Interpretation of provisions in Truth in Lending Regulation Z
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For immediate roleaixs Jytus 23 j,-.. 1.869» The Hoard of: Governors o£ tlus Federnt R^tsurvc .System today issued three interpretations of provisions in i t s .Truth -in lending Regulation 2 which rows into offset on July I, A copy of o.'ich Interpretation i« attached.
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TITLE 12 - BANKS AND BANKING CHAPTER II - PEDKRAL RESERVE 8YSTISM SUliCHAPTKR A - BOARD Of GOVERNORS OF THID I'liDliiltM, Ri?fJERVK SYSTfc'M [Reg. Z) PART 226 * TRUTH IN LANDING Miyeclimutous Interpretations § ,226,605 Rotii ciiflrt.j; and tflbltta una vvil 1 obi c (n) Subject; to carta In conditions, § 226.6(f) of Regulation % permits a creditor to usa nn oBtimoto or approximation of Information when the Inforniotion l«- -"unknown or not avnlloblc to the creditor, nnd the creditor bus mode u treasonable e f f o r t to Ascertain It*" •(b) It nppoors thnt some ertnli tore who require special charts or tables in order to operate with necGfiscry efficiency in coriipliiinee with Regulation Z, and who hove placed orders,fot" euch charts or tnblo3 with (suppliers of them, may be unable to obtain such chart8 or tables by July 1, 1969, the effective date of Regulation X.
(c) In th€i citcumatoncoB indicated, when the n&ccsaary ciuirts or tables have boon ordered prior to July I, I960, And «ro temporarily unov<iil» able to a creditor who haa thus ronde a reasonable e f f o r t to obtain thorn, | 5'26.6(f) permits tho creditor to use on estimate or approximation of the annual percentage rate and other information during the interim until thoy become available, subject, of course, to the other requirements of that paragraph.
(Interprets And applies 15 U.8.C. 1631) (•/ >')/-9
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The question ¢
atanees when it te. not known at the “tng of constunmat-ton of the transaction -
vhether such change well, “pec oF the ‘date Or -ajoun of change.
(b) In ‘auch eases, the creditor ohall «uate: all dioclonures. on the basis of the rate in effect at the. time of consummation of the transaction and shall also disclose. the varlable feature,
(¢) Tf disclosure ts nade, petoy to the ‘consummation of the transaction that the annual percentage rate da prospectively subject to change, the conditions ander which guch tate may be changed, and, 1£ applicable, the maxdmum and sndndivi Limits of such rate stipulated in the note, contract, or other Lasteunent evidencing the obligation, auch subsequent change in the annual percentage rate in accordance with the foregoing disclosures is a
subsequent occurance under § 226,6(g) and is not a new transaction,
(interpreta and applies 15 U.S.C. 1634)
6/20/59
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• • § 226,903 Refinancing oncl Incroas Pi»c.lo$utc,H nnd mffocte on the rlftht of r e a c l s n l o n (a) In eoiM?, csacs tho c r e d i t o r of mt obllgtiirfon w i l l refinance that o b l i g a t i o n a t the requeut of o customer by p<3rmit.fcilng the customer to oxocutc >'i now n o t e , c o n t r a c t , or othor document evident;ling tho trnmxietion under the terms o£ which ona or more of tha o r i g i n n l c r e d i t terma, including tho maturity d«t« of the o b l i g a t i o n , 1 u changed, Although such r e f i n a n c i n g constituttuj o new t r a n s a c t i o n , »nd o i l d i s c l o s u r e s required under S 226 »8 must be tha question a r i s e s cs to'Whether choc t r a n s a c t i o n Is subject: to tho r i g h t of' l'o&clufllmi undor § 2?(>,9 whore Ihu o b l i g a t i o n in ?ilr«?n!y securod by a l i e n on ronl property which i« used or oxpdictod to bo used as the p r i n c i p a l res Ukmee of thiit CUB torn or. •(b) If tho fimount, of such iuiw tronBoefcion do09 not oxeoed tho amount o f the unpaid biilnnce plus nny accrued and unpaid f i n a n c e chorgo on the e x i s t i n g obli.Koti.on» § 226,9 docs not apply to tho tr«nflnction, (c) I f , howtivor, the amount of ouch new trfmitnction i s for on increosad amount, thflt i s for cm amount in except* of tins amount of tho unpaid bolnnco plus any accrued nod unpflidfintfnea chflvgo on the e x i s t i n g o b l i g a t i o n , § 226.9 ftjpplioa to the t r a n s a c t i o n , Howover, such right of r e s c i s s i o n a p p l i e s only to such excess and does not o f f c c t the or.iating o b l i g a t i o n (or r e l a t e d s e c u r i t y i n t e r e s t ) for the unpaid balance plus accrued nnd unpaid finance charge.
(720/69
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-4- (d) Tiio provisions of porngroph (b) above do not apply AN the ovout Mint tho obligation lfi rofinflncod by n c r e d i t o r otiuHf than the c r e d i t o r ol: the e x i s t i n g ' o b l i g a t i o n , (Interprets., and opplioa 15 U.S.C. 1635) •••Dflited a t Washington, I). 0,»• tha .?0i h day of JUuur, 1969, Hy order of the Board of Governors. (SEAL) (Signed) Kobcirt P. |forvo8f,al Robert P. Forrest:
Assistfiiit SUicrctcry