|
FDIC Federal Register Citations
[Federal Register: October 4, 2006 (Volume 71, Number 192)]
[Notices]
[Page 58672-58678]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04oc06-110]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
[Docket No. 06-12]
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
[Docket No. OP-1267]
FEDERAL DEPOSIT INSURANCE CORPORATION
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
[No. 2006-36]
NATIONAL CREDIT UNION ADMINISTRATION
Proposed Illustrations of Consumer Information for Nontraditional
Mortgage Products
AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC);
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision,
Treasury (OTS); and National Credit Union Administration (NCUA).
ACTION: Notice of proposed illustrations of consumer information with
request for comment.
---------------------------------------------------------------------------------------------------------------------------------------
SUMMARY: The OCC, Board, FDIC, OTS, and NCUA (the Agencies), request
comment on these Proposed Illustrations of Consumer Information for
Nontraditional Mortgage Products. The illustrations are intended to
assist institutions in implementing the consumer protection portion of
the Interagency Guidance on Nontraditional Mortgage Product Risks
(Interagency Guidance), which is being published simultaneously with
this notice. The illustrations are not intended as model forms, and
institutions will not be required to use them. Rather, they are
provided at the request of commenters to the Interagency Guidance to
illustrate the type of information that the Interagency Guidance
contemplates.
DATES: Comments must be submitted on or before December 4, 2006.
ADDRESSES: The Agencies will jointly review all of the comments
submitted. Therefore, interested parties may send comments to any of
the Agencies and need not send comments (or copies) to all of the
Agencies. Please consider submitting your comments by e-mail or fax
since paper mail in the Washington area and at the Agencies is subject
to delay. Interested parties are invited to submit comments to:
OCC: You should include ``OCC'' and Docket Number 06-12 in your
comment. You may submit your comment by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
OCC Web site: http://www.occ.treas.gov. Click on ``Contact
the OCC,'' scroll down and click on ``Comments on Proposed
Regulations.''
E-Mail Address: regs.comments@occ.treas.gov.
Fax: (202) 874-4448.
Mail: Office of the Comptroller of the Currency, 250 E
Street, SW., Mail Stop 1-5, Washington, DC 20219.
Hand Delivery/Courier: 250 E Street, SW., Attn: Public
Information Room, Mail Stop 1-5, Washington, DC 20219.
Instructions: All submissions received must include the agency name
(OCC) and docket number for this notice. In general, the OCC will enter
all comments received into the docket without change, including any
business or personal information that you provide.
You may review comments and other related materials by any of the
following methods:
Viewing Comments Personally: You may personally inspect
and photocopy comments at the OCC's Public Information Room, 250 E
Street, SW., Washington, DC. You can make an appointment to inspect
comments by calling (202) 874-5043.
Viewing Comments Electronically: You may request that we
send you an electronic copy of comments via e-mail or mail you a CD-ROM
containing electronic copies by contacting the OCC at
regs.comments@occ.treas.gov.
Docket Information: You may also request available
background documents and project summaries using the methods described
above.
Board: You may submit comments, identified by Docket No. OP-1267,
by any of the following methods:
Agency Web site: http://www.federalreserve.gov
Follow the instructions for submitting comments at http://www.federalreserve.gov/.
.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: regs.comments@federalreserve.gov. Include the
docket number in the subject line of the message.
Fax: 202/452-3819 or 202/452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons. Accordingly, your comments will
not be edited to remove any identifying or contact information. Public
comments may also be viewed in electronic or paper form in Room MP-500
of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m.
and 5 p.m. on weekdays.
FDIC: You may submit comments by any of the following methods:
Agency Web site: http://www.FDIC.gov/regulations/laws/federal/propose.html.
Follow the instructions for submitting comments
on the Agency Web site.
E-Mail: Comments@FDIC.gov.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW.,
Washington, DC 20429.
Hand Delivery/Courier: Guard station at the rear of the
550 17th Street Building (located on F Street) on business days between
7 a.m. and 5 p.m.
[[Page 58673]]
Instructions: All submissions received must include the agency
name. All comments received will be posted without change to
http://www.FDIC.gov/regulations/laws/federal/propose.html
including any personal information provided.
OTS: You may submit comments, identified by docket number 2006-36,
by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail address: regs.comments@ots.treas.gov. Please
include docket number 2006-36 in the subject line of the message and
include your name and telephone number in the message.
Fax: (202) 906-6518.
Mail: Regulation Comments, Chief Counsel's Office, Office
of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552,
Attention: No. 2006-36.
Hand Delivery/Courier: Guard's Desk, East Lobby Entrance,
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days. Address
envelope as follows: Attention: Regulation Comments, Chief Counsel's
Office, Attention: No. 2006-36.
Instructions: All submissions received must include the agency name
and docket number for this proposed Guidance. All comments received
will be posted without change to the OTS Internet Site at
http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1
including any personal information provided.
Docket: For access to the docket to read background documents or
comments received, go to http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1.
In addition, you may inspect comments
at the OTS's Public Reading Room, 1700 G Street, NW., by appointment.
To make an appointment for access, call (202) 906-5922, send an e-mail
to public.info@ots.treas.gov, or send a facsimile transmission to (202)
906-7755. (Prior notice identifying the materials you will be
requesting will assist us in serving you.) We schedule appointments on
business days between 10 a.m. and 4 p.m. In most cases, appointments
will be available the next business day following the date we receive a
request.
NCUA: You may submit comments by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
NCUA Web site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html.
Follow the
instructions for submitting comments.
E-mail: Address to regcomments@ncua.gov. Include ``[Your
name] Comments on'' in the e-mail subject line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
Mail: Address to Mary Rupp, Secretary of the Board,
National Credit Union Administration, 1775 Duke Street, Alexandria,
Virginia 22314-3428.
Hand Delivery/Courier: Same as mail address.
FOR FURTHER INFORMATION CONTACT: OCC: Michael S. Bylsma, Director,
Stephen Van Meter, Assistant Director, or Kathryn D. Ray, Special
Counsel, Community and Consumer Law Division, (202) 874-5750.
Board: Kathleen C. Ryan, Counsel, Division of Consumer and
Community Affairs, (202) 452-3667; or Andrew Miller, Counsel, Legal
Division, (202) 452-3428. For users of Telecommunications Device for
the Deaf (``TDD'') only, contact (202) 263-4869.
FDIC: April Breslaw, Acting Associate Director, Compliance Policy &
Exam Support Branch, (202) 898-6609, Division of Supervision and
Consumer Protection; or Richard Foley, Counsel, (202) 898-3784, Legal
Division.
OTS: Montrice G. Yakimov, Assistant Managing Director, Compliance
and Consumer Protection Division, (202) 906-6173; or Glenn Gimble,
Senior Project Manager, Compliance and Consumer Protection Division,
(202) 906-7158.
NCUA: Cory Phariss, Program Officer, Examination and Insurance,
(703) 518-6618.
SUPPLEMENTARY INFORMATION:
I. Background
On December 29, 2005, the Agencies published for comment proposed
Interagency Guidance on Nontraditional Mortgage Products, 70 FR 77249
(Dec. 29, 2005). The consumer protection section of the proposed
guidance set forth recommended practices to ensure that consumers have
clear and balanced information about nontraditional mortgages prior to
making a mortgage product choice, such as when lenders provide
promotional materials about nontraditional mortgages or during face-to-
face meetings when consumers are shopping for a mortgage. Additionally,
the proposed guidance recommended that monthly statements given with
payment option mortgages provide information that enables consumers to
make informed payment choices. The Agencies have revised the proposed
guidance based on the comments received, and today are publishing the
final Interagency Guidance in a separate Federal Register notice.
The Interagency Guidance, including the consumer protection
portion, is a set of recommended practices to assist institutions in
addressing particular risks raised by nontraditional mortgage products.
Several commenters to the proposal, including industry trade
associations, encouraged the Agencies to include model or sample
disclosures or other descriptive materials as part of the Interagency
Guidance.
In response to commenters, the Agencies believe that illustrations
of consumer information may be useful to institutions as they seek to
implement the consumer information recommendations of the Interagency
Guidance. The Agencies also believe that it would be desirable to seek
public comment before issuing illustrations of the recommended
practices, to determine the types of illustrations that would be most
useful to consumers and institutions.
II. Proposed Illustrations
The Agencies appreciate that some institutions, including community
banks, may prefer not to incur the costs and other burdens of
developing their own consumer information documents to address the
issues raised in the Interagency Guidance, and could benefit from
illustrations like those below.
Use of the proposed illustrations would be entirely voluntary.
Accordingly, there is no Agency requirement or expectation that
institutions must use the illustrations in their communications with
consumers.
Institutions seeking to follow the recommendations set forth in the
Interagency Guidance could, at their option, elect to:
Use or not use the illustrations;
Provide information based on the illustrations, but
expand, abbreviate, or otherwise tailor any information in the
illustrations as appropriate to reflect, for example:
[cir] The institution's product offerings, such as by deleting
information about loan products and loan terms not offered by the
institution and by revising the illustrations to reflect specific terms
currently offered by the institution;
[cir] The consumer's particular loan requirements;
[cir] Current market conditions, such as by changing the loan
amounts, interest rates, and corresponding payment amounts to reflect
current local market circumstances; and
[[Page 58674]]
[cir] Other information, consistent with the Interagency Guidance,
such as the payment and loan balance information for monthly statements
discussed in connection with Illustration 3 or information about when a
prepayment penalty may be imposed; or
Provide the information described in the Interagency
Guidance, as appropriate, in an alternate format.
Whether or not an institution chooses to use the proposed
illustrations, the Interagency Guidance recommends that promotional
materials and other product descriptions provide consumers with
information about the costs, terms, features, and risks of
nontraditional mortgage products that can assist consumers in their
product selection decisions. This includes information about potential
payment shock and negative amortization and, where applicable,
information about prepayment penalties and the costs of reduced
documentation loans. The recommended information could be presented in
a brief narrative format as shown in Illustration 1 and/or in a chart
with examples as shown in Illustration 2.
Set forth below are three illustrations that show how important
information about nontraditional mortgages could be provided to
consumers in a concise and focused manner and format. The Agencies
request comment on all aspects of these illustrations. We encourage
specific comment on whether the illustrations, as proposed, would be
useful to institutions, including community banks, seeking to implement
the ``Communications with Consumers'' portion of the Interagency
Guidance, or whether changes should be made to them. We also encourage
specific comment on whether the illustrations, as proposed, would be
useful in promoting consumer understanding of the risks and material
terms of nontraditional mortgage products, as described in the
Interagency Guidance, or whether changes should be made to them.
Finally, we seek comment on whether there are other illustrations
relating to nontraditional mortgages that would be useful to
institutions and consumers.
The Agencies are aware that individual institutions and industry
associations have developed and are likely to continue developing
documents that can be effective in conveying critical information
discussed in the ``Communications with Consumers'' portion of the
Interagency Guidance. These illustrations are not intended to dissuade
institutions and trade associations from developing their own means of
delivering important information about nontraditional mortgages to
consumers. In this regard, the Agencies note that they have not
conducted any consumer testing to assess the effectiveness of any
existing documents currently used by institutions, or of the proposed
illustrations set forth below. Commenters are specifically invited to
provide information on any consumer testing they have conducted in
connection with comparable disclosures.
[[Page 58675]]
[GRAPHIC] [TIFF OMITTED] TN04OC06.010
[[Page 58676]]
Illustration 2
Some of the information recommended by the guidance--in particular,
some of the more detailed information about payment shock and negative
amortization--may be conveyed most effectively through quantitative
illustrations. The Interagency Guidance expressly contemplates
hypothetical loan examples to aid consumer understanding. This
information also could be incorporated into a narrative format as shown
in Illustration 1. Illustration 2 shows another way in which this
information could be presented. The chart and the narrative explanation
may also be combined into a two-page document that both explains and
illustrates the key facts about nontraditional mortgage products.
BILLING CODE 7535-01-P
[[Page 58677]]
[GRAPHIC] [TIFF OMITTED] TN04OC06.011
[[Page 58678]]
Illustration 3
The Interagency Guidance also recommends that if institutions
provide monthly statements to consumers on payment option mortgages,
those statements should provide information that enables consumers to
make informed payment choices, including an explanation of each payment
option available and the impact of that choice on loan balances. The
following illustration shows one way in which this information could be
presented. It is important to note this illustration is not intended to
set forth all of the information that may be useful, and could be
provided, to consumers on their monthly statement, such as the current
loan balance, an itemization of the payment amount devoted to interest
and to principal, and whether the loan balance has increased.
[GRAPHIC] [TIFF OMITTED] TN04OC06.012
III. Request for Comment
As noted above, the Agencies request comment on all aspects of the
proposed illustrations. Comments are specifically requested on the
usefulness of the illustrations, as proposed, for consumers and for
institutions, or whether changes should be made; whether the
information is set forth in a clear manner and format; whether these
illustrations or a modified form should be adopted by the Agencies; and
whether there are other illustrations relating to nontraditional
mortgages that would be useful to consumers and institutions in
addition to these.
Dated: September 25, 2006.
John C. Dugan,
Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System, September 27, 2006.
Jennifer J. Johnson,
Secretary of the Board.
Dated at Washington, DC, this 27th day of September, 2006.
By order of the Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
Dated: September 28, 2006.
By the Office of Thrift Supervision.
John M. Reich,
Director.
By the National Credit Union Administration on : Thursday,
September 28, 2006.
JoAnn M. Johnson,
Chairman.
[FR Doc. 06-8479 Filed 10-3-06; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P; 7535-01-C
|
