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Federal r e se r v e B ank OF DALLAS W IL L IA M H. W ALL A C E DALLAS, TEXAS 75222 f i r s t v ic e p r e s i d e n t AND CHIEF OPERATING OFFICER JUIIS 17 1987 C i r c u l a r 87-41 TO: The Chief Executive O f f i c e r o f a l l member banks, bank holding companies and o t h e r s concerned in the Eleventh Federal Reserve D i s t r i c t SUBJECT S lip sh e et with amendments and c o rr e ctio n s to Regulation Z — Truth in Lending and th e Truth in Lending Act DETAILS The Board o f Governors o f the Federal Reserve System has pu b li sh ed amendments and c o r r e c t i o n s in s l i p - s h e e t form to Regulati on Z, e f f e c t i v e April 1987. The new s l i p s h e e t should be i n s e r t e d in Volume 2 o f yo ur R eg ul atio ns Binders. ENCLOSURES Enclosed i s a s l i p - s h e e t to Regulation Z. MORE INFORMATION For more i n f o r m a t i o n , p le a s e c o n t a c t David W. Dixon of t h i s Bank's Legal Department a t (214) 651-6228. Sincerely yours, For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800) 527-9200 (interstate). This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Board of Governors of the Federal Reserve System Amendments and Corrections to Regulation Z, Truth in Lending, ^ m d the Truth in Lending Act ^ V p r i l 1987* REGULATION Z 1. The April 1, 1982 effective date for manda tory compliance with Regulation Z was de layed to October 1, 1982, pursuant to Public Law 97-110. 2. Effective December 31, 1984, section 226.1(a) is amended by adding a sentence to the end to read as follows: (a) Authority. * * * Information-collection requirements contained in this regula tion have been approved by the Office of Management and Budget under the provi sions of 44 USC 3501 et seq. and have been assigned OMB No. 7100-0199. 3. Effective October 1, 1982, section 226.2 is amended by deleting the text o f paragraph (a)(3) and footnote 2 and reserving those paragraph and footnote numbers and by de leting paragraph (a)(17)(ii) and redesignatk ing paragraphs (a) (17) (iii), (iv), and (v) as f paragraphs (a)(17)(ii), (iii), and (iv), respec tively, to read as follows: (a) Definitions. * * * (3) [Reserved] [Footnote 2 reserved] I of Refunds), a person that honors a credit card. (iii) For purposes of subpart B, any card issuer that extends either openend credit or credit that is not subject to a finance charge and is not payable by written agreement in more than four installments. (iv) For purposes of subpart B (ex cept for the finance charge disclosures contained in sections 226.6(a) and 226.7(d) through (g) and the right of rescission set forth in section 226.15) and subpart C, any card issuer that extends closed-end credit that is sub ject to a finance charge or is payable by written agreement in more than four installments. 4. Effective December 31, 1984, section 226.3 is amended by removing footnote 4 to para graph (a) and adding a new footnote 4 to read as follows: SEC TIO N 226.3— Exem pt Transactions This regulation does not apply to the following:4 * * * " (17) “Creditor” means: * * * (ii) For purposes of sections 226.4(c)(8) (Discounts), 226.9(d) (Finance Charge Imposed at Time of Transaction), and 226.12(e) (Prompt Notification of Returns and Crediting * The complete Regulation Z, as amended effective De cember 16, 1986, consists of— * Regulation Z pamphlet dated April 1, 1981 and • this slip sheet. Items 7 and 10 of the regulatory amendments and item 2 of the statutory amendments are new. All other items were included in the December 1984 slip sheet. ♦T h e provisions in sections 226.12(a) and (b) gov erning the issuance of credit cards and the liability for their unauthorized use apply to all credit cards, even if the credit cards are issued for use in connection with extensions of credit that otherwise are exempt under this section. 5. Effective October 1, 1982, section 226.3 is amended by adding new paragraph (f) to read as follows: (f) Student loan programs. Loans made, insured, or guaranteed pursuant to a pro1 Regulation Z gram authorized by title IV of the Higher Education Act of 1965 (20 USC 1070 et seq.). A = _____ I_____ (l+fi)(l+i)t I p, . r V 3 ( 1+i ) ^ Pn 6. Effective October 1, 1982, footnotes 31a to section 226.14(a) and 45a to section 226.22(a)(1) are amended by deleting the last sentence o f both. 7. Effective December 16, 1986, section 226.23(f)(2) is amended to read as follows: (2) A refinancing or consolidation by the same creditor of an extension of credit al ready secured by the consumer’s principal dwelling. The right of rescission shall ap ply, however, to the extent the new amount financed exceeds the unpaid prin cipal balance, any earned unpaid finance charge on the existing debt, and amounts attributed solely to the costs of the refi nancing or consolidation. Tfr (l+ i)n- i ^ P TR UTH IN LENDING ACT 1. Effective July 27, 1981, section 103 o f the Truth in Lending Act is amended by adding paragraph (z); and effective April 10, 1982, section 103 is amended by redesignating paragraphs (x), (y), and (z) as (y), (z), and (x), respectively. New paragraph (x), origi nally designated as (z), reads as follows: 9. Effective December 3, 1981, the paragraph entitled “How to Cancel” o f model form G-6 is amended by adding “I f you send or deliver your written notice to cancel some other way, it must be delivered to the above address no later than that time. ” immedi ately after “(or midnight o f the third busi ness day following the latest o f the three events listed above). ” (x) As used in this section and section 167, the term “regularprice" means the tag or posted price charged for the property or service if a single price is tagged or posted, or the price charged for the property or service when payment is made by use of an open-end credit plan or a credit card if ei ther (1) no price is tagged or posted, or (2) two prices are tagged or posted, one of which is charged when payment is made by use of an open-end credit plan or a credit card and the other when payment is made by use of cash, check, or similar means. For purposes of this definition, payment by check, draft, or other negotiable instruJ ment which may result in the debiting on an open-end credit plan or a credit card holder’s open-end account shall not be con sidered payment made by use of the plan or the account. 10. Effective April 4, 1985, appendix I is amended by changing the enforcement agency for air carriers: 2. Effective March 4, 1985, section 108(a)(4) o f the Truth in Lending Act is amended to read as follows: Air Carriers Assistant General Counsel for Aviation Enforcement and Proceedings Department of Transportation 400 Seventh St., S.W. Washington, D.C. 20590 (4) the Federal Aviation Act of 1958, by the Secretary of Transportation with re spect to any air carrier or foreign air carri er subject to that Act. 8. Effective December 3, 1981, the last sen tence o f the paragraph entitled “Section 226.11” in appendix E is amended by changing “five business days” to “seven business days. ” 11. The equation in paragraph (c)(4) o f appen dix J is corrected to appear as follows: 2 3. Section 108(e)(7) o f the Truth in Lending Act, as amended, is corrected by removing ‘*except in the case o f an irregular mortgage lending transaction, ” after lttitle," and be fore “with”. Regulation Z 4. Effective December 21, 1982, section 114 o f the Truth in Lending Act is amended by revising the first sentence to read: “Each year the Board shall make a report to the Congress concerning the administration o f its functions under this title, including such recommendations as the Board deems nec essary or appropriate. ” 5. Pursuant to section 201 o f Public Law 97 25 (July 27, 1981), section 167(a)(2) o f the Truth in Lending Act ceased to be effective on February 27, 1984. 6. Effective July 27, 1981, section 167(b) o f the Truth in Lending Act is amended to read as follows: (b) With respect to any sales transaction, any discount from the regular price offered by the seller for the purpose of inducing payment by cash, checks, or other means not involving the use of an open-end credit plan or a credit card shall not constitute a finance charge as determined under section 106 if such discount is offered to all pro spective buyers and its availability is dis closed clearly and conspicuously. 3
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