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Reg Z Recent Commentary[1]

Reg Z Recent Commentary[1]

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Published by TA Webster

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Published by: TA Webster on Sep 17, 2010
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Add new subsection:
C.2 July 30, 2008 Amendments—Effective in 2009 or Later
Editor’s Note: For the Supplementary Information to these amendments, see Appx. B.2,
supra.
Appx. C.2
Truth in Lending / 2008 Supplement
232
44604
Federal Register/Vol. 73, No. 147/Wednesday, July 30, 2008/Rules and Regulations
Supplement I to Part 226—Official Staff
Interpretations
Subpart A—General
I13. In Supplement I to Part 226, under
Section 226.1—Authority, Purpose,
Coverage, Organization, Enforcement
Offıcial Staff Commentary on Regulation Z / 2008 Supplement
Appx. C.2
233
44605
Federal Register/Vol. 73, No. 147/Wednesday, July 30, 2008/Rules and Regulations
and Liability, new headings 1(d)
Organizationand Paragraph 1(d)(5), and
new paragraph 1(d)(5)–1 are added to
read as follows:
Section 226.1—Authority, Purpose, Coverage,
Organization, Enforcement and Liability
*
*
*
*
*
1(d) Organization.
Paragraph 1(d)(5).

1.Effective dates. The Board’s revisions to
Regulation Z published on July 30, 2008 (the
‘‘final rules’’), apply to covered loans
(including refinance loans and assumptions
considered new transactions under 226.20),
for which the creditor receives an application
on or after October 1, 2009, except for the
final rules on advertising, escrows, and loan
servicing. The final rules on escrows in
§ 226.35(b)(3) are effective for covered loans,
(including refinancings and assumptions in
226.20) for which the creditor receives an
application on or after April 1, 2010; but for
such loans secured by manufactured housing
on or after October 1, 2010. The final rules
applicable to servicers in § 226.36(c) apply to
all covered loans serviced on or after October
1, 2009. The final rules on advertising apply
to advertisements occurring on or after
October 1, 2009. For example, a radio ad
occurs on the date it is first broadcast; a
solicitation occurs on the date it is mailed to
the consumer. The following examples
illustrate the application of the effective
dates for the final rules.

i.General. A refinancing or assumption as
defined in 226.20(a) or (b) is a new
transaction and is covered by a provision of
the final rule if the creditor receives an
application for the transaction on or after that
provision’s effective date. For example, if a
creditor receives an application for a
refinance loan covered by 226.35(a) on or
after October 1, 2009, and the refinance loan
is consummated on October 15, 2009, the
provision restricting prepayment penalties in
§ 226.35(b)(2) applies. However, If the
transaction were a modification of an existing
obligation’s terms that does not constitute a
refinance loan under § 226.20(a), the final
rules, including for example the restriction
on prepayment penalties would not apply.

ii.Escrows. Assume a consumer applies for
a refinance loan to be secured by a dwelling
(that is not a manufactured home) on March
15, 2010, and the loan is consummated on
April 2, 2010, the escrow rule in 226.35(b)(3)
does not apply.

iii.Servicing. Assume that a consumer
applies for a new loan on August 1, 2009.
The loan is consummated on September 1,
2009. The servicing rules in 226.36(c) apply
to the servicing of that loan as of October 1,
2009.

I14. In Supplement I to Part 226, under
Section226.2—Definitions and Rules of
Construction, 2(a) Definitions, 2(a)(6)
Business day, paragraph 2(a)(6)–2 is
revised, and under 2(a)(24) Residential
mortgage transaction,paragraphs
2(a)(24)–1 and 2(a)(24)–5.ii are revised,
to read as follows:
Section 226.2—Definitions and Rules of
Construction
2(a) Definitions.
*
*
*
*
*
2(a)(6) Business day.
*
*
*
*
*

2.Recission rule. A more precise rule for
what is a business day (all calendar days
except Sundays and the federal legal
holidays listed in 5 U.S.C. 6103(a)) applies
when the right of rescission, the receipt of
disclosures for certain mortgage transactions
under section 226.19(a)(1)(ii), or mortgages
subject to section 226.32 are involved. (See
also comment 31(c)(1)–1.) Four federal legal
holidays are identified in 5 U.S.C. 6103(a) by
a specific date: New Year’s Day, January 1;
Independence Day, July 4; Veterans Day,
November 11; and Christmas Day, December
25. When one of these holidays (July 4, for
example) falls on a Saturday, federal offices
and other entities might observe the holiday
on the preceding Friday (July 3). The
observed holiday (in the example, July 3) is
a business day for purposes of rescission, the
receipt of disclosures for certain mortgage
transactions under section 226.19(a)(1)(ii), or
the delivery of disclosures for certain high-
cost mortgages covered by section 226.32.

*
*
*
*
*
2(a)(24) Residential mortgage transaction.

1.Relation to other sections. This term is
important in five provisions in the
regulation:

i. § 226.4(c)(7)—exclusions from the
finance charge.
ii. § 226.15(f)—exemption from the right of
rescission.
iii. § 226.18(q)—whether or not the
obligation is assumable.
iv. § 226.20(b)—disclosure requirements
for assumptions.
v. § 226.23(f)—exemption from the right of
rescission.
*
*
*
*
*
5.Acquisition.* * *
*
*
*
*
*

ii. Examples of new transactions involving
a previously acquired dwelling include the
financing of a balloon payment due under a
land sale contract and an extension of credit
made to a joint owner of property to buy out
the other joint owner’s interest. In these
instances, disclosures are not required under
§ 226.18(q) (assumability policies). However,
the rescission rules of §§ 226.15 and 226.23
do apply to these new transactions.

*
*
*
*
*
Subpart B—Open-End Credit
I15. In Supplement I to Part 226, under
Section 226.16—Advertising, paragraph

16–1 is revised, paragraph 16–2 is
redesignated as paragraph 16–6, and
new paragraphs 16–2 through 16–5 and
16–7 are added; under 16(d) Additional

requirements for home-equity plans,

paragraph 16(d)–3 is revised, paragraphs
16(d)–5, 16(d)–6, and 16(d)–7 are
redesignated as paragraphs 16(d)–7,
16(d)–8, and 16(d)–9, respectively, new
paragraphs 16(d)–5 and 16(d)–6 are

added, and newly designated
paragraphs 16(d)–7 and 16(d)–9 are
revised; and new heading16(e)

Alternative disclosures—television or
radio advertisements is added, and new
paragraphs 16(e)–1 and 16(e)–2 are
added, to read as follows:
Section 226.16—Advertising
1.Clear and conspicuous standard—
general. Section 226.16 is subject to the

general ‘‘clear and conspicuous’’ standard for
subpart B (see § 226.5(a)(1)) but prescribes no
specific rules for the format of the necessary
disclosures, aside from the format
requirements related to the disclosure of a
promotional rate under § 226.16(d)(6). Aside
from the terms described in § 226.16(d)(6),
the credit terms need not be printed in a
certain type size nor need they appear in any
particular place in the advertisement.

2.Clear and conspicuous standard—
promotional rates or payments for home-
equity plans. For purposes of § 226.16(d)(6),

a clear and conspicuous disclosure means
that the required information in
§ 226.16(d)(6)(ii)(A)–(C) is disclosed with
equal prominence and in close proximity to
the promotional rate or payment to which it
applies. If the information in
§ 226.16(d)(6)(ii)(A)–(C) is the same type size
and is located immediately next to or directly
above or below the promotional rate or
payment to which it applies, without any
intervening text or graphical displays, the
disclosures would be deemed to be equally
prominent and in close proximity.
Notwithstanding the above, for electronic
advertisements that disclose promotional
rates or payments, compliance with the
requirements of § 226.16(c) is deemed to
satisfy the clear and conspicuous standard.

3.Clear and conspicuous standard—
Internet advertisements for home-equity
plans.For purposes of this section, a clear

and conspicuous disclosure for visual text
advertisements on the Internet for home-
equity plans subject to the requirements of
§ 226.5b means that the required disclosures
are not obscured by techniques such as
graphical displays, shading, coloration, or
other devices and comply with all other
requirements for clear and conspicuous
disclosures under § 226.16(d).See also
comment 16(c)(1)–2.

4.Clear and conspicuous standard—
televised advertisements for home-equity
plans.For purposes of this section, including

alternative disclosures as provided for by
§ 226.16(e), a clear and conspicuous
disclosure in the context of visual text
advertisements on television for home-equity
plans subject to the requirements of § 226.5b
means that the required disclosures are not
obscured by techniques such as graphical
displays, shading, coloration, or other
devices, are displayed in a manner that
allows for a consumer to read the information
required to be disclosed, and comply with all
other requirements for clear and conspicuous
disclosures under § 226.16(d). For example,
very fine print in a television advertisement
would not meet the clear and conspicuous
standard if consumers cannot see and read
the information required to be disclosed.

Appx. C.2
Truth in Lending / 2008 Supplement
234

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