The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEDERAL RESERVE BAMK
OF MEW YORK
Circular No. 1 0 2 1 8
[ December 30, 1987 ]
CONSUMER CREDIT PROTECTION REGULATIONS
— Proposed Amendment to Regulation Z Regarding Home Equity Disclosures
Comment Invited by February 8, 1988
—- Proposed Changes In Official Staff Commentaries on Regulations B, E, and Z
Comment Invited by February 12, 1988
To All Depository Institutions, and Others Concerned,
in the Second Federal Reserve District:
Following is the text of statements issued by the Board of Governors of the Federal Reserve
System on these matters:
Home Equity Disclosures
The Federal Reserve Board has issued for public comment a proposal to amend Regulation Z,
“Truth in Lending,” that would require creditors to give consumers expanded disclosures about home
equity lines of credit much earlier in the credit process. Comment is requested by February 8, 1988.
Under the Board’s proposal, Regulation Z would be amended to require that the disclosures for
home equity lines of credit, secured by the consumer’s principal dwelling, be given to the consumer at
the time an application form is provided or before the consumer pays a nonrefundable fee, whichever is
earlier. The proposed amendment would also require that such disclosures be separate from any other
information provided to the consumer.
In addition, the Board’s proposal calls for creditors to give consumers additional information about
the terms and conditions of the plan, such as the circumstances under which the plan could be terminated;
any right of the creditor to change the terms of the plan; and the payment terms. For variable rate plans,
the additional disclosures would concern the index, the frequency of rate adjustments and information
about the history of index rate changes. The Board’s proposal would also require creditors to give con
sumers a brochure that generally describes home equity lines of credit.
Official Staff Commentaries
The Federal Reserve Board has issued for public comment proposed revisions to the official staff
commentary for three of its consumer credit protection regulations — Regulation B (Equal Credit Oppor
tunity), Regulation E (Electronic Fund Transfers) and Regulation Z (Truth in Lending).
The proposed revisions to the staff commentary for Regulation B address issues concerning consid
eration of age in evaluating creditworthiness, signature requirements, record retention and collection of
monitoring information.
The proposed revisions to the staff commentary for Regulation E clarify questions that have arisen
as a result of the amendments adopted by the Board in August 1987. In general, the questions pertain to
point-of-sale/automated clearinghouse services, such as institutions’ responsibilities concerning peri
odic statements, card issuance and error resolution.
(OVER)
Proposed revisions to the Regulation Z staff commentary address disclosure questions raised by the
emergence of conversion features in adjustable-rate mortgages and the imposition of fees that are consid
ered finance charges at the time a credit card plan is renewed. Proposed commentary is also included
which interprets the Board’s recent rule implementing the requirement of the Competitive Equality
Banking Act that adjustable-rate mortgages contain and disclose a maximum life time interest rate.
Enclosed — for depository institutions in this District and certain others on our mailing lists
who have requested notices of changes in the Board’s consumer credit protection regulations — is
the text of each of the proposals, which have been reprinted from the Federal Register. Comments
should be submitted by February 8, 1988 for the home equity disclosures proposal (Regulation Z —
Docket No. R -0 6 2 5 ), and by February 12, 1988 for the three staff commentary proposals (EC-1
(R eg .B ), E FT -2 (R eg .E ), and TIL-1 (Reg. Z )). Comments may be sent to the Board of Governors,
as specified in the Board’s notices, or to our Compliance Examinations Department.
Additional copies of the enclosure will be furnished to others upon request directed to the Cir
culars Division of this Bank (Tel. No. 212-720-5215 or 5216).
E.
G era ld C
o r r ig a n
,
President.
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Regulation Z; Docket No. R-0625]
Truth in Lending; Home Equity
Disclosures Under Regulation Z
Correction
In proposed rule document 87-29556
beginning on page 48702 in the issue of
Thursday, December 24,1987, make the
following corrections:
1. On page 48705, in the second
column, in item (6)(i), in the 17th line, “of
method” should read “or method”.
2. In the same paragraph, in die 22nd
line, remove die words “footnote 36. The
proposed” and insert "§ 226.6(e) for
home equity”.
§226.6 [C orrected]
3. On page 48706, in the first Golumn,
in § 226.8(e)(4) introductory text, in the
last line, remove the period and insert “,
including:”.
BILLING CODE 1505-01-0
Note: Corrections to page 4, second column, item 6(i),
17th and 22nd lines; and to page 5, first column,
section 226.6(e)(4), line 5.
[Ref. Enc. Cir. No. 10218; Proposed Amendment to
Regulation Z Regarding Home Equity Disclosures;
Reprint from Federal Register, Vol. 52, No. 247.]
CONSUMER CREDIT PROTECTION REGULATIONS
— Proposed A m endm ent to R egulation Z R egarding H om e Equity D isclosures
Comment Invited by February 8, 1988
— Proposed C hanges in O fficial S taff C om m entaries on Regulations B , E , and Z
Comment Invited by February 12, 1988
Reprint from
VoL 529 Nos. 247; 240
[Enc.Cir. No. 10218]
PRINTED INNEW YORK
P R O P O S E D A M E N D M E N T T O R E G U L A T I O N Z R E G A R D IN G H O M E
E Q U I T Y D IS C L O S U R E S
FEDERAL RESERVE SYSTEM
G o v e rn o rs o f the F e d e ra l R e se rv e
S y stem , W a sh in g to n , DC, 20551.
12CFR Part 226
SUPPLEMENTARY INFORMATION:
[Regulation Z; Docket No. R-0625]
Truth in Lending; Home Equity
Disclosures Under Regulation Z
AGENCY: Board of G overnors of the
Federal Reserve System.
a c t io n : Proposed rule.
SUMMARY: T h e B o a rd is publishing for
co m m e n t a p ro p o sal to am en d
R eg u latio n Z. T h e p ro p o se d am en d m en t
w ou ld req u ire cre d ito rs to p rovid e
d isclo su re s fo r h om e eq uity lin es of
c re d it se c u re d b y the co n su m e r’s
p rin cip a l d w elling a t the tim e an
a p p lica tio n form is g iv en to the
c o n su m e r o r b efo re the co n su m er p a y s a
n o n -re fu n d a b le fee, w h ich e v e r is earlier.
T h e p ro p o sa l also w ou ld req u ire the
d isclo su re s for hom e eq uity p lan s to be
se g re g a te d from an y o th er in form atio n
g iv en to the co n su m er. U n d er the
p ro p o se d a m e n d m en t, cre d ito rs w ould
h a v e to p ro v id e a d d itio n al in form ation
a b o u t h om e equity lin es se cu re d b y a
co n s u m e r’s p rin cip al dw elling, including
in fo rm a tio n a b o u t a p lan ’s p ay m en t
te rm s, w h e th e r a c re d ito r ca n term in a te
o r ch a n g e the term s o f a p lan , an d , for
v a ria b le -ra te p lan s, d isclo su re s ab o u t
th e in d e x , freq u en cy o f ra te
a d ju stm e n ts, an d a h isto ry o f ch a n g e s in
the in d e x . C re d ito rs a lso w ou ld be
re q u ire d to p ro v id e co n su m e rs w ith a
b ro ch u re d e scrib in g h om e eq uity p lan s.
C o m m en ts m u st be re c e iv e d on
o r b e fo re F e b ru a ry 8 ,1 9 8 8 .
dates:
(1) B a ck g ro u n d
A h om e equity line is an op en -en d
cre d it line se cu re d b y the h o m e o w n e r’s
eq u ity— the d ifferen ce b e tw e e n the
m a rk e t v alu e o f the h om e an d a n y d eb ts
s e cu re d b y th a t h om e. During the p a st
few y e a rs the n u m b er o f len d ers offering
hom e eq u ity lines o f cre d it an d the
n u m b er o f co n su m ers b orro w in g through
this form o f cre d it h a v e in c re a s e d
c o n sid e ra b ly . T he in c re a s e d p ro m o tio n
a n d u se o f h om e eq uity p lan s h a s led the
B o a rd to e x a m in e the d isclo su re s
req u ired b y the T ru th in L ending A c t
an d R eg u latio n Z to d eterm in e if the
cu rre n t req u irem en ts en su re th at
co n su m e rs re c e iv e a d e q u a te inform atio n
a b o u t th ese p lan s a t a re le v a n t s ta g e of
the cred it-g ran tin g p ro c e s s . F in a n cia l
in stitu tio n s, tra d e a ss o c ia tio n s ,
co n su m e r grou ps, the B o a rd 's C o n su m er
A d v iso ry C oun cil (C A C ), an d the
C o n g ress a lso h a v e fo cu sed on e x istin g
d isclo su re req u irem en ts. F in a n cia l
in stitu tio n s an d tra d e a s s o c ia tio n s h a v e
a sk e d B o a rd sta ff h o w in form ation
sh ould b e d isclo se d fo r th ese p lan s.
C o n su m er grou ps an d the C A C h a v e
e x p re s s e d co n ce rn a b o u t the
co m p le x itie s an d risk s a s s o c ia te d w ith
th ese p lan s, an d the a d e q u a cy o f the
d isclo su re s co n su m e rs a re receiv in g . In
ad d itio n , bills h a v e b een in tro d u ced in
the C o n g ress th at w ou ld req u ire
in c re a s e d d isclo su re s an d w ould
reg u late su b sta n tiv e a s p e c ts o f hom e
eq uity lines.
a d d r e s s e s : C o m m en ts should be
m a ile d to W illiam W . W ile s, S e c re ta ry ,
B o a rd o f G o v e rn o rs o f the F e d e ra l
R e s e r v e S y ste m , W a sh in g to n , D C, 20551,
o r d e liv e re d to the 20th S tre e t co u rty a rd
e n tr a n c e on 20th S tre e t, b e tw e e n C
S tre e t a n d C o n stitu tio n A v en u e N W .,
W a sh in g to n , DC, b e tw e e n 8:45 a.m . an d
5 :1 5 p.m . w e e k d a y s. C o m m en ts sh ould
in clu d e a re fe re n ce to D o ck et N o. R 0 6 2 5 . C o m m en ts m ay be in sp ected in
R o o m B -1 1 2 2 b e tw e e n 8:45 a.m . an d 5:15
p.m . w e e k d a y s.
(2) C u rren t D isclo su re R eq u irem en ts
FOR FURTHER INFORMATION CONTACT:
S h a ro n B o w m an o r L eo n ard C h an in ,
S ta ff A tto rn e y s, D ivision of C o n su m er
a n d C om m unity A ffairs, at (202) 4 5 2 3 6 6 7 or 4 5 2 -2 4 1 2 ; fo r the h earin g
im p aired only, c o n ta c t E a rn e stin e Hill o r
D o ro th e a T h om p son,
T e le co m m u n ica tio n s D ev ice fo r the
D eaf, a t [202] 452-3544, B o ard o f
Currently, Regulation Z requires the
sam e disclosures for home equity lines
of credit as for other open-end credit
plans. As w ith other open-end plans,
creditors may provide consum ers with
disclosures at any time prior to the first
transaction under the plan, and the
disclosures need not be provided in a
specified format. In addition the
B a s e d on the B o a r d ’s a n a ly sis o f the
cu rre n t d isclo su re req u irem en ts u n d er
R eg u latio n Z — an d d iscu ssio n s w ith
Financial in stitu tio n s, tra d e a s s o c ia tio n s ,
co n su m e r grou ps an d the C A C — the
B o a rd h a s co n clu d ed th at the cu rren t
d isclo su re req u irem en ts do n ot en su re
th at co n su m e rs re c e iv e a d eq u ate
in form atio n ab o u t h om e equity lin es in a
m eaningful an d tim ely fashion.
d isclo su re s req u ired by the reg u latio n
a re ra th e r lim ited— a cre d ito r is req u ired
to d isclo se only how the fin a n ce ch a rg e
is d eterm in ed , including the p erio d ic
an d an n u al p e rce n ta g e ra te s : o th e r
(n o n fin an ce) ch a rg e s, su ch a s la te
p ay m en t fees, th at m ay be im p osed : the
e x is te n c e o f a secu rity in te re st; a n d the
co n su m e r’s billing rights. T h e B o a rd
b eliev es th at the cu rren t d isclo su re
req u irem en ts for hom e equity lin es a re
in su fficien t in their timing, fo rm at, an d
co n ten t to en su re th at co n su m e rs
u n d erstan d the term s an d co n d itio n s of
a p a rtic u la r loan p rogram b efore
co m m ittin g to a plan.
(i) T im in g o f disclosures. In g e n e ra l,
the T ru th in Lending A c t perm its
d isclo su re s fo r b oth o pen -end an d
clo se d -e n d cre d it tra n sa ctio n s to be
given a t a re la tiv e ly la te sta g e o f the
cred it p ro c e s s — at an y tim e b efo re the
co n su m e r a ctu a lly b e co m e s o b ligated •"
for a p a rtic u la r cred it p lan .
T h e re a re tw o e x ce p tio n s to this rule,
h o w e v e r. S e ctio n 128(b )(2 ) o f the Truth
in L end in g A c t p ro v id es th a t in clo se d end re s id e n tia l m o rtgage tra n sa ctio n s
su b je ct to the R eal E s ta te S ettlem en t
P ro ce d u re s A c t, d isclo su re s m ust be
given w ithin th ree b u sin ess d a y s a fte r
the c r e d ito r re c e iv e s the co n su m e r's
w ritten a p p licatio n . A n o th e r e x ce p tio n
to this g e n e ra l rule is co n ta in e d in the
reg u latio n s ju st ad op ted b y the B o a rd
w ith r e s p e c t to ad ju sta b le -ra te
m o rtg ag es (A R M s). T h o se reg u latio n s
req u ire inform atio n ab o u t the v a ria b le ra te fe a tu re o f ce rta in clo se d -e n d
a d ju s ta b le -ra te m o rtg ag es to be g iv en to
co n su m e rs eith er w hen a n ap p lica tio n
form is p ro v id ed or b efo re a co n su m e r
p ay s a n on refu n d ab le fee, w h ich e v e r is
earlier. (S e e this issue o f the F e d e ra l
R eg ister.)
T h e B o a rd b eliev es th a t co n su m e rs
should re c e iv e d isclo su re s ab ou t hom e
eq uity lin es a t an e a rlie r tim e in the
cred it p ro c e s s to fa c ilita te co n su m e r
u n d erstan d in g an d shopping for this
typ e o f cre d it. T h e sa m e co n c e rn s th at
p ro m p ted e a rly d isclo su re s for clo se d end A R M s— cre d it shopping an d risk to
the co n su m e r— also su pp ort requiring
e arly d isclo su re s for hom e equity lines.
T h e risk to the co n su m er in the e v e n t of
defau lt, the p oten tial loss o f the h om e, is
th e s a m e for b o th clo se d -e n d a n d o p en en d tra n s a c tio n s se cu re d b y the h om e.
F u rth e rm o re , b e c a u s e m o st hom e equity
lin es a re v a ria b le -ra te a n d often h a v e
larg e u p -fron t fe e s, the B o a rd b e lie v e s
1
PRINTED IN NEW YORK, FROM FED ER A L
REGISTER,
VOL. 52, NO. 247
c o n s u m e rs sh o u ld r e c e iv e d is c lo s u r e s in
a tim e ly fa s h io n to b e t t e r u n d e rs ta n d th e
r is k s a n d c o m p le x itie s o f a p a rtic u la r
p la n , a s w e ll to b e t t e r sh o p am o n g
p la n s . S p e c ific a lly , th e B o a rd b e lie v e s
c o n su m e rs sh o u ld b e p ro v id e d w ith
d is c lo s u r e s w h e n a n a p p lic a tio n fo rm is
p ro v id e d o r b e fo r e th e c o n su m e r p a y s a
n o n -r e fu n d a b le fe e , w h ic h e v e r is e a rlie r .
(ii) Format of disclosures. R e g u la tio n
Z c u rr e n tly d o e s n o t re q u ire c re d ito rs to
p ro v id e h o m e e q u ity d is c lo s u re s in a n y
p a r tic u la r fo rm a t. A s w ith o th e r o p en e n d p la n s , th e d is c lo s u r e s c a n b e
in te r s p e r s e d w ith c o n tr a c t an d o th e r
in fo rm a tio n , a n d n e e d n o t b e
h ig h lig h ted .
T h e B o a rd b e lie v e s th a t the
d is c lo s u r e s fo r h o m e e q u ity lin e s sh o u ld
b e s e p a r a te d fro m o th e r in fo rm a tio n .
T h e s a m e c o n c e r n th a t p ro m p ted
s e g re g a tio n o f d is c lo s u r e s g e n e r a lly fo r
c lo s e d -e n d tr a n s a c t io n s - —th a t is, to
e n s u re th a t th e d is c lo s u r e s a re
h ig h lig h ted — e x is t s w ith r e s p e c t to h o m e
e q u ity lin e s . T h e p u rp o se o f th e T ru s t in
L en d in g d is c lo s u r e is to p ro v id e
c o n su m e rs w ith c le a r a n d re a d ily
u n d e r s ta n d a b le in fo rm a tio n a b o u t th e
c o s t s o f a c r e d it tr a n s a c tio n . B e c a u s e
h o m e e q u ity p la n s in v o lv e te rm s an d
c o n d itio n s th a t a r e m o re c o m p lic a te d
a n d n u m e ro u s th a n th o s e in o th e r ty p es
o f o p e n -e n d p la n s , th e B o a rd b e lie v e s
th a t th e d is c lo s u r e s re q u ire d to b e
p ro v id e d to c o n s u m e rs b y th e re g u la tio n
sh o u ld b e s e g re g a te d fro m o th e r
in fo rm a tio n to e n a b le c o n su m e rs to
e a s ily id e n tify a n d u n d e rs ta n d th e m o st
im p o rta n t te rm s a n d co n d itio n s. S u c h a
re q u ire m e n t is p a r tic u la r ly im p o rta n t
w h e n th e c o n s u m e r ’s h o m e s e c u r e s th e
transaction.
In a d d itio n to th is re q u ire m e n t, th e
B o a rd b e lie v e s so m e in fo rm a tio n
w a r r a n ts s p e c ia l a tte n tio n . T h e B o a rd is
p ro p o sin g th a t th re e d is c lo s u r e s — the
r is k o f th e lo s s o f th e c o n su m e r’s h o m e
in th e e v e n t o f d efa u lt, th e righ t o f a
c r e d ito r to te rm in a te a n a c co u n t, an d
th e righ t o f a c r e d ito r to ch a n g e th e
te rm s o f a n a c c o u n t— a s w e ll a s th e
c u rr e n t s e c u r ity in te r e s t d is clo s u re ,
p re c e d e a ll o t h e ’ d is c lo s u re s on th e form
p ro v id e d to th e c o n su m e r. P ro v is io n s
su ch a s th e c r e d ito r ’s a b ility to c h a n g e a
p la n 's te rm s a n d c o n d itio n s a t w ill o r to
te rm in a te a n a c c o u n t a re co m m o n in
o p e n -e n d c re d it, in clu d in g h o m e eq u ity
lin e s . C o n su m e rs , h o w e v e r, m a y n o t b e
fa m ilia r w ith th e s e a s p e c ts o f th e p la n s
if th e y a re m o re a c c u s to m e d to c lo s e d en d c re d it w h e r e th e h o m e is b e in g u sed
a s s e c u r ity . M o re o v e r, th e e x e r c is e o f
a n y o n e o f th e s e p ro v isio n s co u ld h a v e
a n a d v e rs e e ffe c t o n c o n su m e rs, th u s
m a k in g it p a rtic u la rly im p o rta n t th a t
c o n su m e rs b e a le rte d to them .
(iii) Content o f disclosures. T h e B o a rd
d o es n o t b e lie v e th a t ch an g in g th e
tim in g a n d fo rm a t o f the d is clo s u re
re q u ire m e n ts w ill b e su fficie n t to e n s u re
th a t c o n su m e rs u n d e rsta n d h o m e e q u ity
p la n s. R e g u la tio n Z cu rren tly re q u ire s
c re d ito rs to p ro v id e on ly the fo u r item s
o f in fo rm a tio n m e n tio n e d e a rlie r.
T h e r e fo r e , c e r ta in im p o rta n t in fo rm a tio n
a b o u t h o m e eq u ity lin e s is n o t re q u ire d
to b e d is c lo s e d . T h e re g u latio n , fo r
e x a m p le , d o e s n o t req u ire d is c lo s u re o f
w h e th e r a c r e d ito r m a y u n ila te ra lly
c h a n g e th e term s an d c o n d itio n s o f th e
p la n , a n d th e c irc u m s ta n c e s u n d er
w h ic h th e c re d ito r m a y te rm in a te th e
p la n a n d re q u ire p a y m e n t o f a n y
o u tsta n d in g b a la n c e . In fo rm a tio n a b o u t
th e p a y m e n t term s o f the p la n m a y b e
d ifficu lt to u n d e rsta n d , a n d m a y n o t b e
p r e s e n te d in a m a n n e r th a t f a c ilit a t e s
c o n su m e r a w a r e n e s s o f su ch fe a tu re s .
T h e a b s e n c e o f su ch d is c lo s u re s is
s ig n ific a n t s in c e h o m e eq u ity lin e s
c o n ta in u n iq u e fe a tu re s th a t m a y e x p o s e
c o n su m e rs to g r e a te r ris k th a n th e
ty p ic a l o p e n -e n d c re d it p lan . F o r
e x a m p le , m a n y o f th e p ro g ram s h a v e
c h a r a c t e r is t ic s o f b o th o p e n -e n d a n d
c lo s e d -e n d c re d it. T h e p ro g ram s o fte n
in v o lv e tw o p h a s e s-—a p h a s e during
w h ic h th e c o n su m e r m a y o b ta in
a d v a n c e s , a s w ith tra d itio n a l o p e n -e n d
p ro d u c ts, a n d a p h a s e during w h ic h th e
c o n su m e r m a y n o t b o rro w a d d itio n a l
m o n ey a n d sim p ly re p a y s w h a t a lr e a d y
h a s b e e n b o rro w e d . E a c h p h a s e m a y
in v o lv e its o w n p a y m e n t term s, an d , in
a d d itio n , c re d ito rs m a y give the
c o n su m e r th e o p tio n to c h o o s e am o n g
s e v e r a l p a y m e n t term s during a p h a s e .
M o re o v e r, u n lik e m o st tra d itio n a l o p e n e n d pians, many home equity programs
p erm it p a y m e n t o f o n ly in te re s t d uring
th e d ra w p erio d . W h ile som e p ro g ra m s
p ro v id e fo r p a y m e n t o f the o u tsta n d in g
b a la n c e o v e r a n e x te n d e d p erio d o f
tim e, o th e rs do n o t; in the la tte r c a s e , th e
c o n su m e r m a y b e re q u ire d to p a y th e
e n tire o u tsta n d in g b a la n c e a t th e en d o f
th e d ra w p erio d , a fa c t th a t m a y n o t b e
c le a r ly d is c lo s e d w h e n th e c o n su m e r
c o n tr a c ts fo r the p la n . I f th e p la n c a lls
fo r full p a y m e n t o f th e o u tstan d in g
b a la n c e a t th e e n d o f the d ra w p erio d ,
th e re m a y b e n o g u a ra n te e th a t the
c r e d ito r w ill r e fin a n c e the o u tsta n d in g
p rin c ip a l b a la n c e w h e n it b e c o m e s due.
A lth ou g h o th e r ty p e s o f o p e n -e n d c re d it,
lik e c re d it c a rd s , a ls o c a n in v o lv e
re p a y m e n t te rm s th a t p erm it b o rro w e rs
to m a k e sm a ll m o n th ly p a y m e n ts, the
risk to c o n su m e rs is g r e a te r w ith a h o m e
e q u ity lin e g iv en the s iz e o f th e a v e ra g e
c re d it lin e, th e p o te n tia l s iz e o f th e
b a la n c e s , a n d the risk th a t c o n su m e rs
m a y lo s e th e ir h o m es if th ey a r e u n a b le
to p a y th e full b a la n c e w h e n it is due.
2
In the c a s e o f v a r ia b le -r a te h o m e
eq u ity lin e s , the B o a rd is a ls o c o n c e rn e d
a b o u t a d e q u a te d is c lo s u re o f th e
v a r ia b le -r a te fe a tu re . F o r o p e n -e n d
v a r ia b le -r a te h o m e e q u ity lin e s , o n ly a
lim ited am o u n t o f in fo rm a tio n a b o u t the
v a r ia b le -r a te fe a tu re is c u rre n tly
re q u ire d . (T h e c re d ito r m u st d is c lo s e the
c ir c u m s ta n c e s un d er w h ic h th e r a te m a y
in c r e a s e , a n y lim its o n th e in c r e a s e , a n d
th e e ffe c t o f a n in c r e a s e .) R e q u irin g
a d d itio n a l d is c lo s u re s fo r v a r ia b le -r a te
h o m e e q u ity lin e s s e c u r e d b y th e
c o n su m e r’s p rin c ip a l d w e llin g w o u ld b e
c o n s is te n t w ith th e a d d itio n a l v a r ia b le r a te d is c lo s u re s ju s t a d o p te d b y th e
B o a rd fo r c lo s e d -e n d A R M s. T h e s a m e
c o n c e r n e x is ts in b o th o p e n -e n d a n d
c lo s e d -e n d tr a n s a c tio n s , th a t is, th e
p o s s ib ility o f lo sin g th e h o m e in th e
e v e n t o f d efa u lt an d th e f a c t th a t th e
v a r ia b le -r a te fe a tu re co u ld in c r e a s e the
ris k o f d efa u lt in so m e in s ta n c e s . T h e
B o a rd b e lie v e s m o st o f th e v a r ia b le -r a te
d is c lo s u re s c o n ta in e d in its fin a l A R M s
ru le sh o u ld b e p ro v id e d fo r h o m e e q u ity
lin e s s e c u r e d b y th e c o n s u m e r’s
p rin c ip a l d w ellin g . S u c h d is c lo s u re s ,
a d ju s te d to r e fle c t th e f a c t th a t o p e n -e n d
tr a n s a c tio n s d iffer fro m c lo s e d -e n d
tr a n s a c tio n s , w o u ld e n s u re th a t
co n su m e rs r e c e iv e s u b s ta n tia lly th e
s a m e in fo rm a tio n fo r a ll v a r ia b le - r a te
cre d it se c u re d b y th e c o n s u m e r ’s
p rin c ip a l d w ellin g.
(3)
C u rren t A d v e rtisin g R e q u ire m e n ts
C u rren tly a n a d v e rtis e m e n t th a t s t a te s
a n a n n u a l fe e o r o th e r c o s t in fo rm a tio n
m u st s ia t e a d d itio n a l in fo rm a tio n , su ch
a s th e a n n u a l p e rc e n ta g e r a te (A P R ),
a n y m inim um , fix ed , tr a n s a c tio n or
a c tiv ity ch a rg e, and a n y m e m b e rsh ip or
p a rtic ip a tio n fe e . R e fe r e n c e in a n
a d v e rtis e m e n t to c e r ta in o th e r te rm s,
su ch a s a p a y m en t term , h o w e v e r, d o es
n o t req u ire th e d is clo s u re o f th e o th e r
c o s t in fo rm a tio n , su ch a s th e A P R .
T h e B o a rd b e lie v e s th a t p ro v id in g
s p e c ific term s, su ch a s th e p a y m e n t
am o u n t, in a n a d v e rtis e m e n t w ith o u t
p ro v id in g a d d itio n a l c o s t in fo rm a tio n
g iv e s a n in c o m p le te a n d p o te n tia lly
m is le a d in g p ictu re o f th e m a jo r te rm s
a n d c o n d itio n s o f the p la n a n d th e
c o n su m e r’s p o te n tia l o b lig a tio n s u n d e r
th e p lan . T h e p ro p o se d a m e n d m e n ts to
§ 228.6 to req u ire a d d itio n a l d is c lo s u re s
fo r h o m e e q u ity lin e s w o u ld a d d r e s s th is
c o n c e rn w ith o u t th e n e e d fo r c h a n g e s to
th e a d v e rtisin g s e c tio n . U n d e r th e o p en en d a d v e rtisin g ru les in | 2 2 6 .1 6 , a n y
re fe r e n c e to a n item re q u ire d to b e
d is c lo s e d u n d e r § 22 6 .6 re q u ire s the
d is c lo s u r e o f th e c o s t in fo rm a tio n
d is c u s s e d a b o v e . T h u s if a n y o f th e
p ro p o s e d d is c lo s u r e s in § 2 2 6 .6 (e ) is
s ta te d in a n a d v e rtis e m e n t, the c o s t
in fo rm atio n listed in § 226.16(b ) w ould
h a v e to b e p ro v id ed .
(4) C o n su m e r B ro ch u re
In ad d itio n to the n eed for d isclo su res
a b o u t sp e cific h om e eq uity p ro g ram s,
b e c a u s e h om e eq u ity lines a re a
re la tiv e ly n ew an d n o n trad itio n al form
o f cre d it the B o a rd b e lie v e s th at
c o n su m e rs a lso m a y n eed m ore g en eral
in fo rm atio n a b o u t th ese p ro d u cts. U n d er
the n e w c lo se d -e n d reg u latio n s,
c re d ito rs w ill p ro v id e co n su m ers w ith a
b ro ch u re th a t d e sc rib e s A R M s [The
Consumer Handbook on Adjustable
Rate Mortgages, p ublished by the B o ard
an d the F e d e ra l H om e L o an B an k B o ard ,
o r a su ita b le su b stitu te), along w ith the
o th e r d isclo su re s. T h e B o ard is
p rop osin g th a t c re d ito rs be req u ired to
p ro v id e p ro s p e ctiv e b o rro w e rs w ith a
sim ilar b ro ch u re d escrib in g hom e eq uity
lines of cre d it. T h e b ro ch u re w ould
g e n e ra lly d e scrib e h o w hom e equity
p lan s o p e ra te , d efin e term s co n su m ers
m ight n o t be fam iliar w ith, an d ad v ise
c o n su m e rs h o w to c o m p a re h om e eq uity
p la n s. T h e B o a rd is cu rren tly w orkin g on
a b ro ch u re th a t w ould m eet this
req u ire m e n t. U n d er the p ro p o sal,
c re d ito rs w ou ld p ro v id e this b ro ch u re,
or a su ita b le su b stitu te, along w ith the
o th e r d isclo su re s.
(5) P ro p o se d A m e n d m e n ts to R e g u la tio n
2
(i) Coverage. T h e B o ard is p rop osin g
to am e n d R egu lation Z to require
a d d itio n a l d isclo su re s for hom e equity
lin es. T h e d isclo su re s w ou ld be req u ired
only fo r o p e n -en d cre d it p rog ram s
s e cu re d b y the co n su m e r’s p rin cip al
d w ellin g. T h e n ew req u irem en ts w ould
n ot ap p ly to h om e equity lines s e cu re d
by o th e r co n su m e r dw ellings, su ch a s
v a c a tio n h o m es.
(ii) Timing, the in itial h om e equity
d isclo su re sta te m e n t— co n tain in g both
the e x istin g a n d p ro p o sed d isclo su re s—
an d the b ro ch u re w ou ld be given to the
co n su m e r w h en an ap p licatio n form is
p ro v id e d o r b efo re the co n su m er p a y s a
n o n re fu n d a b le fee, w h ich e v e r is earlier.
F o r m ail an d telep h o n e ap p licatio n s
(a n d th o se su b m itted through an ag en t
o r b ro k er) d isclo su re s w ould be
p ro v id e d w ithin th ree b u sin ess d a y s o f
re ce ip t o f the a p p licatio n by the
cre d ito r. T h e c re d ito r w ould n ot be
req u ired to p ro v id e the co n su m er w ith
a d d itio n a l initial T ru th in Lending
d isclo su re s u nd er se ctio n 226.6 a t the
tim e an a c co u n t is op en ed . If a cre d ito r
m a k e s a ch a n g e in a hom e equity
p rog ram afte r giving the initial
d isclo su re s, h o w ev er, the cre d ito r m ust
p rov id e co n su m ers w ritten n o tice of the
ch a n g e s under the existin g ru les in
§ 22 6 .9 (c), d ealing w ith ch an g e s in the
term s of a cre d it p lan. S ectio n 2 2 6 .9 (c)
w ould req u ire cre d ito rs to give the
n o tice to all co n su m e rs w ho m ay be
affe cte d by the ch an g es, for e x a m p le , a t
the tim e the co n su m e r subm its a
co m p leted ap p licatio n . C red ito rs w ould
n o t be req u ired to give n o tic e s to
con su m ers th at h a d m erely re c e iv e d the
in itial d isclo su res alon g w ith an
ap p licatio n . T h e B o a rd seek s co m m en t
on w h eth er the cu rren t ru les in § 2 2 6 .9 (c)
d ealin g w ith ch a n g e s in the term s of
o p en -en d cred it p lan s a re a d e q u a te to
en su re th at n o tice o f ch a n g e s is
p ro v id ed to co n su m e rs w ith o u t im posing
undue b u rden s on cre d ito rs, or w h e th e r
the ru les should be m odified in som e
m an n er.
(iii) Format. U n d e r the p ro p o sal,
cre d ito rs w ou ld be req u ired to se g re g a te
the d isclo su res from a n y o th er
in form ation p ro v id ed to the co n su m er.
C red ito rs w ou ld n ot b e p erm itted to
in clude the d isclo su res in lo an c o n tra c ts ,
o r to p rov id e a d d itio n al in form ation
w ith the seg re g a te d d isc lo s u re s. T o
fu rth er highlight th ree of the n ew
d isclo su res-—the risk o f lo ss o f the
co n su m e r’s hom e in the e v en t of d efau lt,
the right of a c re d ito r to te rm in a te an
acco u n t, an d the right o f a cre d ito r to
ch an g e the term s o f an a c c o u n t— a s w ell
a s the cu rren t se cu rity in te re st
d isclo su re, the reg u latio n w ou ld req u ire
th at th ese d isclo su re s p re c e d e all o th er
d isclo su res on the form p ro v id ed to the
co n su m er. C red ito rs co u ld co n tin u e to
p rov id e ad d itio n al in fo rm atio n ab ou t
p lans, as long as the in fo rm atio n is not
in te rsp e rse d w ith the req u ired
d isclo su res.
(iv) New home equity disclosures.
U n d er the p ro p o sal cre d ito rs w ould
h a v e to d isclo se the fa ct th at co n su m ers
risk losing th eir h o m es in the ev en t of
d efau lt. C red ito rs also w ou ld be
req u ired to d e scrib e c e rta in of their
c o n tra c tu a l rights. T h e c ircu m s ta n ce s
u nd er w h ich the cre d ito r (o r co n su m er)
m ay term in ate the p lan w ou ld be
p rov id ed . F o r e x a m p le , if a c re d ito r
re tain s the right to term in ate the p lan if
a ra te ceiling is re a ch e d , th at fa c t w ou ld
be n oted . In ad d itio n , the d isclo su re
w ould s ta te an y fees th at m ay be
im p osed in the e v en t of term in atio n , an d
w h eth er the c re d ito r m ay require
p ay m en t in full o f a n y o u tstan d in g
b a la n c e . If a c re d ito r re tain s the right to
u n ilaterally ch an g e the term s and
co n d itio n s of the p lan, that right also
w ou ld be d isclo sed .
C red ito rs w ould d isclo se the p eriod
during w h ich a co n su m e r cou ld o b tain
a d v a n ce s an d the p eriod during w h ich
the co n su m er w ou ld be allo w e d only to
3
m ak e p ay m en ts. C re d ito rs a lso w ould
h av e to d isclo se h o w the m inim um
m onthly p ay m en t req u ire m e n ts fo r e a ch
p eriod a re d eterm in ed . E x a m p le s o f the
m onthly p ay m en t am o u n t for e a c h
p eriod b a se d on an a ssu m e d $ 1 0 ,0 0 0
b a la n c e o u tstan d in g , a t a r e c e n t in te re st
ra te ch arg ed u nd er the p lan, w ou ld be
p rov id ed . F o r p u rp o ses o f the e x a m p le s ,
an in te re st ra te w ou ld b e c o n sid e re d
re c e n t if it h ad b een in e ffe ct w ith in 90
d a y s of d eliv ery of the d isclo su re s.
C red ito rs also w ould p ro v id e a
s ta te m e n t if the m inim um m o nth ly or
p erio d ic p ay m en t m a y n ot or w ill not
red u ce the o u tstan d in g p rin cip al
b a la n c e . T h e p ro p o sal w ou ld req u ire
d isclo su re of a n y m inim um o u tsta n d in g
b a la n c e o r m inim um d ra w re q u ire m e n ts
u n d er the p lan. D isclo su re a lso w ou ld
h a v e to b e m ad e th at in fo rm atio n a b ou t
the c re d ito r’s o th er o p en -en d h om e
eq uity p ro g ram s is a v a ila b le .
(v)
Additional disclosures for
variable-rate plans. T h e B o a rd p ro p o se s
to req u ire cre d ito rs to p ro v id e ad d itio n a l
in form ation for v a r ia b le -r a te h om e
eq uity lin es. T h ese d isclo su re s w ou ld
clo se ly p a rallel the d isclo su re s just
a d o p ted b y the B o ard (an d p u b lish ed in
this issu e of the F e d e ra l R e g iste r), for
clo se d -e n d v a ria b le -ra te tra n s a c tio n s
se cu re d b y a co n su m e r’s p rin cip al
dw elling. U n d er the p ro p o sa l cre d ito rs
w ou ld p rov id e the in d e x o r the form ula
u sed to m ak e ra te a d ju stm e n ts, an d a
so u rce of in form ation ab o u t the in d ex.
C red ito rs also w ould h a v e to d e sc rib e
h ow the in terest ra te is d eterm in ed ,
including, for ex a m p le , w h e th e r a
m argin is ad d ed to the in d e x to a rriv e at
the in te re st ra te . A s ta te m e n t a ls o w ould
be p ro v id ed to co n su m e rs su ggestin g
th ey ask ab o u t the cu rren t in d ex,
m argin, an d in terest ra te . C re d ito rs
w ould d isclo se the freq u e n cy o f ra te and
p ay m en t ad ju stm en ts, an d a n y ru les
relatin g to ch an g es in the in d ex, in te re s:
ra te , p ay m en t am o un t, a n d o u tsta n d in g
lo an b a la n c e . Such in fo rm atio n w ou ld
in clude an e x p la n a tio n o f lim ita tio n s on
the m axim u m p a y m e n t o r ra te th at
w ould be ch arg ed , in te re st ra te
c a rry o v e r, an d n eg a tiv e a m o rtiz a tio n .
C red ito rs also w ou ld sp e cifiy the
in form aiton that w o u ld be p ro v id e d on
p erio d ic s ta te m e n ts c o n ce rn in g the ra te
ch an g es.
In ad d itio n to th ese d isclo su re s,
cre d ito rs w ould h a v e to p ro v id e a
h isto rical tab le th at sh o w s the v a lu e s of
the sp ecific in d ex o r form ula to be used
in the loan p rogram , beginning w ith the
valu e for 1977. T h e in d ex v a lu e s w ould
be u p d ated an n u ally u ntil,a fifte e n -y e a r
h isto ry is sh o w n . C red ito rs w ould then
sh o w a ‘Tolling h isto ry ” of in d ex v a lu e s
for the p reced in g fifteen y e a r s . T h e
m argin a n d in te re st r a te for e a c h of the
y e a r s a ls o w ou ld be p ro v id ed . U nlike
the c lo s e d -e n d A R M s rule just a d o p ted
by the B o a rd , the m o nth ly p ay m en t and
rem ain in g b a la n c e for the h isto rica l
ta b le w ou ld n ot h a v e to be p rov id ed .
T h e B o a rd b e lie v e s this in form ation
w ou ld be o f lim ited v alu e for op en -en d
tra n s a c tio n s sin ce the ou tstan d in g
b a la n c e c a n , an d often d o es, flu ctu ate as
the c o n su m e r m a k e s d ra w s and
p a y m e n ts u n d er the plan. C o m m en t is
re q u e ste d , h o w e v e r, o r w h eth er the
m o n th ly p a y m e n t am o u n t an d rem ainin g
b a la n c e sh o u ld b e req u ired for op en -end
a s it is fo r c lo s e d -e n d tra n s a ctio n s .
C re d ito rs a ls o w ou ld be req u ired to
d isc lo s e the in itial in te re st ra te sh o w n in
the h isto rica l ta b le an d the m axim u m
in te re st r a te an d the co rresp o n d in g
p a y m e n ts for a $ 1 0 ,0 0 0 loan und er the
p lan.
T h e B o a rd re q u e sts co m m en t on one
issu e th a t re la te s to an existin g
p ro v isio n in the reg u latio n an d sta ff
c o m m e n ta ry d ealin g w ith d isclo su res of
the a n n u al p e rc e n ta g e ra te in op en -en d
v a r ia b le -r a te c re d it p lan s. T h e
c o m m e n ta ry to § 2 2 6 .6 (a )(2 ) s ta te s th at a
cre d ito r in d isclo sin g the A PR in effect
in a v a r ia b le -r a te p lan m ay u se in in sert
sh o w in g the cu rre n t ra te , m ay give the
ra te a s o f a sp ecified d a te an d u p d ate
the d isc lo s u re from tim e to tim e for
e x a m p le , e a c h c a le n d a r m onth, o r m ay
d isc lo s e an e s tim a te d ra te under
§ 2 2 6 .5 (c ). In light o f the p ro p o sed
re q u ire m en t th at h om e equity
d isc lo s u re s b e p ro v id ed earlier, the
B o a rd re q u e sts co m m en t on w h eth er
th e se o p tio n s for d isclo sin g the A PR
p ro v id e c re d ito rs w ith sufficient
flexib ility.
C re d ito rs a lso w ou ld h av e to p rov id e
a d d itio n a l v a r ia b le -r a te in form ation on
o r w ith th e first p erio d ic sta te m e n t sen t
to c o n su m e rs a fte r the ra te h a s b een
a d ju ste d . C o n su m ers w ould be inform ed
o f the p rio r an d cu rre n t in d ex v alu es
a n d the in te re st r a te s d eriv ed from th ese
v a lu e s. If the c re d ito r h a s fo reg on e an y
in te re st ra te in c re a s e , this w ould be
n o te d . C re d ito rs a ls o w ould d isclo se the
c o n tra c tu a l e ffe cts o f a n y ra te
a d ju stm e n t, in cluding the p ay m en t due
an d lo a n b a la n c e .
A sa m p le h om e eq uity d isclo su re
s ta te m e n t th a t sh o w s how the p ro p o sed
a n d e x istin g re q u irem en ts m ight be m et
is p ro v id ed in the A p p en d ix of this
n o tice .
(vi)
Consumer brochure. T h e B o a rd
a ls o p ro p o se d to req u ire cre d ito rs to
furnish c o n su m e rs w ith a hom e equity
b ro ch u re alo n g w ith the required
d isc lo s u re s. C red ito rs w ould p ro v id e the
b ro ch u re th at the B o ard will publish o r a
su itab le su b stitu te. A n y b ro ch u re th at is
su b stitu ted for the B o a rd ’s p am p h let
w ou ld h a v e to define term s co m m o n to
h om e equity lines, d e scrib e fe atu res th at
a re b a sis to m o st h om e equity lin es, give
e x a m p le s of how ra te ch an g es cou ld
a ffe ct m onthly p a y m en ts, an d p ro v id e a
b a sic ch e ck list o f item s th at co n su m ers
should be a lerted to w h en they shop for
h om e equity p ro d u cts.
(6) R e la te d P ro v isio n s
(i) Right of rescission—material
disclosures. T he B o a rd is a lso p rop osin g
to am en d fo o tn o te 36, acco m p a n y in g
§ 2 2 6 .1 5 (a )(3 ) of the reg u latio n . S e ctio n
2 2 6 .1 5 (a )(3 ) s ta te s th at the co n su m er
m a y e x e r c is e the right o f re scissio n until
m idnight of the third b u sin ess d a y
follow ing opening the plan, d eliv ery of
the n o tice of the right to rescin d , or
d e liv ery of all “ m ate ria l d isc lo s u re s,”
w h ich e v e r o ccu rs la st. F o o tn o te 36 of
th e reg u latio n cu rren tly d efin es m a te ria l
d isclo su re s to in clu de the m eth od of
d eterm in in g the fin a n ce ch arg e an d the
b a la n c e upon w h ich a fin an ce c h a rg e
w ill be im p osed , the an n u al p e rce n ta g e
ra te , an d the am o u n t of m eth od of
d eterm in in g the am o u n t of an y
m em b ersh ip or p a rticip a tio n fee th at
m ay be im p osed a s p a rt of the p lan. T h e
B o a rd b eliev es all of the p ro p o sed
d isclo su re s in fo o tn o te 36. T h e p ro p o sed
lines sho uld be tre a te d as m a terial
d isco lsu re s in fo o tn o te 36. T h e p ro p o sed
d isclo su re s co n tain in form ation th a t is
e sse n tia l to co n su m ers u n d erstan d in g
the c o s t, term s, an d co n d itio n s o f h om e
eq uity tra n s a ctio n s , an d thus co n su m e rs
m u st h a v e the in fo rm atio n in o rd e r to
p ro p erly e x e rc is e th eir right of
re s c is s io n .
(ii) Advertising requirements. T h e
B o a rd is not prop osin g ch an g es to the
ad v e rtisin g ruies co n ta in e d in § 2 2 6 .1 6 of
the reg u latio n . T h e ad d itio n al
d isclo su re s for h om e eq uity p lans, if
in clu d ed in an ad v e rtise m e n t, will
req u ire ad d itio n al a d v ertisin g
d isclo su re s, h o w ev er. U n d er the op en end ad v ertisin g ru les in § 226.16, a n y
re fe re n ce to an item req u ired to be
d isclo se d under § 2 2 6 .6 ca lls for the
d isclo su re of co st in fo rm atio n su ch as
the A P R . a n y m em b ersh ip or
p articip a tio n fee, a n d a n y m inim um ,
fixed , tra n sa ctio n , o r a c tiv ity ch a rg e .
T h u s if a n y of the p ro p o sed d isclo su res
in § 2 2 6 .6 (e ) is s ta te d in an
a d v ertisem en t, o th e r c o s t in form ation
such a s the A PR a lso w ould h a v e to be
p ro v id ed . (T he c o m m e n ta ry cu rren tly
lim its the term s th at req u ire ad d itio n al
d isclo su re s to th ose item s in § 2 2 6 .6 (a )
and (b); co m m en t 2 2 6 .1 6 (b )-l w ou ld be
re v ise d to include a re fe re n ce to
§ 22 6 .6 (e ). if the B o ard ad o p ts this
4
p ro p o sal as a final rule.)
(7) Comment Period
T h e co m m en t p eriod en d s on
F eb ru ary 8 ,1 9 8 8 . B e c a u s e p rom pt
reso lu tio n of th ese m a tte rs is e sse n tia l
an d in the public in te re st, the e x p a n d e d
ru lem ak in g p ro ced u re se t forth in the
B o a rd ’s p olicy s ta te m e n t of Ja n u a ry 19.
19 7 9 (44 FR 3957) w ill n ot be fo llow ed .
T h e B o a rd b e liev es an a b b re v ia te d
co m m en t p eriod is n e c e s s a r y to en su re
th at a final rule is issu ed at le a s t six
m onth s b efo re O c to b e r 1 .1 9 8 8 , the
s ta tu to ry d ead lin e for the e ffe ctiv e d a te
of re g u lato ry am en d m e n ts.
(8) Economic impact statement
T h e B o a rd 's D ivision o f R e s e a rc h and
S ta tis tic s h as p rep a re d an e c o n o m ic
im p act s ta te m e n t on the p ro p o se d
rev isio n s to R egu lation Z. A c o p y o f the
an a ly sis m ay be o b ta in e d from
P u b licatio n s S e rv ice s, B o a rd of
G o v ern o rs of the F e d e ra l R e s e rv e
S y stem , W ash in g to n , DC, 20 5 5 1 , a t (202)
5 4 2 -3 2 4 5 .
List of Subjects in 12 CFR Part 226
A d v ertisin g , B an ks, b anking,
C o n su m er p ro tectio n C red it. F e d e ra l
R e se rv e S y stem , F in a n ce , P e n a ltie s,
T ru th in lending.
(9) Text of Proposed Revisions
C ertain co n v en tio n s h a v e b een used
to highlight the p ro p o se d re v isio n s. N ew
lan gu age is sh o w n in sid e b o ld -fa ce
a rro w s, w hile lan gu age th a t w ou ld be
rem o v ed is set off w ith b ra c k e ts . F o r the
re a s o n s set out in this n o tice , an d
p u rsu an t to the B o a rd ’s a u th o rity under
se ctio n 105 of the T ru th in L en din g A ct
(15 U .S .C . 1604 et seq .). the B o a rd
p ro p o ses to am en d P a rt 2 2 6 a s fo llow s:
PART 226—TRUTH IN LENDING
1. T h e au th o rity c ita tio n for P a rt 226
co n tin u es to re a d a s fo llow s:
Authority: Sec. 105. Truth in Lending Act.
as amended by sec. 605 Pub. L. 96-221. 945
Stat. 170 (15 USC 1604 et seq.): sec. 1204(c).
Competitive Equality Banking Act., Pub. I,.
100-86. 101 Stat. 552.
2. S e ctio n 226.5 is am e n d e d b y ad din g
p ara g ra p h (a)(3), red e sig n a tin g (b )(2 ) a s
(b )(3) an d adding a n ew p a ra g ra p h (b )(2)
to re a d a s follow s:
S ubpart B— Open-end C re d it
§ 226.5
General disclosure requirements
( a ) Form of disclosures. * * '
o ( 3 ) In a plan se cu re d by the
co n su m e r's p rin cip al d w ellin g, the
d isclo su re s req u ired by § 2 2 6 .6 sh all be
grou ped tog eth er, shall be se g re g a te d
from everything else, and shall not
contain any information not directly
related 10a to the disclosures required
under § 226.6. The disclosures required
by § 226.6(c) and (e)(lH 3) shall precede
all other disclosures.lcb<3
(b) Time of disclosures. * * *
e> (2) Initial disclosures for plans
secured by the consumer’s principal
dwelling. In a plan secured by the
consumer’s principal dwelling, the
creditor shall furnish the initial
disclosure statement and brochure
required by section 226.6 at the time an
application form is provided or before
the consumer pays a nonrefundable fee,
whichever is earlier.1Qc The creditor may
furnish the disclosures required by
§ 226.6(d) in accordance with
§ 226.5(b)(1). <3
*
*
*
*
*
3.
Section 226.6 is amended by adding
paragraph (e) and (f) to read as follows:
§ 226.6
*
*
Initial disclosure statem ent
*
*
*
E>(e) Additional disclosures for plans
secured by the consumer’s principal
dwelling. In a plan secured by the
consumer’s principal dwelling, the
following additional disclosures:
(1) A statement that loss of the
consumer’s home may occur in the event
of default.
(2) A statement of the circumstances
under which the consumer or the
creditor may terminate the plan, any
fees that may be imposed upon
termination, and whether the creditor
may require payment of the outstanding
balance in full at such time.
(3) If the creditor has the right to
change the terms and conditions during
the plan, a statement of that fact
(4) The payment terms for the plan
(separately stated, if applicable, for the
period when advances may be obtained
and the period when repayment is made
without new advances).
(i) The length of the plan.
(ii) An explanation of how the
minimum monthly or periodic payment
will be determined, including a
statement of any other payment, such as
t> 123The disclosures m a y include an
acknowledgement of receipt, the date of the
transaction, and the consumer's name address, and
account number. <t
O
The disclosures required by § 226.6(d) and (f)
may be sparated from the other disclosures.
Creditors also may use an insert or attachment for
disclosing information that is subject to change,
such as the index, interest rate, and payment
example.<5
> c In the case of telephone or mail applications
or when an application reaches the creditor through
an intermediary agent or broker, disclosures may be
delivered not later than three business days after
the creditor receives the consumer's application.^
o n e-tim e p ay m en t o f the o u tstan d in g
b a la n c e .
(iii)
A n exa m p le , b a se d on a $ 1 0 ,0 0 0
am o u n t ou tstan d in g an d a re ce n t
in te re st ra te , sho w ing the m inim um
m o n th ly o r p erio d ic p ay m en t, an d an y
o n e-tim e p ay m en t o f th e o u stan d in g
b a la n c e .
(5) If the m inim um m o n th ly or p erio d ic
p a y m e n t m ay n ot o r w ill n ot re d u ce the
o u tstan d in g p rin cip al b a la n c e , a
s ta te m e n t of th at fa ct.
(6) A n y m inim um o u tstan d in g b a la n c e
o r m inim um d ra w req u irem en ts, s ta te d
a s d o llar am o un ts.
(7) A sta te m e n t th a t d isclo su re form s
a re a v a ila b le fo r the c re d ito r’s o th er
o p en -en d p ro g ram s s e cu re d b y the
c o n su m e r’s p rin cip al dw elling,
(8) If the plan h a s a v a ria b le ra te , the
fo llow in g ad d itio n al d isclo su re s:
(i) T h e in d ex or fo rm u la u sed in
m ak in g ad ju stm en ts, an d a so u rce of
in fo rm atio n ab ou t the in d e x .
(ii) A n e x p la n a tio n o f h ow the in te re st
r a te w ill b e d eterm in ed , in cluding an
e x p la n a tio n of h o w the in d e x is
ad ju sted , such a s b y the ad d itio n o f a
m argin .
(iii) A s ta te m e n t th a t the co n su m e r
should a sk a b o u t the cu rre n t in d e x
v a lu e , m argin, an d in te re st r a te . _
(iv) T h e freq u en cy o f in te re s t ra te an d
p a y m e n t ch an g es.
(v ) A n y ru les relatin g to c h a n g e s in
the in d ex, in te re st r a te , p a y m e n t
am o u n t, an d o u tstan d in g lo a n b a la n c e
including, fo r e x a m p le , an e x p la n a tio n
o f in te re st ra te o r p a y m e n t lim itatio n s,
n e g a tiv e a m o rtizatio n , a n d in te re st ra te
c a rry o v e r.
(vi) A n h isto rica l tab le sh o w in g h o w
in te re st ra te s w ou ld h a v e b een a ffe cte d
b y ch a n g e s in in d e x v a lu e s o v e r a 15y e a r p eriod . T h e h isto rica l ta b le w o u ld
s ta r t in 1977 a n d b e u p d ated an n u ally
until 15 y e a r s of in d e x , m arg in , an d
in te re st ra te v a lu e s a re sh o w n .
(vii) A sta te m e n t o f th e m o st re c e n t
in te re st ra te sh o w n in th e ’r s t o r i c a l
ta b le an d m axim u m in te re st ra te an d
co rresp o n d in g p a y m e n ts b a se d on a
$ 1 0 ,(XX) a d v a n ce .
(viii) A s ta te m e n t th a t in terest ra te
in fo rm atio n w ill b e p ro v id ed on o r w ith
the first p erio d ic s ta te m e n t a fte r e a c h
r a te ch an g e.
(f)
Brochure for plans secured by the
consumer’s principal dwelling. In a p lan
s e cu re d b y the co n su m e r’s p rin cip al
dw elling, the h om e eq u ity b ro ch u re
p ub lish ed by th e B o ard , o r a su itab le
su b stitu te. <3
4L S ectio n 226.7 is am en d ed b y adding
p a ra g ra p h (1) to re a d a s fo llow s:
§ 226.7 Periodic statement
*
*
*
*
*
5
D>(I) Additional disclosures for
variable rate plans secured by the
consumer's principal dwelling. O n
or
w ith the first p eriod ic s ta te m e n t a fte r an
in te re st ra te ad ju stm en t of a v a ria b le ra te p lan secu red b y the co n su m e r's
p rin cip a l dw elling, n o tifica tio n o f the
r a te ch a n g e . T h e n o tice shall co n ta in the
follow ing in form ation .
(1) T h e cu rren t an d p rior in te re st
ra te s .
(2) T h e in d e x v a lu es upon w h ich the
cu rre n t an d p rio r in te re st ra te s a re
b a se d .
(3) T h e e x te n t to w h ich the c re d ito r
h as fo reg o n e an y in cre a se in the in te re st
ra te .
(4) T h e c o n tra c tu a l effe cts o f the
ad ju stm en t, including the p a y m e n t due
a fte r the ad ju stm en t is m a d e .< i
*
*
*
*
*
5.
F o o tn o te 36 to p a ra g ra p h (a )(3 ) of
§ 2 26.15 is rev ised to re a d a s fo llow s:
§ 226.15
(a ) 6 4
Right of rescission.
4
(3) * 4 * 36
*
*
*
*
*
Appendix
Editorial Note: This appendix will not
appear in the Code of Federal Regulations.
S a m p le D isclo su re
Important Terms of Our Home Equity Line of
Credit
S e c u rit y I n t e r e s t You must give us a
security interest in your home. You could lose
your home if you do not meet the obligations
in your agreement with us.
T erm ination a n d P aym ent Upon
T erm in a tio n : We can cancel your account
and require you to pay the entire outstanding
balance immediately: (1) If the interest rate
that would apply to your account should
exceed 18%; (2) if changes in the law either
prohibit or increase our risk or burden of
offering the plan; (3) if you fail to comply with
the requirements in your agreement with us.
You may close your account at any time by
notifying us in wri:.ng. If you close your
account, w e can require you to pay tr - entire
outstanding balance immediately.
C h a n g e s in T erm s: W e can change In:
terms and conditions that apply to your
account during the life of the plan.
Payment Requirements: You can obtain
advances for fifteen years. During this period,
your minimum monthly payment will equal
the amount of interest accrued and unpaid on
your account at the end of the billing period
or $10, whichever is greater. For example, if
36 The term “material disclosures" means the
information that must be provided to satisfy the
requirements in § 226.6 with regard to the method of
determining the finance charge and the balance
upon which a finance charge will be imposed, 'he
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 if plan(.]e>, and those items set forth in § 226.6(e). <o
you had an outstanding balance of $10,000,
the minimum monthly payment at an interest
rate of 10.25% would be $85.42. Outstanding
balances of less than $200 must be paid in
full.
The minimum monthly payment (when it
equals accrued interest) will not reduce the
outstanding principal balance on your
account.
At the end of fifteen years, you must pay
the entire outstanding balance immediately.
For example, if after fifteen years you had an
outstanding balance of $10,000, you would
have to make one payment of $10,000.
V a ria b le R a te F e a tu r e : The interest rate is
variable and can change quarterly. The rate
will not exceed 18%.
The interest rate equals an “index" plus a
“margin." The index is the average prime rate
charged by banks as published in the Federal
Reserve Bulletin for the first month of the
preceding quarter. The margin was 2
percentage points on 10/1/87. Ask us for the
current index value, margin, and interest rate.
H o w the F in a n c e C h a rg e is D eterm in ed :
Finance charges begin to accrue on the date a
transaction is posted to your account. To
determine the finance charge for a billing
period, we multiply the “average daily
balance" on your account by the “periodic
rate.” The “average daily balance" equals the
total of the balances outstanding at the end
of each day during the billing period divided
by the number of days in the billing period.
(The balance outstanding at the end of each
day is determined by taking the beginning
balance in your account each day. adding
new advances, and subtracting any payments
and credits and unpaid finance charges.) The
"periodic rate" equals the interest rate (the
index plus the margin) divided by the number
of billing periods in a year (12).
Currently, the periodic rate is .8542% and
the corresponding Annual Percentage Rate is
10.25%.
O th er F in a n c e C h a rg es: You must pay a
loan processing fee Finance Charge of $200
when you open your account.
O th er C h a rges
Application fee....... .............................. $150
Annual fee.............................................
45
Late payment fee (or 5% of the late
payment whichever, is greater).......
5
Closing costs (estimated)....................... 750
Title search/Insur..................................
200
Appraisal fee..........................................
150
250
Attorney/Doc. prep...............................
Recording fees........................
150
M in im u m D raw R e q u ire m e n ts : The
minimum amount of an advance is $500.
E ffe c ts o f the V a ria b le-R a te F e a tu r e :
Increases in the interest rate will increase the
amount of your minimum monthly payment.
For example, if the interest rate increased
from 10.25% to the 18% maximum permitted
under the plan, the minimum monthly
payment on a $10,000 balance would increase
from $85.42 to $150.
You will be notified of changes in the
interest rate on the monthly periodic
statement you receive following the change.
R a te H isto ry: This table shows how the
interest rate would have been affected by
actual changes in the index that occurred
between 1977 and 1987. It does not
necessarily indicate how the index will
change in the future.
Information on our other home equity
programs is available on request.
Board of Governors of the Federal Reserve
System, December 21,1987.
William W. Wiles,
S e c r e t a r y o f the B oard.
(FR Doc. 87-29556 Filed 12-23-87; 8:45 am]
BILLING CODE S210-01-M
Index
(percent)
Year
1977...............................................................................................................................................................................
1978...................................;............ .............................................................................................................................
1979............................................... .............. ...................... ........................................ ................. .................... ..........
1980........................ ............................................. ..................................................................... ..................................
1981..................................... ................ ........................................ ............................................. .......... .......................
1982................................. .............................:...............................................................................................................
1983........................................................................... .............. ................. ................... ................................ ..............
1984............................ ................. .......................................................................... .................. .................. ..............
1985..................................................................„...................... ■............... ....................................................................
1986.............................................. ......................... .................. .............................................. .............................. .
1987................................. .......... ........................................... .....................................................................................
° This interest rate reflects the 18% lifetime interest rate cap.
6
6.75
9.00
11.54
11.48
20.39
16.26
10.50
13.00
9.50
8.16
8.25
-
'
Margin
(percent)
Interest rate
(percent)
2
2
2
2
2
2
2
2
2
2
2
8.75
11.00
13.54
13.48
18.00*
18.00°
12.50
15.00
11.50
10.16
10.25
P R O P O S E D C H A N G E S IN O F F IC IA L S T A F F C O M M E N T A R IE S O N
R E G U L A T IO N S B , E , A N D Z
rights under the Consumer Credit
Protection Act. This statute is
implemented by the Board’s Regulation
B (12 CFR Part 202).
FEDERAL RESERVE SYSTEM
12 CFR Part 202
[Reg. B; EC-1 j
Equal Credit Opportunity; Proposed
Update t© Official Staff Commentary
A©£N€Y: B o a rd of G o v ern o rs o f the
F e d e ra l R e s e rv e S y stem .
ACTION: P ro p o se d official s ta ff
in te rp re ta tio n .
SUMMARY: T h e B o a rd is p ublishing fo r
co m m e n t p ro p o sed re v isio n s to the
official s ta ff c o m m e n ta ry to R eg u latio n
B (E q n al C re d it O p p o rtu n ity ). T h e
c o m m e n ta ry ap p lies a n d in te rp re ts the
re q u ire m e n ts of R eg u latio n B an d is a
su b stitu te fo r in divid u al s ta ff
in te rp re ta tio n s o f the reg u latio n . T h e
p ro p o se d re v isio n s a d d re ss is su e s
co n ce rn in g c o n sid e ra tio n o f ag e in
e v a lu a tin g cre d itw o rth in e ss, sig n atu re
req u ire m e n ts, re c o r d re te n tio n a n d
co lle ctio n o f m o nitorin g in fo rm atio n .
b a t e : C o m m e n ts m u st be r e c e iv e d on o r
b efore F e b ru a ry 1 2 ,1 9 8 8 .
a d d ress:
C o m m en ts should b e m ailed
to W illiam W . W iles, S e c r e ta r y , B o a rd
o f G o v e rn o rs o f the F e d e r a l R e s e rv e
S y stem , W a sh in g to n , D C 2 0 5 5 1 , or
d eliv ered to the 20th S tre e t co u rty a rd
e n tra n ce (20th S treet b e tw e e n C S tr e e t
a n d C o n stitu tio n A v e n u e NW.«
W a sh in g to n , DC] b e tw e e n 8:45 a .m . an d
5:15 p.m . w e e k d a y s. C o m m en ts should
in clude a re fe re n ce to E C - 1 . C o m m en ts
m a y be in sp e cte d in R o o m B -1 1 2 2
b e tw e e n 8 :4 5 a.m . an d 5:15 p.m .
w e e k d a y s,
FOR FURTHER INFORM ATION CONTACT:
K ath leen S . B ru eger o r L e o n a rd N.
Chanin, S ta ff A tto rn e y s, o r A d rie n n e D.
H urt, S e n io r A tto rn e y , D iv isio n of
C o n su m e r a n d C o m m u n ity A ffa irs, a t
(202) 4 5 2 -2 4 1 2 o r 4 5 2 -8 6 6 7 ; fo r th e
h earin g im p aired only, c o n ta c t
E a rn e stin e H ill or D o ro th e a T h o m p so n .
T e le co m m u n ica tio n D e v ice for th e D e a f
a t (202) 4 5 2 -3 5 4 4 , B o a rd o f G o v e rn o rs o f
the F e d e ra l R e s e rv e S y stem ,
W a s h in g to n , D C 2 0551.
O n N o v e m b e r 2 0 ,1 9 8 5 , an official
s ta ff co m m e n ta ry w a s p ub lish ed to
in te rp re t the reg u latio n s, alon g w ith a
final rule rev isin g R eg u latio n B (50 F R
4 8 0 1 8 ). T h e c o m m e n ta ry is d esig n ed to
p ro v id e g u id a n ce to c re d ito rs in
ap p ly in g the reg u latio n to sp ecific
tra n s a c tio n s . T h e co m m e n ta ry is
u p d ated p e rio d ica lly to a d d re ss
sig n ifican t q u estio n s th a t a rise . T h e
p re v io u s u p d a te w a s p ub lish ed in A pril
13 8 7 (52 F R 107 3 2 ). T h is n o tice c o n ta in s
the p ro p o se d s e c o n d u p d ate. It is
e x p e c te d th at it w ill be ad o p te d in final
form in M a rc h 1988.
(2) Proposed Revisions
The following is a brief description of
the proposed revisions to the
commentary:
Section 202.6—Rules Concerning
Evaluation of Applications
6(b) Specific Rules Concerning Use of
Information
Paragraph 6(b)(2). C o m m en t 6 ( b ) ( 2 ) - !
w ould b e am e n d e d to cla rify th a t w h ile
§ 202 .6 (b )(2 )(iv ) p erm its fav orin g
p e rso n s ag e 62 an d old er, th at p a ra g ra p h
d o es n o t p erm it fav o rin g a larg er age
jro u p (su ch a s p e rso n s ag e 55 and
c id e r). T o o ffer a p ro g ram fav o rin g a
la rg e r ag e group, the cre d ito r m u st rely
on the s p e c ia l p u rp o se cre d it p ro v isio n s
c f s e ctio n 202.8.
C o m m en t 6 (b )(2 )—3 w ou ld be a m e n d e d
to cla rify th a t age o r a g e -re la te d
in fo rm atio n ab o u t an a p p lica n t c a n n o t
be the sole f a c to r in d eterm in ing
cre d itw o rth in e s s o r in form ulatin g cre d it
term s an d co n d itio n s.
Section 202.7—Rules Concerning
Extensions of Credit
7(d )
Signature of Spouse or Other Person
Paragraph 7(d)(5). C o m m en t 7 (d )(5 )-2
w ou ld b e re v ise d in light o f United
States v. ITT Consumer Financial Corp.,
(1) G e n e ra l
8 1 3 F .2d 4 8 7 (9th Cir. 1987) to cla rify the
ru les on w h en a cre d ito r m a y req u ire
a d d itio n a l sig n atu res on a cre d it
o b ligatio n . In the ITT c a s e , the U.S.
T h e E q u a l C red it O p p o rtu n ity A c t
(E C O A ) (1 5 U .S .C . 1691 et seq.) m a k e s it
u nlaw ful for c re d ito rs to d iscrim in a te in
a n y a s p e c t o f a cre d it tra n s a c tio n bn the
b a s is o f ra c e , co lo r, religion, n atio n a l
origin, s e x , m a rita l s ta tu s, age, r e c e ip t o f
p u b lic a s s is ta n c e , o r the e x e r c is e o f
Court of Appeals for the Ninth Circuit
held that the future earnings of a spouse
are not community property. Therefore,
when an applicant relies on the spouse’s
future earnings to establish
creditworthiness, a creditor may
condition the extension of credit on the
SUPPLEMENTARY INFORMATION:
n o n a p p lica n t s p o u se ’s signing the c re d it
o b ligatio n .
W h e th e r an a p p lica n t is rely ing on the
fu tu re earn in g s o f a n o n a p p lica n t sp o u se
is for the cre d ito r to d eterm in e. B e c a u s e
I 2 0 2 .5 (c)(2 )(iv ) p erm its a c re d ito r
ro u tin ely to req u est in form ation a b o u t a
n o n a p p lica n t sp o u se, the m e re fa c t th at
the n o n ap p lican t sp o u se ’s in co m e is
listed on an a p p licatio n form is
in su fficien t to sh o w th at the a p p lica n t is
rely in g on the sp o u se ’s in co m e.
A third s e n te n ce w ou ld be a d d e d to
co m m en t 7(d )(5)—2 to in co rp o ra te the
h olding o f ITT. S om e cre d ito rs h a v e
a s k e d w h eth er, given the ITT ruling,
th ey a re req u ired to o b tain the sig n a tu re
o f the a p p lica n t’s sp o u se w h o se future
e arn in g s a re relied on for a n e x te n sio n
o f cred it. C red ito rs h a v e a lso a sk e d
w h e th e r th ey m a y d ifferen tiate on the
b a sis o f m a rital sta tu s w h en future
earn in g s a re relied on— th at is, w h e th e r
a c re d ito r m a y fo llow the p ra c tic e o f n ot
req u irin g the sig n atu re o f a spouse
w h o s e earn in g s a re rfejied on if it is the
c re d ito r’s p o licy to req u ire the sig n atu re
o f a person not married to the applicant
w h o s e future earn in g s a re relied on. (In
th e c a s e of a sp o u se, the c re d ito r w ou ld
b e assu m in g that, u n d er com m u n ity
p ro p e rty s ta te law , the sp o u se ’s future
earn in g s— unlike the future earn in g s o f a
n o n sp o u se— w ill b e co m e com m u n ity
p ro p e rty .) A d d itio n al lan gu age h a s b een
a d d e d to m ak e c le a r th at such a p ra c tic e
is p erm issib le, referen cin g § 2 0 2 .6 (c )—
w h ich a llo w s the co n sid e ra tio n of s ta te
p ro p e rty la w s.
Section 202.12—Record Retention
12(b) Preservation of Records
C o m m en t 1 2 ( h ) - l w ould be re v ise d to
c la rify the rules for re co rd re te n tio n of
d o cu m en ts (for ex a m p le , n o tifica tio n s of
a c tio n tak en ) in co m p u terized s y ste m s.
Section 202.13—Information for
Monitoring Purposes
1 3 (a ) In fo rm atio n to Be R e q u e ste d
C o m m en t 1 3 ( a ) - 5 w ould be re v ise d to
cla rify the m onitoring in form ation ru les
reg ard in g o p en -en d lines of cre d it.
List of Subjects in 12 CFR Part 202
Banks, Banking, Civil rights,
Consumer protection, Credit, Federal
Reserve System, Marital status
discrimination, Minority groups,
Penalties, Religious discrimination, Sex
discrimination, Women.
7
PRINTED IN NEW YORK, FROM FED ER A L
REGISTER,
VOL. 52, NO. 240
C e rta in c o n v e n tio n s h a v e b e e n u sed
to highlight the p ro p o se d re v isio n s. N ew
lan g u ag e is sh o w n in sid e b o ld -fa ce d
a rro w s , w h ile la n g u ag e th at w o u ld be
re m o v e d is se t off w ith b ra c k e ts .
(3) Text of Proposed Revisions
P u rsu a n t to au th o rity g ra n te d in
se ctio n 703 o f the E q u a l C red it
O p p o rtu n ity A c t (15 U .S .C . 1 6 9 1 b ), the
B o a rd p ro p o se s to a m e n d the official
sta ff c o m m e n ta ry to R eg u la tio n B (12
C FR P a rt 202 Supp. I) a s fo llo w s:
PART 202—[AMEMDEO]
1. The authority citation for Part 202
continues to read:
Authority: 15 U.S.C. 1691 e t sc q .
2. T h e p ro p o se d re v isio n s am en d the
c o m m e n ta ry (12 C F R P a rt 202, Supp. I)
b y re v isin g co m m e n ts 6 ( b ) ( 2 ) - ! , 6 (b )(2 )3, 7 ( d ) ( 5 ) - 2 ,1 2 ( b ) - l an d 1 3 ( a ) - 5 an d read
a s fo llo w s:
Supplement I—Official Staff
Commentary
★
*
*
.
*
*
Section 202.6—Rules Concerning
Evaluation of Applications
*
*
*
6(h) S p e c ific
*
*
ru le s c o n c e r n in g u s e o f
inform ation.
*
*
*
*
*
Paragraph 6(b)(2)
1. F a v o rin g the eld erly . Any system of
evaluating credit-worthiness may favor a
credit applicant who is age 62 or older. e> A
credit program offering more favorable credit
terms to applicants at an age lower than 62 is
permissible, however, only if the program
meets the special-purpose credit
requirements of § 202.8. <a
*
*
*
*
*
3. C o n sid era tio n o f a g e in a ju d g m e n ta l
sy stem . In a judgmental system, defined in
§ 202.2(t), a creditor may riot take age directly
into account in any aspect of the credit
transaction. For example, the creditor may
not reject an application or terminate an
account because the applicant is 60 years old.
But a creditor that uses a judgmental system
may relate the applicant’s age to other
information about the applicant that the
creditor considers in evaluating
creditworthiness. For example:
° A creditor may consider the applicant's
occupation and length of time to retirement to
ascertain whether the applicant's income
(including retirement income) will support the
extension of credit to its maturity.
e A creditor may consider the adequacy of
any security offered when the term of the
credit extension exceeds the life expectancy
of the applicant and the cost of realizing on
the collateral could exceed the applicant's
equity. (An elderly applicant might not
qualify for a 5 percent down, 30-year
mortgage loan but might qualify with a larger
downpayment or a shorter loan maturity.)
° A creditor may consider the applicant's
age to assess the significance of the length of
the applicant’s employment (a young
applicant may have just entered the job
market) or length of time at an address (an
elderly applicant may recently have retired
and moved from a long-term residence).
d
>A s the examples above illustrate, the
evaluation must be made in an
individualized, case-by-case manner; and it is
impermissible for a creditor, in deciding
whether to extend credit or in setting the
terms and conditions, to consider age-related
information solely. Age-related information
may be considered only in evaluating other
"pertinent elements of creditworthiness” that
are drawn from the particular facts and
circumstances concerning the application in
question. <3
*
*
*
*
*
S ectio n 2 0 2 .7 —R u le s C o n cern in g E x ten sio n s
o f C red it
*
*
*
*
7(d) S ig n a tu re
*
*
*
o f s p o u s e o r o th e r p ers o n .
*
*
Paragraph 7(d)(5)
*
*
*
*
*
*
2. o
R e lia n c e o n e in c o m e o f a n o th er
p e r s o n s>— in d iv id u a l c r e d i t e . An applicant
who requests individual credit relying on the
income of another person ([[such asj
f>including<3 a spouse t>in a noncommunity
property stateo) may be required to provide
the signature of the other person to make the
income available to pay the debt. In
community property states, the signature oof
a spouseo may be required if the applicant
relies on the ospouse's<j separate income
o . < 3 [[of another person, i.e., income]] olf
the applicant relies on the spouse’s future
earnings <a that as a matter of state law
oare<3 [[is]] not community property [[.]] o ,
the creditor may but need not require the
spouse's signature. The option of not
requiring the spouse’s signature is
permissible regardless of whether the
creditor requires the signature of a nonspouse
whose future earnings are relied on by the
applicant. (See § 202.6(c) on consideration of
state property laws.)<a
*
*
*
*
*
S ec tio n 202.12— R e c o r d R eten tio n
*
*
*
*
*
12(b) Preservation of records.
1.
C opies. A copy of the original record
includes carbon copies, photocopies,
microfilm or microfiche copies, or copies
produced by any other accurate retrieval
system, such as documents stored and
reproduced by computer. t>A creditor who
uses a computerized or mechanized system
need not keep a written copy of a document
(for example, an adverse action notice) if it
can regenerate all pertinent information in a
timely manner for examination or other
purposes, o
*
*
*
*
*
S ectio n 202.13— Inform ation f o r M onitoring
P u rp oses
13(a) Information to be requested.
*
*
*
*
5.
T ransactions not c o v e re d .,The
information-collection requirements of
§ 202.13(a) apply to applications for credit
primarily for the purchase or refinancing of a
dwelling that is or will become the
applicant’s principal residence. Therefore,
[[applications for home-equity lines and
other]] applications for credit secured by the
applicant’s principal residence but made
primarily for a purpose other than the
purchase or refinancing of the principal
residence (such as loans for home
improvement and debt consolidation) are not
subject to the information-collection
requirements of § 202.13(a). e>An application
for an open-end home equity line of credit is
not subject to § 202.13 unless it is readily
apparent to the creditor during the
application process (for example, by the
documentation involved) that the purpose of
the line is for the purchase or refinancing of a
principal dwelling. <3
Board of Governors of the Federal Reserve
System. December 9.1987.
William W. Wiles,
*
S e c r e ta r y o f the Board.
[FR Doc. 87-28698 Filed 12-14-87; 8:45 am]
BILLING CODE 6210-01-M
12 CFR Part 205
[Reg. E; EFT-2]
Electronic Fund Transfer; Proposed
Update to Official Staff Commentary
agency: Board of Governors of the
Federal Reserve System.
ACT8GM: Proposed official staff
interpretation.
summary :
The Board is publishing for
comment proposed changes to the
official staff commentary to Regulation
E (Electronic Fund Transfers). The
commentary applies and interprets the
requirements of Regulation E and is a
substitute for individual staff
interpretations of the regulation. The
proposed revisions address questions
that have arisen about the regulation,
including amendments adopted by the
Board in August 1987 dealing with POS/
ACH services. The proposed revisions
deal, for example, with the
responsibilities of a service-providing
institution concerning periodic
statements, card issuance, and error
resolution.
d a t e : Comments must be received on or
before February 12,1988.
ADDRESS: Comments should be mailed
to William W. Wiles, Secretary, Board
of Governors of the Federal Reserve
System. Washington, DC 20551, or
delivered to the 20th Street courtyard
entrance (between C Street and
Constitution Avenue NVV.), Washington,
DC between 8:45 a.m. and 5:15 p.m.
weekdays. Comments should include a
reference to EFT-2. Comments may be
inspected in Room B-1122 between 8:45
a.m. and 5:15 p.m. weekdays.
FOR FURTHER INFORMATION CONTACT:
Kathleen S. Brueger, Staff Attorney, or
Gerald P. Hurst or John C. Wood. Senior
Attorneys, Division of Consumer and
Community Affairs, at (202) 452-3667 or
(202) 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) General
The Electronic Fund Transfer Act (15
U.S.C. 1693 et seq.) governs any transfer
of funds that is electronically initiated
and that debits or credits a consumer's
account. This statute is implemented by
the Board’s Regulation E (12 CFR Part
205).
Effective September 24.1981, an
official staff commentary (EFT-2, Supp.
II to 12 CFR Part 205) was published to
interpret the regulation. The
commentary is designed to provide
guidance to financial institutions in
applying the regulation to specific
situations. The commentary is updated
periodically to address significant
questions that arise. This notice
contains the proposed sixth update. ,: is
expected that the update will be
adopted in final form in March 1988. The
previous updates were published on
April 6,1983 (48 FR 14880), October 18,
1984 (49 FR 40794), April 3. 1985 (50 FR
13180), April 21,1986 (51 FR 13484), and
April 3, 1987 (52 FR 10734).
(2) Proposed Revisions
Following is a brief description of the
proposed revisions to the commentary:
Section 205.3—Exemptions
Question 3-6. Question 3-6 would be
revised to make clear that section 913 of
the EFT Act does not require an
employer to give its employees the
choice of receiving their salary by check
as an alternative to direct deposit.
Instead, an employer may comply with
section 913 by allowing each employee
to choose the institution to receive the
direct deposits.
Section 205.14—Services Offered by
Financial Institutions Not Holding
Consumer's Account
Question 14-4. Question 14-4 would
be revised to make clear that if the
service provider complies with, the
conditions set forth in the August 1987
amendments to the regulation (52 FR
30904), it need not provide a periodic
statement. The question as currently
written could be viewed as requiring a
service-providing institution to provide- a
periodic statement to consumers in. all.
cases.
Question 14-5. This question is a new
question. It would clarify that in any
POS/ACH program where the service
provider does not issue debit.cards that
will actually he used to initiate transfers
through the system, the service provider
must provide periodic statements to
consumers..
Question 14-6. This question is also
new. It deals with the responsibility of a
service provider with regard to error
resolution. It would clarify that the
service provider must reimburse the
consumer for any fees or charges
incurred as a result of the error.
Question 14-7.. This question; would be
added to the commentary to address an
issue concerning the periodic statement
provided by the account-holding
institution. Specifically, the question
would make clear that the statement
need not show, with respect to POS/
ACH transactions, information other
than the transaction description set
forth in § 205.9(b)(1).
List o f S u b je cts in 12 C F R P a rt 205:
Banks, Banking* Consumer protection*
Electronic fund transfers,. Federal
Reserve System, Penalties.
Certain conventions have been used
to highlight the revisions. New language
is shown- inside bold-faced arrows,
while language to be removed is set off
with brackets.
(3) Text of Proposed Revisions
Pursuant to authority granted in
section 904 of the Electronic Fund
Transfer Act. 15 U.S.C. 1693b, the Board
proposes to amend the-official staff
commentary to Regulation E (12 CFR.
Part 205, Supp. II) as follows:
PART 205—[AMENDED].
1. The authority citation for Part 205
continues to read:
Authority: Pub. L. 95-630, 92 StaL 3730 (15
U.S.C. 1693b).
2. The proposed revisions amend the
official staff commentary on Regulation
E (EFT-2, Supp. II to 12 CFR Part 205) by
revising questions 3-6 and 14-4 and by
9
adding questions 14-5,14-6, and 14-7„
' and read as follows:
Supplement II—Official Staff
Interpretations
*
*
☆
#.
*
S ec tio n 205.3— E x em p tio n s
*
*
*
*
*
*
Q 3-6: C om pulsory u s e — s a la ry pay m en ts..
Preauthorized transfers from a financial'
institution to a consumer's account at the
same institution are.exempt from, the act and
regulation generally but are subject to the
statutory prohibition against requiring.an
employee (as a condition of employment) to
receive payroll deposits by electronic means,
at a particular, institution. Does this,
prohibition apply to a financial institution as
an employer?
A: Yes. The prohibition applies to all
employers,, including financial institutions. To
■< comply with, the law, an employer could. [T,
for example,3 give its employees a choice of
^institutions to receive directly deposited
payments, or a choice of<3 the method of
receiving payment—such as having their pay
deposited at a particular institution, or
receiving payment by check or cash.
As in the case of preauthorized loan
payments, the compulsory-use prohibition
does not require an employer to offer
alternative means of payment t©employees;
who agreed to electronic deposits at a
particular financial institution before May 10,
1980. However, if an employee asks to
terminate this arrangement, the employer
should honor the request. (§ 20{L3(d)(2);
section 913)
*
*>
&
irr
S ec tio n 205.14— S e r v ic e s O ffe re d b y
F in a n c ia l Institutions N a t H olding.
C o n s u m e r’s A cco u n t
*
*
*
*
*
.
Q 14-4: P e rio d ic sta tem en t —s e r v ic e p ro v id in g institution. Does the serviceproviding institution have to provide to the
consumer a periodic statement showing
transfers other than electronic fund transfers
made with.the service provider’s access
device?
A: No; t>Andif the service provider
complies with the conditions set forth in the
regulation, it need not provide any periodic
statement.«a (§ 205.14(a)(2)e> (i)Hv)o)
oQ 14-5: Is s u a n c e o f c a r d b y s e r v ic e p ro v id in g institution.. May a.service provider
provide a POS/ACH service without sending
periodic, statements* if it issues Us own card
but then allows the consumer to use another
card (such as a bank-issued debit or credit
card) to initiate transfers through the. POS/
ACH system?
A: No. In order to take advantage of the
exception* the debit card for initiating
transfers through the system must be the one
issued by the service provider. Similarly, a
service provider that, does not issue debit
cards remains subject to the requirement to
send periodic statements. (1 205.14(a)(2)(i))<]
oQ 14 - 6 ‘. E rro r resolution-—re sp o n sib ility
o f serv ice -p ro v id in g institution. In a POS/
ACH transaction, the; consumer properly
notifies the service-providing institution of an
alleged error. What is the service provider's
responsibility?
A: The service provider must investigate
and resolve the error as set forth in the
regulation. If an error in fact occurred, any
fees or charges imposed as a result of the
error, either by the service provider or by the
account-holding institution (for example,
overdraft or dishonor fees) must be
reimbursed to the consumer by the service
provider. (§§ 205.11 and 205.14(a)(3)-(a)(6))<a
t>Q 14-7: Content of periodic statement.
For POS/ACH transactions, is the. account
holding institution required to disclose all the
items specified in § 205.9(b) on its periodic
statement?
A: No. The periodic statement need contain
only the transaction descriptive information
specified in § 205.9(b)(1). (§ 205.14(b)(1))<3
*
it
*.
is*
Board7of Governors of the Federal Reserve
System. December 9,1987.
William W. Wiles,
S e c r e t a r y o f th e Board.
(FR Doc. 87-28699 Filed 12-14-87; 8:45 am}
BILLING CODE 6210-01-63
12 GFR Part 226
[Reg. 1; TIL-1]
Tratih Sr Lending;; Proposed Update £©
Official: Staff Commentary
AGENCY: Board of Governors-o£ the.Federal Reserve Systems..
ACTION: Proposed official staff
interpretation.
SUMMANV: The Board is publishing for
comment proposed revisions- to the
official' staff commentary to Regulation
Z (Truth.in Lending). The commentary
applies and interprets the requirements
o f Regulation Z and is a substitute for
individual staff interpretations of the
regulation.. The proposed revisions
address a variety of questions that have
arisen about the regulation*. and include
new material and changes in existing
material The proposed changes
address, for example? disclosure
questions raised by the emergence of
conversion features in adjustable-rate
mortgages, as well as the imposition of
fees that are considered finance charges
at the time.a credit card plan is
renewed. Proposed commentary also is
included which interprets the Board’s .
recent rule implementing the
requirement of the Competitive- Equality
Banking Act that adjustable-ratemortgages contain a maximum interest
rate.
d a y s : C o m m en ts m u st be re c e iv e d on or
b efore F e b ru a ry
1988.
&D0K1SS: Comments should be: mailed
to William W. Wiles, Secretary, Board
of Governors of the Federal Reserve
S y ste m , W a sh in g to n , DC 20551, or
d e liv e re d to the 20th S tre e t co u rty a rd
e n tra n c e (20th S treet, b e tw e e n C S treet
an d C o n stitu tio n A v en u e, N W „
W a sh in g to n , DC) b e tw e e n 8:45 a.m . an d
5:15 p.m . w e e k d a y s. C o m m en ts should
in clu d e a re fe re n ce to T IL -1 . C o m m en ts
m ay be in sp e cte d in R o om B -1 1 2 2
b e tw e e n 8 :45 an d 5:15 p.m . w e e k d a y s.
FOR FURTHER INFORMATION CONTACT:
T h e follow ing a tto rn e y s in the D ivision
o f C o n su m er an d C o m m u n ity A ffairs, at
(202) 4 5 2 -3 6 6 7 or (202) 4 5 2 -2 4 1 2 :
S u b p arts A an d B— K a th le e n S. B ru eger,
Gerald P. Hurst, John C. Wood
Subpart C—Michael S. Bylsma, Leonard
N.
Chanin, Thomas J. N oto
Subpart D—Adrienne D. Hurt, Sharon T.
Bowman
For the hearing impaired only,
Telecommunication Device for the Deaf
(TDD). Earnestine Hill or Dorothea
Thompson, a t (202) 4 5 2 -3 5 4 4 , Board of
Governors of the Federal Reserve
System, Washington, DC 20551.
SUPPLEMENTARY INFORMATION:
(1) General
T h e T ru th in Len din g A c t (15 U .S .C .
1601 et seq.) g o v ern s co n su m e r cred it
tra n s a c tio n s an d is im p lem en ted by the
B o a rd 's R eg u latio n Z (12 C F R P a rt 226).
E ffe ctiv e O c to b e r 1 3 ,1 9 8 1 , an official
s ta ff c o m m e n ta ry (T IL -1 , Supp. I to 12
C F R P a rt 226) w a s p ub lish ed to in terp ret
the reg u latio n . T h e c o m m e n ta ry is
d esig n ed to p ro v id e g u id an ce to
c re d ito rs in ap plying the reg u latio n to
sp e cific tra n s a c tio n s an d is u p d ated
p e rio d ica lly to a d d re ss sig n ifican t
q u estio n s th a t arise. T h e re h a v e b een
s ix g e n e ra l u p d a te s so fa r— the first in
S e p te m b e r 19 8 2 (47 F R 413 3 8 ), the
s e c o n d in A pril 1983 (48 F R 148 8 2 ), the
third in A p ril 198 4 (49 F R 134 8 2 ), the
fourth in A p ril 198 5 (50 F R 131 8 1 ), the
fifth in A p ril 19 8 6 (51 F R 114 2 2 ), an d the
six th in A p ril 198 7 (52 F R 1 0 8 7 5 ). T h ere
w a s a ls o a lim ited u p d a te co n cern in g
fees for th e u se of a u to m a te d teller
m a ch in e s, w h ich w a s a d o p te d in
O c to b e r 1 9 8 4 (49 FR 4 0 5 6 0 ). T h is n o tice
co n ta in s th e p ro p o sed sev en th g e n eral
u p d ate. It is e x p e c te d th a t it w ill be
a d o p te d in fin al form in M a rch 198 8 w ith
o p tio n al co m p lia n ce until the u niform
e ffe ctiv e d a te of O c to b e r 1 for
m a n d a to ry co m p lia n ce .
(2) Proposed Revisions
The following is a brief description of
the proposed revisions to the
commentary:
Subpart A—General
Section 226.4—Finance Charge— 4(c)
Charges Excluded from the Finance
Charge-Paragraph 4(c)(4). A cross
10
reference would be added to comment
fees. The crossreference is to the commentary to
§ 2 2 6 .1 4 (c), computation of the annual
percentage rate on periodic statements.
Comment 1 4 ( c )- 7 discusses those
situations when Finance charges need
not be included in the annual percentage
rate computed for the periodic
statement. Comment 1 4 ( c )- 7 currently
deals with fees related to the opening of
the account. In this update, the Board
proposes to also exclude certain account
renewal fees from the computation of
the annual percentage rate on periodic
statements.
4 (c )(4 )—2— participation
Subpart 3 — Open-end Credit
Section 226.8—Initial Disclosure
Statement— 8(a) Finance Charge—
Paragraph 6(a)(2). C o m m e n t 6 (a )(2 )—7
w ould be re v ise d to in clu d e a re fe re n ce
to n ew § 2 26.30 an d the c o m m e n ta ry to
that se ctio n . S e ctio n 2 2 6 .3 0 req u ire s
cre d ito rs to in clu de a p ro v isio n settin g a
m axim u m in te re st ra te in th eir d w ellin gse cu re d cre d it c o n tr a c ts th a t p ro v id e for
ch an g es in the in te re st ra te .
Section 226.7—Periodic Statement—
7(h) Other Charges. C o m m e n t 7 ( h ) - l
w ould be rev ise d to c la rify the tre a tm e n t
of ta x e s an d filing o r n o ta ry fe e s th at
a re e x c lu d e d from the fin a n ce ch a rg e
under § 2 2 6 .4 (e ). E v e n th ou gh th e
§ 226.4(e) item s a re n ot re q u ire d to be
d isclo se d a s “o th e r c h a r g e s ” u n d e r
§ 226.6(b ), c re d ito rs m a y in clu d e such
ch arg e s in a d isclo su re o f “ o th e r
c h a r g e s " o n the in itial d isc lo s u re s.
Sim ilarly, th e se c h a rg e s m a y b e
in clu ded in the a m o u n t sh o w n a s
“closin g c o s t s " o r “ s e ttle m e n t c o s t s ” on
the p e rio d ic sta te m e n t, if the c h a rg e s
w ere item ized an d d isc lo s e d a s p a rt of
the closin g or s e ttle m e n t c o s ts on the
initial d isclo su re sta te m e n t. T h e re v ise d
co m m en t cla rifie s this p oin t.
Section 226.14—Determination of
Annual Percentage Rate— 14(c) Annual
Percentage Rate for Periodic
Statements. C o m m e n t 1 4 ( c ) - 7 cu rre n tly
d iscu sse s the e x c lu s io n o f c h a rg e s
re la te d to opening a n a c c o u n t from
in clu sion in the a n n u a l p e rc e n ta g e ra te
co m p u tatio n . This, c o m m e n t w o u ld be
re v ised to a lso e x c lu d e fe e s th a t a re
im p osed for re n e w a l o f a n a c c o u n t,
p rov id ed the fees a re n o t im p o se d a s a
resu lt o f sp ecific tra n s a c tio n s o r sp e cific
acco u n t a ctiv ity . T h is p ro p o s a l is b a se d
on the id ea th at c h a rg e s re la te d to the
ren ew al o f an a c co u n t, w h e n th e y a re
not re la te d to sp e cific tra n s a c tio n s or
sp ecific activ ity , re su lt in the s a m e
p rob lem s a lre a d y id en tified in this
co m m en t w ith re s p e c t to fe e s re la te d to
the opening o f an a c co u n t. In clu d in g the
fees, su ch a s c h a rg e s th a t a re on ly
im posed on cu sto m e rs th a t do n o t
ch a rg e a c e rta in am o u n t on th eir cre d it
ca rd an n u ally , in the co m p u ta tio n o f the
an nu al p e rc e n ta g e ra te w ould, in m an y
c a s e s , resu lt in sign ifican t d isto rtio n s of
the an nu al p e rce n ta g e ra te an d the
d elivery of p o ssib ly m islead in g
in form ation to co n su m ers.
Subpart C— Closed-end Credit
Section 226.18—Content of
Disclosures— 18(b) Amount Financed—
Paragraph 18(b)(3). C o m m en t 1 8 (b )(3 )—1,
a d d ressin g the tre a tm e n t o f p rep aid
fin an ce c h a rg e s in c a lcu la tio n s of the
am oun t fin an ced , w ould be d eleted and
a n ew co m m e n t 1 8 ( b ) (3 ) - ! su b stitu ted in
its p la ce . T h e n ew co m m en t cla rifie s
and m ore fully e x p la in s the tre a tm e n t of
p rep aid fin an ce ch a rg e s, w h ich h as b een
the so u rce of c o n sid e ra b le con fu sio n .
The n ew co m m en t is not in ten d ed to
ch a n g e the ex istin g rules u nd er
§ 226 .1 8 (b ), but m erely to cla rify w h en
cre d ito rs h a v e an option to tre a t c e rta in
fees a s p rep aid fin an ce c h a rg e s and
w h a t the im p licatio n s of th at c h o ice are
u nd er § 226 .1 8 (b ).
18(c) Itemization of Amount
Financed—Paragraph 18(c)(1)(iv).
C om m en t 1 8 ( c ) ( l ) ( i v ) - l , ad d re ssin g the
item izatio n of p rep aid fin an ce ch a rg e s ,
w ould be sup plem ented by a n ew
se n te n ce a t the beginning w h ich clarifie s
that only th ose fin an ce ch arg es
d e d u cte d from the p rin cip al lo a n am o u n t
und er § 226.1 8 (b )(3) should be item ized
as p rep aid fin an ce ch arg es u nd er
§ 2 2 6 .1 8 (c )(l)(iv ). T h e rev isio n is m ad e
in co n ju n ctio n w ith the c la rific a tio n to
co m m en t 1 8 ( b ) (3 ) - ! and is n ot in ten d ed
to ch a n g e the su b sta n c e o f existin g
rules.
18(f) Variable Rate. C o m m en t 1 8(f)—9
w ould be ad d e d to d iscu ss the
d isclo su re req u irem en ts u nd er this
se ctio n for v a r ia b le -ra te tra n s a c tio n s
co n tain in g a n option perm itting
co n su m e rs to co n v e rt to a fixed ra te .
T h e co n v e rsio n op tion is a v a r ia b le -r a te
fe a tu re th a t m ust be d isclo sed . T h e
co m m e n t e x p la in s h ow the d isc lo s u re s
should be given. C o n siste n t w ith the
rev isio n being m ad e to co m m en t
1 8 ( f ) ( 4 ) - !, d e scrib e d b elow , it cla rifie s
th at only on e h y p o th e tica l e x a m p le
should be d isclo se d , su ch as an e x a m p le
of p a y m e n t term s resu ltin g from c h a n g e s
in the in d e x .
This co m m e n t is sim ilar to the
p a ra g ra p h on co n v e rsio n op tion s
p ro p o se d in the fifth c o m m e n ta ry u p d ate
in D e ce m b e r 1985. T h a t p ro p o sa l w a s
not a d o p te d th en b e ca u se it w a s
e x p e c te d to be in co rp o ra te d into a
uniform a ju sta b le -ra te m o rtg ag e
d isclo su re reg u latio n . T h is reg u latio n
w a s p ro p o se d by the B o ard in
N o v em b er. 1986. In the likely e v e n t the
u niform d isclo su re reg u latio n is ad o p ted
in the n e a r future, co m m en t 18(f)—9
w ou ld ap p ly only to tra n s a c tio n s n ot
c o v e r e d by the n ew req u irem en ts.
Paragraph 18(f)(2). C o m m en t 1 8 (f )(2 )1 w ou ld be re v ise d b y ad d in g a c ro s s re f e re n c e to the re q u irem en t in n ew
§ 2 2 6 .3 0 th at a m a x im u m in te re st ra te
lim itatio n be in clu d ed in certain ,
v a r ia b le -r a te tra n s a c tio n s .
Paragraph 18(f)(4). C o m m en t 1 8 (f )(4 )1 w ou ld b e re v ise d to cla rify th a t s e ctio n
18(f)(4) re q u ire s on ly o n e e x a m p le o f the
e ffe cts o f a r a te in c r e a s e o n paym entterm s. T h e c o m m e n t s ta te s th a t in.
tra n s a c tio n s w ith m o re than, one
v a r ia b le -r a te featu re* o n ly on e
h y p o th e tica l e x a m p le m a y b e in clu d ed
in th e se g re g a te d d isc lo s u re s.
Subpart D—Miscellaneous
Section 226.28—Effect on State
Laws— 28(a) Inconsistent Disclosure
Requirements. C o m m en t 2 8 (a )-1 3 w ou ld
be a d d e d to re fle ct th e B o a rd ’s 1985
d e term in atio n o f th e e f f e c t o f the T ru th
in L en d in g A c t o n a p ro v isio n o f the
c o n su m e r cre d it la w o f A riz o n a . O n
S e p te m b e r 4,. 1987, the B o a rd a ls o
p u b lish ed fo r p ublic c o m m e n t a
p ro p o se d d e te rm in a tio n o f th e F e d e r a l
la w ’s e ffe ct o n a, p ro v isio n o f the
c o n su m e r cre d it la w o f In d iana. (52 F R
3 3 5 9 6 ), a n d w ill lik ely m ak e a fin al
d e te rm in a tio n on this p ro p o sa l la te r this
y e a r. T h a t d e te rm in a tio n is. e x p e c te d t o
be in co rp o rte d in to th e fin al
c o m m e n ta ry updates
Section 226.30—Limita Lions on Rates.
O n N o v e m b e r 9,1987,.. the B o a rd
p ub lish ed a fin al rule am en d in g
R eg u latio n Z to in co rp o ra te the
s u b sta n c e of s e ctio n 12 0 4 o f the
C o m p etitiv e E q u ality B an k in g A c t
(C E B A ) into the re g u la tio n (52 FR. 43178;.
te c h n ica l c o rr e c tio n s to origin al n o tice
at 52 F R 45611 (1987). T h e ru le req u ires
c re d ito rs w h o o ffe r d w e llin g -secu red
lo an s w ith a n a d ju s ta b le in te re st ra te to
in clu d e a m axim u m ra te ceilin g in th eir
cre d it a g re e m e n ts e n te re d into on or
a fte r D e c e m b e r 9; 198 7 . T h e follow in g
co m m en ts w ou ld b e in clu d ed a s p a r t o f
the c o m m e n ta ry to § 226.30.
C o m m en ts 3 0 -1 through 3 0 - 5 w ou ld
e x p la in th e s co p e o f th e ru le’s c o v e ra g e ,
in cluding e x a m p le s o f w h a t ty p e s o f
o b lig a tio n s a re c o v e re d a n d n o t c o v e re d .
G e n erally s ta te d , th e ru le i s t h a t a n y
p o st-e ffe ctiv e d a te c re d it o b lig atio n is
su b je ct to the in te re st r a te ceilin g
req u irem en t if ih (1 ) Is s e cu re d b y a
dw elling, (2)' c o n tr a c tu a lly a llo w s fo r
in te re st ra te in c r e a s e s , a n d (3) re q u ire s
in itial T ru th in L en d in g A c t (T IL A )
d isclo su re s. A c re d it o b lig atio n s u b je ct
to the TILA- m a y also- b e c o m e s u b je ct to:
| 2 2 8 .3 0 in tw o o th e r in s ta n c e s :-(1 ) If a
se cu rity in te re st in a d w e llin g i s added*
11
to an ob ligation th at a llo w s for in te re st
ra te in cre a se s , o r (2) a v a ria b le ra te
fe a tu re is ad d ed to a d w e llin g -se cu re d
cre d it obligation.
T h e s co p e of the su b stan tiv e la w
req u irem en t of sectio n 1204 o f C E B A is
lim ited to obligations su b je ct to the
T IL A an d R egulation Z. C o m m en t 3 0 - 6
g e n e ra lly exp lain s th at the o th e r
p ro v isio n s of the reg u latio n re la tin g to
T IL A d isclo su res and th eir
corresp o n d in g co m m en tarie s ap p ly to
§ 225.30-w h ere ap p ro p riate (su ch a s
d efin itions and ex e m p tio n s),,u n le ss
o th erw ise sp ecified in the c o m m e n ta ry
to | 226.30. F or exam p le, f o r p u rp o se s of
coverage, the refinan cin g and
assu m p tio n ru les of § 2 2 8 .2 0 (a ) a n d (b )
apply.. On. the. o th er h an d , fo r p u rp o se s
of increasing a maximum interest, rate
origin ally im p osed u n d e r | 2 2 6 .3 0 only
the. refin an cin g an d assu m p tion , ru les in
p ro p o s e d com m en ts 11 an d 12 . to this
s e c tio n w o u ld apply..
C o m m en ts 3 0 -7 through 3 0 - 9 e x p la in
the req u irem en t to sp ecify the in te re st
ra te ceilin g in cre d it c o n tr a s ts , in cluding
h o w the ra te m a y be s ta te d a n d th a t
m ultiple ra te s m a y b e set.
C o m m en t 3 0 -1 0 w o u ld be in clu d e d to
ex p la in th a t th e m axim u m r a te ce ilin g
m u st b e ap p lica b le to in c r e a s e s a fte r
d e fa u lt. T h is co m m en t a p p lie s o n ly in
situ atio n s in w h ich a p o st-d e fa u lt
a g re e m e n t is still c o n sid e re d p a rt o f th e
orig in al o b ligatio n s u b je c t to- R e g u la tio n
Z.
C o m m en ts 3 0 -1 1 a n d 3 0 - 1 2 e x p la in
w h en th e m axim um , in te re st r a te ceilin g
origin ally se t on a n o b lig a tio n m a y b e
in cre a se d .
C o m m en t 3 0 - 1 3 fu rth er e x p la in s th e
relie f p ro v id ed in fo o tn o te 5 0 to § 228.30k
L ist o f S u b jects in
12 C F K
F a rt 226
A dvertising,, B an k s, B an kin g,
C o n su m er p ro tectio n . C re d it, F e d e ra l
R e s e rv e S y stem , F in a n ce , P e n a ltie s,
R ate. lim itations,, T ru th in len d in g .
C e rtain co n v en tio n s h a v e b e e n u sed
to- highlight the p ro p o sed re v isio n s. N e w
la n g u a g e is sh o w n in sid e b o ld -fa ce d
a rro w s, w h ile lan g u ag e th a t w o u ld b e
d eleted is s e t off w ith b ra c k e ts .
(3)
T e x t o f P ro p o sed S a v is io n s
P u rsu an t t o a u th o rity g ra n te d in
s e ctio n ICS' o f th e T ru th in L en d in g A c t
(15 U .S .C . 1 6 0 # a s a m e n d e d ) a n d s e ctio n
1 2 0 4 o f the C o m p etitive Eiquality
B an k in g A ct, Pub. L 1 0 0 - 8 6 ,1 0 1 S ta t.
552, th e B o a rd p ro p o s e s to a m e n d the
official s ta ff c o m m e n ta ry t o R eg u latio n
Z (12 C F R P a r t 2 2 6 Supp. I) a s fo llo w s:
1. T h e au th o rity cita tio n fo r P a rt 2 2 6
co n tin u es to reach
Authority: Sec. 105, Truth in Lending Act,
as amended by sec. 605, Pub. L. 96-221, 94
Stat. 170 (15 U.S.C. 1604 et seq.)\ sec. 1204(c).
Competitive Equality Banking Act, Pub. L
100-86, 101 Stat. 552.
2. T h e p ro p o sed re v isio n s am en d the
c o m m e n ta ry ( T I L - 1 ,12 C F R P a rt 2 2 6
Supp. I) b y rev isin g co m m e n ts 4 (e )(4 )—2:
am en d in g co m m e n t 6 ( a ) ( 2 ) - 7 by ad d in g
tw o s e n te n c e s a fte r the s e c o n d
s e n te n ce ; rev isin g co m m e n t 7 ( h ) - l ,
1 4 ( c )- 7 ,1 8 ( b )( 3 ) —1; am en d in g co m m en t
1 8 ( c ) ( l ) ( i v ) - l b y ad d in g a n e w first
s e n te n ce ; ad d in g co m m en t 1 8 (f )-9 ;
rev isin g c o m m e n ts 1 8 (f)(2)—1 an d
1 8 ( f ) ( 4 ) - l ; an d ad d in g c o m m e n ts 2 8 ( a ) 13 an d 3 0 - 1 through 3 0 -1 3 to r e a d as
fo llow s:
Subpart A— General
<r
it
■ft'
Section 226.4— Finance Charge
*
it
*
*
*
| 226.4(c)(7), if the same term (such as
“closing costs”) w as used in the initial
disclosures and if the creditor chose to
itemize and individually disclose the costs
included in that term. e>Even though the
taxes and filing or notary fees excluded from
the finance charge under § 226.4(e) are not
required to be disclosed as "other charges”
under § 226.6(b), these charges may be
included in the amount shown as “closing
costs” or "settlement costs" on the periodic
statement, if the charges were itemized and
disclosed as part of the “closing costs" or
“settlement costs" on the initial disclosure
statement. < (See comment 8(b )-l for
exam ples of “other charges.”}
it
★
it
<r
*
*
Paragraph 4(c)(4)
it
it
it
it
it
2.
Participation fees—exclusions. * * *
(See the commentary to § 226.4(b)(2). [>Also,
see comment 14(c}-7 for treatment of certain
types o f fees excluded in determining the
annual percentage rate for the periodic
statement. <j)
<r
■ *'
4r
*
Subpart B— Open-end Credit
*
**
tp
Section 226.6 In itia l Disclosure Statement
*
it
*
6
*
6(a) Finance Charge
*
*
*
•
*
♦
Paragraph 6(a)(2)
it
*
it
it
it
7. Variable-rate plan— limitations on
increase. In disclosing any limitations on rate
increases,, limitations such as. the maximum
increase per y ear or the maximum increase
over the duration of the plan must be
disclosed. When there are no limitations. the
creditor may, but need not, disclose that fact.
t> (A maximum interest rate must be included
in dwelling-secured open-end cred it plans
under which the interest rate may b e
changed. See § 228.30 and the commentary to
that section.) <3 Legal limits such as usury or
rate ceilings- * * *
*
*
*
*
*
*
Section 226.7— Periodic Statement
*
*
*
*
*
7(h) Other Charges
1. Identification. In identifying any ‘‘other
charges” actually imposed during the billing
cycle, the type is adequately described as
"late charge” or “membership fee.” for
example. Similarly, “closing costs” or
“settlement costs,” for example, may be used
tO' describe charges imposed in connection
with real estate transactions that are
excluded from the finance charge under
it
*
Section 226.14— Determination o f Annual
Percentage Rate
it
a
it
14(c) Annual Percentage Rate for Periodic
Statements
it
4(c) Charges Excluded from the Finance
Charge
it
it
it
it
is
7. Charges related to opening E>or
renewing <a account. Footnote 33 is
applicable to § 226.14(c)(2) and (c)(3). The
charges involved here do not relate to a
specific transaction or to c> s p e c ific s activity
on the account, but relate solely to the
opening E>or ren ew in go of the account. e> A s
a result a fee that is charged annually to
renew a credit card account if the customer
has not met certain account usage criteria—
and thus may not be excluded from the
finance charge under § 226.4(c)(4) (see
comment 4(c)(4)-2)—would not be included
in the calculation of the annual percentage
r a te .o Inclusion of these charges in the
annual percentage rate calculation results in
significant distortions of the annual
percentage rate and delivery of a possibly
misleading disclosure to consumers. The rule
in footnote 33 applies even if the loan fee,
points, or similar charges are billed on a
subsequent periodic statement or withheld
from the proceeds of the first advance on the
account.
*
it
*
ft
1r
Subpart C—Closed-end Credit
it
it
*
it
it
Section 226.18— Content o f Disclosures
*
*
*
a
*
18(b) Amount Financed
*
*
*
*
*
Paragraph 18(b)(3)
1. Prepaid finance charges, o Prepaid
finance charges that are paid separately in
cash or by check should be deducted under
§ 226.18(b)(3) in calculating the amount
financed. To illustrate:
• A consumer applies for a loan of $2,500
with a $40 loan fee. The face amount o f the
note is $2,500 and the consumer pays the loan
fee separately by cash or check at closing.
The principal loan amount for purposes of
§ 226.18(b)(1) is $2,500 and $40 should be
deducted under § 226.18(b)(3), thereby
yielding an amount financed of $2,460.
In some instances, as when loan fees are
financed by the creditor, finance charges are
incorporated in the face amount of the
12
obligation. Creditors have the option, when
the charges are not add-on or discount
charges, of either including or not including
the finance charges in the principal loan
amount that they determine under
§ 226.18(b)(1). When the finance charges are
included in the principal loan amount, they
should be deducted as prepaid finance
charges under § 226.18(b)(3).
W hen the finance charges are not included
in the principal loan amount, they should not
be deducted under § 226.18(b)(3). The
following examples illustrate the application
of 1226.18(b) to this type of transaction. Each
example assumes a loan request of $2*500
with a loan fee of $40; the creditor assesses
the loan fee by increasing the face amount of
the note to $2,540.
0 If the creditor determines the principal
loan amount under § 226.18(b)(1) to be $2,540,
it has included the loan fee in the principal
loan amount and should deduct $40 as a
prepaid finance charge under § 226.18(b)(3),
thereby obtaining an amount financed of
$2,500.
° If the creditor determines the principal
loan amount under § 226.18(b)(1) to be $2,500,
it has not included the loan fee in the
principal loan amount and should not deduct
any amount under § 226.18(b)(3), thereby
obtaining an amount financed of $2,500 . < 3
it
*
it
it
it
18(c) Itemization o f Amount Financed
it
*
it
*
it
Paragraph 18(c)(l)(iv)
1. Prepaid finance charge. e> Prepaid
finance charges that are deducted under
§ 226.18(b)(3) must be disclosed under this
s e c tio n s * * *
*
a
it
a
a
18(f) Variable Rate
*
*
&
it
ir
p>9. Conversion feature. In variable-rate
transactions with an option permitting
consumers to convert to a fixed-rate loan, the
conversion option is a variable-rate feature
that should be disclosed. In making
disclosures under § 226.18(f), creditors should
disclose the fact that the rate may increase
upon conversion and identify the index used
to set the fixed rate, any limitations on the
increase resulting from conversion, and the
effect of an increase. Because § 226.18(f)(4)
permits only one hypothetical example in the
segregated disclosures (such as an example
of the effect on payments resulting from
changes in the index), a second hypothetical
example wosdd not be given. < 3
a
a
o
4
Q
Paragraph 18(f)(2)
1. Limitations. This includes any maximum
imposed on the amount of an increase in the
rate at any time, as well as any maximum on
the total increase over the life of the
transaction. W hen there are no limitations,
the creditor may, but need not, disclose that
fact. Limitations do not include legal limits in
the nature of usury or rate ceilings under
state or federal statutes or regulations. ^-{See
§ 220.30 for the rule requiring that a maximum
interest rate be included in certain variablerate transactions.) o
*
*
*
*
*
Paragraph 18(f)(4)
1. Hypothetical example. The example
may. at the creditor’s option, appear apart
from the other disclosure. The creditor may
provide either a standard example that
illustrates the terms and conditions of that
type of credit offered by that creditor or an
example that directly reflects the terras and
conditions of the particular transaction, o l n
transactions with more than one variablerate feature, only one hypothetical example
should be provided in the segregated
disclosures. <o
a
o
a
<r
Subpart D— Miscellaneous
g
a
a
<r
*
Section 226.28—Effect on State Laws
28(a) Inconsistent Disclosure Requirements
&
ti
&
<3
<b
t>13. Preemption determination—Arizona.
Effective October 1,1988, the Board has
determined that the following provision in the
state law of Arizona is preempted by the
federal law:
® Section 8-621A .2—Use of the term “the
total sum of $ ____ " in certain notices
provided to borrowers. This term describes
the same item that is disclosed under federal
law as the “total of payments.” Since the
state law requires the use of a different term
than federal law to describe the same item,
the state-required term is preempted. The
notice itself is not preem pted^it
D>
*
*
*
*
Section 226.30—Limitation on Rates
1, Scope of coverage. The requirement of
this section applies to dwelling-secured
consumer credit obligations— both open-end
and dosed-end credit— entered into on or
after December 9,1987 that are subject to the
Truth in Lending A ct and Regulation Z. in
which the annual percentage rate may
increase after eeasusamation (off during the term of the plan, in the case of open-end
credit) as a result of an increase in the
interest rate component of the finance
charge— whether those increases are tied to
an index or formula or are within a creditor’s
discretion. The section applies to credit sales
as well as loans. Examples of obligations
subject to this section include:
e Dwelling-secured credit obligations that
require variable rate disclosures under the
regulation because the interest rate may
increase during the term of the obligation.
(See the commentaries to sections
§ § 226.6(a)(2}ra.l2 and 220.18(f).)
® Dwelling-seemed open-end credit plans
that do not require variable rate disclosures
under the regulation but where the creditor
reserves the contractual right to increase the
interest rate— periodic rate and
corresponding annual percentage rate—
during the term of the plan.
In contrast, the following obligations are
not subject to this section, because there is
no contractual right to increase the interest
rate during the term of the obligation.
° “Shared-equity" or “sharedappreciation” mortgages as described in
comment 18(f)—
6° Fixed-rate closed-end balloon payment
mortgage loans and fixed-rate open-end plans
with a stated term that the creditor may, but
does not have a contractual legal obligation
to, renew at maturity.
2. R e fin a n c e d obligations. On or after
December 9,1987, when a credit obligation is
refinanced, as defined in § 226.20(a) the new
obligation is subject to the requirement of
this section if it is dwelling-secured and
allows for increases in the interest rate.
3. A ssu m p tio n s. On or after December 9,
1987, when a credit obligation is assumed, as
defined in § 226.20(b), the obligation becomes
subject to the requirement of this section if it
is dwelling-secured and allows for increases
in the interest rate.
4. M o d ifica tio n s o f obligations.
Modifications of agreements entered into
prior to December 9,1987 are generally not
covered by this section. For example,
increasing the credit limit on a dwellingsecured, open-end plan with a variable
interest rate entered into before the effective
date of the rule does not make the obligation
subject to the requirement of this section. If,
however, a security interest in a dwelling is
added on or after December 9,1987 to a pre
existing credit obligation that allows for
interest rate changes, the obligation becomes
subject to the requirement of this section.
Similarly, if on or after December 9,1987, a
variable interest rate feature is added to a
pre-existing dwelling-secured credit
obligation, the obligation becomes subject to
the requirement of this section.
5. L a n d trusts. In some states, a land trust
is used in residential real estate transactions.
(See discussion in comment 3(a)—
8).) If a
consumer-purpose loan that allows for
interest rate changes is secured by an
assignment of a beneficial interest in a land
trust that holds title to a consumer’s dwelling,
that loan is subject to the requirement of this
section.
6. R ela tio n sh ip to o th e r sectio n s. Unless
otherwise provided for in the commentary to
this section, other provisions of the
regulations such as definitions, exemptions,
rules and interpretations aiso apply to this
section where appropriate. To illustrate:
° An adjustable interest rate businesspurpose loan is not subject to this section
even if the loan is secured by a dwelling
because such credit extensions are not
subject to the regulation. (See generally
§ 226.3(a))
° Creditors subject to the requirement of
this section are only those that fall within the
definition of a creditor in §226.2(a)(17).
7. C o n su m er c r e d it co ntract. Creditors are
required to specify a lifetime maximum
interest rate ceiling in their credit contracts—the instrument that creates personal liability
and generally contains the terms and
conditions of the agreement (for example, a
promissory note or home-equity line of credit
agreement). This requirement is subject to the
general “clear and conspicuous" standard of
the regulation, but no specific rule is
prescribed regarding the format of the
13
requirement. In some states, the signing of a
commitment letter may create a binding
obligation, for example, constituting
“consummation” as defined in § 22G.2(a)(13).
The maximum interest rate ceiling must be
included in the credit contract, but a creditor
has the option of including the rate ceiling in
the commitment instrument as well.
8. M a n n e r o f stating th e ra te ceilin g. The
maximum interest rate must be stated either
as a specified amount or in any other manner
that would allow the consumer to easily
ascertain, at the time of entering into the
obligation, what the lifetime interest rate
ceiling will be over the term of the obligation.
For example, the following statements would
be sufficiently specific:
° The maximum interest rate will not
exceed X%.
° The interest rate will never be higher
than X percentage points above the initial
rate of Y%.
° The interest rate will not exceed X%, or
X percentage points above [a rate to be
determined at some future point in time],
whichever is less.
° The maximum interest rate will not
exceed X% or the state usury ceiling,
whichever is less.
The following statements would not
comply with this section:
° The interest rate will never be higher
than X percentage points over the going
market rate.
° The interest rate will never be higher
than X percentage points above [a rate to be
determined at some future point in time].
0 The interest rate will not exceed the
state usury ceiling which is currently X%.
A creditor may state the maximum rate in
terms of a maximum annual percentage rate
that may be imposed. Under an open-end
credit plan, this would be the corresponding
annual percentage rate. (See generally
§ 226.6(a)(2).)
9. M u ltip le in terest ra te ceilin gs. Creditors
are not prohibited from setting multiple
interest rate ceilings. For example, on loans
with multiple variable rate features, creditors
may establish a maximum interest rate for
each feature. To illustrate, in a variable rate
loan that has an option to convert to a fixed
rate, a creditor may set one maximum
interest rate for the initially imposed indexbased variable rate feature and another for
the conversion option. Of course, a creditor
may establish one maximum interest rate
applicable to all features.
10. In tere st ra te c h a r g e d a ft e r default. State
law may allow an interest rate after default
higher than the contract rate in effect at the
time of default; however, the interest rate
after default must be subject to a maximum
interest rate set forth in a credit obligation
that is otherwise subject to the requirement
of this section. This rule applies only in
stituations in which a post-default agreement
is still considered part of the original
obligation.
11. In crea sin g the in terest ra te c eilin g —
g e n e r a l ru le. Generally, a creditor may not
increase the maximum interest rate originally
set on a credit obligation unless the consumer
and the creditor enter into a new obligation.
Therefore, under an open-end plan subject to
this section, a creditor may not increase the
maximum rate ceiling imposed merely
because there is an increase in the credit
limit. If an open-end plan is closed and
another opened, a new rate ceiling may be
imposed. Furthermore, where an open-end
plan subject to this section has a fixed
maturity and a creditor renews the plan at
maturity, or converts the plan to closed-end
credit, without having a legal obligation to
renew or convert, a new maximum interest
rate may be set at that time. If under the
initial agreement, the creditor is obligated to
renew or convert the plan, the maximum
interest rate originally imposed cannot be
increased upon renewal or conversion. For a
closed-end credit transaction, a new interest
rate ceiling may be set only if the transaction
is satisfied and replaced by a new obligation
that is dwelling-secured and allows for
increases in the interest rate. (The exceptions
to the general on refinancings in
§ 226.20(a)(l)-(5) do not apply with respect to
increases in the rate ceiling.)
12.
In c re a s in g the in te re s t ra te c eilin g —
assum ption o f an obligation. If an obligation
subject to this section is assumed by a new
obligor and the original is released from
liability, the maximum interest rate set on the
obligation may be increased as part of the
assumption agreement. (This rule applies
whether or not the transaction constitutes an
assumption as defined in § 226.20(b).)
13.
T ransition ru les. Under footnote 50, if
creditors properly include the maximum rate
ceiling in their credit contracts, creditors
need not revise their Truth in Lending
disclosure statement forms to add the
disclosures about limitations on an increase
required by §§ 226.6(a)(2) n.12 and 226.18(f)(2)
until October 1,1988, After that date,
creditors are required to state the limitations
on a increase as part of their Truth in Lending
disclosures as well as stating the maximum
interest rate ceiling in their credit contracts.
References
Statute: Competitive Equality Banking Act
of 1987, Pub. L. No. 100-86,101 Stat. 552.
O ther s e ctio n s: Sections 226.6(a)(2) n.12
and 226.18(f)(2).
P rev io u s regula tio n : None.
1987 c h a n g e s : This section implements
section 1204 of the Competitive Eqvality
Banking Act of 1987, Pub. L. No. 100-86, 101
Stat. 552 which provides that, effective
December 9,1987, adjustable rate mortgages
must include a limitation on the interest rate
that may apply during the term of the
mortgage loan. An adjustable rate mortgage
loan is defined in section 1204 as “any loan
secured by a lien on a one-to-four family
dwelling unit, including a condominium unit,
cooperative housing unit, or mobile home,
where the loan is made pursuant to an
agreement under which the creditor may,
from time to time adjust the rate of interest."
The rule in this section incorporates section
1204 into Regulation Z and limits the scope of
section 1204 to dwelling-secured consumer
credit subject to the Truth in Lending Act. in
which a creditor has the contractual right to
increase the interest rate during the term of
the credit obligation.^
Board of Governors of the Federal Reserve
System, December 9,1987.
William W. Wiles,
Secretary of the Board.
[FR Doc. 87-28700 Filed 12-14-87; 8:45 am)
BtLUMG 60D E 6210-01-M
i
14
p f 6
@FedFRASER