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Federal R eserve Bank O F DALLAS DALLAS, TEXAS 75222 January 17, 1985 Circular 85-7 TO: The Chief Executive Officer of all member and others concerned in the Eleventh Federal Reserve District SUBJECT Amendments to Lending — slip sheet form Regulation Z — Truth in SUMMARY The Board of Governors of the Federal Reserve System has issued amendments to Regulation Z in slip sheet form. The attached slip sheet should be filed in Volume 2 of your of your Regulations Binders. DETAILS ATTACHMENTS An updated slip sheet for Regulation Z is attached. MORE INFORMATION For further information about Regulation Z, please contact this Bank's Legal Department at (214) 651-6171. Sincerely yours, For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800) 527-9200 (interstate). This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Board of Governors of the Federal Reserve System Amendments and Corrections to Regulation Z, Truth in Lending, and the Truth in Lending Act December 1984* REGULATION Z 1. The April 1, 1982 effective date for manda tory compliance with Regulation Z was de layed to October 1, 1982, pursuant to Public Law 97-110. 2. Effective December 31, 1984, section 226.1(a) is amended by adding a sentence to the end to read as follows: (a) Authority. * * * Infonnation-collection requirements contained in this regula tion have been approved by the Office of Management and Budget under the provi sions of 44 USC 3501 et seq. and have been assigned OMB No. 7100-0199. 3. Effective October 1, 1982, section 226.2 is amended by deleting and reserving the text o f paragraph (a)(3) and footnote 2 and by deleting paragraph (a)(17)(ii) and redesig nating paragraphs (a)(17)(iii), (iv), and (v) as paragraphs (a)(17)(ii), (iii), and (iv), re spectively, to read as follows: (a) Definitions. * • • (3) [Reserved] [Footnote 2 reserved] (17) “Creditor” means: • (ii) For purposes of sections 226.4(c)(8) (Discounts), 226.9(d) (Finance Charge Imposed at Time of Transaction), and 226.12(e) (Prompt Notification of Returns and Crediting * For this regulation to be complete, effective December 31, 1984, destroy the slip sheet dated May 1983 and re tain— * Regulation Z pamphlet dated April 1, 1981 and • this slip sheet. Items 2 and 4 of the regulatory amendments are new. All other items were included in the May 1983 slip sheet. of Refunds), a person that honors a credit card. (iii) For purposes of subpart B, any card issuer that extends either openend credit or credit that is not subject to a finance charge and is not payable by written agreement in more than four installments. (iv) For purposes of subpart B (ex cept for the finance charge disclosures contained in sections 226.6(a) and 226.7(d) through (g) and the right of rescission set forth in section 226.IS) aad subpart C, any card issuer that extends closed-end credit that is sub ject to a finance charge or is payable by written agreement in more than four installments. 4. Effective December 31, 1984, section 226.3 is amended by removing footnote 4 to para graph (a) and adding a new footnote 4 to read as follows: SECTION 226.3—Exempt Transactions This regulation does not apply to the following:4 * • * 4 The provisions in sections 226.12(a) and (b) gov erning the issuance of credit cards and the liability for their unauthorized use apply to all credit cards, even if the credit cards are issued for use in connection with extensions of credit that otherwise are exempt under this section. 5. Effective October 1, 1982, section 226.3 is amended by adding new paragraph (f) to read as follows: (0 Student loan programs. Loans made, insured, or guaranteed pursuant to a pro- Regulation Z gram authorized by title IV of the Higher Education Act of 1965 (20 USC 1070 et seq.). 6. Effective October 1, 1982, footnotes 31a to section 226.14(a) and 45a to section 226.22(a)(1) are amended by deleting the last sentence o f both. 7. Effective December 3, 1981, the last sentence..of the paragraph entitled “ Section 22611” in appendix E is amended by changing “ five business days" to “seven business days. ” 8. Effective December 3, 1981, the paragraph entitled “How to Cancel” o f model form G-6 is amended by adding “I f you send or deliver your written notice to cancel some other way, it must be delivered to the above address no later than that time. ” immedi ately after “(or midnight o f the third busi ness day following the latest o f the three events listed above). ” 9. The equation in paragraph (c)(4) o f appen dix J is corrected to appear as follows: A = (l + f i ) ( l + i ) « [ P| + ( l S + (1 + i V '] TRUTH IN LENDING ACT 1. Effective July 27, 1981, section 103 o f the Truth in Lending Act is amended by adding paragraph (z); and effective April 10, 1982, section 103 is amended by redesignating paragraphs (x), (y), and (z) as (y), (z), and (x), respectively. New paragraph (x), origi nally designated as (z), reads as follows: (x) As used in this section and section 167, the term “regular price” means the tag or posted price charged for the property or 2 service if a single price is tagged or posted, or the price charged for the property or service when payment is made by use of an open-end credit plan or a credit card if ei ther (1) no price is tagged or posted, or (2) two prices are tagged or posted, one of which is charged when payment is made by use of an open-end credit plan or a credit card and the other when payment is made by use of cash, check, or similar means. For purposes of this definition, payment by check, draft, or other negotiable instru ment which may result in the debiting of an open-end credit plan or a credit card holder’s open-end account shall not be con sidered payment made by use of the plan or the account. 2. Section 108(e)(7) o f the Truth in Lending >'Act, as amended is corrected by removing “except in the case o f ap irregular mortgage lending transaction,'*after “title,” and be fore “with” . 3. Effective December 21, 1982, section 114 o f the Truth in Lending Act is amended by revising the first sentence to read: “Each year the Board shall make a report to the Congress concerning the administration o f its functions under this title, including such recommendations as the Board deems nec essary or appropriate. ” 4. Pursuant to section 301 o f Public Law 97 25 (July 27, 1981), creditors and their as signees choosing to comply with the amend ed Truth in Lending Act and implementing regulations prior to October 1, 1982 are sub ject to the amended civil liability provisions in sections 130 and 131 o f the act 5. Pursuant to section 201 o f Public Law 97 25 (July 27, 1981), section 167(a)(2) o f the Truth in Lending Act will cease to be effec tive on February 27, 1984. 6 Effective July 27, 1981, section 167(b) o f Regulation Z the Truth in Lending Act is amended to read as follows: (b) With respect to any sales transaction, any discount from the regular price offered by the seller for the purpose of inducing payment by cash, checks, or other means not involving the use of an open-end credit plan or a credit card shall not constitute a finance charge as determined under section 106 if such discount is offered to all pro spective buyers and its availability is dis closed clearly and conspicuously. 3
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