Consumer laws to apply to larger loans
WASHINGTON (Reuters) - Consumer protection laws will apply to larger loans and credit transactions under a rule proposed on Monday.
The Truth in Lending Act will now apply to loans, credit transactions and leases up to $50,000, doubling the current limit of $25,000.
The new rules were issued by the Federal Reserve as required by the Dodd-Frank financial overhaul law enacted in July.
The Truth in Lending Act and a similar consumer leasing law require lenders to provide clear information about the terms of loans and transactions so that consumers have a full understanding of the deal before signing on the dotted line.
Under the current system most transactions and loans above $25,000 are exempt from these requirements. The Dodd-Frank law boosts this exemption to $50,000. Mortgages and private student loans fall under truth in lending requirements regardless of size, according to the Fed.
Under the Fed proposal, this new threshold would take effect on July 21 and would be adjusted annually using the Consumer Price Index.
The public will have 30 days to submit comments on the proposal, which is expected to be finalized early next year.
(Reporting by Dave Clarke, editing by Matthew Lewis)