Section 32 of Regulation Z (12 CFR 226.32) imposes certain disclosure requirements and substantive limitations on creditors in connection with loans that exceed certain rate and/or fee thresholds. Section 32 applies, in part, to certain loans if the total points and fees payable by the consumer at or before loan closing will exceed the greater of eight percent (8%) of the total loan amount, or a dollar amount threshold. When Section 32 was added to Regulation Z in 1995, the dollar amount threshold was $400. However, both the Truth in Lending Act (15 U.S.C. §§1601 - 1666j) and Regulation Z require the Federal Reserve Board (FRB) to make annual adjustments to the dollar amount threshold based on changes in the consumer price index. By 2006, the dollar amount threshold had reached $528. In a final rule and commentary published on August 9, 2006, the FRB announced that effective January 1, 2007, the dollar amount threshold will be increased to $547. As a practical matter, the fixed dollar amount threshold of $547 will apply only if a loan's total loan amount is less than $6,837.50.

To view a copy of the FRB's rule and commentary, click here.

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