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Federal R eserve Bank
O F DALLAS
W ILLIA M
H. WALLACE
DALLAS, TEXAS 7 5 2 2 2
FIRST VIC E P R ES ID EN T
AND C H IE F O PER ATING O FFIC ER
February 7, 1989
Circular 89-6
TO:
The Chief Executive Officer of all
member banks and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Request for public comment on a proposal to amend Regulation Z
(Truth in Lending) to implement the Home Equity Loan Consumer Protection Act
DETAILS
The Board of Governors of the Federal Reserve System has requested
public comment on a proposal to amend its Regulation Z, Truth in Lending,, to
implement the Home Equity Loan Consumer Protection Act. The proposed
amendment requires creditors to provide consumers with disclosures when they
receive an application for an open-end home equity line of credit. It also
would limit a creditor's ability to terminate the loan and accelerate any
outstanding balance, or to change the terms of a loan after it has been
opened.
Comments should be addressed to William W. Wiles, Secretary, Board
of Governors of the Federal Reserve System, Washington, D.C. 20551. All
correspondence should refer to Docket No. R-0655 and must be received by
March 21, 1989.
ATTACHMENTS
The Board's press release and the material as published in the
Federal Register are attached.
MORE INFORMATION
For further information, please contact Jane Anne Schmoker at (214)
651-6228.
Sincerely yours,
For additional co p ies of any circular p lease c o n ta c t the Public Affairs Departm ent a t (214) 651-6289. Banks and o th ers are
encourag ed to u se the following incom ing WATS num b ers in co n tactin g 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)
FEDERA^RESERVEpressrelease
For immediate release
January 12, 1989
The Federal Reserve Board today issued for public
comment a proposal to amend its Regulation Z, Truth in Lending, to
implement the Home Equity Loan Consumer Protection Act.
Comment is requested by March 21.
The proposed amendment requires creditors to provide
consumers with disclosures when they receive an application for an
open-end home equity line of credit.
More specifically, creditors
will be required to supply consumers with information regarding
the payment options, any fees imposed by the creditor,
and other terms of the agreement.
If the home equity line of
credit has a variable-rate feature, the creditor must provide
information about the index upon which the rate is based including
a 15-year history of changes in the index values.
In addition to these disclosure requirements, the
proposed amendment would limit a creditor’s ability to terminate
the loan and accelerate any outstanding balance, or to change the
terms of a loan after it has been opened.
The limitations also
prohibit the type of index that can be used for home equity lines
of credit with variable rates.
The Board's proposed amendment also imposes duties on
third parties who provide applications to consumers and modifies
the rules relating to advertisements for home equity loans.
The Board's notice is attached.
-0-
Federal Register / Vol. 54, No. 13 / Monday, January 23, 1989 / Proposed Rules
3063
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Reg. Z: Docket No. R-0655I
Truth in Lending; Home Equity
Disclosure and Substantive Rules
Board of Governor of the
Federal Reserve System.
a c t i o n : Proposed rule.
agency:
The Board is publishing for
comment a proposal to amend
Regulation Z (Truth in Lending). The
proposal implements provisions of the
Home Equity Loan Consumer Protection
Act of 1988, which requires creditors to
provide consumers with more
information for open-end credit plans
secured by the consumer’s dwelling, and
imposes substantive limitations on these
plans. Creditors would have to provide
information at the time an application is
provided to the consumer, including
information about the payment terms,
su m m a ry :
3064
Federal Register / Vol. 54, No. 13 / Monday, January 23, 1989 / Proposed Rules
fees imposed under the plan, and, for
variable-rate plans, information about
the index and a fifteen-year history of
changes in the index values. Creditors
would be required to provide consumers
with a brochure prepared by the Board
(or one substantially similar) describing
home equity plans. The proposal also
imposes duties on third parties who
provide applications to consumers and
modifies the rules relating to
advertisements for home equity plans.
In addition to these disclosure
requirements, the proposal would
amend Regulation Z to implement new
substantive limitations imposed by the
6tatute. The regulation would limit a
creditor's right to terminate a plan and
accelerate any outstanding balance, or
to change the terms of a plan after it has
been opened, as well as limit the type of
index that can be used for variable-rate
plans.
DATES: Comments must be received on
or before March 21,1989.
a d d r e s s e s : Comments should refer to
Docket No. R-0655 and be mailed to Mr.
William W. Wiles, Secretary, Board of
Governors of the Federal Reserve
System, Washington, DC 20551. They
may be delivered to Room B-2222 of the
Eccles Building between 8:45 a.m. and
5:15 p.m. weekdays or to the guard
station in the Eccles Building Courtyard
on 20th Street NW. (between
Constitution Avenue and C Street NW.)
any time. Comments will be available
for inspection in the Freedom of
Information Office, Room B-1122 of the
Eccles Building between 9:00 a.m. and
5:00 p.m. weekdays.
FOR FURTHER INFORMATION CONTACT:
Sharon Bowman, Leonard Chanin or
Thomas Noto, Staff Attorneys, or Mike
Bylsma, Senior Attorney, Division of
Consumer and Community Affairs, at
(202) 452-3667 or 452-2412; for the
hearing impaired only, contact
Earnestine Hill or Dorothea Thompson,
Telecommunications Device for the
Deaf, at (202) 452-3544, Board of
Governors of the Federal Reserve
System, Washington, DC 20551.
SUPPLEMENTARY INFORMATION*.
(1) Background
In December 1987 the Board proposed
amendments to Regulation Z to change
the existing disclosure requirements for
home equity lines of credit secured by
the consumer’s principal dwelling (52 FR
48702). The proposal would have (1)
required disclosures to be given at the
time an application form is provided to
the consumer (or before the consumer
pays a nonrefundable fee, if that occurs
earlier); (2) required that the disclosures
be segregated from other information;
and (3) increased the number of required
disclosures. Subsequently, the Home
Equity Loan Consumer Protection Act
w as enacted on November 23,1988 (Pub.
L. No. 100-709). The law superseded the
Board’s proposal. While both the
Board’s 1987 proposal and the statute
address many of the same disclosure
and advertising issues, the statute also
places substantive limitations on how
home equity plans operate.
The statute, which requires the Board
to issue regulations, provides that the
statutory provisions and rules adopted
by the Board shall apply to open-end
credit plans entered into five months
after the promulgation of final
regulations. The Board is proposing
amendments for comment, and expects
to adopt final regulations in May 1989.
Compliance with the law would be
m andatory around October 1989.
Under Truth in Lending and
Regulation Z, creditors offering openend credit are currently required to
provide consumers with a limited
amount of information prior to the first
transaction under the plan. The
disclosures must reflect the features of
the specific plan. Creditors must
disclose the information clearly and
conspicuously, but are permitted to
integrate the disclosures into the
contractual agreement.
The statute and proposed
amendments to the regulation leave in
place the existing disclosure
requirements. They would add,
however, two requirements to this
framework. First, as is the case for
closed-end adjustable-rate mortgages
that are secured by the consumer's
principal dwelling and have a term over
one year (see § 226.19(b) of Regulation
Z), creditors generally would be
required to provide detailed disclosures
about their home equity plans when an
application is provided to the consumer.
Second, creditors would be required to
provide the information again, along
with the current disclosures, prior to the
first transaction under the plan.
The Board is publishing proposed
sample disclosure forms to assist
creditors in preparing their plan
disclosures. The Board expects to
publish along with the final regulation
tables of values for commonly used
indices for home equity plans.
(2) Proposed Amendments to Regulation
Z
The Home Equity Loan Consumer
Protection Act is quite detailed and, for
the most part, the proposed amendments
mirror the statutory requirements. The
proposed amendments to Regulation Z
would incorporate the disclosure
provisions into a new § 226.5b of the
regulation and into existing § 226.6. (A
new § 226.5a has been proposed
recently by the Board to implement the
Fair Credit and Charge Card Disclosure
Act. See 53 FR 51785, December 23,
1988.) Modifications would be made to
the advertising rules contained in
§ 226.16, and technical amendments
would be made to §§ 226.1 and 226.5.
(i) Coverage
The proposed amendments to
Regulation Z would apply to all openend credit plans secured by the
consumer’s dwelling, as set forth in
§ 226.5b. Thus, the rules apply not only
to plans secured by the consumer's
principal dwelling, but also to those
secured by second or vacation homes.
(ii) Form at o f D isclosures
Unlike existing Truth in Lending
requirements for closed-end and other
types of open-end credit, the proposed
amendments would not require that the
disclosures provided at the time of
application be in a form the consumer
can keep. (See footnote 8 accompanying
§ 226.5(a).) Thus, under the proposal,
although the disclosures would have to
be in writing, creditors would be
permitted to place the first set of
disclosures on the application form the
consumer returns to the creditor to
apply for the plan.
Section 226.5b(a) of the proposal
would require most of the disclosures to
be grouped together and "segregated”
from unrelated information provided to
the consumer in connection with the
application. The brochure and the
variable rate information could be
provided either separately from or with
the other disclosures. Under the
proposal, greater flexibility would be
permitted in complying with the
segregation standard than currently
exists for closed-end credit. Disclosures
for home equity plans tend to be less
concise and more narrative in form than
those for closed-end credit. Therefore,
the Board proposes to apply a more
liberal standard that would permit
information that explains or expands on
the required disclosures to be included.
Information on other aspects of the plan
that is not related to the required
disclosures, such as underwriting
criteria, however, would not'be
permitted to be interspersed with the
disclosures. Such information, of course,
could be provided as long as it is
separated from the required disclosures.
The segregation standard would not
apply to the second set of disclosures
provided by the creditor prior to the first
transaction under the plan. The
additional disclosures would be given
Federal Register / Vol. 54, No. 13 / Monday, January 23, 1989 / Proposed Rules
with the information currently required
under Regulation Z, which is not
required to be segregated from other
information. These disclosures could be
combined and could be integrated into
the contract. Like the disclosures
currently required, the additional
disclosures would haVe to be in a form
the consumer can keep.
In the first set of disclosures, § 226.5
(a)(2) of the proposal provides that
certain items would be further
highlighted by requiring them to precede
the other disclosures. Consumers would
be notified that (1) they should keep a
copy of the disclosures; (2) they have a
right to obtain a refund of fees if any
terms change and they decide not to
enter into the contract as a result; (3)
they risk the loss of the dwelling in the
event of default: and (4) a creditor may
terminate a plan or suspend future
advances under certain circumstances.
Creditors would state all aspects of
their plans in the first set of disclosures.
For example, if a creditor offers several
payment options, all options would have
to be set forth. Furthermore, if any
aspects of a plan are linked together—
for example, if the consumer can obtain
only certain payment options in
conjunction with plans of certain
lengths—the creditor must clearly
disclose the relation among those plan
features. As an alternative to the
combined disclosure method, the Board
proposes to permit creditors to create
separate disclosure documents where
features may vary. Creditors pursuing
this latter alternative would have to
include a statement in the early
disclosures that the consumer should
“ask about" the creditor’s other home
equity programs. Creditors would have
to provide disclosures in response to
any such request.
(iii) Timing o f D isclosures
Section 226.5b(b) would require the
disclosures and a brochure to be given
to consumers at the time an application
is provided. In the case of applications
contained in magazines or taken by
telephone or through third parties,
footnote 10a would allow the creditor to
mail or deliver the disclosures and
brochure to the consumer within three
business days of receipt of the
application.
In addition to providing these
disclosures early in the application
process, the statute and § 226.6(e) would
require creditors to provide all of the
disclosures again along with the
disclosures currently required for openend credit, to the extent they are not
duplicative. Creditors also would
disclose a list of the conditions that
permit the creditor to terminate the plan,
freeze or reduce the credit limit, and
implement modifications to the original
terms. (This requirement could be met
by providing a separate list or by
identifying the provisions in the contract
which contain such conditions.) The
disclosures would be provided prior to
the first transaction under the plan, in
accordance with the existing rule in
§ 226.5(b). (See the discussion below
concerning the specific requirements for
this second set of disclosures.)
(iv) D uties o f Third Parties
In addition to requiring creditors to
provide disclosures to consumers at an
earlier time, § 226.5b(c) of the proposed
amendments also would impose a duty
on third parties who provide
applications to consumers. The statute
requires that a third party, such as a
loan broker, that provides a consumer
with an application also must give a
brochure and disclosures. The statute
recognizes, however, that in some
circumstances third parties may not be
able to provide disclosures since
specific information about the plan
terms may be unavailable.
The Board believes that requiring both
a third party and a creditor to provide
the consumer with identical information
about the same plan may result in
unnecessary duplication. Under
§ 226.5b(c) of the proposal, therefore, a
third party Would be required to provide
disclosures only if that party has the
disclosures for a creditor's particular
home equity plan in its possession.
Third parties would not have an
affirmative duty to obtain such
disclosures about a creditor’s programs,
or to create a set of disclosures based on
w hat the third party knows about a
creditor’s program. If, however, a
creditor supplies disclosures to a third
party along with its application form,
the third party would have to give the
consumer the disclosures. In all cases,
consumers will be provided disclosures
by the creditor within three days after
the creditor receives the application.
While consumer shopping might be
enhanced if third parties provided the
disclosures at the earlier time,
consumers will still be able to shop for
credit since neither a creditor nor any
other party is permitted to collect a
nonrefundable fee until three days after
disclosures have been received by the
consumer.
Although the duty of third parties to
provide the disclosures may arise
infrequently, the proposal would require
third parties to give the home equity
brochure at the time an application is
given to the consumer. Because
providing the brochure is not linked to
the availability of information from a
3065
creditor about its specific plan, the
Board believes third parties would have
access to the brochure, and, thus, be
able to provide it with the application.
(See the discussion below concerning
the responsibility of the creditor if the
third party has already given the
consumer a brochure.)
(v) Content o f D isclosures
Section 228.5b(d) of the proposal lists
the information that would be given to
consumers when they apply for home
equity plans. As is the case with existing
Truth in Lending disclosure rules, the
information would be provided only to
the extent applicable; thus, for example,
if negative amortization cannot occur in
a program, no mention of it need be
made. Because the disclosures need not
be in a form the consumer can keep, the
consumer would be advised to retain a
copy of the disclosures. Creditors would
include a statement of any time by
which an application must be submitted
to obtain specific terms disclosed. If
creditors choose not to “guarantee” all
or some of the terms, they would
provide a statem ent of the terms that
may change prior to opening the plan.
Creditors also would have to notify the
consumer of the right to refund of all
fees paid in connection with the
application if any disclosed terms (other
than a variable rate) change prior to
opening the plan, and as a result the
consumer chooses not to enter into the
plan. Creditors would have to disclose
the fact that a security interest is being
taken in the consumer’s dwelling and
that the consumer may lose the home in
the event of default.
(A) Possible Actions by Creditor
Under § 226.5b(d)(4) of the proposal, a
statement must be provided that, under
certain circumstances, a creditor may
terminate the plan and accelerate any
outstanding balance, prohibit additional
advances or reduce the credit limit or, as
set forth in the initial agreement,
implement modifications to the original
terms. In light of § 226.5b(f)(3)(i) of the
proposal, which would permit such
modifications if they are explicitly
provided for in the contract, the Board is
proposing to add this last condition to
the disclosure. A creditor would be
required to state if fees may be imposed
if the account is terminated. Consumers
would be notified that they can receive,
upon request, a list of the conditions
that permit the creditor to terminate the
plan, prohibit additional advances or
reduce the credit limit, and implement
modifications during the term of the
plan. Upon receiving a request from a
consumer, creditors would be required
30G5
Federal Register / Vol. 54, No. 13 / Monday, January 23, 1989 / Proposed Rules
to provide this information in writing in
a form the consumer can keep. (See
§ 226.5b(g) of the proposal.)
Although the statute calls only for a
disclosure of the right to receive upon
request the list of conditions, the Board
proposes in § 226.5b(d)(4)(iii) to permit
creditors to provide the actual list with
the early disclosures in lieu of that
statement. The Board believes this
flexibility may help consumers compare
home equity lines, and may assist
creditors by reducing the circumstances
in which consumers will request that
this information be provided. Creditors
would be permitted to provide this list
with the segregated disclosures or apart
from those disclosures. Section 226.6(e)
would provide that the list of these
conditions also would have to be given
with the disclosures currently required
for open-end credit. (This requirement
could be met by identifying the
provisions in the contract which contain
such conditions.)
(B) Payment Terms
Under § 226.5b(d)(5) of the proposal,
creditors would be required to describe
the payment terms of the plan, including
the length of the draw period and any
repayment period. (The combined length
of the draw period and any repayment
period would not have to be stated.) If
the terms are indefinite, creditors would
state that fact. All payment options
under the plan would be stated,
including any different payment terms
that may exist during the draw period or
during any repayment period, as well as
any differences that may apply within
either period. If the plan permits the
consumer to convert any of the loan
balance to a fixed term loan, this
information would be provided in the
disclosures. How the minimum periodic
payment is determined, the frequency of
payments, and whether making only the
minimum payments would not repay
any or all of the principal balance during
the draw and repayment periods would
be set forth. The proposed regulation
also calls for a disclosure if a balloon
payment is required under the plan—to
give consumers an accurate picture of
their payment obligations. An
explanation of the balance computation
method would not have to be provided.
Creditors would disclose an example,
based on an assumed $10,000
outstanding balance and a recent annual
percentage rate (APR), showing the
minimum periodic payment and any
balloon payment, and the time it would
take to pay off the balance if the
consumer made only those payments.
Footnote 10c of the proposal would
provide that, for fixed rate plans, a
recent APR is one that has been in effect
under the plan within the twelve months
prior to the date the disclosures are
provided to the consumer. For variable
rate plans, a recent APR would be the
most recent rate provided in the
historical table, or a more recent rate.
uniform, and thus make compliance
easier for creditors. Furthermore, these
additional disclosures would provide
consumers with more complete
information about the variable-rate
feature of home equity lines.
(C) Annual Percentage Rate
Section 226.5b(d)(6) of the proposal
provides that, for fixed-rate plans, a
recent APR would have to be provided.
Consumers would be told that the APR
does not include costs other than
interest.
(A) Index and APR
(D) Fees Imposed By the Creditor and By
Third Parties
Under § 226.5b(d)(7) of the proposal,
creditors would have to provide a
description and the amount of charges
required to open and use the account
and a statement of when the consumer
must pay the charges. These charges
could be stated as an estimated dollar
amount for each fee, or as a percentage
of a hypothetical amount of credit.
These fees include application fees,
points, annual fees, and transaction
fees. Under § 226.5b(d)(8) of the
proposal, an estimate of fees imposed by
third parties stated as a single dollar
amount or a range (and a statement that
the consumer may request more specific
information about such fees from the
creditor) also would be provided.
(E) Other Provisions
Under § 226.5b(d)(9), a statement if
the plan has a negative amortization-—
which will reduce the consumer’s equity
in the dwelling—most be provided.
Section 226.5b(d)(10) would require
creditors to state any limitations on the
number of extensions or amount of
credit that can be obtained during any
time period and any minimum draw or
minimum outstanding balance
requirement stated as dollar amount or
as a percentage. Section 226.5(d)(ll)
would require that consumers be told to
consult a tax advisor regarding the
deductibility of interest and charges
under the plan.
(vi) Variable-Rate D isclosures
Section 226.5b(d)(12) of the proposal
would require creditors to provide
information about the variable-rate
feature contained in a plan. Many of
these disclosures closely parallel the
disclosures currently required for
closed-end variable-rate transactions
secured by a consumer’s principal
dwelling. The Board is proposing to add
a few additional variable-rate
disclosures to those required by the
statute. These minor additions would
help make the home equity rules and the
rules for closed-end ARMs more
Creditors would be required to state
that the APR may change and that the
payment or term may change due to the
fact that the APR is variable. The
frequency of changes in the APR would
be provided. Creditors would have to
identify the index used to determine rate
adjustments and a source of information
about the index. Creditors would have
to describe how the corresponding APR
will be determined (for example, by
stating that a margin is added to the
index value). If the initial rate is
discounted, a disclosure of that fact as
well as the disclosure forms could be
preprinted and rate information may not
be accurate, consumers would be told to
“ask about” the current index value,
margin, and APR. Rules relating to
changes in the index value and resulting
changes in the APR would be set forth.
This provision would require an
explanation, for example, of a preferredrate provision, where the rate will
increase upon the occurrence of some
event, such as an employee leaving the
creditor’s employ. Similarly, an
explanation would have to be given if
the plan permits the consumer to
convert from a variable rate plan to a
fixed rate.
(B) Rate and Payment Limitations
Any annual rate caps m ust be stated
and, if there are no such limits, that fact
must be stated. The maximum rate that
may be imposed under each payment
option under the plan also would be
provided. This rate could be stated as a
specific rate (for example, 18%), or as a
percentage above an initial rate (for
example, 5% above the initial rate). In
either circumstance creditors could use
a range in expressing the maximum rate
in the early disclosures. In addition,
creditors would have to show, if the
maximum rate were in effect the
minimum periodic payment based on a
$10,000 outstanding balance. (If a range
is used, the highest rate in the range
should be used for this disclosure.)
Finally, any payment limitations would
be provided.
(C) Historical Table
A 15-year historical table, based on an
assumed $10,000 extension of credit and
showing how the APRs and payments
would have been affected by the index
value changes under the plan, would be
Federal Register / Vol. 54, No. 13 / Monday, January 23, 1989 / Proposed Rules
provided. If the values for an index have
not been available for 15 years,
crpditors would need only go back as far
as the values have been available in
giving the history and may start the
example at the year for which values
are first available. The history would
reflect the method of choosing values for
each plan. For instance, if an average of
index values is used, averages would be
used in the history, but if a single index
value is used, a single index value
would be shown. The creditor would
assume one date within a year (or one
period, if an average is used) on which
to base the history of index values for
each loan plan. The creditor could
choose to use index values as of any
da'te or period as long as the index value
as of this date or period is used for each
year in the index history. Only one
index value per year need be shown,
even if the plan provides for
adjustments to the APR or payment
more than once a year. In such cases,
the creditor would assume that the
index rate remained constant for the full
year for the purpose of calculating the
annual percentage rate and payment.
Updating will be necessary only once
each year to reflect the most recent
year’s index value. To assist creditors in
constructing histories of certain common
indices, the Board expects to include
tables of index values when the final
rule is published. In its final regulation,
the Board expects to publish rate
information for the prime rate published
in the Wall Street Journal, the average
prime rate published in the Federal
Reserve Bulletin, and United States
Treasury securities adjusted to constant
maturities of 90 days and 6 months. The
Board requests that commenters provide
the names of any other indices for which
it would be useful to h av e rate histories.
The payment figures in the example
must reflect all significant loan program
terms. For example, features such as
rate and payment caps, a discounted
APR, negative amortization, and interest
carryover would be taken into account
by creditors in calculating the payment
figures. One payment per year would be
shown in the table, even though
payments may vary during a year. (The
calculations, however, should be based
on the actual paynfent computation
formula.) Balloon payments need not be
reflected in the table.
Because disclosures will be given
early, creditors would need to assume a
value for the margin in order to do the
calculations for the example. Creditors
would select a margin that they used
during the preceding six months and
disclose on the form that the margin is
one that they have used recently. The
3067
margin selected may be used until a
creditor updates the disclosure form to
reflect the most recent 15 years of index
values. Similarly, if the home equity
plan has a discounted initial rate,
creditors also will be permitted to
assume an amount by which the initial
rate will be discounted—which is
representative of the amount of a
discount used by the creditor during the
preceding six months—and disclose on
the form that the initial rate has been
discounted.
In setting forth payment information,
both the draw and any repayment
period would be illustrated in the table.
In providing this information, creditors
would assume that the $10,000 balance
is reduced according to the terms of the
plan. To minimize compliance costs, the
Board proposes to permit the use of a
representative term within a range of a
five-year period in setting forth the draw
and repayment information in the table.
For example, if a creditor offers plans
with a five-year draw period, and
repaym ent periods ranging from six to
fifteen years, the creditor would use the
actual length of the draw period. In
figuring the repayment period for the
table, the creditor could use any term
from six to ten years (for example, eight
years), and any term from eleven to
fifteen years (for example, thirteen
years). If different payment options are
available during either period, payments
under each option would have to be
shown.
fees imposed by third parties (see
proposed § 226.5b(d)(8)).
(D) O ther Information
(D) Historical Information
Consumers would be informed that
rate information will be provided with
the periodic statement.
Sample home equity disclosure forms
that show how the proposed
requirements might be met are provided
in proposed Appendix G.
Creditors could provide the same
historical information about the program
that w as given in the first set of
disclosures. For example, the historical
table provided in the earlier disclosures
would not have to be modified for the
later disclosures to reflect more recent
margins or discounts, since the table is
intended to show historical rate
fluctuations and their effects on
payments (and need only be updated
once a year).
(vii)
Later D isclosures
As discussed earlier, § 226.6(e) would
require creditors to provide the
disclosures set forth in § 226.5b(d) a
second time along with the disclosures
would be provided prior to the first
transaction under the plan, in
accordance with the existing rule in
§ 226.5(b), and could be integrated into
the contract.
(A) Duplicative Information
Information that duplicates the
current disclosures need not be
provided. For example, because
§ 226.6(a)(4) and (b) require the
disclosure of any finance and “other"
charges, respectively, creditors would
not have to disclose fees imposed by the
creditor (see proposed § 226.(d)(7)) or
(B) Inapplicable Information
Creditors need not provide
information that is inapplicable. For
example, because § 226.5(a)(1) requires
that the disclosures be in a form the
consumer may keep, creditors would not
make the statement in proposed
§ 226.5b(d)(l) that consumers should
make a copy of the disclosures.
Similarly, because proposed § 226.6(e)(2)
would require creditors to disclose the
conditions under which the creditor
may. for example, terminate the plan
and require payment of the outstanding
balance in full in a single payment upon
termination, creditors need not disclose
that the consumer may receive, upon
request, this information, as required by
proposed § 226.5b(d)(4).
(C) Current Information
Creditors would be required to
provide current information about
aspects of the plan that may vary among
consumers. For example, if the creditor
offers a variety of payment options and
the consumer chooses one option (and
the others are unavailable), the specific
payment terms selected would have to
be disclosed. Similarly, if the first set of
disclosures stated the maximum APR
that could be imposed (for variable-rate
plans) as a range, the later disclosures
would have to reflect the specific rate
cap.
(viii) Consum er Brochure
Section 226.5b(e) would require
creditors and third parties providing
applications to furnish consumers with a
brochure prepared by the Board
describing home equity plans, or a
brochure that provides substantially
similar information. As required by the
statute, the brochure will describe home
equity plans, including the potential
advantages and disadvantages. The
brochure also will provide guidance on
how to compare home equity plans with
closed-end credit. The Board envisions
that any substitutes must be. at a
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Federal Register / Vol. 54, No. 13 / Monday, January 23, 1989 / Proposed Rules
minimum, comparable in substance and
comprehensiveness, recognizing that
some lenders’ brochures may contain
more detailed descriptions of their
particular home equity programs than
contained in the Board's brochure. The
Board is currently preparing a brochure
and will have it available when the
regulation is issued in final form.
The proposal would mirror the statute
in requiring third parties to provide
consumers with the brochure if an
application is given to the consumer.
The Board believes, however, that
requiring a second brochure to be given
by the creditor in such circumstances is
unnecessary. Therefore, the Board
believes that the creditor’s duty to
provide the brochure would be met if the
third party provides the brochure to the
consumer. This will avoid duplication.
The creditor would have a duty,
however, to ensure that the third party
has provided the brochure if the creditor
chooses not to give the consumer the
brochure.
fix ) R ight o f R escission— M aterial
D isclosures
The Board is soliciting comment on
whether it should amend footnote 36,
accompanying § 226.15(a)(3) of the
regulation, to provide that the payment
information required under proposed
I 226.5b(d)(5) (i) and (ii) that is given at
the time an account is opened be treated
as "material disclosures” for purposes of
the right of rescission (§ 226.15). Section
226.15(a)(3) states that the consumer
may exercise the right of rescission until
midnight of the third business day
following the opening of the plan,
delivery of the notice of the right to
rescind, or delivery of all “material
disclosures,” whichever occurs last.
Footnote 36 of the regulation currently
defines material disclosures to include
the method of determining the finance
charge and the balance upon which a
finance charge will be imposed, the
annual percentage rate, and the amount
or method of determining the amount of
any membership or participation fee
that may be imposed as part of the plan.
Including such payment information in
the definition of "material disclosures”
would be consistent with the material
disclosure definition in the closed-end
credit rescission provisions.
(x) A dvertising Requirem ents
Under the open-end advertising rules
in § 226.16, any reference to an item
required to be disclosed under § 226.6
requires the disclosure of cost
information such as the APR, any
membership or participation fee, and
any minimum, fixed, transaction, or
activity charge. Under current rules, a
creditor may refer to a payment term in
an advertisement for open-end credit
without having to make additional
disclosures about other material terms.
Furthermore, only items stated
affirmatively require further
information. Under § 226.16(d)(1) of the
proposed regulation, any reference to a
payment term in a home equity
advertisement would "trigger” further
disclosures, including loan fees,
estimates of other fees that may be
imposed, and, for variable-rate plans,
the maximum rate that may be imposed
under the plan. Proposed § 226.16(d)(3)
provides that, if such an advertisement
states a payment amount, it would have
to state, if applicable, that the plan
contains a balloon payment.
Furthermore, if any of the "triggers" is
stated affirmatively or negatively,
further disclosures must be given. For
example, if a creditor states “no annual
fee” in an advertisement, additional
information must be provided.
In addition, § 226.16(d)(2) of the
proposal provides that if an
advertisement states a “discounted"
APR it must state in equal prominence
the APR derived by use of the fullyindexed value. Creditors would be
prohibited by § 226.16(d)(5) from
referring to home equity plans as “free
money" or using similarly misleading
terms. Finally, if an advertisement states
that any interest under the plan may be
tax deductible, the advertisement must
not be misleading about such
deductibility. (See § 226.16(d)(4).) For
example, an advertisement referring to
deductibility might include a statement
that the consumer should consult a tax
advisor regarding the deductibility of
interest.
(xi) Substantive Lim itations
The act imposes three substantive
limitations on the way home equity
plans can be structured. In some
provisions the statute speaks in terms of
creditor actions. In other provisions the
statute speaks in terms of w hat may be
contained in the credit contract. Under
I 226.5b(f) of the Board’s proposal, the
substantive limitations would apply to
both actions creditors may take and the
provisions that may be contained in
contracts. These limitations also would
apply to assignees and holders.
(A) Index For Variable-Rate Plans
Under § 226.5b(f)(l) of the proposal, a
creditor may change the APR after the
plan is opened only if the change is
based on an index outside the creditor's
control and the index value is available
to the public. This provision would
prohibit a creditor from using its own
prime rate or simply retaining the right
to change rates at its discretion. A
creditor would be permitted to use the
W all Street Journal prime rate, for
example, or any other index not within
the creditor’s control.
(B) Termination
Under the statute and proposed
§ 226.5b(f)(2), creditors are prohibited
from terminating an account and
accelerating payment of the outstanding
balance prior to the scheduled
expiration of the plan. The act, however,
provides three exceptions to the rule.
First, a creditor may terminate the plan
if there has been fraud or material
misrepresentation by the consumer in
connection with the plan. Second, a
creditor may terminate the plan if the
consumer has failed to meet the
repayment terms of the agreement. This
provision would permit termination only
if the consumer fails to actually make
payments. A creditor could not
terminate a plan if, for example, the
consumer, in error, sends a payment to
the wrong location, such as a branch
rather than the main office of the
creditor. Finally, a creditor is permitted
to terminate the plan if the consumer
acts or fails to act in a w ay that
adversely affects the creditor’s security
interest. This provision would permit
termination, for example, if the
consumer transferred title to the
property without the permission of the
creditor or if the consumer failed to
maintain required insurance on the
dwelling.
If any of these three events occurs, a
creditor may also be able to take action
short of terminating an account and
accelarating payment of the outstanding
balance. These three events would
likely constitute circumstances that
would permit a creditor to prohibit
additional extensions of creditor or
reduce the credit limit. (See the later
discussion of the ability of a creditor to
change the terms due to default and
other events.)
Creditors would not be permitted to
specify in their contracts other events
that would permit terminating an
account and accelerating payment of the
outstanding balance. Thus, for example,
a contract.could not provide that the
account will be terminated and the
balance accelerated if a judgment is
filed against the consumer.
(C) Change of Terms
Section 226.5b(f)(3), which implements
the third substantive limitation, provides
that a creditor may not unilaterally
change the terms under the plan after
the account has been opened. There are,
however, several exceptions to this rule.
Federal Register / Vol. 54, No. 13 / Monday, January 23. 1989 / Proposed Rules
(1) E vents p rovided fo r in the
contract. The legislative history makes
clear that a creditor w as not meant to be
prohibited from implementing specific
changes set forth in the contract that are
contemplated on the occurrence of a
specific event; this exception has been
incorporated in proposed
§ 226.5b(f)(3)(i). Both the triggering event
and the resulting modification must be
stated with specificity. For example, in
an employee loan program, the contract
could provide that a specified higher
rate will apply if the borrower's
employment ends. Similarly, a creditor
would be permitted to suspend
additional extensions of credit if the
maximum APR is reached, as long as
this is expressly provided for in the
agreement. A creditor using this
provision could only suspend advances
for the period the APR would exceed the
rate cap, and would have to permit
further advances if the applicable rate
drops to or below the cap, if that occurs
during the draw period set forth in the
initial agreement. The Board solicits
comment on w hether other examples
should be provided such as permitting
contracts to provide for a replacement
index in the event the original index in a
variable-rate plan becomes unavailable.
While the Board proposes to permit
creditors to specify in the initial
agreement specific changes that are
contemplated on the occurrence of
specific events, there are two limitations
on the provisions that could be set forth
in the contract. First, under the
regulation, creditors would not be
permitted to include a general provision
in the agreement permitting them to
change any or all of the terms of the
plan. For example, creditors could not
include “boilerplate” language in the
agreement stating that they reserve the
right to change the payment obligations
under the plan. Second, creditors would
not be permitted to include in the initial
agreement any events which the
regulation expressly addresses. For
example, the statute and
§ 226.5b(f)(3)(iii) of the regulation
provide that a creditor may prohibit
additional extensions of credit or reduce
the credit limit during any period in
which the value of the dwelling that
secures the plan declines significantly
below the property’s appraised value.
Because the statute expressly provides
for this situation, and specifically sets
forth what action the creditor may take
if it arises, the contract may not
authorize the creditor to '.ake more
sweeping action. For example, a creditor
could not permanently refuse to make
further advances if the value of the
property declines significantly below the
property’s appraised value, since the
statute provides that further advances
can be prohibited only during the period
in which the value of the property
remains significantly below the
appraised value. Similarly, a contract
may not authorize the creditor to take
any additional action beyond
prohibiting further advances or reducing
the credit limit w hen the creditor
reasonably believes that the consumer
will be unable to fulfill the repayment
obligations due to a material change in
the consumer's financial
circumstances—since this condition also
is set forth in the statute. The Board
believes permitting creditors to expand
on the exceptions set forth in the statute
would be inconsistent with the intent of
the legislation.
(2) Changes m ade b y m utual w ritten
agreem ent. The statute and the
proposed amendments to the regulation
prohibit unilateral changes. The Board
proposes to permit creditors to change
the terms after a plan is opened
provided the consumer expressly agrees
in writing to the change. Thus, for
example, under footnote lOd to
§ 226.5b(f}(3), a consumer and a creditor
could agree to extend the period during
which advances can be obtained, or
could agree to change the repayment
terms from, for example, interest-only
payments to payments that reduce the
principal balance. Under the proposal,
creditors would not be permitted to
assume consent because the consumer
uses an account (even if that implies
acceptance under state law). The Board
believes this will carry out the
Congressional intent to limit changes
after a plan is opened, yet accommodate
the need for adjustments agreed to by
both parties to the contract.
(3) Insignificant changes. The statute
and § 226.5b(f)(3) of the proposal
provide another exception to the general
prohibition against changing terms, for
changes to “insignificant terms.” This is
intended to address operational
problems, such as changing the address
of the creditor for purposes of sending
payments. This exception would not
permit a creditor to unilaterally change
a term such as a fee charged for late
payments.
(4) Substitution o f index. Section
226.5b(f)(3)(ii) of the proposal also
provides that the creditor may change
the index and margin used under the
plan if the original index becomes
unavailable, as long as historical
fluctuations in the two indices were
substantially similar, and as long as the
new index and margin would have
resulted in a rate similar to the rate that
3069
w as in effect at the time the original
index became unavailable.
(5) B eneficial changes. Creditors also
would be permitted under proposed
§ 226.5b(f)(3)(iv) to make any changes
that “unequivocally benefit” the
consumer as long as the change is
beneficial for the entire term of the
agreement. A creditor would not be able
to change the payment obligations of the
plan in reliance on this exception. For
example, reducing the amount of the
minimum payment may not be
unequivocally beneficial since it may
result in less principal being repaid over
the term of the plan and may result in a
higher total amount of finance charges.
While this exception is narrow, as noted
above, a consumer and creditor would
be permitted to change the terms of the
plan by mutual written agreement.
(6) Changes due to default and other
events. Section 226.5b(f)(3)(iii) of the
proposal incorporates the statutory
provisions that provide that a creditor
may prohibit additional extensions of
credit or reduce the credit limit in four
circumstances. First, a creditor m ay take
such action if the value of the dwelling
that secures the plan declines
significantly below the property’s
appraised value for purposes of the plan.
Second, a creditor may prohibit
additional extensions of credit or reduce
the credit line if the creditor reasonably
believes the consumer will be unable to
fulfill the repayment obligations under
the plan due to a material change in the
consumer’s financial circumstances.
Two conditions must be met for a
creditor to use this exception. First,
there must be a “material change” in the
consumer’s financial circumstances. For
example, a significant decrease in the
consumer’s income would meet this part
of the requirement. Second, as a result
of this change, the creditor must have a
reasonable belief, based on some
evidence (such as failure to pay other
debts), that the consumer will be unable
to fulfill the payment obligations of the
plan.
The third exception permits a creditor
to prohibit additional extensions of
credit or reduce the credit line if the
consumer is in default of any material
obligations under the agreement.
(Sections 226.5b(d)(4) and 226.6(e)(2)
require that the creditor provide or make
available a list of the conditions that
would permit prohibiting additional
extensions of credit or reducing the
credit line.) The final exception permits
a creditor to prohibit additional
advances or reduce the credit line
because action by a governmental body
either (a) precludes the creditor from
imposing the agreed-upon APR (for
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Federal Register / Vol. 54, No. 13 / Monday, January 23, 1989 / Proposed Rules
example, enactment of a lower state
rate ceiling after the plan has been
entered into), or (b) adversely affects the
priority of the creditor’s security interest
to the extent that the value of the
security is less than 120 percent of the
amount of the credit line (for example,
through imposition of a tax lien).
Under the proposed regulation,
creditors are permitted to prohibit
additional extensions of credit or reduce
the credit limit only as long as any of
these four circumstances exist. Thus, for
example, if the creditor limits the ability
of the consumer to obtain further
advances due to a significant decline in
the value of the dwelling, and during the
length of the draw period the value of
the property subsequently increases, the
creditor would have to reinstate credit
drawing privileges. Similarly, a creditor
may reduce the credit limit only during
the period any of the circumstances
exists.
(D) Refund of Fees
Section 226.5b(g) of the proposal
imposes a duty on a creditor to refund
all fees paid by the consumer in
connection with an application if any
term disclosed (other than a variable
rate) changes between the time
disclosures are provided to the
consumer and the plan is opened, and if,
as a result of the change, the consumer
decides to not enter into the plan. This
rule applies to any fees paid in
connection with the plan, such as credit
report fees and appraisal fees, w hether
paid directly to the creditor or to third
parties. This right is distinct from the
existing right of rescission under
§ 226.15, which begins only when a plan
secured by the consumer’s principal
dwelling is actually opened.
regulations become final: and (2) any
application to open a plan which is
distributed by or received by a creditor
five months after regulations become
final. Under this requirement, creditors
would have to provide the first set of
disclosures to consumers if an
application is received after the
effective date of the regulations, even if
the application w as provided to the
consumer prior to the effective date of
the rule. The Board plans to provide a
rule in the supplemental information to
the final amendments allowing creditors
to provide the first set of disclosures to
consumers within three days of receipt
of the application in such cases.
(xiii)
D isclosure Sam ples and M odel
C lauses
In connection with the other revisions,
the Board is proposing to revise
Appendix G of the regulation to
incorporate disclosure samples (G-17A
and G-17B), and model clauses (G-1S) to
assist creditors in preparing disclosures.
(E) Imposition of Fees
Finally, under § 226,5b(h) of the
proposal, neither the creditor nor any
other party may impose a nonrefundable
fee in conjunction with an application
until three business days after the
disclosures and brochure have been
provided to the consumer. If disclosures
are mailed to the consumer, footnote lOe
of the regulation provides that a fee
cannot be collected until six business
days after the mailing. If a refundable
fee is collected prior to the consumer
receiving the disclosures, the fee would
have to be refunded to the consumer if
the consumer decides not to enter into
the agreement.
(A) Disclosure Samples
Form G-17A illustrates a variable-rate
plan with 10-year draw period followed
by a 5-year repayment period. The
payments are based on a percentage of
the outstanding balance so that,
independent of rate changes, payments
will vary each month during die plan.
Consequently, payments are stated as a
range in the minimum payment example.
In the historical table, which illustrates
both the draw and the repayment
periods, only one payment per year is
reflected and the fact that payments
would have varied during each year is
stated. All calculations, however, are
conducted using the actual payment
computation formula. The Board
specifically solicits comment on whether
this treatment is appropriate for such
payment arrangements.
Form G-17B illustrates a variable-rate
plan with interest-only paym ents during
the draw period followed by a
repayment period, the length of which
depends on the size of the outstanding
balance. The consumer is permitted to
select between two payment
arrangements—monthly or quarterly
payments—during the draw period.
Accordingly, the payment disclosures
and examples illustrate such payment
option. In addition, by including two
payment columns, the form illustrates
how one historical table can be used to
disclose multiple payment options.
(xii)
E ffective D ate
The statute provides that the act and
regulations shall apply to: (1) Any
agreement to open a plan which is
entered into five months after the
(B) Model Clauses
Appendix G-18 contains a number of
model clauses that may be used in
preparing disclosures. Information that
must be inserted is indicated by
italicized language within parentheses.
Alternative language is set forth in
brackets and separated by a slash.
Disclosures that may not be applicable
to a given plan are set forth in brackets.
(3) Economic Impact Statement
The Board’s Division of Research and
Statistics has prepared an economic
impact statem ent on the proposed
revisions to Regulation Z. A copy of the
analysis may be obtained from
Publications Services, Board of
Governors of the Federal Reserve
System, Washington, DC, 20551, at (202)
452-3245.
List of Subjects in 12 CFR Part 226
Advertising, Banks, banking,
Consumer protection, Credit, Federal
Reserve System, Finance, Penalties,
Rate limitations, Truth in Lending.
(4) Text of Proposed Revisions
Certain conventions have been used
to highlight the proposed revisions. New
language is shown inside arrows.
Pursuant to authority granted in section
105 of the Truth in Lending Act (15
U.S.C. 1604 as amended), the Board
proposes to amend Regulation Z (12 CFR
Part 226).
1. The authority citation for Part 226
continues to read:
Authority: Sec. 105, Truth in Lending Act,
as am ended by sec. 605, Pub. L. No. 96-221, 94
Siat 170 {15 U.S.C. 1604 et seq.); section
1204(c), Competitive Banking Equality Act,
Pub. L. No. 100-86,101 S ta t 552.
2, Regulation Z (12 CFR Part 226) is
proposed to be amended by adding a
sentence to the end of paragraph (b) of
§ 226.1 (the first sentence is
republished), by adding paragraph (3),
§ 226.1(c), by revising the second
sentence of paragraph (2) to § 226.l(d,
(the first sentence is republished), by
revising footnote 8, by adding paragraph
(4) to § 226.5(a) (a) introductory text is
republished) by adding paragraph (4) to
§ 226.5(b), by adding § 226.5b, by adding
paragraph (e) to § 226.6, and by adding
paragraph (d) to § 226.16.
Subpart A—General
§ 226.1 Authority, purpose, coverage,
organization, enforcement and liability.
(b) Purpose. The purpose of this
regulation is to promote the informed
use of consumer credit by requiring
disclosures about its terms and cost.
* * * ► I n addition, the regulation
requires a maximum interest rate to be
stated in variable-rate contracts secured
by the consumer's dwelling, and
imposes limitations on home equity
Federal Register / Vol. 54. No. 13 / Monday, January 23, 1989 / Proposed Rules
plans that are subject to the
requirements of § 226.5b.
(c) Coverage. * * *
► (3) In addition, certain requirements
of § 226.5b apply to persons who are not
creditors but who provide applications
for home equity plans to consumers.-*
(d) Organization. * * *
(2) Subpart B contains the rules for
open-end credit. It requires that initial
disclosures and periodic statements be
p ro vided ^, as well as additional
disclosures for home equity plans
subject to the requirements of
§ 226.5b*. * * *
shall be provided at the time an
application is provided to the
consumer.10* (See § 226.6(a) for
additional disclosures to be provided
later.)
(c) D uties o f third parties. Persons
other than the creditor who provide
applications to consumers for home
equity plans must provide the brochure
required under paragraph (e) of this
section at the time an application is
provided. If such persons have the
disclosures for a creditor’s home equity
plan, they also shall provide the
disclosures at such time.
*
*
*
*
*
(d) C ontent o f disclosures. The
creditor shall provide the following
Subpart B—Open-End Credit
disclosures, as applicable:
(1) R etention o f inform ation. A
§ 226.5—General disclosure requirements.
statement that the consumer should
(a) Form o f disclosures. (1) The
make or otherwise retain a copy of the
creditor shall make the disclosures
disclosures.
required by this subpart clearly and
(2) C onditions fo r disclosed terms, (i)
conspicuously in writing,7 in a form that
A statement of the time by which the
the consumer may keep.8
*
*
*
*
*
consumer must submit an application to
obtain specific terms disclosed and an
► (4) For rules governing the form of
identification of any disclosed term that
disclosures for home equity plans, see
is subject to change prior to opening the
§ 226.5b(a).*
plan.
(b) Tim e o f disclosures. * * *
(ii) A statement that, if a disclosed
► {4) H om e equ ity plans. Disclosures
term changes (other than a change due
for home equity plans shall be made in
to a variable-rate feature) prior to
accordance with § 226.5b(b}.*
opening the plan and the consumer
► § 226.5b Requirements for home equity
therefore elects not to open the plan, the
plans.
consumer may receive a refund of all
The requirements of this section apply
fees paid in connection with the
to open-end credit plans secured by the
application.
consumer's dwelling.
(3) Security interest a nd risk to home.
(a) Form o f disclosures—fl) General.
A statement that the creditor will
The disclosures required by § 226.5b(d)
acquire a security interest in the
shall be made clearly and conspicuously
consumer's dwelling and that loss of the
and shall be grouped together and
dwelling may occur in the event of
segregated from all other unrelated
default.
information. The disclosures may be
(4) Possible actions b y creditor, (i) A
provided on the application form or on a
statement
that the creditor, under
separate form. The variable-rate
certain conditions, may terminate the
information required in paragraph
plan and require payment of the
(d)(12) of this section, as well as the
outstanding balance in full in a single
disclosure provided for under paragraph
payment upon termination, and that fees
(d)(4)(iii) of this section, may be
may be imposed upon termination; that
provided separately from the other
the creditor may prohibit additional
required disclosures.
(2) Precedence o f certain disclosures. extensions of credit or reduce the credit
limit under certain conditions; and that
The disclosures required by paragraphs
the creditor, as specified in the initial
(d)(1) through (4)(ii) of this section shall
agreement, may modify certain terms of
precede the other required disclosures.
the plan.
(b) Tim e o f disclosures. The
(ii) A statement that the consumer
disclosures and brochure required by
may receive, upon request, information
paragraphs (d) and (e) of this section
about the conditions under which such
actions may occur.
7 The disclosure required by § 226.9(d) when a
Finance charge is imposed at the time of a
transaction need not be written.
* The ► h o m e equity disclosures required under
§ 226.5b(d). the-* alternative summary billing rights
statement provided for in § 226.9(a)(2). and the
disclosures made under § 226.10(b) about payment
requirements need not be in a form that the
consumer can keep.
,0a The disclosures and the brochure may be
delivered or placed in the mail not later than three
business days following receipt of a consumer’s
application in the case of applications contained in
magazines or other publications, or when the
application reaches the creditor by telephone or
through an intermediary agent or broker.
3071
(iii) In lieu of the disclosure required
under paragraph (d)(4)(ii) of this, section,
a statement of such conditions.
(5) P aym ent term s. The payment
terms of the plan, including:
(i) The length of the plan.
(ii) An explanation of how the
minimum periodic payment will be
determined and the timing of the
payments. If paying only the minimum
periodic payments will not repay any of
the principal or will repay less than the
outstanding balance, a statem ent of this
fact, as well as a statement of any
balloon payment that will result.10”
(iii) An example, based on a $10,000
outstanding balance and a recent annual
percentage rate,10' showing the
minimum periodic payment, any balloon
payment, and the time it would take to
repay the $10,000 outstanding balance if
the consumer made only those payments
and obtained no additional extensions
of credit.
If different payment terms may apply to
the period during which the consumer
may obtain additional extensions of
credit and the period during which the
consumer must repay the outstanding
balance without obtaining additional
extensions of credit, or if different
payment terms may apply within either
period, the disclosures shall reflect the
different payment terms.
(6) A nnual percentage rate. For Fixed
rate plans, a recent annual percentage
rate 10c imposed under the plan and a
statement that the rate does not include
costs other than interest.
(7) Fees im posed b y creditor. An
itemization of any fees imposed by the
creditor to open, use, or maintain the
plan, stated as a dollar amount or
percentage, and when such fees are
payable.
(8) Fees im posed b y third parties. An
estimate, stated as a single dollar
amount or range, of any fees that may
be imposed by persons other than the
creditor, as well as a statement that the
consumer may request from the creditor
a good faith itemization of such fees.
A balloon payment results if paying the
minimum periodic payments will not fully amortize
the outstanding balance by a specified date, and the
consumer will be required to repay the entire
outstanding balance at such time.
I0C For purposes of this section, an annual
percentage rate is the annual percentage rate as
determined under 5 226.14(b). For fixed rate plans, a
recent annual percentage rate is a rate that has
been in effect under the plan within the twelve
months preceding the date the disclosures are
provided to the consumer. For variable rate plans, a
recent annual percentage rate is the most recent
rate provided in the historical table or a rate that
has been in effect under the plan since the date of
the most recent rate in the table.
3072
Federal Register / Vol. 54, No. 13 / Monday, January 23, 1989 / Proposed Rules
(9) N egative am ortization. A
statement that negative amortization
may occur and that negative
amortisation increases the principal
balance and reduces the consumer’s
equity in the dwelling.
(10) Transaction requirem ents. Any
limitations on the number of extensions
of credit and the amount of credit that
may be obtained during any time period,
as well as any minimum outstanding
balance and minimum draw
requirements, stated as dollar amounts
or percentages.
(11) Tax im plications. A statem ent
that the consumer should consult a tax
advisor regarding the deductibility of
interest and charges under the plan.
(12) D isclosures fo r variable-rate
plans. In a variable-rate plan, the
following disclosures:
(i) The fact that the annual percentage
rate, payment, or term may change due
to the variable-rate feature.
(ii) A statement that the annual
percentage rate does not include costs
other than interest
(iii) The index used in making rate
adjustments and a source of information
about the index.
(iv) An explanation of how the annual
percentage rate will be determined,
including an explanation of how the
index is adjusted, such as by the
addition of a margin.
(v) A statem ent that the consumer
should ask about the current index
value, margin, and annual percentage
rate.
(vi) A statem ent that the initial annual
percentage rate is not based on the
index and margin used to make later
rate adjustments, and the period of time
such initial rate will be in effect
(vii) The frequency of changes in the
annual percentage rate.
(viii) Any rules relating to changes in
the index value and resulting changes in
the annual percentage rate and payment
amount, including, for example, an
explanation of payment limitations and
interest rate carryover.
(ix) A statem ent of the maximum
amount that the annual percentage rate
may change in any one-year period (or a
statem ent that no such limitation exists),
as well as a statement of the maximum
annual percentage rate that may be
imposed under each payment option.
(x) The minimum periodic payment
required when the maximum annual
percentage rate for each payment option
is in effect for a $10,000 outstanding
balance, and a statem ent of the earliest
date the maximum rate may be imposed.
(xi) An historical table, based on a
$10,000 extension of c re d it illustrating
how annual percentage rates and
payments would have been affected by
index value changes implemented
according to the terms of the plan. The
historical table shall be based on the
most recent 15 years of index values
(selected for the same time period each
year) and shall reflect all significant
plan terms, such as rate discounts, rate
and payment limitations, rate carryover,
and negative amortization, that would
have been affected by the index
movement during the period.
(xii) A statem ent that rate information
will be provided on or with each
periodic statem ent
(e) Brochure. The home equity
brochure published by the Board or any
brochure that provides substantially
similar information shall be provided.
(f) Lim itations on hom e equ ity plans.
No creditor may, by contract or
otherwise:
(1) Change the annual percentage rate
unless:
(1) Such change is b ased on an index
that is not under the creditor’s control;
and
(ii) Such index is available to the
general public.
(2) Terminate a plan and dem and
repayment of the entire outstanding
balance in advance of the original term
unless:
(i) There has been fraud or material
misrepresentation by the consumer in
connection with die plan;
(ii) The consumer has failed to meet
the repayment terms of the agreement
for any outstanding balance; or
(iii) Any action or inaction by the
consumer has adversely affected th e
creditor's security far the plan.
(3) Change any term lod (other than an
insignificant term), except th at a
creditor may:
(i) Provide in the initial agreement
that specified changes will occur if a
specific event takes place (for example,
that the annual percentage rate will
increase a certain amount if the
consumer leaves the creditor’s
employment or that further extensions
of credit will not be made if the
maximum annual percentage rate is
reached).
(ii) Change the index and margin used
under the plan if the original index is no
longer available, the new index has an
historical movement substantially
similar to that of the original index, and
the new index and margin would have
resulted in an interest rate substantially
similar to the rate in effect a t the time
the original index became unavailable.
(iii) Prohibit additional extensions of
credit or reduce the credit limit
' M The creditor may implement changes during
the plan if a specific written agreement is made
with the consumer at that time.
applicable to an agreement during any
period in which:
(A) The value of the dwelling that
secures the plan declines significantly
below the property’s appraised value for
purposes of the plan;
(B) The creditor reasonably believes
that the consumer will be unable to
fulfill the repayment obligations under
the plan because of a material change in
the consumer's financial circumstances;
(C) The consumer is in default o f any
material obligation under the agreement;
(D) The creditor is precluded by
government action from imposing the
annual percentage rate provided for in
the agreement; or
(E) The priority of the creditor’s
security interest is adversely affected by
government action to the extent that the
value of the security interest is less than
120 percent of the credit line.
(iv) Make any change that will
unequivocally benefit the consumer
throughout the remainder of the plan.
(g) D isclosure required upon req u est
A creditor shall provide, a t the
consumer’s req u est a statem ent of the
conditions under which the creditor may
take the actions described in paragraph
(d)(4)(i) of this section.
(h) R efund to consum er. A creditor
shall refund all fees paid by the
consumer to anyone in connection with
an application if any term required to be
disclosed under paragraph (d) of this
section changes (other than a change
due to a variable-rate feature) before the
plan is opened and, as a re su lt the
consumer elects not to open the plan.
(i) Im position o f nonrefundable fees.
Neither a creditor nor any other person
may impose a nonrefundable fee in
connection with an application until
three business days after the consumer
receives the disclosures and brochure
required under this section.10*
§ 226.6 initial disclosure statement.
*
*
*
*
► (e) H om e eq uity plan inform ation.
(1) The disclosures required under
I 226.5b(d), to the extent they are not
duplicative.
(2) A statem ent of the conditions
under which the creditor may take the
actions described in § 226.5b(d)(4)(i).-^
*
«
*
*
*
§ 226.26 Advertising.
► (d) A d d itiona l requirem ents fo r
hom e eq u ity plans.—(1) A dvertisem ent
If the disclosures and brochure are mailed to
the consumer, the consumer is considered to have
received them three business days after they have
been mailed. ^
3073
Federal Register / Vol. 54, No. 13 / Monday, January 23, 1989 / Proposed Rules
o f term s that require additional
disclosures. If any of the terms required
to be disclosed under § 226.6(a) or (b) or
the payment terms of the plan are set
forth, affirmatively or negatively, in an
advertisement for a home equity plan
subject to the requirements of § 228.5b,
the advertisement shall also clearly and
conspicuously set forth the following;
(1) Any loan fee that is a percentage of
the credit limit tinder the plan and an
estimate of any other fees imposed for
opening the plan, stated as a single
dollar amount or a reasonable range.
(ii) Any periodic rate used to compute
the finance charge, expressed as an
annual percentage rate as determined
under § 226.14(b).
(iii) The maximum annual percentage
rate that may be imposed in a variablerate plan.
(2) D iscounted a n d prem ium rates. If
an advertisement states an initial
annual percentage rate that is not based
on the index and margin used to make
later rate adjustments in a variable-rate
plan, the advertisement also shall state
the period of time such rate will be in
effect, and, with equal prominence to
the initial rate, a reasonably current
annual percentage rate that would have
been in effect using the index and
margin.
(3) Balloon p a y m e n t If an
advertisement contains a statement
about any minimum periodic payment,
the advertisement also shall state, if
applicable, that a balloon paym ent1ob
will result.
(4) Tax im plications. An
advertisement that states that any
interest expense incurred under the
home equity plan is or may be tax
deductible may not be misleading in this
regard.
(5) M isleading term s. An
advertisement may not refer to a home
equity plan as “free money" or contain a
similarly misleading term.-*
► G—17A
Home Equity Sample
IMPORTANT TERMS OF OUR HOME
EQUITY LINE OF CREDIT
This disclosure contains important
information about our Home Equity Line of
Credit. You should read it carefully and keep
a copy for your records.
Availability of Terms: To obtain the terms
described below, you must submit your
application before April 1,1989.
If any of these terms changes (other than
the annual percentage rate) and you decide,
as a re s u lt to not enter into an agreement
with us, you are entitled to a refund of any
fees that you paid in connection with your
application.
Security Interest: W e will take a mortage in
your home. You could lose your home if you
don’t meet the obligations in your agreement
with us.
Possible Actions: Under certain
circumstances, we can (1) terminate your
account and require you to pay us the entire
outstanding balance in one paym ent and also
charge you certain fees, (2) refuse to make
additional extensions of c re d it and (3)
reduce your credit limit.
Upon req u e st we will provide you with
more specific information about w hen w e can
take these actions.
Minimum Payment Requirements: You can
obtain credit advances for 10 years (the
“draw period"). During the draw period,
paym ents will be due monthly. Your
minimum monthly paym ent will equal the
greater of l/360th of the outstanding balance
plus the finance charges that have accrued on
the outstanding balance, or $100.
After the draw period ends, you will no
longer be able to obtain credit advances and
must pay the outstanding balance on your
account over 5 years (the “repaym ent
period”). During the repaym ent period,
paym ents will be due monthly. Your
minimum monthly payment will equal all
paym ents past due, plus l/6 0 th of the balance
that w as outstanding at the end of the draw
period plus the finance charges that have
accrued on the remaining balance.
Minimum Payment Example: If you made
only the minimum monthly paym ent and took
no other credit advances, it would take 15
years to pay off a credit advance of $10,000 at
an ANNUAL PERCENTAGE RATE of 12.00%.
During that period, you would make 120
*
*
**
*
monthly payments varying betw een $127.78
3.
Appendix G is am ended by adding and $100.00 followed by 60 monthly payments
G—17A, G—173, and G—18.
varying between $187.06 and $118.08.
Fees and Charges: In order to open and
Appendix G—Open-End Model Forms And
maintain an account, you must pay certain
Clauses
fees and charges. The following fees must be
*
*
*
*
*
paid to us:
► G-17A Home Equity Sample.
Application fee: $150 (due at application)
G-17B Home Equity Sample.
Points: 1% of credit limit (due when account
G-18 Home Equity Model Clauses.-^
opened)
*
*
*
*
*
Annual maintenance fee: $75 (due each year)
You also must pay certain fees to third
parties such as appraisers, credit reporting
firms, and government agencies. These fees
generally total between $500 and $900. Upon
request, w e will provide you w ith an
itemization of the fees you will have to pay to
third parties.
Minimum Draw and Balance Requirements:
The minimum credit advance that you can
receive is $500. You must maintain an
account balance of a t least $100.
Tax Deductibility: You should consult a tax
advisor regarding the deductibility of interest
and charges under the plan.
Variable-Rate Feature: The plan has a
variable-rate feature, and the annual
percentage rate and the minimum monthly
payment can change as a result. The annual
percentage rate does not include costs other
than interest.
The annual percentage rate is based on the
value of an index. The index is the monthly
average prime rate charged by banks and is
published in the Federal Reserve Bulletin. To
determine the annual percentage rate that
will apply to your acco un t we add a margin
to the value of the index.
Ask us for the current index value, margin
and annual percentage rate. After you open
an account rate information will be provided
on periodic statem ents that we send you.
Rate Changes: The annual percentage rate
can change monthly. There is no limit on the
amount by which the rate can change during
any one-year period. The maximum
ANNUAL PERCENTAGE RATE that can
apply during the plan is 18%.
Maximum Rate and Payment Examples: If
you had an outstanding balance of $10,000 at
the beginning of the draw period, the
minimum monthly payment at the maximum
ANNUAL PERCENTAGE RATE of 18% would
be $177.78. This annual percentage rate could
be reached during the first month of the draw
period.
If you had an outstanding balance of
$10,000 at the beginning of the repayment
period, the minimum monthly payment at themaximum ANNUAL PERCENTAGE RATE of
18% would be $318.67. This annual percentage
rate could be reached during the first month
of the repaym ent period.
Variable-Rate Example: The following
table shows how the annual percentage rate
and the minimum monthly payments for a
single $10,000 credit advance would have
changed based on changes in the index over
the last 15 years. The index values are from
September of each year. While only one
payment amount per year is shown,
payments would have varied slightly during
each year.
The table assumes that no additional credit
advances w ere taken and that only the
minimum payment was made each month. It
does not necessarily indicate how the index
or your payments would change in the future.
Percentatge—
Year
1974................... .................................... ................. . ............................ .........................................................................
19 75 .............. ............ - ........................................ ............................................................................................................
Index
12.00
7.88
7.00
Annual rate
Margin
2
2
2
14.00
988
9.00
Minimum
monthly
payment
$144.44
$106.50
$100.00
3074
Federal Register / Vol. 54, No. 13 / Monday January 23, 1989 / Proposed Rules
Percentatge—
Year
Index
1 9 7 7 ....................................................................................................................
...................................................
1 9 7 8 ......................................................................................................................................................................................
19 79 ......................................................................................................................................................................................
1 980 ......................................................................................................................................................................................
1981 ......................................................................................................................................................................................
1 9 82.................................................................................................................................. ......................... ...................;......
19 83 ................................................... .............................. ...................................................................................................
1 9 8 4 ......................................................................................................................................................................................
1985......................................................................................................................................................................................
1 9 8 6 ................................................................................................................. ....................................................................
1987................................................................................... ..................................................................................................
1 9 8 8 .....................................................................................................................................................................................
7.13
9.41
12.90
12.23
20.08
13.50
11.00
12.97
9.50
7.50
8.70
10.00
Margin
Annual rate
2
2
2
2
2
2
2
2
2
2
2
2
9.13
11.41
14.90
14.23
1 18.00
15.50
13.00
14.97
11.50
9.50
10.70
12.00
Minimum
monthly
payment
$100.00
$105.47
$126.16
$117.53
$138.07
$117.89
$100.00
$203.81
$170.18
$149.78
$141.50
$130.55
' This rate reflects the 18 percent maximum rate limitation.
G-17B Home Equity Sample
IMPORTANT TERMS OF OUR HOME
EQUITY LINE OF CREDIT
This disclosure contains important
information about our Home Equity Line of
Credit. You should read it carefully and keep
a copy for your records.
Availability of Terms: All of the terms
described below are subject to change.
If any of these terms changes {other than
the annual percentage rate) and you decide,
as a result, to not enter into an agreement
with us, you are entitled to a refund of any
fees that you paid in connection with your
application.
Security Interest: We will take a mortgage
in your home. You could lose your home if
you don't meet the obligations in your
agreement with us.
Possible Actions: Under certain
circumstances, we can (1) terminate your
account and require you to pay us the entire
outstanding balance in one payment and also
charge you certain fees, (2) refuse to make
additional extensions of creidt, (3) reduce
your credit limit, and (4) make specific
changes that are set forth in your agreement
with us.
Upon request, we will provide you with
more specific information about when we can
take these actions.
Minimum Payment Requirements: You can
obtain credit advances for 15 years (the
"draw period"). W hen you open your
account, you can choose to make either
monthly or quarterly payments during the
draw period. If you choose the monthly
payment option, your monthly payment will
equal the finance charges that accrued during
the preceding month. If you choose the
quarterly payment option, your quarterly
payment will equal the finance charges that
accrued during the preceding quarter. Under
either option, if the accrued finance charges
are less than $50, the minimum payment will
equal S50 or the account balance, whichever
is less. Balances of less than $50 must be paid
in full.
Under either the monthly or quarterly
payment option, the minimum payment
during the draw period will not reduce the
principal that is outstanding on your account.
After the draw period ends, you will no
longer be able to obtain credit advances and
must repay the outstanding balance on your
account (the “repayment period"). The length
of the repayment period will depend on the
balance outstanding on your account at the
beginning of it. During the repayment period,
payments will be due monthly and will equal
3% of the then outstanding balance (including
finance charges) on your account or $100,
whichever is greater.
Minimum Payment Examples: If you made
only the minimum payment and took no other
credit advances, it would take 22 years and
11 months to pav off a credit advance of
$10,000 at an ANNUAL PERCENTAGE RATE
of 12.00%. Under the monthly payment option,
you would make 180 monthly paym ents of
$100.00 followed by 94 monthly payments
varying between $303.00 and $100.00 and a
final payment of $30.27. Under the quarterly
payment option, you would make 60 quarterly
paym ents of $303.01 followed by 94 monthly
payments varying between $303.00 and
$100.00 and a final payment of $30.27.
Fees and Charges: In order to open and
maintain an account, you must pay certain
fees and charges. The following fees must be
paid to us:
Application fee: $100 (due at application)
Points: 1% of credit limit (due when account
opened)
Annual m aintenance fee: $75 (due each year)
You also must pay certain fees to third
parties such as appraisers, credit reporting
firms, and government agencies. These fees
generally total between $500 and $900. Upon
request, w e will provide you with an
itemization of the fees you will have to pay to
third parties.
Minimum Draw Requirement: The
minimum credit advance that you can receive
is $200.
Tax Deductibility: You should consult a tax
advisor regarding the deductibility of interest
and charges under the plan.
Variable-Rate Feature: The plan has a
variable-rate features, and the annual
percentage rate and the minimum monthly
payment can change as a result. The annual
percentage rate does not include costs other
than interest.
The annual percentage rate is based on the
value of an index. The index is the monthly
average prime rate charged by banks and is
published in the Federal Reserve Bulletin. To
determine the annual percentage rate that
will apply to your account, we add a margin
to the value of the index.
Ask us for the current index value, margin
and annual percentage rate. After you open
an account, rate information will be provided
on periodic statem ents that we send you.
Rate Changes: The annual percentage rate
can change monthly. There is no limit on the
amount by which the rate can change during
anv one-year period. The maximum
ANNUAL PERCENTAGE RATE that can
apply during the plan is 18%.
Maximum Rate and Payment Examples:
Under the monthly payment option, if you
had an outstanding balance of $10,000 at the
beginning of the draw period, the minimum
monthly payment at the maximum ANNUAL
PERCENTAGE RATE of 18% would be
$150.00. Under the quarterly payment option,
the minimum quarterly payment would-be
$456.78. This annual percentage rate could be
reached during the first month of the draw
period.
If you had an outstanding balance of
$10,000 at the beginning of the repayment
period, the minimum monthly payment at the
maximum ANNUAL PERCENTAGE RATE of
18% would be $304.50. This annual percentage
rate could be reached during the first month
of the repayment period.
Variable-Rate Example: The following
table shows how the annual percentage rate
and paym ents for a single $10,000 credit
advance would have changed based on
changes in the index over the last 15 years.
The index values are from September of each
year.
The table assumes that no additional credit
advances were taken and that only the
minimum payment w as made. It does not
necessarily indicate how the index or your
paym ents would change in the future.
Federal Register / Vol. 54, No. 13 / Monday, January 23, 1989 / Proposed Rules
307S
Minimum payment—
Percentage—
Year
Index
1974.,
1975.,
1976.,
1977.,
1978.,
1979.
1980.,
1981 .,
1982.,
1983.,
1984.,
1985.
1986.
1987.
1988.
1This rate reflects the
Margin
Annual rate
Monthly
12.97
9.50
7.50
8.70
14.00
9.88
9.00
9.13
11.41
14.90
14.23
> 18.00
15.50
13.00
14.97
11.50
9.50
10.70
$116.67
$82.33
$75.00
$76.08
$95.08
$124.17
$118.58
$150.00
$129.17
$108.33
$124.75
$95.83
$79.17
$89.17
10.00
12.00
$100.00
12.00
7.88
7.00
7.13
9.41
12.90
12.23
20.08
13.50
11.00
Quarterly
$354.10
$249.04
$226.69
$229.99
$287.97
$377.14
$369 99
$456.78
$392.53
$328.53
$378.94
$290.26
$239.39
$269.89
$303.01
18-percent maximum rate limitation.
G- 1 8 Home Equity Model Clauses
Retention of Information: This disclosure
contains important information about our
Home Equity Line of Credit. You should read
it carefully and keep a copy for your records.
Availability of Terms: To obtain the terms
described below, you must submit your
application before (date). However thte
[description of terms) are subject to change.
If any of these terms changes [(other than
the annual percentage rate)] and you
therefore decide to not enter into an
agreement with us, you need not do so. You
will then be entitled to a refund of any fees
that you paid in connection with your
application.
Security Interest: W e will take a [security
interest in/mortgage onj your home. You
could lose your home if you don't m eet the
obligations in your agreement with us.
Possible Actions: Under certain
circumstances, w e can (1) terminate your
account and require you to pay us the entire
outstanding balance in one payment [, and
also charge you certain fees), (2) refuse to
make additional extensions of credit, (3)
reduce your credit limit. [, and (4) make
specific changes that are set forth in your
agreement with us],
[Upon request, we will provide you with
more specific information about when we can
take these actions./W e can take these
actions under the following circumstances:
[when actions may be taken).]
Minimum Payment Requirements: The
length of the [draw period/repaym ent period]
is (length). Payments will be due [frequency).
Your minimum payment will equal [how
payment determined).
The minimum payment will not repay the
balance that is outstanding on your account
by (time). You will then be required to pay
the entire balance in a single payment.
Minimum Payment Example: If you made
only the minimum monthly payment and took
no other credit advances, it would take
(length o f time) to pay off a credit advance of
$10,000 at an ANNUAL PERCENTAGE RATE
of (recent rate). During that period, you
would make (numberj (frequency) paym ents
of $__.
Fees and Charges: To open a n d maintain
an account, you must pay certain fees and
charges. The following fees must be paid to
us:
[Description o f fee) [S____ / ___ % o f _______]
(When payable)
(Description o f fee) [$____/ ___ % o f ______ ]
(When payable)
You also must pay certain fees to third
parties such as appraisers, credit reporting
firms, and government agencies. These fees
generally total [$___ / ____% o f _____ J. Upon
request, we will provide you with an
itemization of the fees you will have to pay to
third parties.
Minimum Draw and Balance Requirements:
The minimum credit advance that you can
receive is $____. You must m aintain an
account balance of a t least $_____
Negative Amortization: Under some
circumstances, negative amortization may
occur. Negative amortization will increase
the amount that you owe us and reduce your
equity in your home.
Tax Deductibility: You should consult a tax
advisor regarding the deductibility of interest
and charges for the plan.
Variabie-Rate Feature: The plan has a
variable-rate feature and the annual
percentage rate and the [minimum paym ent/
term of the plan) can change as a result. The
annual percentage rate does not include costs
other than interest.
The annual percentage rate is based on the
value of an index. The index is the
(identification of index) and is published in
(source of information). To determine the
annual percentage rate that will apply to your
account, We add a margin to the value of the
index.
Ask us for the current index value, margin
and annual percentage rate. After you open
an account, rate information will be provided
on periodic statem ents that w e send you.
[The initial annual percentage rate is not
based on the index and margin used for later
rate adjustments. The initial rate will be in
effect for (period).]
Rate Changes: The annual percentage rate
can change [frequency). [The rate cannot
increase by more th a n ___ percentage points
in any one yearperiod./T here is no limit on
the amount by which the rate can change in
any one year period.] [The maximum
ANNUAL PERCENTAGE RATE that can
apply during the plan i s ___ %./The
ANNUAL PERCENTAGE RATE cannot
increase by more th a n ___ percentage points
above the initial rate during the plan.)
Maximum Rate and Payment Examples: If
you had an outstanding balance of $10,000,
the minimum payment at the maximum
ANNUAL PERCENTAGE RATE o f ___ %
would be $____ This annual percentage rate
could be reached [when maximum rate could
be reached).
Variable-Rate Example: The following
table shows how the annual percentage rate
and the minimum paym ents for a single
$10,000 credit advance would have changed
based on changes in the index over the last
15 years. The index values are from ( when
values are measured).
The table assumes that no additional credit
advances were taken and that only the
minimum payment w as made. It does not
necessarily indicate how the index or your
payments would change in the future.
Percentage—
Year
Index
1 9 7 4 ................................................................. .............
1 9 7 5....................................................
1 97 6......... ..........................................
197 7 .............. ........... .......... .................. .......................
197 8 .............................. ..............................
197 9 ...............................................................................
Margin
Annual rate
Minimum
payment
3076
Federal Register / Vol. 54, No. 13 / Monday. January 23. 1989 / Proposed Rules
1980.
1981.
1983.....
1984.....
1985.....
1986.....
1987
198 8 ...
............... ..................
By order of the Board of Governors of the
Federal Reserve System. January 11.1989.
William W. Wiles,
Secretary o f the Board.
|FR Doc. 89-1080 Filed 1-19-69: 8:45 am]
BILLING C O D E 6 2 1 0 -0 1 -M
............................................ ............
__________ P e r c e n ta g e - ____________
Minimum
Index
payment
Margin
Annual rate
@FedFRASER