In the above-cited May 11, 2011 issue of the Federal Register, the Board of Governors of the Federal Reserve System (FRB) published proposed rules (proposed rule) to implement Sections 1411, 1412, and 1414 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Dodd-Frank Act creates new TILA Section 129C, which, among other things, establishes new ability-to-repay requirements and new limits on prepayment penalties. If you wish to submit written comments regarding this proposed rule, you must do so by no later than July 22, 2011. The procedures for submitting written comments are located on page 27390 of the above issue of the Federal Register. The following summary of the proposed rule is a redaction of the summary contained in the above-cited issue of the Federal Register: The Dodd-Frank Act amends TILA to prohibit creditors from making mortgage loans without regard to the consumer’s repayment ability. These underwriting requirements are substantially similar but not identical to the ability-to-repay requirements adopted by the FRB for higher-priced mortgage loans in July 2008 under the Home Ownership and Equity Protection Act (see Reg. Z §226.35).

Complete Memorandum