BOARD OF GOVERNORS 

OF' THE 

FEDERAL RESERVE SYSTEM 

WASHINGTON, O. C:. 20551 

December 23, 2013 

SANDRA F. BRAUNSTEIN 

DIRECTOR 

DIVISION OF CONSUMER 

AND COMMUNITY AFFAIRS 

CA 13-25 

TO THE OFFICERS AND MANAGERS IN CHARGE OF CONSUMER AFFAIRS 

SECTIONS: 

SUBJECT: Revised Interagency Examination Procedures for Regulation Z and 

Applicability of CA Letter 09-12 

Applicability to Community Banking Organizations: This guidance applies to all state 

member banks, including those with $10 billion or less in consolidated assets. 

The Task Force on Consumer Compliance of the Federal Financial Institutions 

Examination Council recently approved the attached interagency examination procedures for 

Regulation Z - Truth in Lending. These revised examination procedures supersede the 

Regulation Z interagency examination procedures transmitted with CA Letter 13-12. 

The attached procedures reflect recent amendments to Regulation Z, issued by the 

Consumer Financial Protection Bureau (CFPB). The CFPB has published a series of 

rulemakings to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act, 

including rules regarding ability-to-repay and qualified mortgage standards (ATRJQM), loan 

originator compensation and qualification, servicing, loans subject to HOEPA, and escrows. 

These rules will generally go into effect on January 10, 2014. The attached procedures 

incorporate these amendments to Regulation Z finalized through October 1, 2013, as well as an 

interim final rule issued on October 15, 2013. The procedures also include an updated examiner 

points-and-fees worksheet for high-cost loans under 12 CFR § 1026.32. 

The attached procedures also incorporate interagency amendments to Regulation Z 

regarding appraisals finalized in January 2013 and generally effective on January 18, 2014. 

However, the attached procedures do not reflect revisions to the appraisals rules issued on 

December 12, 2013. These revisions provide additional exemptions for loans of $25,000 or less 

and for certain streamlined refinances. These revisions also contain special provisions applicable 

to manufactured home loans and extend the mandatory compliance date for those provisions 

until July 18, 2015. Updated procedures reflecting the December appraisals rulemaking will be 

forthcoming. 

Separately, we have received questions about the continued application of CA Letter 09-

12, which provides guidance concerning how the Board's 2009 Regulation Z repayment ability 

rule applies to certain higher-priced balloon mortgage loans. The CFPB's new ability-to-repay 

rule will replace the existing ability-to-repay rule. Accordingly, CA Letter 09-12 applies only to 

loans where the application was received before January 10, 2014 (the effective date ofthe new 
ability-to-repay rules). CA Letter 09-12 will not apply to loan applications received on or after 

that date. 

If you have any questions, please contact Dana Miller, Senior Supervisory Consumer 

Financial Services Analyst, at (202) 452-2751, or Amy Henderson, Managing Counsel, at (202) 

452-3140. 

Sincerely, 

Attachment: Revised Interagency Examination Procedures for Regulation Z 

Supersedes: CA 13-12 "Revised Interagency Examination Procedures for Regulation Z" 

(August 21, 2013) 

Cross-Reference: CA 09-12 "Short-Term Balloon Loans and Regulation Z Repayment Ability 

Requirement for Higher-Priced Mortgage Loans" (November 9, 2009) 

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