Lenders Praise Move to Allow Lumping of Fees

Lenders praised a proposed Federal Reserve Board staff commentary, saying it would protect them from consumer lawyers looking for technical violations of the Truth-in-Lending Act.

The rule interpretation allows lenders to consolidate various fees, rather than listing each one separately. Lawyers have sued lenders for failing to record particular charges.

"This proposed revision is urgently needed, and will better reflect the realities of the marketplace and reduce costly litigation based on overly hypertechnical disclosure requirements," wrote Sidney E. Morrison, general counsel to the Independent Finance Association of Illinois.

Consumer lawyer Daniel A. Edelman said the Fed should limit its commentary to fees that apply equally to all borrowers. Abuses occur when lenders try to charge individual customers different fees for the same service, he said. Lumping the fees together would prevent consumers from discovering potential wrongdoing, he said.

Comments were due Feb. 2 on the commentary, which also addresses high- cost and reverse mortgages.

Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America, wrote that use of the Department of Housing and Urban Development's reverse mortgage disclosure software should give banks a safe harbor from prosecution by the Fed.