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FEDERAL RESERVE BANK
OF DALLAS

Dallas, Texas, December 19,1941

NOTICE REGARDING USE OF
“STATEMENT OF NECESSITY TO PREVENT UNDUE HARDSHIP”
IN CONNECTION WITH REGULATION W

To All Banking Institutions, and Others Concerned,
in the Eleventh Federal Reserve District:
Regulation W, relating to consumer credit, which was issued by the Board of Governors of the
Federal Reserve System pursuant to Executive Order No. 8843 issued by the President of the United
States, limits the terms of payment of certain instalment credits.
It would tend to defeat the purposes of the Order if, after an instalment credit subject to Regula­
tion W had been granted, the terms could ordinarily be changed at a later time or the credit
refinanced to provide a rate of payment not regularly permitted by the regulation. However, in order
to prevent undue hardship, provision has been made for flexibility in exceptional circumstances.
The regulation provides that in such circumstances a creditor may, within certain limits, renew,
revise, consolidate, or refinance an instalment credit already outstanding so as to provide a rate of
payment below that regularly permitted by the regulation. Section 8(d) of the regulation provides
that a creditor may take such action upon acceptance in good faith of a “ Statement of Necessity to
Prevent Undue Hardship” signed by the obligor. Until January 15, 1942, such a statement may be
in any form which meets the requirements set forth in section 8(d) of the regulation, but a state­
ment received on or after January 15, in order to be acceptable under the regulation, must follow
the form prescribed by the Board of Governors of the Federal Reserve System.
A specimen copy of the form which the Board has prescribed for use in this connection is
enclosed. The forms will not be supplied by the Board or by this Bank but should be printed or other­
wise reproduced by the Registrant or obtained by him from stationery or supply houses. Please note
that the form should be reproduced only in accordance with the instructions at the top of the speci­
men form. Your attention is also called to the fact that Registrants are instructed to keep all state­
ments on file.
Any inquiry relating to this form should be addressed to the Federal Reserve Bank of Dallas or
to one of its branches at Houston, San Antonio and El Paso.

Yours very truly,
R. R. GILBERT
President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

SPECIMEN

FORM

Form F. R. 565.

FOR INFORM ATION OF REGISTRANT OR PRINTER ON LY— N O T T O BE PRINTED AS PART OF FORM:

In reproducing this form,
the Registrant or printer shall follow exactly the wording and arrangement o f the front and back o f the form, but may vary the spacing as desired; may
make additions to the form, such as an acknowledgment by the Borrower that he has received a copy, provided they do not call for the obtaining of any
additional information from the Borrow er; may, in a form to be used by a Registrant who contemplates using it only in connection with credits already
held by him, change the opening sentence of the statement to read “ I am requesting a change in the terms o f payment o f the following instalment
indebtedness payable to you” and omit the column ‘ ‘Name of Creditor” ; or may change ‘ ‘Signature o f Customer” to “ Signature of Borrower” .
Since the form may be changed from time to time, it is suggested that Registrants do not stock large supplies o f the form.

STATEM ENT OF NECESSITY TO PREVENT U N D U E H ARDSHIP

Prescribed by the Board of Governors of the Federal Reserve System under its Regulation W,
issued pursuant to Executive Order No. 8843 of the President of the United States.
This form is to be used only in connection with credits subject to Regulation W , in exceptional cases in
accordance with the terms of that Regulation. See other side of this sheet for further explanation.

To:
(Name of Registrant)

I am requesting a change in the terms of payment, or a refinancing, of the following instal­
ment indebtedness:
Name of Creditor

Unpaid Balance

Present terms of payment

The desired change is necessary in order to avoid undue hardship to me or my dependents
resulting from contingencies unforeseen by me at the time of obtaining the above credit or which
were beyond my control. Following is a brief statement of the principal facts and circumstances
with respect to such contingencies:

I make this statement in good faith and certify (a) that the information contained in this
statement is true and correct, and (b) that the requested change is not to be made in connection
with any plan or intention to evade or circumvent the requirements of Regulation W.

(D a te)

(Signature o f Customer)

Record of action taken: See reverse side for notation to be made by the Registrant if the request is granted.

THE REG ISTRAN T RECEIVIN G THIS STATEM EN T MUST K EEP IT ON FILE

E X P L A N A T I O N
Executive Order No. 8843 issued by the President of the United States relates to consumer
credit. Regulation W, which was issued by the Board of Governors of the Federal Reserve
System pursuant to that Order, limits the terms of payment of certain instalment credits.
It would tend to defeat the purposes of the order if, after an instalment credit subject to Regulation
W had been granted, the terms could later be changed or the credit refinanced to provide terms of pay­
ment that would not originally have been permitted by the Regulation. However, in order to prevent
undue hardship, provision has been made for flexibility in exceptional circumstances.

The Regulation provides that in such circumstances a creditor may, within certain limits,
renew, revise, consolidate, or refinance an instalment credit already outstanding so as to provide
a rate of payment below that which would originally have been permitted by the Regulation. A
creditor may take such action upon acceptance in good faith of a written statement signed by the
obligor that the contemplated action is necessary to avoid undue hardship upon the obligor or his
dependents resulting from contingencies that were unforeseen by him at the time of obtaining the
original extension of instalment credit or which were beyond his control. In order to be acceptable
such written statement must set forth, briefly but specifically, the principal facts and circum­
stances with respect to such contingencies and upon which the request for modification is based.
It must also contain the specific statement that the desired renewal, revision, or other action
is not pursuant to a preconceived plan or an intention to evade or circumvent the requirements
of the Regulation.

RECORD OF ACTION TAKEN
(To be filled in and signed by the Registrant if a renewal, revision, consolidation, or refinancing is granted on the basis of this
Statement of Necessity.)

This Statement of Necessity has been accepted in good faith by the undersigned.
Terms of credit as renewed, revised, consolidated, or refinanced
Amount

Terms of payment

(Name of R egistrant)

( D ate)

(Signature o f individual signing for Registrant)


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102