Bulletin No. 98

1 6474 Federal Register/ Vol. 63, No. 26/ Monday, February 9, 1998/ Rules and RegulationsFEDERAL RESERVE SYSTEM12 CFR Part 226[Regulation Z; Docket No. R 0998]Truth in LendingAGENCY: Board of Governors of theFederal Reserve : Notice of adjustment of : The Board is publishing anadjustment to the dollar amount thattriggers certain requirements ofRegulation Z (Truth in Lending) formortgages bearing fees above a certainamount. The Home Ownership andEquity Protection Act of 1994 sets forthrules for home-secured loans in whichthe total points and fees payable by theconsumer at or before loanconsummation exceed the greater of$400 or 8 percent of the total loanamount. The Board is required toannually adjust the $400 amount basedon the annual percentage change in theConsumer Price Index as reported onJune 1.

2 The Board adjusted the $400amount to $412 for 1996 and to $424 for1997. The Board has adjusted the dollaramount from $424 to $435 for DATES: January 1, 1998through December 31, FURTHER INFORMATION CONTACT:Michael Hentrel, Staff Attorney,Division of Consumer and CommunityAffairs, Board of Governors of theFederal Reserve System, at (202) 452 3667. For the users ofTelecommunications Device for the Deafonly, please contact Diane Jenkins at(202) 452 INFORMATION:BackgroundThe Truth in Lending Act (TILA; 1601 1666j) requires creditors todisclose credit terms and the cost ofconsumer credit as an annualpercentage rate. The act requiresadditional disclosures for loans securedby a consumer s home, and permitsconsumers to cancel certain transactionsthat involve their principal TILA is implemented by theBoard s Regulation Z (12 CFR part 226).

3 On March 24, 1995, the Boardpublished amendments to Regulation Zimplementing the Home Ownership andEquity Protection Act of 1994 (HOEPA),contained in the Riegle CommunityDevelopment and RegulatoryImprovement Act of 1994, Public Law103 325, 108 Stat. 2160 (60 FR 15463).These amendments, which becameeffective on October 1, 1995, arecontained in of the regulationand impose additional disclosurerequirements and substantivelimitations on certain closed-endmortgage loans bearing rates or feesabove a certain percentage or to fees, creditors are generallyrequired to comply with the rules in if the total points and feespayable by the consumer at or beforeloan consummation exceed the greaterof $400 or 8 percent of the total loanamount.

4 The TILA (15 (aa)(3)) and (a)(1)(ii) ofRegulation Z provide that the $400figure shall be adjusted annually onJanuary 1 by the annual percentagechange in the Consumer Price Index(CPI) that was reported on the precedingJune Bureau of Labor Statisticspublishes consumer-based indicesmonthly, but does not report a CPIchange on June 1; adjustments arereported in the middle of each Board believes the CPI U index,which is based on all urban consumersand represents approximately 80percent of the population, is theappropriate index to use in theadjustment to the $400 dollar adjustment to the $400 dollarfigure reflects the adjustment reportedon May 15, 1997, the rate in effect onJune 1, which states the percentageincrease from April 1996 to April 1995, the Board adjusted the $400amount to $412 for 1996.

5 Last year, theBoard adjusted the $400 amount from$412 to $424, reflecting a percentincrease in the CPI U. During the periodfrom April 1996 to April 1997, the CPI U increased by percent, bringing theadjusted amount to $ The Boardis rounding that number to wholedollars for ease of the reasons set forth in thepreamble, for purposes of determiningwhether a mortgage transaction iscovered by (based on the totalpoints and fees payable by the consumerat or before loan consummation), a loanis covered if the points and fees exceedthe greater of $435 or 8 percent of thetotal loan amount, effective January 1,1998 through December 31, order of the Board of Governors of theFederal Reserve System, February 3, W.

6 Wiles,Secretary of the Board.[FR Doc. 98 3108 Filed 2 6 98; 8:45 am]BILLING CODE 6210 01 PSECURITIES AND EXCHANGECOMMISSION17 CFR Part 211[Release No. SAB 98] Staff Accounting Bulletin No. 98 AGENCY: Securities and : Publication of Staff : This Staff Accounting bulletinrevises the views of the Staff containedin certain topics of the Staff accountingbulletin series to be consistent with theprovisions of certain accountingstandards recently adopted by theFinancial Accounting Standards include: Topic Allocationof Expenses and Related Disclosure inFinancial Statements of Subsidiaries,Divisions or Lesser BusinessComponents of Another Entity; Convertible Securities; Earnings Per Share Computationsin an Initial Public Offering; Income or Loss Applicable toCommon Stock; and Topic Selected Quarterly Financial Data (Item302(a) of Regulation S K).

7 EFFECTIVE DATE: February 3, FURTHER INFORMATION CONTACT:Cody L. Smith, Office of the ChiefAccountant (202 942 4400), Kenneth , Division of CorporationFinance (202 942 2960), Securities andExchange Commission, 450 Fifth Street, , Washington, INFORMATION: Thestatements in Staff Accounting bulletinsare not rules or interpretations of theCommission, nor are they published asbearing the Commission s officialapproval. They represent interpretationsand practices followed by the Divisionof Corporation Finance and the Office ofthe Chief Accountant in administeringthe disclosure requirements of theFederal securities : February 3, H. McFarland,Deputy 211 [AMENDED]Accordingly, Part 211 of Title 17 ofthe Code of Federal Regulations isamended by adding Staff AccountingBulletin No.

8 98 to the table found inSubpart Accounting Bulletin No. 98 The Staff hereby amends the followingin the Staff Accounting Bulletin Series:(a) Topics and , regardingthe allocation of expenses and relat