GGRREECC RREENNeewwss January 2023
Volume 19 Issue 1

Monthly Newsletter of the Georgia Real
Estate Commission

# 1
2023 Calendar
TBA
Link to GREC Disciplinary Actions
View Current Suspensions and
Revocations
Link to Proposed Rule
Changes
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RENewsletter Click Here

This Issue What is a Federal Reserve Rate Hike GREC Job Opportunities Disciplinary Stats Rates and More Rates TILA and Regulation Z

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The Federal Reserve is the central bank of the United States, and its general

purpose is to promote the effective operation of the U.S. economy. When the Federal

Reserve makes a "Rate Hike", it is designed to affect the supply of available money. By

affecting the public's interest in their spending habits and business planning, rate changes

are done in an effort to stabilize the financial and economic system.

The "Rate" in this situation is the Federal Funds Rate, which is the rate charged

to commercial banks and other depository institutions that lend money to each other on

an overnight basis to maintain the regulatory reserve limit required for the banks. The

Federal Funds Rate is also referred to as the Federal Interest Rate, the Federal Reserve

Rate, or the Federal Funds Target Rate.

The Prime Rate is the most common reference rate used as the base rate for many

loans, credit cards, etc. The Federal Reserve does not set the Prime rate, but it is chosen

by a majority of the top 25 banks based upon the target level of the Federal Funds Rate.

Therefore, a Rate Hike affects the Prime Rate, which in turn affects the rates for charged

for various short-term loans, mortgages, loans, credit card loans, etc., impacting both

businesses and individual borrowers. The Federal Reserve publishes select interest

rate daily at https://www.federalreserve.gov/releases/h15/ .

In essence, the Federal Reserve uses the target rate to influence

the supply of funds. A Rate Hike will encourage saving and will reduce

consumer spending that results in a decrease in demand, and therefore

should reduce the rate of inflation.

More Rates on Page 2...

Two Job Opportunities at the Georgia Real Estate Commission Investigator Click for More Information Information Specialist Click for More Information

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Click here to review a legend of the disciplinary actions the Commission may impose.
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Georgia Real Estate Commission Suite 1000 International Tower 229 Peachtree Street NE Atlanta, GA 30303-1605 Phone 404-656-3916

GREC RENews January 2023, Volume 19 Issue 1
Rates and More Rates
Interest is the total sum paid or accrued for the use of money. Interest Rate is usually quoted as an annual percentage charged/paid for the loan
or paid/received on a deposit, and is dependent on the prime rate, the type of financing, the length of term of financing, the business cycle availability for funds, and economic conditions. Annual Percentage Rate (APR) is not interest but does include interest. "Credit costs may vary depending on the interest rate, the amount of the loan and other charges, the timing and amounts of advances, and the repayment schedule. The APR, which must be disclosed in nearly all consumer credit transactions, is designed to take into account all relevant factors and to provide a uniform measure for comparing the cost of various credit transactions. The APR is a measure of the cost of credit, expressed as a nominal yearly rate. It relates the amount and timing of value received by the consumer to the amount and timing of payments made." i "The Finance Charge is a total monetary measure of the cost of consumer credit .It includes loan points, loan service fees, mortgage broker fees, required credit insurance, required closing agent/3rd part fees, private mortgage insurance, Life of Loan chares such as flood, and taxes) and other fees that may be considered finance charges". i The Prime Rate is an interest rate determined by individual banks. It is often used as a reference rate (also called the base rate) for many types of loans, including loans to small businesses and credit card loans.

Truth In Lending Act (TILA) and Regulation Z

The Truth in Lending Act (TILA) was enacted on May 29, 1968, as title I of the

Consumer Credit Protection Act.

The TILA is implemented by Regulation Z and became effective July 1, 1969.

"The Truth in Lending Act is intended to ensure that credit terms are disclosed in a

meaningful way so consumers can compare credit terms more readily and

knowledgeably. Before its enactment, consumers were faced with a bewildering

array of credit terms and rates. It was difficult to compare loans because they were

seldom presented in the same format. Now, all creditors must use the same credit

terminology and expressions of rates. In addition to providing a uniform system for

disclosures, the act is designed to:

Protect consumers against inaccurate and unfair credit billing and credit

card practices;

Provide consumers with rescission rights;

Provide for rate caps on certain dwelling-secured loans; and
Impose limitFatoiocnus sonohnomTee remquinityolliongesy:of c"rRedaitteand certain closed-end

home mortgages." i

"

Most practitioners of residential real estate are very familiar with Regulation Z and its

required disclosures in closing statements and loan transactions. Most Credit extended

primarily for a business, commercial, or agricultural purposes are exempt from

Regulation Z. Further detail regarding specific disclosures and exemptions can be found

at the following resource links:

i https://www.federalreserve.gov/boarddocs/caletters/2008/0805/08-

05_attachment1.pdf

https://www.federalregister.gov/truth-in-lending-regulation-z-

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