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FEDERAL RESERVE BANK O F N E W YO RK Circular No. 6982 August 1, 1972 PROPOSED AMENDMENTS TO REGULATION Z Credit Other Than Open End To All State Member Banks, and Others Concerned, in the Second Federal Reserve District: The following statement was issued July 27 by the Board of Governors of the Federal Reserve System: T he Board o f Governors o f the Federal R eserve System today announced a proposed am endm ent to its R egulation Z— which im plem ents the T ruth in Lending A ct— with th e aim o f helping hom e buyers to shop for th e best available credit terms. The am endm ent would require that creditors m ake the disclosures required by the Act to hom e buyers, or to those seeking to refinance a hom e, o f the annual p ercentage rate and the other terms o f their loan, “ not less than 10 days before the date on which th e custom er execu tes the n ote or other evidence o f d eb t.” Provision is m a d e for the customer to waive the 10-day notice period, or any part o f it, in the event ot a personal em ergency. In its proposal, the Board said: “ Presently, many creditors follow the practice o f m aking d isclosures at the tim e o f settlem ent, which u sually d oes not enable the custom er to shop for m ore favorable credit term s. U nder the proposal, the custom er w ould have a reasonable period to com pare credit term s before b ecom in g ob lig a ted .” Interested persons were invited to su bm it com m en t, in w riting, to the Secretary of the Board, or through any Federal Reserve Bank, not later than Septem ber 8, 1972. Printed below is the text of the proposed amendments. Comments thereon should be submitted by September 8 and may be sent to our Regulations and Bank Analysis Department. ALFRED HAYES, President. (Reg. Z) TR UTH IN LENDING Credit Other Than Open End 1. Pursuant to the authority con tain ed in the Truthcredit other than open end credit sh all, in accordance with § 226.6 and to the extent applicab le, m ake the d is in Lending A ct (15 U .S.C . 1601 et. seq .) the Board o f closures required by this section with respect to any G overnors proposes to am end Part 226 (R egulation Z), transaction consum m ated on or after July 1, 1969. E x in the m anner and for the reasons set forth below: cept as otherwise provided in this section , such d isclo § 226.8(a) would be am ended and § 226.8(q) would sures shall be made before the tran saction is co n su m be added to read as follows: m ated. At the time disclosures are m a d e, the creditor § 226.8—-CREDIT O T H ER TH A N O PE N E N D shall furnish the custom er with a d u p lica te o f the in SPECIFIC D ISC L O SU R E S strum ent or a statem ent by which the required d isclo (a) General Rule. Any creditor w hen extend ing (Over) sures are m ade and on which the creditor is identified. E xcept as provided in paragraph (q) o f this section, all o f the disclosures shall be m ade together on either (1) The note or other instrum ent evidencing the ob ligation on the sam e side o f the p age and above or adjacent to the place for the cu stom er’s signature; or (2) One side of a separate statem en t w hich id en ti fies the transaction. (q) Purchase or acquisition o f a dwelling. In any transaction involving the purchase or acq u isition o f a d w elling or subsequent refinancing o f such transaction, the disclosures required by this section shall be delivered to the custom er before con su m m ation o f the transaction but not less than 10 business d a y s 13? before the date on which the custom er execu tes the note or other evidence of debt. N otw ithstanding the provisions o f paragraph (a) of this section, such disclosures may, at the creditor’s option, be m ade on sin gle sides o f a m ultipaged statem ent which identifies the transaction. In the event o f a bona fide personal em ergency, the custom er may waive all or a portion o f the m inim um 10 day period by furnishing the creditor w ith a separate dated and signed personal statem ent d escribing the personal emergency and stating the num ber o f days b ein g waived. The use o f printed form s for such a waiver is prohibited. 2. The am endm ent to § 226.8(a) involves merely 13g For the purpose o f this section, a business day is any calendar day except Sunday and those legal public holidays specified in section 6103(a) of Title 5 of the United States Code (New Year’s Day, W ashington’s Birthday, Memorial Day, Independence Day, Labor Day, Colum bus Day, Veterans Day, Thanksgiving Day and Christmas Day). technical changes to accom m odate the addition o f the new paragraph § 226.8(q). 3. The new paragraph, § 226.8(q), relates only to a consum er credit transaction involving the purchase, acquisition or refinancing o f a dw elling. Section 226.8(a) would provide that the required d isclosures m ust be m ade before consum m ation o f the tran saction but not less than 10 business days before the cu stom er executes a note or other evidence o f debt. Presently, m any creditors follow the practice o f m aking disclosures at the tim e o f settlement, which usually does not enable the custom er to shop for m ore favorable credit term s. U nd er the proposal, the custom er would have a reason able period to compare credit term s before becom in g ob ligated . The proposal would perm it the custom er to reduce or waive the 10 day disclosure period in bona fide personal em ergencies. The proposal would also allow creditors in such transactions to use a m ultipage statem ent in m aking the disclosures. T his notice is published pursuant to section 553(b) o f T itle 5, United States Code, and § 262.2(a) o f the R ules o f Procedure o f the Board o f G overnors o f the Federal Reserve System (12 CFR 262.2(a)). To aid in the consideration o f these m atters by the Board, interested persons are invited to su bm it relevant d ata, views, or arguments. Any such m aterial should be subm itted in writing to the Secretary, the Board o f Governors o f the Federal Reserve System , W ashington, D .C . 20551, or to any Federal Reserve B ank for trans m ittal to the Board, to be received at the Board not later than September 8, 1972. Such m aterial will be m ade available for inspection and copying upon request, except as provided in § 261.6(a) o f the B oard’s R ules Regarding Availability o f Inform ation. By order of the Board o f G overnors, July 20, 1972.
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