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FEDERAL RESERVE BANK
OF NEW YORK
[
C ircu la r N o.
10451 ”1
A p r il 2 4 , 1991
REGULATIONS B AND Z
Amendments to the Official Staff Commentaries
To All Depository Institutions and Others Concerned,
in the Second Federal Reserve District:
The Board of Governors of the Federal Reserve has amended its official staff commentary on
Regulation B, “Equal Credit Opportunity,” and on Regulation Z, “Truth in Lending.”
The changes to the staff commentary for Regulation B clarify the Board’s position regarding
notification of adverse action under certain circumstances, and reflect a determination of preemption
of a revision of an Ohio law by Federal law; these changes were effective April 1, 1991.
The amendments to the Regulation Z staff commentary address such issues as renewals of home
equity lines of credit, credit card substitution, and renewable balloon payment mortgages. These
changes were effective on April 1, 1991, but compliance is optional until October 1, 1991.
Enclosed — for depository institutions in the Second Federal Reserve District and others who
maintain sets of regulations of the Board of Governors — are copies of the amendments to the official
staff commentaries for Regulations B and Z, which have been reprinted from the Federal Register.;
additional, single copies may be obtained at this Bank (33 Liberty Street) from the Issues Division
on the first floor, or by contacting the Circulars Division (Tel. No. 212-720-5215 or 5216). Questions
regarding these matters may be directed to our Compliance Examinations Department (Tel. No.
212-720-5914).
E. G erald C o rr ig a n ,
President.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
EQUAL CREDIT OPPORTUNITY
A M E N D M E N TS TO THE OFFICIAL STAFF COMMENTARY ON REGULATION B
(Effective A pril 1, 1991)
FEDERAL RESERVE SYSTEM
12 CFR Part 202
[Reg. Si; EC-1]
Equal Credit Opportunity; Update to
Official S taff Commentary
a g e n c y : B oard o f G o v e rn o rs o f the
F ed er a l R e se r v e S y ste m .
a c t io n : F in al o ffic ia l s ta ff
in terp retation .
SUMMARY: H ie B o a r d is p u b lish in g in
fin a l form r e v is io n s to th e o ffic ia l s ta ff
co m m en ta r y to R egu lation B {Equal
C redit O p portu nity). T h e com m en tary
a p p lie s a n d in terp rets th e requ irem en ts
o f R eg u la tio n B a n d is a su b stitu te for
in d iv id u a l s ta ff in terp reta tio n s o f the
regu lation . T h e r e v isio n s a d d r e ss
n o tific a tio n o f a d v e r s e a ctio n a n d a
sta te la w p reem p tion d eterm in ation .
EFFECTIVE DATE: April 1,1991.
FOR FURTHER INFORMATION CONTACT: In
the Division of Consumer and
Community Affairs, Adrienne D. Hurt,
Senior Attorney, or Jane Ahrens, Staff
Attorney, at (202) 452-2412; for the
hearing impaired only, contact Dorothea
Thompson, Telecommunications Device
for the Deaf {TDD), at (202) 452-3544,
Board of Governors of the Federal
Reserve System. Washington, DC 29551.
need not be provided in instances where
a creditor takes action regarding a
(1) General
current delinquency or default on an
account—that is, a delinquency or
The Equal Credit Opportunity Act
(ECOA), 15 U.S.C. 1691-lQSlf, makes it default that has not been cured by the
unlawful for creditors to discriminate in time a creditor takes action on an
any aspect of a credit transaction on the account. Notification generally is
required, however, for action based on a
basis of race, color, religion, national
origin, sex, marital status, age, receipt of past delinquency or default that may
have previously existed but that no
public assistance, or the exercise of
longer continues.
rights under the Consumer Credit
Protection Act. This statute is
Section 202.11 Relation to State Law
implemented by the Board’s Regulation
11(a) Inconsistent state laws
B (12 CFR part 202). The Board also has
an official staff commentary (12 CFR
Comment ll(a)-2 is added to reflect a
preemption determination relating to
part 202 (Supp. I)) that interprets the
Ohio law that took effect on July 23,
regulation. The commentary provides
general guidance to creditors in applying 1990 (55 FR 29586).
the regulation to various credit
List o f S u b je c ts in 12 CFR Part 202
transactions, and is updated
Banks; Banking; Civil rights;
periodically to address significant
Consumer protection; Credit; Federal
questions that arise.
Reserve System; Marital status
On November 28,1990, the Board
discrimination; Minority groups;
published for comment a proposed
update to the commentary. (55 FR 49391) Penalties; Religious discrimination; Sex
discrimination; Women.
This notice contains in final form the
Pursuant to authority granted in
1890-91 update to the official staff
section 703 of the Equal Credit
commentary on Regulation B.
Opportunity Act (15 U.S.C. 1691b), the
Board is amending the official staff
commentaiy to Regulation B (12 CFR
(2) R e v is io n s
Part 202 Supp. I) as follows:
Section 2022 Definitions
PART 202—[AMENDED]
2(c) Adverse action
1.
The authority citation for part 202
Comment 2(c)(2)(ii)-2 is added to
continues to read as follows:
clarify the Board’s long-standing
position that a notice of adverse action
Authority: 15 U.S.C. 1091-1091f.
SUPPLEMENTARY INFORMATION:
F or th is C o m m en ta ry to b e co m p le te , retain:
1) C o m m en ta ry p am p h let dated A p ril 1, 1 9 9 0 .
2 ) T h is s lip sh eet.
PRINTED IN NEW YORK, FROM FEDERAL
[E n c . Cir. N o. 1 0 4 5 1 ]
REGISTER ,
VOL. 56, NO. 69, pp. 14461-14462
(O V E R )
2.
In ( 202.2, comment 2(c)(2)(ii)-2 is creditor's action is based on a past
delinquency or default on the account
added to read as follows:
*
Section 202.2 Definitions
2(c) Adverse action.
* * * * *
Paragraph 2(c)(2)(H)
* * * * *
2. Current delinquency or default The term
adverse action does not include a creditor’s
termination of an account when the
accountholder is currently in default or
delinquent on that account Notification in
accordance with i 202.9 of the regulation
generally is required, however, if the
*
*
*
*
3.
In $ 202.11, comment ll(a)-2 is
added to read as follows:
Section 202.11 Relation to State Law
11(a) Inconsistent state laws.
*'
*
*
*
*
the extent that it bars asking or favorably
considering the age of an elderly applicant;
prohibits the consideration of age in a credit
scoring system: permits without limitation the
consideration of age in real estate
transactions; and limits the consideration of
age in special-purpose credit programs to
certain government-sponsored programs
identified in the state law.
*
*
*
*
*
2. Preemption determination—Ohio.
Effective July 23,1990, the Board has
Board of Governors of the Federal Reserve
determined that the following provision in the
System, April 1,1991.
state law of Ohio is preempted by the federal
William W. Wiles,
law:
• Section 4112.021(B)(1)—Unlawful
discriminatory practices in credit
transactions. This provision is preempted to
Secretary of the Board.
[FR Doc. 91-6406 Filed 4-9-91; 8:45 am]
BILUNQ CODE S21(M>1-M
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
TRUTH IN LENDING
AM E N D M E N TS TO THE OFFICIAL STAFF COMMENTARY ON REGULATION Z
(Effective A pril 1, 1991)
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Reg. Z; TIL-1]
Truth in Lending; Update to Official
Staff Commentary
AGENCY: Board of Governors of the
Federal Reserve System.
a c t io n : Official staff interpretation.
s u m m a r y : The Board is publishing
revisions to the official staff
commentary to Regulation Z (Truth in
Lending). The commentary applies and
interprets the requirements of
Regulation Z and is a substitute for
individual staff interpretations. The
revisions address several issues,
including renewals of home equity lines,
credit card substitution, and renewable
balloon payment mortgages.
DATES: Effective April 1,1991, but
compliance optional until October 1,
1991.
commentary is designed to provide
guidance to creditors in applying the
regulation to specific transactions and is
updated periodically to address
significant questions that arise. This
update reflects material that was
published for comment at 55 FR 49392
(November 28,1990). Creditors are free
to rely on the revised commentary as of
April 1,1991, although they need not
follow the revisions until October 1,
1991. (2) Revisions. The following is a
description of the revisions to the
commentary:
Subpart A—General
Section 226.4 Finance Charge
4(a) Definition
In the proposal, comment 4(a)-2
would have been revised to say that a
tax imposed on a creditor by a state is a
finance charge if the creditor separately
imposes the charge on the consumer in
connection with a credit transaction
(instead of absorbing the charge as a
cost of doing business), even if the
FOR FURTHER INFORMATION CONTACT:
creditor is authorized by the state to
The following attorneys in the Division
of Consumer and Community Affairs, at pass the charge on to the consumer. A
number of commenters opposed the
(202) 452-3667 or (202) 452-2412: Jane
proposed revision. Some commenters
Ahrens, Sharon Bowman, Michael
felt that the relationship between the
Bylsma, Leonard Chanin, Adrienne Hurt, proposed new language in comment
Kurt Schumacher, Mary Jane Seebach,
4(a)-2 and other comments dealing with
John Wood. For the hearing impaired
the treatment of taxes was not clear.
only, Telecommunications Device for
Others believed that the proposal
the Deaf (TDD), Dorothea Thompson, at characterized taxes as finance charges
(202) 452-3544, Board of Governors of
in inappropriate situations.
the Federal Reserve System,
In response to comments, the position
Washington, DC 20551.
taken in the proposal has been changed:
SUPPLEMENTARY INFORMATION: (1)
it is set forth as new comment 4(a)-6.
General. The Truth in Lending Act (15
New language in comment 4(a)-2 deals
U.S.C. 1601 et seq.) governs consumer
only with one situation in which a tax is
credit transactions and is implemented
not a finance charge, where the creditor
by the Board’s Regulation Z (12 CFR
absorbs the tax as a cost of doing
part 226). Effective October 13,1981, an
business.
official staff commentary (TIL-1, Supp. I
New comment 4(a)-6 differs from the
to 12 CFR part 226) was published to
proposal in several ways. First, the
interpret the regulation. The
position taken in the proposal that a tax
F o r th is C o m m e n ta ry to be com plete, re ta in :
1) C o m m e n ta ry p am p h let dated A p r il 1, 1990.
2 ) T h is s lip sheet.
[E n c . C ir. No. 10451]
imposed solely on the creditor is a
finance charge even if the state permits
the creditor to pass the tax onto the
consumer is changed. If applicable law
is silent as to the permissibility of
passing the tax on, the tax is a finance
charge. If, however, applicable law
directs or authorizes the pass-on, the tax
is not a finance charge.
The new comment also clarifies that a
tax does not constitute a finance charge
in several other situations. For example,
if the law imposes a tax on the parties
jointly or on the credit transaction
without indicating whether the creditor
or the consumer is to pay the tax, the
tax is not a finance charge. (This
clarification harmonizes the new
comment with comment 4(a)—
3,
addressing concerns expressed by some
commenters.) Finally, the comment
clarifies that if a tax is excluded from
the finance charge by some other
provision of Regulation Z or the
commentary (for example, traditional
sales taxes or mortgage recording taxes)
the tax does not become a finance
charge by virtue of this new comment.
Subpart B—Open-End Credit
Section 226.5a Credit and Charge Card
Applications and Solicitations
5a(b) Required Disclosures
5a(b)(2) Fees for Issuance or
Availability
Proposed comments 5a(b)(2)-l and
5a(b)(2)-2 provided that certain
membership fees and fees for
enhancements should not be presented
in the tabular format. Comment 5a(b)(2)1 distinguishes between membership
fees that result in the automatic
issuance of card accounts as a benefit of
membership, (which must be disclosed)
and fees that merely result in eligibility
for a card (which may but need not be
disclosed). Commenters stated that
when it is difficult to determine the
nature of the membership fee, an issuer
ensures compliance by being able to
include the fee in the tabular format.
Therefore, the proposed revision to
comment 5a(b)(2)-l is withdrawn.
Because enhancement fees are not
imposed for the issuance or availability
of a card, comment 5a(b)(2)-2 is revised
as proposed.
5a(c) Direct-mail Applications and
Solicitations
Comment 5a(c)-l is revised to correct
a drafting error. Under § 226.5a(b)(l)(ii),
for direct-mail applications and
solicitations, an accurate variable
annual percentage rate is one in effect
within 60 days before mailing.
Comment 5a(c)-2 is revised to clarify
the dual use of a single application form
in direct mailings and public locations
as “take-ones." The comment provides
that if the issuer adheres to
requirements relating to the accuracy of
the credit terms in each case, creditors
have the flexibility of including or
omitting the disclosures referred to in
§ 226.5a(e)(l) (ii) and (iii) (the printing
date, the statement that the credit terms
are accurate as of that date and subject
to change thereafter, the statement that
the consumer should contact the issuer
for updated information, and a toll-free
telephone number or a mailing address).
5a(e) Applications and Solicitations
Made Available to General Public
5a(e)(l) Disclosure of Required Credit
Information
Comment 5a(e)(l)-2 is revised to
make a technical correction. The
comment clarifies that disclosures
specified in § 226.5a(e)(l) (ii) and (iii)
may appear either in or outside the table
containing the credit term disclosures.
A technical change is made to
comment 5b(d)(4)(iii)-l to provide
guidance concerning the ability of a
creditor to retain the right to freeze a
line of credit if the maximum annual
percentage rate is reached.
5b(d)(5) Payment Terms
Paragraph 5b(d)(5)(iii)
Comment 5b(d)(5)(iii)-4 is revised to
clarify the disclosures required for
reverse mortgages with shared
appreciation features. While the
proposal gave general guidance
regarding reverse mortgages, the final
comment provides greater specificity
about the information that should be
provided.
5b(d)(8) Fees Imposed by Third Parties
to Open a Plan
Comment 5b(d)(8)-2 is revised to
clarify that creditors need not include
costs for property insurance in the total
of third party fees if the creditor
discloses that such insurance is
required. The proposed amendment to
require creditors to include another
disclosure about property insurance in
any itemization of third party fees
provided in response to a consumer’s’
request has not been adopted. Requiring
creditors to repeat this information is
unnecessary since consumers already
will receive information under this
section if property insurance is required.
5b(f) Limitations on Home Equity Plans
Paragraphs 5b(f)(3) (i) and (vi)
Comments 5b(f)(3)(i)-l and
5b(f)(3)(vi)-l are revised to provide
additional guidance when a creditor
provides in its initial agreement that
further advances will be prohibited or
tbe credit limit reduced when the
maximum annual percentage rate is
reached.
Section 226.6 Initial Disclosure
Statement
6(e) Home Equity Plan Information
Comment 6(e)-4 is revised to clarify
that when disclosures are the same for
the draw and repayment phase,
creditors need not explicitly state that
the information applies to both phases,
as long as this fact is clear.
Section 226.9 Subsequent Disclosure
Requirements
and payment examples for home equity
plans, unless the disclosures provided
with the application were in a form the
consumer could keep and included
representative payment examples
covering the payment option chosen by
the consumer.
Comment 9(c)(1)—
6 is revised to clarify
that if the index is changed, the
maximum annual percentage rate is
increased, or a variable-rate feature is
added to a fixed-rate plan, the creditor
must give the maximum rate information
required by § 226.5b(d)(12)(x) and the
historical example required by
§ 226.5b(d)(12)(xi), unless these
disclosures are unchanged from those
given earlier. A parenthetical reference
to § 226.30 is included to alert creditors
to the fact that comment 30-11 limits a
creditor’s ability to increase the
maximum rate on a home equity plan
when renewing the plan. (Section 226.30
provides that the cap may be increased
only when a plan is renewed at
maturity—or before maturity, provided
the new cap is effective only after the
original maturity of the plan.) The
comment also clarifies that if the
minimum payment requirement is
changed, the creditor must give the
payment disclosures required by
§ 226.5b(d)(5)(iii) (and, in variable-rate
plans, the disclosures required by
§ 226.5b (d)(12)(x) and (d)(12)(xi)) unless
the disclosures given earlier contained
representative examples covering the
new minimum payment requirement.
This comment only addresses changes
specifically agreed to by the consumer.
Therefore, as provided under
§ 226.5b(f)(3)(iv) (discussing beneficial
changes), the requirements, of the
comment do not apply if a creditor
offers the consumer the option of
making lower payments.
Section 226.12 Special Credit Card
Provisions
Section 226.5b Requirements for Home
1 2 (a) Issuance of Credit Cards
Equity Plans
Card issuers are generally prohibited
Existing comments 5b-2 through 5b-5
from issuing credit cards on an
are redesignated as comments 5b-3
unsolicited basis but may do so as a
through 5b-6, respectively. New
renewal of, or substitute for, an
comment 5b-2 is added to provide
accepted credit card. Comment 12(a)(2)guidance on when changes to a home
2 provides that card issuers may
equity plan are governed by the change
substitute one credit card for another
in terms rules in § 226.9(c), and when
even where the underlying credit card
changes constitute a new plan requiring
account relationship has changed in
completely new disclosures. The
some way, including situations where
comment has been changed from the
credit features will be added or
proposal to clarify that § 226.9(c) applies 9(c) Change in Terms
changed. This comment is revised to
when a plan is changed prior to or at
9(c)(1) Written Notice Required
explain that a particular type of
maturity.
situation—that is, substituting a credit
Section 226.9(c)(1) requires creditors
card on an existing account and at the
to provide a notice whenever any term
5b(d) Content of Disclosures
required to be disclosed under § 226.6 is same time adding another credit card
5b(d)(4) Possible Actions by Creditor
account (such that the consumer is able
changed. Section 226.6(e)(7) requires
to obtain future extensions of credit on
creditors to give certain variable-rate
Paragraph 5b(d)(4)(iii)
2
both the original and the new account)—
is not considered a permissible
substitution for purposes of § 226.12(a).
(There is, of course, no prohibition
against doing this on a solicited basis.)
An example is provided in the comment
to illustrate the point. The language of
the amendment differs from that of the
proposal in order to allay a
misunderstanding of some commenters.
The interpretation does not preclude the
unsolicited substitution of a card in
connection with the conversion of a
retail credit card program into a co
branded retail/bank card, nor does it
preclude the unsolicited substitution of a
card in connection with the transfer of
future receivables to a successor card
issuer aseet forth in comment l2(a){2)-3;
in both of these cases only one account
will be accessible for future extensions
of credit.
Section 226.16 Advertising
16(d) Additional Requirements for
Home Equity Plans
Comment 16(d)-4 is revised to clarify
that a creditor may state, for example,
“no closing costs” in cases where
property insurance may be required as
long as the creditor includes a
disclosure that such insurance may be
required.
Subpart C—Closed-End Credit
Section 226.17 General Disclosure
Requirements
17(a) Form of Disclosures
Paragraph 17(a)(1)
Comment 17(a)(1)—
5 is revised to
indicate that a creditor may disclose in
the segregated disclosures (“federal
box”) whether or not a secured credit
transaction is assumable (even if the
transaction is not a residential mortgage
transaction).
17(c) Basis of Disclosures and Use of
Estimates
Paragraph 17(c)(1)
Comment 17(c)(l)-l is revised to
address questions raised by the addition
of new comment 20(c)—3, which is added
to reiterate that the general principle of
§ 226.17(c)(1), that disclosures reflect the
terms of the legal obligation between the
parties, also applies to the disclosures
required under § 226.20(c) for certain
variable-rate transactions. A few
comments expressed concern that the
existing language in comment 17(c)(l)-l,
that disclosures should reflect the legal
obligation "at the outset of the
transactions,” would not permit the
disclosures under § 226.20(c) to
accurately reflect subsequent
modifications or amendments to the
legal obligation. The revised comment,
therefore, clarifies that the disclosures
required under § 226.20(c) must be
based on the legal obligation at the time
disclosures are provided and “as o f’ the
outset of the transaction in all other
cases. This latter revision reflects the
fact that early disclosures provided
under subpart C are based on what the
legal obligation is expected to be at •
consummation. A technical change also
has been made to the first sentence of
the comment (changing "should” to
“shall”) to provide for consistency with
the language used in the regulation.
Comment 17(c)(1)—11 is revised to
provide guidance on when a renewable
loan with a balloon payment (formerly
referred to as a “renegotiable-rate
mortgage”) should be disclosed as a
long-term variable-rate loan as opposed
to a short-term balloon loan. The
comment provides that disclosures must
be based on the payment amortization
(or the specified term of the obligation
with renewals) when the creditor is
either unconditionally obligated to
renew the loan or obligated to renew
subject only to conditions within the
consumer’s control. The comment
provides examples of both conditions
considered to be within the consumer’s
control and those outside the
consumer’s control. As a variety of these
products is available on the market, no
one product has been singled out as
illustrative in the comment. The
reference contained in the proposed
comment to a creditor’s obtaining a
credit report is not included in the
revised comment since it does not
exemplify a condition on the obligation
to renew a loan. The revised comment
also provides that disclosures for a
renewable balloon-payment instrument
that will be renewed by a “refinancing”
of the obligation (as that term is defined
by § 226.20(a)) must be based on the
term of the balloon-payment loan. In
addition, the comment states that its
provisions do not apply to construction
loans subject to § 226.17(c)(6). Finally,
the heading for comment 17(c)(1)—
11 is
revised to parallel that of comment
19(b)-5. The comment noyv being revised
was originally published to address
disclosure of a specific renegotiable-rate
mortgage product which is no longer
widely available. While the revisions
have broadened the scope of the
comment, renegotiable-rate mortgages
are still included within the comment’s
coverage.
3
Section 226.19 Certain Residential
Mortgage and Variable-Rate
Transactions
19(b) Certain Variable-Rate
Transactions
Comment 19(b)r3 provides factors to
determine whether or not a transaction
involves an. “intermediary agent or
broker," which affects the timing rules
for certain disclosures. The factors look
to whether there is a relationship
between the creditor and the broker in
which the creditor has knowledge of and
exercises control over the broker’s
actions. The third factor describing the
amount of work completed by the broker
is revised to recognize that a large
amount of work performed by a broker
may not necessarily evidence this sort
of relationship. For example, for
purposes of this factor, a broker’s
submission of a completed loan package
to a creditor may not indicate a close
relationship between the two if such a
practice is customary in a particular
area.
Comment 19(b)-5 is revised to parallel
the revisions to comment 17(c)(1)—
11
describing renewable balloompayment
mortgage instruments.
Section 226.20 Subsequent Disclosure
Requirements
20(a) Refinancings
Comment 20(a}-3 is revised to reflect
the name change for describing a
renewable balloon-payment mortgage
(formerly referred to as a “renegotiablerate mortgage”) in comments 17(c)(l)-ll
and 19fb)-5.
20(c) Variable-Rate Adjustments
Comment 20(c)-3 is added to reiterate
that the general requirement of
§ 226.17(c)(1), that disclosures reflect the
terms of the legal obligation between the
parties, applies to the disclosures
required under § 226.20(c) for certain
variable-rate transactions. This
clarification arises from concerns raised
recently that some creditors may not be
adjusting their variable-rate loans
consistent with the terms of the
underlying legal obligation, resulting in
inaccurate interest rate and payment
adjustments. Under § 226.20(c),
disclosures about the new interest rate
and payment must be based on the
index type and index value specified in
the legal obligation.
Subpart D—Miscellaneous
Section 226.28 Effect on State Laws
28(a) Inconsistent Disclosure
Requirements
Comment 28(a}-15 is added to reflect
the Board'8 recent determination of the
effect of the Truth in Lending Act and
Regulation Z on certain provisions of the
law of Wisconsin dealing with
disclosures for home equity plans and
the right of a creditor to accelerate the
outstanding balance when a
nonapplicant spouse terminates a plan.
The notice of this determination was
published at 55 FR 31815 (August 6,
1990).
Section 226.30 Limitation on Rate9
i m p o s e s t h e c h a r g e o n t h e c o n s u m e r . In.
c o n tr a s t, a ta x is n o t a fin a n c e c h a r g e (e v e n if
it i s c o l l e c t e d b y th e c r e d it o r ) i f a p p lic a b le
l a w i m p o s e s t h e ta x :
• S o le ly o n th e co n su m er;
• O n t h e c r e d i t o r a n d t h e c o n s u m e r jo in tly ;
or
• O n t h e c r e d i t t r a n s a c t io n , w it h o u t
in d ic a t in g w h i c h p a r t y i s l i a b l e fo r t h e t a x .
A t a x a l s o i s n o t a f in a n c e c h a r g e i f
a p p lic a b le l a w i m p o s e s th e t a x s o l e l y o n t h e
c r e d ito r , b u t d ir e c t s o r a u t h o r iz e s th e c r e d it o r
to p a s s t h e t a x o n t o th e c o n s u m e r . (F o r
p u r p o s e s o f t h is s e c t i o n , i f a p p lic a b le l a w is
s i l e n t a s to s u c h a p a s s - o n , th e l a w d o e s n o t
a u t h o r iz e th e p a s s - o n . ) In a d d it io n , a t a x is
n o t a f in a n c e c h a r g e u n d e r t h is c o m m e n t i f it
i s e x c l u d e d fr o m t h e f i n a n c e c h a r g e b y a n y
o t h e r p r o v is io n o f t h e r e g u la t io n o r
c o m m e n t a r y (f o r e x a m p l e , i f it i s i m p o s e d
e q u a ll y in c a s h a n d c r e d i t t r a n s a c t io n s .
Comment 30-1 is revised to reflect the
name change for describing a renewable
balloon-payment mortgage (formerly
Subpart B—Open-End Credit
referred to ae a “renegotiable-rate
mortgage”) in comments 17(c)(l)-ll and S ectio n 226.5a C red it a n d C harge C a rd
A p p lication s. a n d .S o licita tio n s
19(b}-5.
b. Comment 5a(b)(2)-2 is revised to
List of Subjects in 12 CFR Part 226
read a s follow s:
Advertising, Banks, Banking,
Consumer protection, Credit, Federal
Reserve System, Finance, Penalties.
Rate limitations, Truth in lending.
(3) Text o f revisions. Pursuant to
authority granted in section 105 of the
Truth in Lending Act (15 U.S.C. 1604 as
amended), the Board amends part 226 as
follows:
5a(b)
*
R e q u ir e d D isc lo su res
*
*
*
*
5a(b)(2)
F ees f o r issu a n c e o r a v a ila b ility
*
*
*
*
*
2. E n h an cem en ts. F e e s fo r o p t io n a l s e r v i c e s
in a d d it io n to b a s i c m e m b e r s h ip p r i v i l e g e s in
a c r e d i t o r c h a r g e c a r d a c c o u n t (fo r e x a m p le ,
t r a v e l i n s u r a n c e o r c a r d - r e g is t r a t io n s e r v i c e s
s h o u ld n o t b e d i s c l o s e d in th e t a b le i f th e
b a s i c a c c o u n t m a y b e o p e n e d w it h o u t p a y in g
su ch fees.
*
*
*
*
*
PART 226—TRUTH IN LENDING
c. Comments to 5a(c) are amended by
1. The authority citation for part 226 is revising the second sentence in
comment 5a(c)-l, and by revising the
revised to read as follows:
third sentence and adding a sentence
Authority: Truth in Lending Act, 1 5 U.S.C. and parenthetical text after the third
1 6 0 4 and 1 6 3 7 (c )(5 ); sec. 1 2 0 4 (c ), Competitive
sentence in comment 5a(c)-2 to read as
Equality Banking Act 1 2 U.S.C. 3808.
follows:
2. Supplement I to part 226 is amended 5a(c) D ire c t-M a il A p p lic a tio n s a n d
as follows:
S o lic ita tio n s
Subpart A—General
S ectio n 226.4
F in an ce C harge
а. Comments to 4(a) are amended by
adding a second bulleted paragraph
after the first bulleted paragraph in
comment 4(a)-2, and by adding new
comment 4(a)-6 to read as follows:
4(a)
*
D efin ition
*
*
*
9
*
2. C o sts o f do in g b u sin ess. * * *
• A t a x i m p o s e d b y a s t a t e o r o th e r
g o v e r n m e n t a l b o d y o n a c r e d i t o r is n o t a
f i n a n c e c h a r g e i f t h e c r e d i t o r a b s o r b s t h e ta x
a s a c o s t o f d o in g b u s i n e s s a n d d o e s n o t
s e p a r a t e l y im p o s e th e t a x o n t h e c o n s u m e r .
(F o r a d d i t i o n a l d i s c u s s i o n o f th e tr e a tm e n t o f
t a x e s , s e e o t h e r c o m m e n t a r y to § 2 2 6 .4 (a ).)
*
*
*
*•-
*
б. Taxes. A t a x i m p o s e d b y a s t a t e o r o t h e r
g o v e r n m e n t a l b o d y s o l e l y o n a c r e d ito r i s a.
f in a n c e c h a r g e i f t h e c r e d it o r s e p a r a t e ly
1. A c cu ra cy. * * * ( A n a c c u r a t e v a r i a b l e
a n n u a l p e r c e n t a g e r a t e i s o n e in e f f e c t w it h in
6 0 d a y s b e f o r e m a ilin g .)
2. M a ile d p u b lica tio n s. * * * In a d d it io n ,
a c a r d is s u e r m a y u s e a s in g le a p p lic a t io n
fo r m a s a " t a k e - o n e ” (in r a c k s in p u b lic
lo c a t i o n s , fo r e x a m p l e ) a n d fo r d ir e c t
m a il in g s , i f t h e c a r d i s s u e r c o m p l i e s w it h th e
r e q u ir e m e n t s o f § 2 2 6 .5 a ( c ) e v e n w h e n th e
fo r m is u s e d a s a “ t a k e - o n e " — t h a t is , b y
p r e s e n t in g t h e r e q u ir e d
2 2 6 .5 a d i s c l o s u r e s
in a ta b u la r fo r m a t . W h e n u s e d in a d ir e c t
m a ilin g , th e c r e d i t te r m d i s c l o s u r e s m u s t b e
a c c u r a t e a s o f t h e m a ilin g d a t e w h e t h e r o r
n o t th e
2 2 6 . 5 a ( e ) ( l ) (ii) a n d (iii) d i s c l o s u r e s
a r e in c lu d e d ; w h e n u s e d in a t a k e - o n e , th e
d i s c l o s u r e s m u s t b e a c c u r a t e fo r a s lo n g a s
th e t a k e - o n e f o r m s r e m a in a v a i l a b l e to th e
p u b lic i f t h e 9 2 2 6 .5 a ( e ) ( l) (ii) a n d (iii)
d i s c l o s u r e s a r e o m it t e d . (I f t h o s e d i s c l o s u r e s
a r e in c lu d e d in th e t a k e - o n e , th e c r e d it te r m
d i s c l o s u r e s n e e d o n ly b e a c c u r a t e a s o f th e
p r in t in g d a t e .)
99
9
*
*
*
*
*
d. Comment 5a(e)(l)-2 is revised to
read as follows:
5a(e) A p p lic a tio n s a n d S o lic ita tio n s M a d e
A v a il a b le to G en era l P u blic
*
*
*
*
5 a (e )(l) D isc lo su re o f R e q u ir e d C red it
Inform ation
*
*
*
*
*
2 . Form o f disc lo su res. T h e d i s c l o s u r e s
s p e c i f i e d in
2 2 6 . 5 a ( e ) ( l) (ii) a n d (iii) m a y
a p p e a r e it h e r in o r o u t s i d e t h e t a b le
c o n t a in in g th e r e q u ir e d c r e d it d is c l o s u r e s .
99
S ectio n 226.5b
E q u ity P lan s
R eq u irem en ts fo r H o m e
e. Comments 5b-2 through 5b-5 are
redesignated as comments 5b-3 through
5b-6, respectively, and new comment
5b-2 is added to read as follows:
2 . C h an ges to h om e e q u ity p la n s e n te r e d
in to on o r a fte r N o v e m b e r 7, 1989. S e c t i o n
2 2 6 .9 (c ) a p p l i e s if, b y w r it t e n a g r e e m e n t
under
2 2 6 .5 b (f) (3 )( iii).
c r e d it o r c h a n g e s
t h e te r m s o f h o m e e q u it y p la n — e n t e r e d in t o
o n o r a f t e r N o v e m b e r 7 ,1 9 8 9 — a t o r b e f o r e its
s c h e d u l e d e x p ir a t io n , fo r e x a m p le , b y
r e n e w in g a p la n o n d if f e r e n t t e r m s . A n e w
p la n r e s u lt s , h o w e v e r , i f th e p la n is r e n e w e d
( w it h o r w it h o u t c h a n g e s to t h e t e r m s ) a f t e r
th e s c h e d u l e d e x p ir a t io n . T h e n e w p l a n is
s u b j e c t t o a ll o p e n - e n d c r e d it r u le s , in c lu d in g
§ § 2 2 6 .5 b , 2 2 6 .6 , a n d 2 2 6 .1 5 .
*
*
*
*
*
9
a
a
f. Comment 5b(d)(4)(iii)-l is amended
by revising the fourth sentence to read
as follows:
5 b (d )
*
C on ten t o f d isc lo su res
*
*
*
*
5b(d)(4)
P o ssib le A c tio n s b y C red ito r
*
*
*
*
*
P aragraph 5b(d)(4)(iii)
1 . D isc lo su re o f co n d itio n s. * * * A s a n
a lt e r n a tiv e to d is c lo s in g th e c o n d itio n s in th is
m a n n e r , th e c r e d i t o r m a y s im p ly d e s c r i b e th e
c o n d i t i o n s u s in g t h e l a n g u a g e in
§ § 2 2 6 .5 b (f) (2 ), 2 2 6 .5 b ( f ) ( 3 ) ( i) (r e g a r d in g
f r e e z in g t h e l i n e w h e n t h e m a x im u m a n n u a l
p e r c e n ta g e r a te is r e a c h e d ), a n d
2 2 6 .5 b ( f ) ( 3 ) ( v i) o r la n g u a g e t h a t is
s u b s t a n t i a l l y s im ila r . * * *
*
*
*
*
*
g. Comment 5b(d)(5)(iii)—4 is amended
by revising the fourth bulleted
paragraph to read as follows:
5b(d)(5)
P a y m e n t T erm s
*
*
*
*
*
P aragraph 5b(d)(5)(iii)
*
*
*
*
*
4. Reverse mortgages. * * *
• S o m e r e v e r s e m o r t g a g e s p r o v id e t h a t
s o m e o r a ll o f t h e a p p r e c ia t io n in t h e v a l u e o f
th e p r o p e r t y w i l l b e s h a r e d b e t w e e n th e
c o n s u m e r a n d th e c r e d it o r . T h e c r e d i t o r m u s t
d i s c l o s e th e a p p r e c ia t io n f e a t u r e , in c lu d in g
d e s c r ib i n g h o w th e c r e d i t o r ’s s h a r e w i l l b e
d e t e r m in e d , a n y l im it a t io n s , a n d w h e n th e
fe a tu r e m a y b e e x e r c is e d .
*
4
*
*
*
*
*
h. Comment 5b(d)(8)-2is amended by a s fo llo w s:
revising the first sentence and by adding 9(c) Change in Terms
a new sentence after the fourth sentence
9(c)(1) Written Notice Required
to read as follows:
'*
*
*
*
*
5b(d)(8) F ees Im p o s e d b y T h ird P a rties to
6.
Changes
to
home
equity
plans entered
O pen a Plan
into on or after November 7,1989. S e c t i o n
* *
*
*
*
2 2 6 .9 (c ) a p p l i e s w h e n , b y w r it t e n a g r e e m e n t
2. Itemization of third-party fees. In all
u n d e r § 2 2 6 .5 b ( f ) ( 3 ) ( iii) , a c r e d it o r c h a n g e s
cases creditors must state the total of thirdth e te r m s o f h o m e e q u it y p la n — e n t e r e d in t o
party fees as a single dollar amount or a
o n o r b e fo r e N o v e m b e r 7 ,1 9 8 9 — a t o r b e fo r e
range except that the total need not include
it s s c h e d u l e d e x p ir a t io n , fo r e x a m p l e , b y
costs for property insurance if the creditor
r e n e w in g a p la n o n t e r m s d if f e r e n t fr o m t h o s e
discloses that such insurance is required.
o f t h e o r ig in a l p la n . In d i s c l o s i n g th e c h a n g e :
* * * Any itemization provided upon the
• I f th e i n d e x i s c h a n g e d , th e m a x im u m
consumer’s request need not include a
a n n u a l p e r c e n t a g e r a t e i s i n c r e a s e d (t o th e
disclosure about property insurance.
lim it e d e x t e n t p e r m it t e d b y § 2 2 6 .3 0 ), o r a
★
*
*
*
*
i. Comment 5b(f)(3)(i)-l is amended
by revising the first sentence and by
adding a new sentence after the first
sentence to read as follows:
5b(f)
*
L im ita tio n s on H o m e E q u ity P lan s
*
*
- *
*
P aragraph 5b(f)(3)(i)
1. Changes provided for in agreement. A
creditor may provide in the initial agreement
that further advances will be prohibited or
the credit line reduced during any period in
which the maximum annual percentage rate
is reached. A creditor also may provide for
other specific changes to take place upon the
occurrence of specific events. * * *
v a r ia b le - r a t e f e a t u r e i s a d d e d t o a f ix e d - r a t e
p la n , th e c r e d it o r m u s t in c lu d e th e
d i s c lo s u r e s r e q u ir e d b y $ 2 2 6 .5 b (d ) ( 1 2 ) ( x )
a n d (d )(1 2 )(x i), u n l e s s t h e s e d i s c l o s u r e s a r e
u n c h a n g e d fr o m t h o s e g i v e n e a r lie r .
•
I f t h e m in im u m p a y m e n t r e q u ir e d is
c h a n g e d , th e c r e d i t o r m u s t in c lu d e th e
d i s c lo s u r e s r e q u ir e d b y S 2 2 6 .5 ( d ) ( 5 )(iii) (a n d ,
in v a r ia b le - r a t e p l a n s , th e d i s c l o s u r e s
r e q u ir e d b y s e c t i o n 2 2 6 .5 b (d ) ( 1 2 ) ( x ) a n d
(d )(1 2 )( x i)) u n l e s s th e d i s c l o s u r e s g iv e n
e a r lie r c o n t a i n e d r e p r e s e n t a t i v e e x a m p l e s
c o v e r in g th e n e w m in im im p a y m e n t
r e q u ir e m e n t . (See t h e c o m m e n t a r y to 1 2 2 6 5 b
(d )(5 )(iii)i ( d ) ( 1 2 ) ( x i) fo r a d i s c u s s i o n o f
r e p r e s e n t a t iv e e x a m p le s .) ?
Section 226.16 Advertising
n. Comment 16(d)-4 is amended by
adding two sentences after the second
sentence to read as follows:
16(d) Additional Requirements for Home
Equity Plans
★
*
*
*
*
4. Misleading terms prohibited. * * * In
the case of property insurance, however, a
creditor may state, for example, “no closing,
costs” even if property insurance may be
required, as long as the creditor also provides
a statement that such.insurance may be.
required. (See the commentary to this section
regarding fees to.open a plan.)
*-
■
*•
*■
Subpart C—Closed-End Credit
Section 226.17 General Disclosure
Requirements
o. Comment17(a)(iH> is revised by
adding a bulleted paragraph after the'
thirteenth bulleted paragraph to read as
follows:
17(a) Farm af Disclosures
Paragraph 17(a)(1)
*•
it.-
*
*•
*
5. Directly related. * * *
• A statement whether or not a subsequent
W h e n th e te r m s a r e c h a n g e d p u r s u a n t to a
purchaser of the property securing an
w r it t e n a g r e e m e n t a s d e s c r i b e d in
obligation may be permitted to assume the
★
*
*
*
*
§ 2 ? .6 5 b (f)(3 )(iii), t h e a d v a n c e - n o t i c e
remaining obligation on its original terms.
r e q u ir e m e n t d o e s n o t a p p ly .
*
*
*
*
*
j. Comment 5b(f)(3)(vi)-l is amended
by revising the first sentence and by
p. Comment 17(c)(1)-! is amended by
Section 226.12 Special Credit Card
adding a new sentence after the first
Provisions
revising the first sentence and adding a
sentence to read as follows:
m.
Comment 12(a)(2)^-2 is amended bysentence after the first sentence to read
as follows:
P aragraph 5 b(f)(3)(vi)
revising the third bulleted paragraph to
17(c) B a sis o f D isc lo su res a n d U se o f
read as follows:
1 . S u sp en sio n o f c r e d it p riv ile g e s o r
E s tim a te s
re d u c tio n o f c r e d it lim it. A creditor may
12(a) Issuance of Credit Cards
prohibit additional extensions of credit or
*
*
*•
**-'
Paragraph 17(c)(1)
reduce the credit limit in the circumstances
I. Legal obligation. The disclosures shall
specified in this section of the regulation. In
Paragraph 12(a)(2)
reflect the credit terms to which the parties
addition, as discussed under § 226.5b(f)(3)(i), *
*
*■ *
*
are legally bound as of the outset of the
a creditor may contractually reserve the right
transaction. In the case of disclosures
2. Substitution—examples. * * *
to take such actions when the maximum
required under section 226.20(c), the
• Changed the credit or other features
annual percentage rate is reached. * * *
disclosures shall reflect the credit terms to
available on the account For example, the
*
*
*
*
*which the parties are legally bound when the
original card could be used to make
purchases and obtain cash advances at teller disclosures are provided. * * *
* * * * *
windows. The substitute card might be
Section 226.6 Initial Disclosure Statement
usable, in addiiton, for obtaining cash
q. Comment 17(c)(l)-ll is amended by
k. Comment 6(e)-4 is amended by
advances through automated teller machines. revising the heading, the first sentence
revising the first sentence read as
(If the substitute card constitutes an access
and the first bulleted paragraph to read
follows:
device, as defined in Regulation E, then the
as follows:
Regulation
E
issuance
rules
would
have
to
be
6(e) Home Equity Plan Information
followed) The “substitution” of one card
II. Examples of variable-rate transaction.
* ' *
*
*
*
with another on an unsolicited basis is not
Variable-rate transactions include:
4. Disclosures for the repayment period.
however, where in conjunction
• Renewable balloon-payment instruments
* * * To the extent the corresponding annual permissible,
with the substitution an additional credit
where the creditor is both unconditionally
percentage rate, the information in footnote
card account is opened and the consumer is
obligated to renew the balloon-payment loan
12, and any other required disclosures are the able
to
make
new
purchases
or
advances
at the consumer's option (or is obligated to
same for the draw and repayment phase, the under both the original and the new account
renew subject to conditions within the
creditor need not repeat such information, as with the new card. For example, if a retail
consumer’s control) and has the option of
long as it is clear that the information applies card issuer replaces its credit card with a
increasing the interest rate at the time of
to both phases.
renewal. Disclosures must be based on the
combined retailer/bank card, each of the
*
*
*
*
*
payment amortization (unless the specified
creditors maintains a separate account, and
term of the obligation with renewals is
both accounts can be accessed for new
Section 226.9 Subsequent Disclosure
shorter) and on the rate in effect at the time
transactions by use of the new credit card,
Requirements
of consummation of the transaction.
the card cannot be provided to a consumer
l. Comment 9(c)(1)—
6 is revised to read without solicitation.
(Examples of conditions within a consumer’s
5
c o n t r o l in c lu d e r e q u ir e m e n t s th a t a c o n s u m e r
b e c u r r e n t in p a y m e n t s o r c o n t in u e to r e s id e
in th e m o r tg a g e d p r o p e r ty . In c o n t r a s t , s e t t in g
a lim it o n th e r a te a t w h ic h th e c r e d it o r
w o u l d b e o b li g a t e d to r e n e w o r r e s e r v i n g th e
r ig h t to c h a n g e th e c r e d it s t a n d a r d s a t th e
tim e o f r e n e w a l a r e e x a m p l e s o f c o n d i t i o n s
o u t s i d e a c o n s u m e r ’s c o n t r o l.) If, h o w e v e r , a
c r e d it o r is n o t o b l i g a t e d to r e n e w a s
d e s c r ib e d a b o v e , d is c lo s u r e s m u st b e b a s e d
o n th e te r m o f t h e b a l l o o n - p a y m e n t lo a n .
D i s c l o s u r e s a l s o m u s t b e b a s e d o n th e te r m o f
th e b a ll o o n - p a y m e n t lo a n in b a l l o o n - p a y m e n t
in s t r u m e n t s in w h i c h t h e l e g a l o b li g a t io n
p r o v i d e s th a t th e lo a n w i l l b e r e n e w e d b y a
“ r e f in a n c in g " o f t h e o b l i g a t io n , a s th a t te r m is
d e f in e d b y § 2 2 6 .2 0 (a ). I f it c a n n o t b e
d e t e r m in e d fr o m th e l e g a l o b li g a t io n th a t th e
lo a n w i l l b e r e n e w e d b y a “ r e f in a n c in g ,"
d i s c l o s u r e s m u s t b e b a s e d e it h e r o n th e te r m
o f th e b a ll o o n r p a y m e n t l o a n o r o n th e
p a y m e n t a m o r t iz a t i o n , d e p e n d in g o n w h e t h e r
th e c r e d i t o r is u n c o n d i t i o n a l l y o b l i g a t e d to
r e n e w th e l o a n a s d e s c r i b e d a b o v e . (T h is
d i s c u s s i o n .d o e s n o t a p p ly to c o n s t r u c t io n
l o a n s s u b j e c t to § 2 2 8 .1 7 (c ) (6 ).) * * *
*
*
*
*
*
S ectio n 226.19 C ertain R e sid e n tia l
M ortg a g e a n d V a ria b le-R a te T ran saction s
r.
Comment 19(b)-3 is amended by
revising the third bulleted paragraph
and the last paragraph to read as
follows:
19(b)
*
C ertain V a ria b le-R a te T ran saction s
*
*
*
b y th a t c r e d ito r . D u r in g th e tim e th e b r o k e r
h a s th e a p p lic a t io n , i t m ig h t re q u e s t a c r e d it
r e p o rt a n d a n a p p r a is a l ( o r e v e n p r e p a re a n
e n tire lo a n p a c k a g e i f c u s to m a ry in th a t
p a r t ic u la r a re a ),
*
*
*
*
*
E x a m p le o f v a ria b le -ra te tran saction s.
5.
*
*
• R e n e w a b le b a llo o n - p a y m e n t in s tr u m e n ts
w h e re th e c r e d ito r is b o th u n c o n d it io n a lly
o b lig a te d to r e n e w th e b a llo o n - p a y m e n t lo a n
a t th e c o n s u m e r ’s o p t io n ( o r is o b lig a te d to
re n e w s u b je c t to c o n d itio n s w it h i n th e
c o n s u m e r's c o n t r o l) a n d h a s th e o p t io n o f
in c re a s in g th e in te r e s t r a te a t th e tim e o f
re n e w a l. (S ee c o m m e n t 1 7 (c )(1 )—11 fo r a
d is c u s s io n o f c o n d itio n s w it h i n a c o n s u m e r ’ s
c o n tr o l in c o n n e c tio n w it h r e n e w a b le
b a llo o n - p a y m e n t lo a n s .) * * *
*
*
*
*
*
t. At the end of the comments to
§ 226.19, under the heading
“References," at the end of the
paragraph designated “1981 changes,”
the phrase “ection 226.20—Subsequent
Disclosure Requirements" is removed,
and a new heading “Section 226.20
Subsequent Disclosure Requirements" is
added, directly below that paragraph.
*
3. In te rm e d ia ry a gen t o r broker. * * *
• T h e a m o u n t o f w o r k (su c h a s d o cu m en t
p r e p a r a tio n ) th e c r e d it o r e x p e c t s to b e d o n e
b y th e b r o k e r o n a n a p p l i c a t i o n b a s e d o n th e
c r e d i t o r ’s p r io r d e a l i n g s w i t h th e b r o k e r a n d
o n th e c r e d it o r 's r e q u ir e m e n t s fo r a c c e p t in g
a p p l i c a t i o n s , t a k in g in t o c o n s id e r a t io n th e
c u s t o m a r y p r a c t ic e o f b r o k e r s in a p a r tic u la r
a r e a . T h e m o r e w o r k th a t th e c r e d it o r e x p e c t s
th e b r o k e r to d o o n a n a p p lic a t io n , in e x c e s s
o f w h a t is u s u a l l y e x p e c t e d o f a b r o k e r in
th a t a r e a , t h e l e s s l ik e ly it is th a t th e b r o k e r
w o u ld b e c o n s i d e r e d a n “ in t e r m e d ia r y a g e n t
S ectio n 228-20
R eq u irem en ts
S u b seq u en t D isclo su re
u. Comment 20(a)-3 is amended by
revising the second sentence to read as
follows:
20(a) Refinancings
*
*
+
*
*
3.
Variable-rate. * * * F o r e x a m p le , a
r e n e w a b le b a llo o n - p a y m e n t m o rtg a g e th a t
w a s d is c lo s e d a s a v a r ia b le - r a te tr a n s a c tio n
is n o t s u b je c t to n e w d is c lo s u re re q u ir e m e n ts
o r b r o k e r ” o f th e c r e d ito r .
w h e n th e v a r ia b le - r a te fe a tu r e is in v o k e d .
A n e x a m p l e o f a n “in t e r m e d i a r y a g e n t or
b r o k e r " i s a b r o k e r w h o , c u s t o m a r ily w it h in a
*
*
b r ie f p e r io d o f tim e a f t e r r e c e iv in g a n
a p p lic a t io n , in q u ir e s a b o u t th e c r e d i t te r m s o f
s e v e r a l c r e d it o r s w it h w h o m th e b r o k e r d o e s
b u s i n e s s a n d s u b m i t s th e a p p lic a t io n to o n e
o f th e m . T h e b r o k e r i s r e s p o n s i b l e fo r o n ly a
s m a ll p e r c e n t a g e o f th e a p p l i c a t i o n s r e c e iv e d
*
*
*
*
*
Basis of disclosures. T h e
d is c lo s u r e s
t e r m s o f t h e p a r t ie s l e g a l o b li g a t io n , a s
r e q u ir e d u n d e r § 2 2 6 .1 7 (c ) (1 ).
Subpart D—Miscellaneous
s. Comment 19(b)—
5 is amended by
revising the first bulleted paragraph to
read as follows:
*
3.
r e q u ir e d u n d e r t h is s e c t i o n s h a l l r e f le c t t h e
S ectio n 226.28
E ffect on S ta te L a w s
w.
Comment 28(a}-15 is added to read
as follows:
28(a)
*
In co n sisten t D isc lo su re R eq u irem en ts
*
15.
*
*
*
Preemption determination—Wisconsin.
E f f e c t iv e O c t o b e r 1 , 1 9 9 1 , t h e B o a r d h a s
d e t e r m in e d t h a t th e f o l l o w i n g p r o v i s i o n s in
th e s ta te la w o f W is c o n s in a r e p r e e m p te d b y
th e f e d e r a l la w :
• S e c t i o n 4 2 2 .3 0 8 (1 )— t h e d i s c l o s u r e o f th e
a n n u a l p e r c e n t a g e r a t e in c a s e s w h e r e th e
a m o u n t o f th e a n n u a l p e r c e n ta g e r a te
d i s c l o s e d to c o n s u m e r s u n d e r t h e s t a t e Taw
d if f e r s fr o m t h e a m o u n t t h a t w o u l d b e
d i s c l o s e d u n d e r f e d e r a l la w ,, s i n c e i n t h o s e
c a s e s t h e s t a t e t a w r e q u ir e s th e u s e o f t h e
s a m e te r m a s th e f e d e r a l l a w t o r e p r e s e n t a
d if f e r e n t a m o u n t t h e n t h e f e d e r a l la w .
• S e c t i o n 7 6 6 .5 6 5 (5 )— t h e p r o v is io n
p e r m it t in g a c r e d i t o r t o in c lu d e in a n o p e n e n d h o m e e q u i t y a g r e e m e n t a u t h o r iz a t io n t o
d e c la r e t h e a c c o u n t b a l a n c e d u e a n d p a y a b l e
u p o n r e c e i v i n g n o t i c e o f t e r m in a t io n fr o m a
n o n - o b lig o r s p o u s e , s i n c e s u c h p r o v is io n is
in c o n s i s t e n t w it h th e p u r p o s e o f th e f e d e r a l
la w .
*
*
*
*
*
S ectio n 226.30 L im ita tio n on R a te s
x.
C om m en t 3 0-1 is a m e n d e d b y
re v isin g the p a r e n th e tic a l te x t a t th e e n d
o f the fourth b u lle te d paragraph to read
a s fo llo w s:
1 . Scope
of coverage
* * * ( C o n t r a s t w it h
th e r e n e w a b l e b a l l o o n - p a y m e n t m o r t g a g e
in s t r u m e n t d e s c r i b e d in c o m m e n t 1 7 (c )( 1 )—1 1 .)
*
B oard o f G o v ern o rs o f th e F ed era l R eserv e
S y s t e m , M a r c h 2 9 ,1 9 9 1 .
20(c)
Variable-Rate Adjustments
* * *
Jennifer J. Johnson,
Associate Secretary of the Board.
v.
Comment 20(c}-3 is added to read (FR Doc. 91-7888 Filed 4-3-91; 8:45 ami
BILLING CODE 6310-0V-M
as follows:
*
*
PRINTED IN NEW YORK, FROM FEDERAL
REGISTER ,
6
VOL. 56, NO. 65, pp. 13751-13757
@FedFRASER