fourth quarter 2021 cbc

Fourth Quarter 2021 CBC

Presented by

Young & Associates

1

Regulation F:Fair Debt Collection

Practices ActPresented by

Young & Associates

2

Notes

▪Manual is complete

▪Not every section applies to banks

▪Limited presentation

▪Balance is for your review

3

1 - Preamble – Abridged

▪Summary

▪Dates

▪Summary of the final rule ▪ Coverage and organization of the final rule

▪Scope of the final rule ▪ Communications provisions

▪ Consumer disclosure provisions

4


▪ Additional provisions

▪Debt collection market background▪ Creditors

▪ Third party debt collectors

▪ Debt collection law firms

▪Consumer protection concerns

5


▪FDCPA and Dodd – Frank▪ Note the requirements

▪FDCPA sections

▪Dodd - Frank

▪E-sign act

6

2 - Regulatory Introduction

▪For your review

7

Subpart A

Presented by

Young & Associates

8

3 – General Authority, Purpose, and Coverage

▪Authority ▪ CFPB preamble

▪ Regulatory text

▪ Regulatory commentary

▪Purpose ▪ CFPB preamble

▪ Regulatory text


9

3 – General Authority, Purpose, and Coverage

▪Coverage ▪ CFPB preamble

▪ Regulatory text


10

4- General Definitions

▪Preamble

▪Introductory language

▪Act or FDCPA

▪Attempt to communicate

▪Bureau

▪Communicate or communication

▪Consumer

11


▪Creditor

▪Debt

▪Debt collector▪ IMPORTANT definition

▪ Regulatory text▪ Includes

▪ Excludes


12


▪Limited content message ▪ CFPB preamble▪ Limited-Content Message Concept▪ Permissible Communication Media▪ Messages Left with Third Parties▪ Meaningful Disclosure of Identity▪ Implementation Issues▪ CFPB Preamble – Optional Content▪ Regulatory text ▪ Regulatory commentary

13


▪Person

▪State

14

Subpart B

Presented by

Young & Associates

15

Comments

• This section is important for those who collect debts

• Since most attendees are not in this category, we will over cover what we believe is relevant for all attendees

• Mortgage servicers are not excluded from the definition – so some of you may be covered

16

5 - Communication

• CFPB Preamble (Abridged and Edited)

• Electronic Communication

17

6 – Communication Definitions

• Introductory CFPB preamble

• Consumer Includes • Spouse

• Parent

• Legal guardian

• Executor

18

7 – Communications with a Consumer

• Introductory CFPB preamble • Attempts to communicate

• Prohibitions • CFPB preamble • Consumer definition of inconvenient times

or places • Duty to inquire • Consumers use of inconvenient time and

places

19


• Prohibitions • Regulatory text

• Regulatory commentary

• Communication with consumer’s attorney • For your review

20


• Prohibitions • Employment – limited

• Generally prohibited if you know it is an issue for the employer

• CFPB preamble

• regulatory text

• regulatory commentary

21


• Prohibitions • Exceptions

• Generally prior consent

• CFPB preamble

• Regulatory text


22

8 – Communication after Request to Cease Communications

• Prohibition • If the customer tells you to leave them alone,

pretty much you have to do so

• CFPB preamble

• Regulatory texts


23

8 – Communication after Request to Cease Communications

• Exceptions• There are three – see regulatory text

• CFPB preamble

• Regulatory text


24

9 – Communication with Third Parties

• Exceptions• There are three – see regulatory text

• CFPB preamble

• Regulatory text


25


• There are extensive rules to use for text and email collections

• Most do not use these methods

• If you decide to do so, a complete review of the requirements are necessary

26


• Reasonable procedures • CFPB preamble

• Risk of the consumer harm

• Reason to anticipate

• Reasonably confirm and document

• Scope

• Regulatory text


27


• Email • CFPB preamble

• Consumer use

• Notice and opt out

• Who may provide

• Timing and content

• Regulatory text


28


• Telephone numbers for text messages • Similar approach

• CFPB preamble

• Regulatory text


29


• Opt out• The rule is extensive, but the basics are if the

customer says to quit using a particular method you have to do it

• Balance is for your review

30

10 - Reserved Sections

• FYI

31

11 – Location Information

• Skip Tracing• There are very specific rules for doing this

• Beyond the scope of what we can do here today

• For your review

32


• FYI

33

13 - Harassing, Oppressive, or Abusive Conduct

• Generally not a problem for most banks

• Limited to one contact per day

• For your review

• This section is lengthy

• Collection staff should read this section to assure that you don't have a problem • Doubt that many will have an issue here

34


• FYI

35

15 – False, Deceptive, Misleading

• This has been the rule for many years

• Just tell the customer the truth and this section means little

• Do not threaten anything that you are not going to do

36


• FYI

37

17 – Unfair or Unconscionable

• Basically more of the same

• Honesty matters

• For your review

38


• FYI

39

19 – Other Prohibited Practices

• Again, not a big deal for banks

• Honesty once again

• For your review

40


• FYI

41

21 – Disputes and Requests for Original Creditor Information

• Generally you are the original creditor• That portion for your review

• Disputes• Generally have to offer proof

• This portion for your review

42


• FYI

43

23 – Sending Required Disclosures

• Section about US Mail

• Section about electronic

• Rarely does anyone have a problem, and this is no change from the past

• For your review

44


• FYI

45

Subpart C

• Reserved

• FYI

46

Subpart D

Presented by

Young & Associates

47

General Discussion

• Very little is this section will impact attendees

• A quick review of what is here

48

Any Final

FDCPAQuestions

HELOCs

Presented by

Young & Associates

50

Introduction

• Section numbers are out of order

• Regulation is fragmented

51

General Rules that Impact HELOCs

Presented by

Young & Associates

52

General [12 CFR § 1026.5(a)(1)]

• Regulatory Discussion• This section describes the form of disclosure

requirements for open-credit credit and includes: • clear and conspicuous standards;

• written and retainable disclosure requirements; and

• electronic disclosures subject to the E-Sign Act.

53

General [12 CFR § 1026.5(a)(1)]

• Regulatory Text• (a) Form of disclosures

• (1) General.

• (i) Clearly and conspicuously

• (ii) In writing, in a form that the consumer may keep, with exceptions

• (iii) The disclosures required by this subpart may be provided to the consumer in electronic form

54

General [12 CFR § 1026.5(a)(1)]

• Regulatory Commentary• 5(a)(1) General

• 1. Clear and conspicuous standard

• 2. Clear and conspicuous - reasonably understandable form – 5 caveats

• 3. Clear and conspicuous - readily noticeable standard

• 4. Integrated document

• 5. Disclosures covered

55

General [12 CFR § 1026.5(a)(1)]

• Regulatory Commentary• Paragraph 5(a)(1)(ii)(A)

• 1. Electronic disclosures

• Paragraph 5(a)(1)(iii)• 1. Disclosures not subject to E-Sign Act

56

Terminology – Open End [12 CFR § 1026.5(a)(2)]

• Regulatory Discussion• This section describes consistent and

conspicuous terminology requirements

57


• Regulatory Text• (2) Terminology.

• (i) Terminology used in providing the disclosures required by this subpart shall be consistent.

• (ii) For home-equity plans the terms finance charge and annual percentage rate, when required to be disclosed with a corresponding amount or percentage rate, shall be more conspicuous

58


• Regulatory Text• (2) Terminology.

• (iii) Omitted

• Regulatory Commentary• 1. When disclosures must be more

conspicuous

• 2. Making disclosures more conspicuous

59


• Regulatory Commentary• 3. Disclosure of figures - exception to more

conspicuous rule

• 4. Consistent terminology

• Both Omitted

60

Specific Formats – Open End [12 CFR § 1026.5(a)(3)]

• Regulatory Discussion• This section generally describes the specific

format requirements and includes eight topics, only one of which matters today

• Regulatory Text• (3) Specific formats.

• (1) Omitted

• (ii) Order of disclosures - HELOCs

61

Specific Formats – Open End [12 CFR § 1026.5(a)(3)]

• Regulatory Text• (3) Specific formats.

• All others are for credit cards

• Regulatory Commentary - None.

62

Account Opening Disclosures – Open End

[12 CFR § 1026.5(b)(1)]

• Regulatory Discussion• This section describes the time of disclosure

requirements for open-credit credit.

63

Account Opening Disclosures – Open End

[12 CFR § 1026.5(b)(1)]

• Regulatory Text• (b) Time of disclosures

• (1) Account-opening disclosures• (i) General rule• (ii) Charges imposed as part of an open-end (not

home-secured) plan - Omitted• (iii) Telephone purchases - Omitted• (iv) Membership fees

• (A) General - Omitted

• (B) Home-equity plans

• (v) Application fees

64

Account Opening Disclosures – Open End [12 CFR § 1026.5(a)(3)]

• Regulatory Commentary• 5(b)(1) Account-Opening Disclosures

• Some of the relevant commentary is there

• Some is omitted

• For your review

65

Account Opening Disclosures – Open End [12 CFR § 1026.5(b)(1)]

• Regulatory Commentary• 5(b)(1)(iv) Membership Fees

• 1. Membership fees - omitted

• 2. Rejecting the plan - omitted

• 3. Using the account - omitted

• 4. Home-equity plans

66

Periodic Statements – Open End [12 CFR § 1026.5(b)(2)]

• Regulatory Discussion• This section continues to describe the time

of disclosure requirements for open-credit credit; the second item is periodic statements.

67


• Regulatory Text• (2) Periodic statements

• (i) Statement required for more than $1 or FC imposed

• (ii) Timing requirements• (A) Credit card accounts under an open-end (not

home-secured) consumer credit plan - omitted

• (B) Open-end consumer credit plans - FYI

68


• Regulatory Commentary• 5(b)(2)(i) Statement Required

• 1. Periodic statements not required

• 2. Termination of draw privilege

• 3. Uncollectible accounts

• 4. Instituting collection proceedings

69


• Regulatory Commentary• 5(b)(2)(ii) Timing Requirements

• 1. Mailing or delivery of periodic statements (examples)

• 2. Treating a payment as late for any purpose (examples)

• 3. Grace periods

• 4. Application of §1026.5(b)(2)(ii) to charge card and charged-off accounts – partially omitted

70


• Regulatory Commentary• 5(b)(2)(ii) Timing Requirements

• 5. Consumer request to pick up periodic statements

• 6. Deferred interest and similar promotional programs

71


• Brief section indicating that HELOCs are covered elsewhere

• We will cover those sections

72

General Rules that Impact HELOCs

Presented by

Young & Associates

73

Basis of Disclosures and Use of Estimates12 C.F.R. § 1026.5(c)

• Regulatory Discussion

• Regulatory Text

• Regulatory Commentary

74

Multiple Creditors / Multiple Consumers 12 C.F.R. § 1026.5(d)


• Regulatory Text


75

Effect of Subsequent Events 12 C.F.R. § 1026.5(e)


• Regulatory Text


76

Disclosures for Access Devices / Additional Features

12 C.F.R. § 1026.9(b)

• Included just in case you issue access devices for your HELOC

• For your review

77

HELOC Account Application and Opening

DocumentsPresented by

Young & Associates

78

Form of Disclosures [12 C.F.R. § 1026.40(a)]

• Regulatory Discussion• This section describes the disclosures

required for HELOCs

• Clear and conspicuously and in writing

• Grouped together and segregated

• Application form or on a separate form.

• Other disclosures may be provided separately

79


• Regulatory Text• (1) General

• (2) Precedence of certain disclosures• First 4 must be in order and first

• (3) Application that is accessed by the consumer in electronic form

80


• Regulatory Commentary• 40(a)(1) General

• 1. Written disclosures

• 2. Disclosure of annual percentage rate - more conspicuous requirement

• 3. Segregation of disclosures

• 4. Method of providing disclosures

• 5. Form of electronic disclosures provided on or with electronic applications

81


• Regulatory Commentary• 40(a)(2) Precedence of Certain Disclosures

• 1. Precedence rule

• Paragraph 40(a)(3)• 1. Form of disclosures

82

Time of Disclosures [12 C.F.R. § 1026.40(b)]

• Regulatory Discussion• This section provides the timing

requirements for delivery of the disclosures and the brochure.

• These disclosures must be provided at the time an application if provided to the consumer.

• The commentary provides information on the timing requirements for various scenarios

83

Time of Disclosures [12 C.F.R. § 1026.40(b)]

• Regulatory Text

• Regulatory Commentary• 1. Mail and telephone applications

• 2. General purpose applications

• 3. Publicly-available applications

• 4. Response cards

• 5. Denial or withdrawal of application

• 6. Intermediary agent or broker

84

Duties of Third Parties [12 C.F.R. § 1026.40(c)]

• Regulatory Discussion• This section states the requirements of third

parties who provide applications to consumers for HELOCs

• Regulatory Text

• Regulatory Commentary• 1. Disclosure requirements

85

Content of Disclosures [12 C.F.R. § 1026.40(d)]

• Regulatory Discussion• The disclosures for a HELOC may include,

as applicable, twelve items; each item will be discussed individually in this section.

• Regulatory Text

• Regulatory Commentary• 1. Disclosures given as applicable• 2. Duty to respond to requests for

information

86

Retention[12 C.F.R. § 1026.40(d)(1)]

• Regulatory Discussion• A statement that the consumer should keep

a copy of the disclosures

• Regulatory Text

• Regulatory Commentary• (1) When disclosure not required

87

Conditions for Disclosed Terms [12 C.F.R. § 1026.40(d)(2)]

• Regulatory Discussion• The time by which the consumer must

submit an application to obtain the disclosed terms; and

• The consumer may receive a refund of all fees paid if a disclosed term changes (other than changes to the index in a variable-rate plan)

88

Conditions for Disclosed Terms [12 C.F.R. § 1026.40(d)(2)]

• Regulatory Text• (2) Conditions for disclosed terms

• Regulatory Commentary• Paragraph 40(d)(2)(i)

• 1. Guaranteed terms

• 2. Date for obtaining disclosed terms

• Paragraph 40(d)(2)(ii)• 1. Relation to other provisions

89

Security Interest and Risk to Home [12 C.F.R. § 1026.40(d)(3)]

• Regulatory Discussion• A security interest in the consumer’s

dwelling will be acquired and that a loss of the dwelling may occur in the event of default

• Regulatory Text

• Regulatory Commentary - None

90

Possible Actions by Creditor [12 C.F.R. § 1026.40(d)(4)]

• Regulatory Discussion• The following statements:

• The plan may be terminated and payment of the outstanding balance in full in a single payment is required;

• Additional extensions of credit may be prohibited or the credit limit may be reduced

91

Possible Actions by Creditor [12 C.F.R. § 1026.40(d)(4)]

• Regulatory Text• (4) Possible actions by creditor


• 1. Fees imposed upon termination• 2. Changes specified in the initial agreement

• Paragraph 40(d)(4)(iii)• 1. Disclosure of conditions• 2. Form of disclosure

92

Payment Terms [12 C.F.R. § 1026.40(d)(5)]

• Regulatory Discussion• The fifth item requires disclosure of the

payment terms

• Regulatory Text• (5) Payment terms

• (i) The length of the draw period and any repayment period.

• (ii) An explanation of how the minimum periodic payment will be determined and the timing of the payments

93


• Regulatory Text• (5) Payment terms

• (iii) An example, based on a $10,000 outstanding balance and a recent annual percentage rate


• 1. Length of the plan

• 2. Renewal provisions

94


• Regulatory Commentary• Paragraph 40(d)(5)(ii)

• 1. Determination of the minimum periodic payment

• 2. Fixed rate and term payment options during draw period

• 3. Balloon payments

95


• Regulatory Commentary• Paragraph 40(d)(5)(iii)

• 1. Minimum periodic payment example

• 2. Representative examples

• 3. Examples for draw and repayment periods

• 4. Reverse mortgages

96

Annual Percentage Rate [12 C.F.R. § 1026.40(d)(6)]

• Regulatory Discussion• For fixed-rate HELOCs, a statement that the

APR imposed under the plan does not include costs other than interest.

• Regulatory Text

• Regulatory Commentary • 1. Preferred-rate plans

97

Fees Imposed by Creditor [12 C.F.R. § 1026.40(d)(7)]

• Regulatory Discussion• An itemization of any fees imposed to open,

use, or maintain the HELOC

• Regulatory Text

98

Fees Imposed by Creditor [12 C.F.R. § 1026.40(d)(7)]

• Regulatory Commentary • 1. Applicability

• 2. Manner of describing fees

• 3. Fees not required to be disclosed

• 4. Rebates of closing costs

• 5. Terms used in disclosure

99

Fees Imposed by Third Parties [12 C.F.R. § 1026.40(d)(8)]

• Regulatory Discussion• A dollar estimate of any fees that may be

imposed by persons other than the creditor to open the HELOC

• Regulatory Text

100

Fees Imposed by Third Parties [12 C.F.R. § 1026.40(d)(8)]


• 2. Itemization of third-party fees

• 3. Manner of describing fees

• 4. Rebates of third party fees

101

Negative Amortization[12 C.F.R. § 1026.40(d)(9)]

• Regulatory Discussion• A statement (if applicable) that negative

amortization may occur and the consequences thereof.

• For your review

102

Transaction Requirements [12 C.F.R. § 1026.40(d)(10)]

• Regulatory Discussion• Requires disclosure (as applicable), of:

• Any limitations on the number of extensions of credit and the amount of credit that may be obtain during any time period;

• Any minimum outstanding balance and minimum draw requirements

• Regulatory Text


103

Tax Implications [12 C.F.R. § 1026.15(f)]

• Regulatory Discussion• A statement that the consumer should

consult their tax advisor

• Regulatory Text


104

Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]

• Regulatory Discussion• For variable-rate HELOCs, Sample form G-

14 in the Appendix to Regulation Z provides illustrative guidance for these disclosures

105


• Regulatory Text• (12) Disclosures for variable-rate plans

• (i) The fact that the annual percentage rate, payment, or term may change due to the variable-rate feature.

• (ii) A statement that the annual percentage rate does not include costs other than interest.

• (iii) The index used in making rate adjustments and a source of information about the index.

106



• (iv) An explanation of how the annual percentage rate will be determined, including an explanation of how the index is adjusted, such as by the addition of a margin.

• (v) A statement that the consumer should ask about the current index value, margin, discount or premium, and annual percentage rate.

107



• (vi) A statement that the initial annual percentage rate is not based on the index and margin used to make later rate adjustments, and the period of time such initial rate will be in effect.

• (vii) The frequency of changes in the annual percentage rate.

108



• (viii) Any rules relating to changes in the index value and the annual percentage rate and resulting changes in the payment amount, including, for example, an explanation of payment limitations and rate carryover.

109



• (ix) A statement of any annual or more frequent periodic limitations on changes in the annual percentage rate (or a statement that no annual limitation exists), as well as a statement of the maximum annual percentage rate that may be imposed under each payment option.

110



• (x) The minimum periodic payment required when the maximum annual percentage rate for each payment option is in effect for a $10,000 outstanding balance, and a statement of the earliest date or time the maximum rate may be imposed.

111



• (xi) An historical example, based on a $10,000 extension of credit, illustrating how annual percentage rates and payments would have been affected by index value changes implemented according to the terms of the plan…

112



• (xii) A statement that rate information will be provided on or with each periodic statement.

• Regulatory Commentary• 40(d)(12) Disclosures for Variable-Rate

Plans

• 1. Variable-rate provisions

113


• Regulatory Commentary• Paragraph 40(d)(12)(iv)

• 1. Determination of annual percentage rate

• Paragraph 40(d)(12)(viii)• 1. Preferred-rate provisions

• 2. Provisions on conversion to fixed rates

• Paragraph 40(d)(12)(ix)

• 1. Periodic limitations on increases in rates

• 2. Maximum limitations on increases in rates

114


• Regulatory Commentary• Paragraph 40(d)(12)(ix)

• 3. Form of disclosures

• Paragraph 40(d)(12)(x)• 1. Maximum rate payment example• 2. Time the maximum rate could be reached

• Paragraph 40(d)(12)(xi)• 1. Index movement• 2. Selection of index values• 3. Selection of margin

115


• Regulatory Commentary• Paragraph 40(d)(12)(xi)

• 4. Amount of discount or premium

• 5. Rate limitations

• 6. Assumed advances

• 7. Representative payment options

• 8. Payment information

• 9. Disclosures for repayment period

• 10. Reverse mortgages

116

Sample Initial Disclosure

• From the Appendix

• See manual – no slides

117

Brochure [12 C.F.R. § 1026.40(e)]

• Regulatory Discussion• The brochure: “What You Should Know

About Home Equity Lines of Credit”

• Regulatory Text

• Regulatory Commentary• 1. Substitutes

• 2. Effect of third party delivery of brochure

118

Refund of Fees 12 C.F.R. § 1026.40(g)

• Regulatory discussion

• Regulatory text


119

Nonrefundable Fees 12 C.F.R. § 1026.40(h)

• Regulatory discussion

• Regulatory text


120

Rules Affecting Home Equity Plans [12 CFR § 1026.6(a)]

• Regulatory Discussion• The requirements of this section apply only

to open-end home-equity plans (i.e., HELOCs).

• Regulatory Text


121

Finance Charge [12 CFR § 1026.6(a)(1)]

• Regulatory Discussion• This section requires the account-opening

disclosures explain the circumstances under which a finance charge will be imposed on a HELOC. The commentary provides additional information

• In addition, account-opening disclosures must also provide an explanation of how the finance charge will be determined

122


• Regulatory Text• (1) Finance charge. The circumstances

under which a finance charge will be imposed• (i) When finance charges begin to accrue• (ii) A disclosure of each periodic rate that may

be used• (iii) An explanation of the method used• (iv) An explanation of how the amount of any

finance charge will be determined

123


• Regulatory Commentary• Paragraph 6(a)(1)(i)

• 1. When finance charges accrue• 2. Grace periods

• Paragraph 6(a)(1)(ii)• 1. Range of balances• 2. Variable-rate disclosures - coverage• 3. Variable-rate plan - rate(s) in effect• 4. Variable-rate plan - additional disclosures

required

124


• Regulatory Commentary• 5. Variable-rate plan – index• 6. Variable-rate plan - circumstances for

increase• i. Circumstances under which the rate(s) may

increase • ii. The creditor must disclose when the increase

will take effect

• 7. Variable-rate plan - limitations on increase

125


• Regulatory Commentary• 8. Variable-rate plan - effects of increase

• 9. Variable-rate plan - change-in-terms notice not required

• 10. Discounted variable-rate plans

• 11. Increased penalty rates

126


• Regulatory Commentary• Paragraph 6(a)(1)(iii)

• 1. Explanation of balance computation method

• 2. Allocation of payments

• Paragraph 6(a)(1)(iv)• 1. Finance charges

127

Other Charges [12 CFR § 1026.6(a)(2)]

• Regulatory Discussion• This section requires the account-opening

disclosures include an explanation of any charge other than a finance charge that may be imposed on a HELOC, or an explanation of how the charge will be determined. The commentary provides general examples of items considered “other charges” as well as examples of items that are not “other charges.”

128


• Regulatory Text• (2) Other charges. The amount of any charge

other than a finance charge that may be imposed as part of the plan, or an explanation of how the charge will be determined.

• Regulatory Commentary• 1. General; examples of other charges –

there are 6 examples

129


• Regulatory Commentary• 2. Exclusions. The following are examples of

charges that are not “other charges”:• 10 examples

130

Home Equity Plan Information [12 CFR § 1026.6(a)(3)]

• Regulatory Discussion• The account-opening disclosures for a

HELOC must include, as applicable, up to seven specific items

• Regulatory Text• (3) Home-equity plan information. The

following disclosures as applicable:• (i) A statement of the conditions under which

the creditor may take certain action

131



following disclosures as applicable:• (ii) Payment information for both the draw

period and any repayment period.

• (iii) A statement that negative amortization may occur

• (iv) A statement of any transaction requirements

132



following disclosures as applicable:• (v) A statement regarding the tax implications

• (vi) A statement that the APR imposed does not include costs other than interest

• (vii) Variable-rate disclosures

133


• Regulatory Commentary• 1. Additional disclosures required

• 2. Form of disclosures

• 3. Disclosure of payment and variable-rate examples

• 4. Disclosures for the repayment period

134

Security Interests [12 CFR § 1026.6(a)(4)]


HELOC must include the fact that a security interest will be held in the property purchased, or other property identified by item or type. The commentary provides additional information

135

Security Interests [12 CFR § 1026.6(a)(4)]

• Regulatory Text• (4) Security interests. The fact that the

creditor has or will acquire a security interest in the property purchased under the plan, or in other property identified by item or type

• Regulatory Commentary• For your review

136

Statement of Billing Rights [12 CFR § 1026.6(a)(5)]


HELOC must include information that outlines certain consumer’s rights and the creditor’s responsibilities.

137


• Regulatory Text• (5) Statement of billing rights. A statement

that outlines the consumer's rights and the creditor's responsibilities under §§1026.12(c) and 1026.13 and that is substantially similar to the statement found in Model Form G-3 or, at the creditor's option, G-3(A), in appendix G to this part.

138


• Regulatory Commentary• 1. See the commentary to Model Forms G-3,

G-3(A), G-4, and G-4(A).

139

HELOC Open End Right of

Rescission Presented by

Young & Associates

140

Initial Commentary [12 C.F.R. § 1026.15(a)]

• Regulatory Discussion• This introductory commentary qualifies

transactions that are not subject to right-of-rescission.

• Regulatory Text - None.

• Regulatory Commentary• 1. Transactions not covered

141

Consumer’s Right to Rescind[12 C.F.R. § 1026.15(a)(1)]

• Regulatory Discussion• This section answers the questions:

• What transactions are subject to rescission?

• Who has the right to rescind?

• When does the right of rescission apply?

• Regulatory Text

142

Consumer’s Right to Rescind[12 C.F.R. § 1026.15(a)(1)]

• Regulatory Commentary• 1. Occurrences subject to right

• 2. Exceptions

• 3. Security interest arising from transaction

• 4. Consumer

• 5. Principal dwelling

• 6. Special rule for principal dwelling

143

Consumer’s Notification of Right to Rescind

[12 C.F.R. § 1026.15(a)(2)]

• Regulatory Discussion• This section answers the question:

• How to rescind?

• Regulatory Text

• Regulatory Commentary• 1. Consumer's exercise of right

144

Timing of Notification [12 C.F.R. § 1026.15(a)(3)]

• Regulatory Discussion• Three business day rule

• Regulatory Text

• Regulatory Commentary• 1. Rescission period

• 2. Material disclosures

• 3. Material disclosures - variable rate program

• 4. Unexpired right of rescission145

Who Can Rescind[12 C.F.R. § 1026.15(a)(4)]

• Regulatory Discussion• The exercise of the right by one consumer

shall be effective as to all consumers.

• Regulatory Text

• Regulatory Commentary• 1. Joint owners

146

Notice of Right to Rescind[12 C.F.R. § 1026.15(b)]

• Regulatory Discussion• To whom does the creditor provide the

notice?

• What are the format and content requirements of the notice?

• When must the creditor give the notice?

147


• Regulatory Text• (b) Notice of right to rescind

• (1) Security interest

• (2) The consumer's right to rescind

• (3) How to exercise the right

• (4) The effects of rescission

• (5) The date the rescission period expires

148


• Regulatory Commentary• 1. Who receives notice

• 2. Format

• 3. Content

• 4. Time of providing notice

149

Delay of Creditor’s Performance [12 C.F.R. § 1026.15(c)]


• This section describes actions the creditor can and cannot take during the rescission period – unless the consumer has waived their right of rescission

• Regulatory Text

150

Delay of Creditor’s Performance [12 C.F.R. § 1026.15(c)]

• Regulatory Commentary• 1. General rule.

• 2. Escrow

• 3. Actions during the delay period

• 4. Performance by third party

• 5. Delay beyond rescission period

151

Effects of Rescission [12 C.F.R. § 1026.15(d)(1)]

• Regulatory Discussion• In the event the consumer rescinds the

transaction, the security interest becomes void and the creditor must take action to reflect the fact that the security interest no longer exists.

• Regulatory Text

152

Effects of Rescission [12 C.F.R. § 1026.15(d)(1)]

• Regulatory Commentary• 1. Termination of security interest

• 2. Extent of termination

153

Creditor Responsibilities[12 C.F.R. § 1026.15(d)(2)]


transaction, this section requires the creditor to return any money or property advanced and take action to reflect the termination of the security interest

• Regulatory Text

154

Creditor Responsibilities[12 C.F.R. § 1026.15(d)(2)]

• Regulatory Commentary• 1. Refunds to consumer

• 2. Amounts not refundable to consumer

• 3. Reflection of security interest termination

155

Consumer Responsibilities [12 C.F.R. § 1026.15(d)(3)]


transaction, this section permits the consumer to retain possession of any money advanced or property delivered until the creditor has satisfied the requirements

• Regulatory Text

156

Consumer Responsibilities [12 C.F.R. § 1026.15(d)(3)]

• Regulatory Commentary• 1. Property exchange

• 2. Reasonable value

157

Modification by Court[12 C.F.R. § 1026.15(d)]

• Regulatory Discussion• In the event of a court order (i.e., due to a

bankruptcy), the requirements may be modified

• Regulatory Text

• Regulatory Commentary• 1. Modifications

158

Consumer’s Waiver of Right to Rescind

[12 C.F.R. § 1026.15(e)]

• Regulatory Discussion• In the event of a bona fide personal financial

emergency, specific procedures must be followed.

• Regulatory Text

• Regulatory Commentary• 1. Need for waiver

• 2. Procedure

159

Exempt Transactions[12 C.F.R. § 1026.15(f)]

• Regulatory Discussion• There are two types of transactions that are

exempt from the rescission requirements

• Regulatory Text• (f) Exempt transactions

• (1) A residential mortgage transaction

• (2) A credit plan in which a state agency is a creditor

160

Exempt Transactions[12 C.F.R. § 1026.15(f)]

• Regulatory Commentary• 1. Residential mortgage transaction

• 2. State creditors

• 3. Spreader clause

161

Rescission Examples

• See manual• Example G-5

• Example G-7

162

HELOC Periodic Statements

Presented by

Young & Associates

163

Introduction[12 CFR § 1026.7]

• Regulatory Discussion• This initial commentary provides

information on open-end plans that may have “multi-features.”

• Regulatory Text - None

• Regulatory Commentary• 1. Multi-featured plans

164

Introduction[12 CFR § 1026.7(a)]

• Regulatory Discussion• The requirements of this document apply

only to periodic statement disclosures. There are 10 items required to be included

• Regulatory Text• The creditor shall furnish the consumer with

a periodic statement that discloses the following items

• Regulatory Commentary - None165

Periodic Statement Content[12 CFR § 1026.7(a)(1)]

• Regulatory Discussion • The first item is the previous balance

• Regulatory Text

• Regulatory Commentary• 1. Credit balances

• 2. Multifeatured plans

• 3. Accrued finance charges allocated from payments

166


• Regulatory Discussion• The second item is the identification of each

transaction.

• Regulatory Text

• Regulatory Commentary• 1. Multifeatured plans

• 2. ATM charges imposed by other institutions in shared or interchange systems

167


• Regulatory Discussion• The third item to be disclosed is any credit

(amount and date) to the account

• Regulatory Text

• Regulatory Commentary• 1. Identification – sufficiency• 2. Format• 3. Date• 4. Totals

168


• Regulatory Discussion• The fourth item to be disclosed is each

periodic rate that may be used to compute the finance charge

• Several notes

• Regulatory Text• (4) Periodic rates

169


• Regulatory Commentary• 1. Disclosure of periodic rates - whether or not

actually applied

• 2. Disclosure of periodic rates required only if imposition possible

• 3. Multiple rates - same transaction

• 4. Corresponding annual percentage rate

• 5. Rate same as actual annual percentage rate

• 6. Range of balances

170


• Regulatory Discussion• The fifth item to be disclosed is:

• the amount of the balance to which a periodic rate was applied; and

• an explanation of how that balance was determined.

• Regulatory Text

171


• Regulatory Commentary• 1. Limitation to periodic rates

• 2. Split rates applied to balance ranges

• 3. Monthly rate on average daily balance


• 5. Daily rate on daily balances

• 6. Explanation of balance computation method

172


• Regulatory Commentary• 7. Information to compute balance

• 8. Non-deduction of credits

• 9. Use of one balance computation method explanation when multiple balances disclosed

173


• Regulatory Discussion• The sixth item to be disclosed is:

• the amount of any finance charge – using the term finance charge – individually itemized and identified.

• the amount of any charge other than a finance charge – itemized and identified by type

174


• Regulatory Text• (6) Amount of finance charge and other charges

• (i) Finance charges

• (ii) Other charges

• Regulatory Commentary• 7(a)(6)(i) Finance Charges

• 1. Total

• 2. Itemization - types of finance charges

175


• Regulatory Commentary• 7(a)(6)(i) Finance Charges

• 3. Itemization - different periodic rates


• 5. Finance charges not added to account

• 6. Finance charges other than periodic rates


• 8. Start-up fees

176


• Regulatory Commentary• 7(a)(6)(ii) Other Charges

• 1. Identification

• 2. Date

• 3. Total

• 4. Itemization - types of other charges

177


• Regulatory Discussion• The seventh item to be disclosed is the

annual percentage rate

• Regulatory Text

• Regulatory Commentary• 1. Plans subject to the requirements of

§1026.40

• 2. Labels

178


• Regulatory Discussion• The eighth item to be disclosed is the grace

period

• Regulatory Text

• Regulatory Commentary• 1. Terminology

179


• Regulatory Discussion• The ninth item to be disclosed is the address

to be used for notice of billing errors.

• Regulatory Text

• Regulatory Commentary• 1. Terminology

• 2. Telephone number

180


• Regulatory Discussion• The tenth item to be disclosed is the closing

date of the billing cycle and the account balance outstanding on that date

• Regulatory Text

181


• Regulatory Commentary• 1. Credit balances



182

Identifying Sale Credit[12 CFR § 1026.8(a)]

• Regulatory Discussion• This section describes the requirements for

identifying transactions on periodic statements for open-credit credit; beginning with sale credit.

• For your review – same as a credit card transaction

183

Identifying Non-Sale Credit[12 CFR § 1026.8(a)]

• Regulatory Discussion• This section continues the description of the

requirements for identifying transactions on periodic statements for open-credit credit;the second is non-sale credit.

• More typical in a HELOC loan

• For your review

184

Alternative Procedures / Consumer Inquiry

[12 CFR § 1026.8(a)]

• Regulatory Discussion• This section is alternative creditor

procedures; consumer inquiries for clarification or documentation

• For your review

185

HELOC Payments

Presented by

Young & Associates

186

General Rule[12 CFR § 1026.10(a)]

• Regulatory Discussion• This section requires the creditor to credit

payment to an account as of the date of receipt

• Regulatory Text

• Regulatory Commentary• 10(a) General Rule.

• 1. Crediting date• 2. Date of receipt

187

Specific Requirements for Payments [12 CFR § 1026.10(b)]

• Regulatory Discussion• The rule states the creditor may have

“reasonable requirements”

• Item (4), below, addresses non-conforming payments.

188


• Regulatory Text• (b) Specific requirements for payments

• (1) General rule

• (2) Examples of reasonable requirements for payments

• (3) In-person payments on credit card accounts -Omitted

189


• Regulatory Text• (b) Specific requirements for payments

• (4) Nonconforming payments

• (i) In general

• (ii) Payment methods promoted by creditor

190


• Regulatory Commentary• 10(b) Specific Requirements for Payments

• 1. Payment by electronic fund transfer

• 2. Payment methods promoted by creditor• Examples

• 3. Acceptance of nonconforming payments

• 4. Implied guidelines for payments

191


• Regulatory Commentary• 10(b) Specific Requirements for Payments

• 5. Payments made at point of sale. Omitted.

• 6. In-person payments on credit card accounts. Omitted.

• 7. In-person payments at affiliate of card issuer. Omitted.

192

Adjustment of Account [12 CFR § 1026.10(c)]

• Regulatory Discussion• In the event a creditor fails to credit a payment

in time, this section requires the creditor to adjust (credit) the account

• Regulatory Text

• Regulatory Commentary• None

193

Creditor Not Accepting Payments on Due Date

[12 CFR § 1026.10(d)]

• Regulatory Discussion• If a creditor does not receive or accept payments

by mail on the due date, a payment received the next business day may not be treated as late.

194

Creditor Not Accepting Payments on Due Date

[12 CFR § 1026.10(d)]

• Regulatory Text• (d) Crediting of payments when creditor does

not receive or accept payments on due date• (1) General

• (2) Payments accepted or received other than by mail


195

Limitations on Fees[12 CFR § 1026.10(e)]

• Note: Omitted from manual, as banks normally do not do this

• Regulatory Discussion• A creditor is prohibited from imposing a

separate fee to allow consumers to make a payment – unless such payment method involves an expedited service with the assistance of a live representative or agent of the creditor

196

Credit Balances [12 CFR § 1026.11(a)]

• Regulatory Discussion• This section describes the treatment of credit

balances for open-end credit. Although unlikely for HELOCs, we have chosen to keep it in this manual.

• Regulatory Text

197

Credit Balances [12 CFR § 1026.11(a)]

• Regulatory Commentary• 1. Timing of refund

• 2. Amount of refund

• Paragraph 11(a)(2)• 1. Written requests - standing orders

• Paragraph 11(a)(3)• 1. Good faith effort to refund

• 2. Good faith effort unsuccessful

198

HELOC Billing Error Resolution

Presented by

Young & Associates

199

Introductory Commentary [12 CFR § 1026.13]

• Regulatory Discussion• This introductory commentary provides information

on a creditor’s failure to comply with the billing error provisions

• Regulatory Text - None

• Regulatory Commentary• 1. Creditor's failure to comply with billing error

provisions• 2. Charges for error resolution

200

Definition of Billing Error [12 CFR § 1026.13(a)]

• Regulatory Discussion• This section provides the definition of billing

error for open-end credit. There are seven potential categories

• Regulatory Text• (a) Definition of billing error

• (1) Transaction without authority

• (2) Transaction not identified

• (3) Property or services not accepted

201


• Regulatory Text• (a) Definition of billing error

• (4) Failure to credit properly a payment

• (5) Computational or similar error

• (6) An extension of credit for which the consumer requests additional clarification

• (7) The creditor's failure to mail or deliver a periodic statement to the consumer's last known address

202


• Regulatory Commentary• Paragraph 13(a)(1)

• 1. Actual, implied, or apparent authority

• Paragraph 13(a)(3)• 1. Coverage

• 2. Application to purchases made using a third-party payment intermediary

• 3. Notice to merchant not required

203


• Regulatory Commentary• Paragraph 13(a)(5)

• 1. Computational errors

• Paragraph 13(a)(6)• 1. Documentation requests

204

Billing Error Notice [12 CFR § 1026.13(b)]

• Regulatory Discussion• This section describes three components of a

billing error notice

• Regulatory Text• (b) Billing error notice

• (1) Is received by a creditor no later than 60 days after the creditor transmitted the first periodic statement that reflects the alleged billing error;

205


• Regulatory Text• (b) Billing error notice

• (2) Enables the creditor to identify the consumer's name and account number

• (3) Indicates the consumer's belief that a billing error exists

206


• Regulatory Commentary• 13(b) Billing Error Notice

• 1. Withdrawal of billing error notice by consumer

• 2. Form of written notice

• Paragraph 13(b)(1)• 1. Failure to send periodic statement - timing

• 2. Failure to reflect credit - timing

• 3. Transmittal

207


• Regulatory Commentary• Paragraph 13(b)(2)

• 1. Identity of the consumer

208

Time for Resolution; General Procedures [12 CFR § 1026.13(c)]

• Regulatory Discussion• This section describes the general procedures for

the time for resolution.

• Regulatory Text• (c) Time for resolution; general procedures

209

Time for Resolution; General Procedures [12 CFR § 1026.13(c)]

• Regulatory Commentary• 13(c) Time for Resolution; General Procedures

• 1. Temporary or provisional corrections

• 2. Correction without investigation

• 3. Relationship with §1026.12

• Paragraph 13(c)(2)• 1. Time for resolution

• 2. Finality of error resolution procedure

210

Rules Pending Resolution [12 CFR § 1026.13(d)]

• Regulatory Discussion• This section describes four rules to follow with

pending resolution

• Regulatory Text

• (d) Rules pending resolution• (1) Consumer's right to withhold disputed

amount; collection action prohibited• (2) Adverse credit reports prohibited

211


• Regulatory Text

• (d) Rules pending resolution• (3) Acceleration of debt and restriction of

account prohibited• (4) Permitted creditor actions

• Regulatory Commentary• 13(d) Rules Pending Resolution

• 1. Disputed amount

212


• Regulatory Commentary• 13(d)(1) Consumer's Right To Withhold Disputed

Amount; Collection Action Prohibited• 1. Prohibited collection actions

• 2. Right to withhold payment

• 3. Imposition of additional charges on undisputed amounts

• 4. Automatic payment plans - coverage

• 5. Automatic payment plans - time of notice

213


• Regulatory Commentary• 13(d)(2) Adverse Credit Reports Prohibited

• 1. Report of dispute

• 2. Person

• 3. Creditor's agent

214

Billing Error Occurred as Asserted [12 CFR § 1026.13(e)]

• Regulatory Discussion• This section describes two procedures to follow if

the billing error occurred as asserted

• Regulatory Text• (e) Procedures

• (1) Correct the billing error and credit the consumer's account

• (2) Mail or deliver a correction notice to the consumer.

215

Billing Error Occurred as Asserted [12 CFR § 1026.13(e)]

• Regulatory Commentary• 13(e) Procedures If Billing Error Occurred as

Asserted• 1. Correction of error

• 2. Form of correction notice.

• 3. Discovery of information after investigation period

216

Different Billing Error or No Billing Error

[12 CFR § 1026.13(f)]

• Regulatory Discussion• This section describes three procedures to follow

if a different billing error occurred or no billing error occurred

217

Different Billing Error or No Billing Error

[12 CFR § 1026.13(f)]

• Regulatory Text• (f) Procedures if different billing error or no

billing error occurred• (1) Mail or deliver to the consumer an explanation

that sets forth the reasons for the creditor's belief that the billing error alleged by the consumer is incorrect in whole or in part;

• (2) Furnish copies of documentary evidence of the consumer's indebtedness, if the consumer so requests; and

218

Different Billing Error or No Billing Error [12 CFR § 1026.13(f)]

• Regulatory Text• (f) Procedures if different billing error or no

billing error occurred• (3) If a different billing error occurred, correct the

billing error and credit the consumer's account with any disputed amount and related finance or other charges, as applicable.

219

Different Billing Error or No Billing Error [12 CFR § 1026.13(f)]

• Regulatory Commentary• 13(f) Procedures If Different Billing Error or No

Billing Error Occurred• 1. Different billing error.

• Examples

• 2. Form of creditor's explanation

• 3. Reasonable investigation• Many examples

220

Creditor’s Rights and Duties after Resolution

[12 C.F.R. § 1026.13(g)]

• Regulatory Discussion• This section describes four creditor rights

and duties after resolution

221


[12 C.F.R. § 1026.13(g)]

• Regulatory Text• (g) Creditor's rights and duties after

resolution• (1) Promptly notify the consumer in writing of

the time when payment is due

• (2) Shall allow any time period during which the consumer can pay the amount due

222


[12 C.F.R. § 1026.13(g)]

• Regulatory Text• (g) Creditor's rights and duties after

resolution• (3) May report an account or amount as

delinquent because the amount due remains unpaid

• (4) May not report that an amount or account is delinquent if the creditor receives further written notice from the consumer that any portion of the billing error is still in dispute, unless the creditor also:

223


[12 C.F.R. § 1026.13(g)]

• Regulatory Text• (g)(4) Creditor's rights and duties after

resolution• (i) Promptly reports that the amount or account is in

dispute;• (ii) Mails or delivers to the consumer (at the same

time the report is made) a written notice of the name and address of each person to whom the creditor makes a report; and

• (iii) Promptly reports any subsequent resolution of the reported delinquency to all persons to whom the creditor has made a report.

224


[12 C.F.R. § 1026.13(g)]

• Regulatory Commentary• Paragraph 13(g)(1)

• 1. Amounts owed by consumer

• 2. Time of notice

• Paragraph 13(g)(2)• 1. Grace period if no error occurred

225


[12 C.F.R. § 1026.13(g)]

• Regulatory Commentary• Paragraph 13(g)(3)

• 1. Time for payment

• Paragraph 13(g)(4)• 1. Credit reporting

• 2. Adverse report to credit bureau

226

Reassertion of Billing Error [12 C.F.R. § 1026.13(h)]

• Regulatory Discussion• This section describes the creditor’s

responsibilities in a reassertion of billing error. There is no commentary.

• Regulatory Text


227

Relation - EFTA and Regulation E [12 C.F.R. § 1026.13(i)]

• Regulatory Discussion• This section describes the relation to the

Electronic Fund Transfer Act (Regulation E).

• Regulatory Text• (i) Relation to Electronic Fund Transfer Act

and Regulation E

228

Relation - EFTA and Regulation E [12 C.F.R. § 1026.13(i)]

• Regulatory Commentary• 13(i) Relation to Electronic Fund Transfer

Act and Regulation E• 1. Coverage

• 2. Incidental credit under agreement

• 3. Application to debit/credit transactions –examples

• Balance for your review229

HELOC Determination of APR

Presented by

Young & Associates

230

General Rule [12 C.F.R. § 1026.14(a)]

• Regulatory Discussion• This section, in general terms, describes the

APR as a measure of the cost of credit, expressed as a yearly rate

231


• Regulatory Text• (a) General rule. The APR is a measure of

the cost of credit, expressed as a yearly rate. An APR shall be considered accurate if it is not more than 1⁄8 th of 1 percentage point above or below the APR. An error in disclosure of the annual percentage rate or finance charge shall not, in itself, be considered a violation of this part if:

232


• Regulatory Text• (1) The error resulted from a corresponding

error in a calculation tool used in good faith by the creditor; and

• (2) Upon discovery of the error, the creditor promptly discontinues use of that calculation tool for disclosure purposes, and notifies the Bureau in writing of the error in the calculation tool

233


• Regulatory Commentary• 1. Tolerance

• 2. Rounding

• 3. Periodic rates

• 4. Finance charges

• 5. Good faith reliance on faulty calculation tools

• 6. Effect of leap year

234

APR – in General [12 C.F.R. § 1026.14(b)]

• Regulatory Discussion• This section, in general terms, describes the

corresponding APR is determined by multiplying the periodic rate by the number of periods in the year.

• Regulatory Text

• Regulatory Commentary• 1. Corresponding annual percentage rate

computation235

Optional Effective APR [12 C.F.R. § 1026.14(c)]

• Used by software

• For your review

236

Calculations Where Daily Periodic Rate Applied

[12 C.F.R. § 1026.14(d)]

• Regulatory Discussion• This section provides additional

requirements for determining the APR

• Regulatory Text• (d) Calculations where daily periodic rate

applied

237

Calculations Where Daily Periodic Rate Applied

[12 C.F.R. § 1026.14(d)]

• Regulatory Commentary• 1. Quotient method

• 2. Daily rate with specific transaction charge

238

HELOC Limitations

Presented by

Young & Associates

239

Limitations on Home Equity Plans [12 C.F.R. § 1026.40(f)]

• Regulatory Discussion• This section provides four limitations (or

prohibitions) a creditor may impose on a HELOC. The manual has a lengthy discussion, worthy of your time

240


• Regulatory Text• (f) Limitations on home equity plans

• (1) Change the annual percentage rate unless:• (i) Based on index• (ii) Available to the public.

• (2) Terminate a plan unless:• (i) Fraud or material misrepresentation• (ii) Fails to meet the repayment terms• (iii) Any action or inaction by the consumer

adversely affects the creditor's security • (iv) Federal law requires it

241



• (3) Change any term, except• (i) Provide in the initial agreement for changes• (ii) Change the index and margin f the original index

is no longer available• (iii) Make a change agreed to in writing• (iv) Make a change that will unequivocally benefit the

consumer• (v) Make an insignificant change• (vi) Prohibit additional extensions of credit or reduce

the credit limit for other good reasons – reg lists 6

242



• (4) Reverse mortgage transactions – Omitted

• Regulatory Commentary• 40(f) Limitations on Home Equity Plans

• 1. Coverage

• Paragraph 40(f)(1)• 1. External index• 2. Publicly available• 3. Provisions not prohibited

243


• Regulatory Commentary• Paragraph 40(f)(2)

• 1. Limitations on termination and acceleration

• 2. Other actions permitted

• Paragraph 40(f)(2)(i)• 1. Fraud or material misrepresentation

• Paragraph 40(f)(2)(ii)• 1. Failure to meet repayment terms

244


• Regulatory Commentary• Paragraph 40(f)(2)(iii)

• 1. Impairment of security• 2. Examples.

• Paragraph 40(f)(3)• 1. Scope of provision• 2. Charges not covered

• Paragraph 40(f)(3)(i)• 1. Changes provided for in agreement• 2. Prohibited provisions

245


• Regulatory Commentary• Paragraph 40(f)(3)(ii)

• 1. Substitution of index

• Paragraph 40(f)(3)(iii)• 1. Changes by written agreement.

• 2. Written agreement

• Paragraph 40(f)(3)(iv)• 1. Beneficial changes

246


• Regulatory Commentary• Paragraph 40(f)(3)(v)

• 1. Insignificant changes. • 2. Examples of insignificant changes

• Paragraph 40(f)(3)(vi)• 1. Suspension of credit privileges or reduction of

credit limit• 2. Temporary nature of suspension or reduction• 3. Imposition of fees• 4. Reinstatement of credit privileges

247


• Regulatory Commentary• Paragraph 40(f)(3)(vi)

• 5. Suspension of credit privileges following request by consumer

• 6. Significant decline defined

• 7. Material change in financial circumstances.

• 8. Default of a material obligation

• 9. Government limits on the annual percentage rate

248

HELOC Change in Terms

Presented by

Young & Associates

249

Change in Terms [12 CFR § 1026.9(c)(1)]

• Regulatory Discussion• This section continues to describe the

requirements for subsequent disclosures -change in terms.

• There are three components:• Written notice requirements• Notice not required• Notice to restrict credit

• Introductory Regulatory Commentary

250


• Regulatory Text• Written Notice Required

• Regulatory Commentary• 9(c)(1)(i) Written Notice Required

• 1. Affected consumers

• 2. Timing - effective date of change

• 3. Timing - advance notice not required

251


• Regulatory Commentary• 9(c)(1)(i) Written Notice Required

• 4. Form of change-in-terms notice

• 5. Security interest change - form of notice

• 6. Changes to home-equity plans entered into on or after November 7, 1989

252



• Regulatory Text

• Regulatory Commentary• 9(c)(1)(ii) Notice not Required

• 1. Changes not requiring notice

• 2. Skip features

253



• Regulatory Text

• Regulatory Commentary• 9(c)(1)(iii) Notice to Restrict Credit

• 1. Written request for reinstatement

• 2. Notice not required

254

HELOC Subsequent Disclosures (Omitted from Manual)

Presented by

Young & Associates

255

Subsequent Disclosures Omitted from Manual

• Statement of Billing Rights• Normally included on each monthly

statement

• Supplemental Access Devices issued after account is opened

• Account Termination• Mostly a contractual matters for HELOCs

256

Any Final

HELOCQuestions

Any Final

Questions

258

Please Stay healthy

Thanks for participating

259