fourth quarter 2021 cbc
TRANSCRIPT
![Page 1: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/1.jpg)
Fourth Quarter 2021 CBC
Presented by
Young & Associates
1
![Page 2: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/2.jpg)
Regulation F:Fair Debt Collection
Practices ActPresented by
Young & Associates
2
![Page 3: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/3.jpg)
Notes
▪Manual is complete
▪Not every section applies to banks
▪Limited presentation
▪Balance is for your review
3
![Page 4: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/4.jpg)
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
![Page 5: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/5.jpg)
1 - Preamble – Abridged
▪ Additional provisions
▪Debt collection market background▪ Creditors
▪ Third party debt collectors
▪ Debt collection law firms
▪Consumer protection concerns
5
![Page 6: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/6.jpg)
1 - Preamble – Abridged
▪FDCPA and Dodd – Frank▪ Note the requirements
▪FDCPA sections
▪Dodd - Frank
▪E-sign act
6
![Page 7: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/7.jpg)
2 - Regulatory Introduction
▪For your review
7
![Page 8: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/8.jpg)
Subpart A
Presented by
Young & Associates
8
![Page 9: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/9.jpg)
3 – General Authority, Purpose, and Coverage
▪Authority ▪ CFPB preamble
▪ Regulatory text
▪ Regulatory commentary
▪Purpose ▪ CFPB preamble
▪ Regulatory text
▪ Regulatory commentary
9
![Page 10: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/10.jpg)
3 – General Authority, Purpose, and Coverage
▪Coverage ▪ CFPB preamble
▪ Regulatory text
▪ Regulatory commentary
10
![Page 11: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/11.jpg)
4- General Definitions
▪Preamble
▪Introductory language
▪Act or FDCPA
▪Attempt to communicate
▪Bureau
▪Communicate or communication
▪Consumer
11
![Page 12: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/12.jpg)
4- General Definitions
▪Creditor
▪Debt
▪Debt collector▪ IMPORTANT definition
▪ Regulatory text▪ Includes
▪ Excludes
▪ Regulatory commentary
12
![Page 13: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/13.jpg)
4- General Definitions
▪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
![Page 14: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/14.jpg)
4- General Definitions
▪Person
▪State
14
![Page 15: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/15.jpg)
Subpart B
Presented by
Young & Associates
15
![Page 16: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/16.jpg)
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
![Page 17: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/17.jpg)
5 - Communication
• CFPB Preamble (Abridged and Edited)
• Electronic Communication
17
![Page 18: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/18.jpg)
6 – Communication Definitions
• Introductory CFPB preamble
• Consumer Includes • Spouse
• Parent
• Legal guardian
• Executor
18
![Page 19: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/19.jpg)
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
![Page 20: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/20.jpg)
7 – Communications with a Consumer
• Prohibitions • Regulatory text
• Regulatory commentary
• Communication with consumer’s attorney • For your review
20
![Page 21: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/21.jpg)
7 – Communications with a Consumer
• Prohibitions • Employment – limited
• Generally prohibited if you know it is an issue for the employer
• CFPB preamble
• regulatory text
• regulatory commentary
21
![Page 22: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/22.jpg)
7 – Communications with a Consumer
• Prohibitions • Exceptions
• Generally prior consent
• CFPB preamble
• Regulatory text
• Regulatory commentary
22
![Page 23: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/23.jpg)
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
• Regulatory commentary
23
![Page 24: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/24.jpg)
8 – Communication after Request to Cease Communications
• Exceptions• There are three – see regulatory text
• CFPB preamble
• Regulatory text
• Regulatory commentary
24
![Page 25: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/25.jpg)
9 – Communication with Third Parties
• Exceptions• There are three – see regulatory text
• CFPB preamble
• Regulatory text
• Regulatory commentary
25
![Page 26: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/26.jpg)
9 – Communication with Third Parties
• 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
![Page 27: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/27.jpg)
9 – Communication with Third Parties
• Reasonable procedures • CFPB preamble
• Risk of the consumer harm
• Reason to anticipate
• Reasonably confirm and document
• Scope
• Regulatory text
• Regulatory commentary
27
![Page 28: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/28.jpg)
9 – Communication with Third Parties
• Email • CFPB preamble
• Consumer use
• Notice and opt out
• Who may provide
• Timing and content
• Regulatory text
• Regulatory commentary
28
![Page 29: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/29.jpg)
9 – Communication with Third Parties
• Telephone numbers for text messages • Similar approach
• CFPB preamble
• Regulatory text
• Regulatory commentary
29
![Page 30: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/30.jpg)
9 – Communication with Third Parties
• 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
![Page 31: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/31.jpg)
10 - Reserved Sections
• FYI
31
![Page 32: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/32.jpg)
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
![Page 33: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/33.jpg)
12 - Reserved Sections
• FYI
33
![Page 34: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/34.jpg)
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
![Page 35: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/35.jpg)
14 - Reserved Sections
• FYI
35
![Page 36: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/36.jpg)
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
![Page 37: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/37.jpg)
16 - Reserved Sections
• FYI
37
![Page 38: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/38.jpg)
17 – Unfair or Unconscionable
• Basically more of the same
• Honesty matters
• For your review
38
![Page 39: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/39.jpg)
18 - Reserved Sections
• FYI
39
![Page 40: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/40.jpg)
19 – Other Prohibited Practices
• Again, not a big deal for banks
• Honesty once again
• For your review
40
![Page 41: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/41.jpg)
20 - Reserved Sections
• FYI
41
![Page 42: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/42.jpg)
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
![Page 43: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/43.jpg)
22 - Reserved Sections
• FYI
43
![Page 44: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/44.jpg)
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
![Page 45: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/45.jpg)
24 - Reserved Sections
• FYI
45
![Page 46: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/46.jpg)
Subpart C
• Reserved
• FYI
46
![Page 47: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/47.jpg)
Subpart D
Presented by
Young & Associates
47
![Page 48: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/48.jpg)
General Discussion
• Very little is this section will impact attendees
• A quick review of what is here
48
![Page 49: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/49.jpg)
Any Final
FDCPAQuestions
![Page 50: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/50.jpg)
HELOCs
Presented by
Young & Associates
50
![Page 51: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/51.jpg)
Introduction
• Section numbers are out of order
• Regulation is fragmented
51
![Page 52: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/52.jpg)
General Rules that Impact HELOCs
Presented by
Young & Associates
52
![Page 53: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/53.jpg)
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
![Page 54: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/54.jpg)
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
![Page 55: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/55.jpg)
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
![Page 56: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/56.jpg)
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
![Page 57: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/57.jpg)
Terminology – Open End [12 CFR § 1026.5(a)(2)]
• Regulatory Discussion• This section describes consistent and
conspicuous terminology requirements
57
![Page 58: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/58.jpg)
Terminology – Open End [12 CFR § 1026.5(a)(2)]
• 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
![Page 59: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/59.jpg)
Terminology – Open End [12 CFR § 1026.5(a)(2)]
• Regulatory Text• (2) Terminology.
• (iii) Omitted
• Regulatory Commentary• 1. When disclosures must be more
conspicuous
• 2. Making disclosures more conspicuous
59
![Page 60: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/60.jpg)
Terminology – Open End [12 CFR § 1026.5(a)(2)]
• Regulatory Commentary• 3. Disclosure of figures - exception to more
conspicuous rule
• 4. Consistent terminology
• Both Omitted
60
![Page 61: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/61.jpg)
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
![Page 62: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/62.jpg)
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
![Page 63: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/63.jpg)
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
![Page 64: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/64.jpg)
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
![Page 65: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/65.jpg)
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
![Page 66: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/66.jpg)
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
![Page 67: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/67.jpg)
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
![Page 68: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/68.jpg)
Periodic Statements – Open End [12 CFR § 1026.5(b)(2)]
• 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
![Page 69: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/69.jpg)
Periodic Statements – Open End [12 CFR § 1026.5(b)(2)]
• 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
![Page 70: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/70.jpg)
Periodic Statements – Open End [12 CFR § 1026.5(b)(2)]
• 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
![Page 71: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/71.jpg)
Periodic Statements – Open End [12 CFR § 1026.5(b)(2)]
• Regulatory Commentary• 5(b)(2)(ii) Timing Requirements
• 5. Consumer request to pick up periodic statements
• 6. Deferred interest and similar promotional programs
71
![Page 72: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/72.jpg)
Periodic Statements – Open End [12 CFR § 1026.5(b)(4)]
• Brief section indicating that HELOCs are covered elsewhere
• We will cover those sections
72
![Page 73: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/73.jpg)
General Rules that Impact HELOCs
Presented by
Young & Associates
73
![Page 74: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/74.jpg)
Basis of Disclosures and Use of Estimates12 C.F.R. § 1026.5(c)
• Regulatory Discussion
• Regulatory Text
• Regulatory Commentary
74
![Page 75: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/75.jpg)
Multiple Creditors / Multiple Consumers 12 C.F.R. § 1026.5(d)
• Regulatory Discussion
• Regulatory Text
• Regulatory Commentary
75
![Page 76: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/76.jpg)
Effect of Subsequent Events 12 C.F.R. § 1026.5(e)
• Regulatory Discussion
• Regulatory Text
• Regulatory Commentary
76
![Page 77: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/77.jpg)
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
![Page 78: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/78.jpg)
HELOC Account Application and Opening
DocumentsPresented by
Young & Associates
78
![Page 79: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/79.jpg)
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
![Page 80: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/80.jpg)
Form of Disclosures [12 C.F.R. § 1026.40(a)]
• 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
![Page 81: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/81.jpg)
Form of Disclosures [12 C.F.R. § 1026.40(a)]
• 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
![Page 82: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/82.jpg)
Form of Disclosures [12 C.F.R. § 1026.40(a)]
• Regulatory Commentary• 40(a)(2) Precedence of Certain Disclosures
• 1. Precedence rule
• Paragraph 40(a)(3)• 1. Form of disclosures
82
![Page 83: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/83.jpg)
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
![Page 84: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/84.jpg)
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
![Page 85: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/85.jpg)
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
![Page 86: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/86.jpg)
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
![Page 87: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/87.jpg)
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
![Page 88: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/88.jpg)
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
![Page 89: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/89.jpg)
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
![Page 90: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/90.jpg)
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
![Page 91: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/91.jpg)
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
![Page 92: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/92.jpg)
Possible Actions by Creditor [12 C.F.R. § 1026.40(d)(4)]
• Regulatory Text• (4) Possible actions by creditor
• Regulatory Commentary• Paragraph 40(d)(4)(i)
• 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
![Page 93: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/93.jpg)
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
![Page 94: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/94.jpg)
Payment Terms [12 C.F.R. § 1026.40(d)(5)]
• Regulatory Text• (5) Payment terms
• (iii) An example, based on a $10,000 outstanding balance and a recent annual percentage rate
• Regulatory Commentary• Paragraph 40(d)(5)(i)
• 1. Length of the plan
• 2. Renewal provisions
94
![Page 95: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/95.jpg)
Payment Terms [12 C.F.R. § 1026.40(d)(5)]
• 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
![Page 96: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/96.jpg)
Payment Terms [12 C.F.R. § 1026.40(d)(5)]
• 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
![Page 97: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/97.jpg)
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
![Page 98: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/98.jpg)
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
![Page 99: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/99.jpg)
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
![Page 100: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/100.jpg)
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
![Page 101: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/101.jpg)
Fees Imposed by Third Parties [12 C.F.R. § 1026.40(d)(8)]
• Regulatory Commentary • 1. Applicability
• 2. Itemization of third-party fees
• 3. Manner of describing fees
• 4. Rebates of third party fees
101
![Page 102: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/102.jpg)
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
![Page 103: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/103.jpg)
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
• Regulatory Commentary • 1. Applicability
103
![Page 104: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/104.jpg)
Tax Implications [12 C.F.R. § 1026.15(f)]
• Regulatory Discussion• A statement that the consumer should
consult their tax advisor
• Regulatory Text
• Regulatory Commentary - None
104
![Page 105: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/105.jpg)
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
![Page 106: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/106.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• 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
![Page 107: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/107.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• Regulatory Text• (12) Disclosures for variable-rate plans
• (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
![Page 108: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/108.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• Regulatory Text• (12) Disclosures for variable-rate plans
• (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
![Page 109: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/109.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• Regulatory Text• (12) Disclosures for variable-rate plans
• (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
![Page 110: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/110.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• Regulatory Text• (12) Disclosures for variable-rate plans
• (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
![Page 111: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/111.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• Regulatory Text• (12) Disclosures for variable-rate plans
• (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
![Page 112: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/112.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• Regulatory Text• (12) Disclosures for variable-rate plans
• (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
![Page 113: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/113.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• Regulatory Text• (12) Disclosures for variable-rate plans
• (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
![Page 114: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/114.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• 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
![Page 115: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/115.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• 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
![Page 116: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/116.jpg)
Disclosures for Variable-Rate Plans [12 C.F.R. § 1026.40(d)(12)]
• 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
![Page 117: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/117.jpg)
Sample Initial Disclosure
• From the Appendix
• See manual – no slides
117
![Page 118: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/118.jpg)
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
![Page 119: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/119.jpg)
Refund of Fees 12 C.F.R. § 1026.40(g)
• Regulatory discussion
• Regulatory text
• Regulatory commentary
119
![Page 120: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/120.jpg)
Nonrefundable Fees 12 C.F.R. § 1026.40(h)
• Regulatory discussion
• Regulatory text
• Regulatory commentary
120
![Page 121: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/121.jpg)
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
• Regulatory Commentary - None
121
![Page 122: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/122.jpg)
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
![Page 123: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/123.jpg)
Finance Charge [12 CFR § 1026.6(a)(1)]
• 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
![Page 124: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/124.jpg)
Finance Charge [12 CFR § 1026.6(a)(1)]
• 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
![Page 125: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/125.jpg)
Finance Charge [12 CFR § 1026.6(a)(1)]
• 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
![Page 126: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/126.jpg)
Finance Charge [12 CFR § 1026.6(a)(1)]
• 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
![Page 127: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/127.jpg)
Finance Charge [12 CFR § 1026.6(a)(1)]
• 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
![Page 128: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/128.jpg)
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
![Page 129: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/129.jpg)
Other Charges [12 CFR § 1026.6(a)(2)]
• 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
![Page 130: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/130.jpg)
Other Charges [12 CFR § 1026.6(a)(2)]
• Regulatory Commentary• 2. Exclusions. The following are examples of
charges that are not “other charges”:• 10 examples
130
![Page 131: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/131.jpg)
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
![Page 132: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/132.jpg)
Home Equity Plan Information [12 CFR § 1026.6(a)(3)]
• Regulatory Text• (3) Home-equity plan information. The
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
![Page 133: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/133.jpg)
Home Equity Plan Information [12 CFR § 1026.6(a)(3)]
• Regulatory Text• (3) Home-equity plan information. The
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
![Page 134: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/134.jpg)
Home Equity Plan Information [12 CFR § 1026.6(a)(3)]
• 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
![Page 135: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/135.jpg)
Security Interests [12 CFR § 1026.6(a)(4)]
• Regulatory Discussion• The account-opening disclosures for a
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
![Page 136: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/136.jpg)
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
![Page 137: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/137.jpg)
Statement of Billing Rights [12 CFR § 1026.6(a)(5)]
• Regulatory Discussion• The account-opening disclosures for a
HELOC must include information that outlines certain consumer’s rights and the creditor’s responsibilities.
137
![Page 138: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/138.jpg)
Statement of Billing Rights [12 CFR § 1026.6(a)(5)]
• 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
![Page 139: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/139.jpg)
Statement of Billing Rights [12 CFR § 1026.6(a)(5)]
• Regulatory Commentary• 1. See the commentary to Model Forms G-3,
G-3(A), G-4, and G-4(A).
139
![Page 140: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/140.jpg)
HELOC Open End Right of
Rescission Presented by
Young & Associates
140
![Page 141: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/141.jpg)
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
![Page 142: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/142.jpg)
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
![Page 143: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/143.jpg)
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
![Page 144: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/144.jpg)
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
![Page 145: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/145.jpg)
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
![Page 146: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/146.jpg)
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
![Page 147: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/147.jpg)
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
![Page 148: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/148.jpg)
Notice of Right to Rescind[12 C.F.R. § 1026.15(b)]
• 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
![Page 149: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/149.jpg)
Notice of Right to Rescind[12 C.F.R. § 1026.15(b)]
• Regulatory Commentary• 1. Who receives notice
• 2. Format
• 3. Content
• 4. Time of providing notice
149
![Page 150: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/150.jpg)
Delay of Creditor’s Performance [12 C.F.R. § 1026.15(c)]
• Regulatory Discussion
• 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
![Page 151: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/151.jpg)
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
![Page 152: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/152.jpg)
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
![Page 153: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/153.jpg)
Effects of Rescission [12 C.F.R. § 1026.15(d)(1)]
• Regulatory Commentary• 1. Termination of security interest
• 2. Extent of termination
153
![Page 154: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/154.jpg)
Creditor Responsibilities[12 C.F.R. § 1026.15(d)(2)]
• Regulatory Discussion• In the event the consumer rescinds the
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
![Page 155: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/155.jpg)
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
![Page 156: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/156.jpg)
Consumer Responsibilities [12 C.F.R. § 1026.15(d)(3)]
• Regulatory Discussion• In the event the consumer rescinds the
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
![Page 157: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/157.jpg)
Consumer Responsibilities [12 C.F.R. § 1026.15(d)(3)]
• Regulatory Commentary• 1. Property exchange
• 2. Reasonable value
157
![Page 158: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/158.jpg)
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
![Page 159: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/159.jpg)
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
![Page 160: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/160.jpg)
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
![Page 161: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/161.jpg)
Exempt Transactions[12 C.F.R. § 1026.15(f)]
• Regulatory Commentary• 1. Residential mortgage transaction
• 2. State creditors
• 3. Spreader clause
161
![Page 162: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/162.jpg)
Rescission Examples
• See manual• Example G-5
• Example G-7
162
![Page 163: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/163.jpg)
HELOC Periodic Statements
Presented by
Young & Associates
163
![Page 164: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/164.jpg)
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
![Page 165: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/165.jpg)
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
![Page 166: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/166.jpg)
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
![Page 167: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/167.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(2)]
• 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
![Page 168: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/168.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(3)]
• 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
![Page 169: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/169.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(4)]
• 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
![Page 170: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/170.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(4)]
• 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
![Page 171: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/171.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(5)]
• 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
![Page 172: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/172.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(5)]
• Regulatory Commentary• 1. Limitation to periodic rates
• 2. Split rates applied to balance ranges
• 3. Monthly rate on average daily balance
• 4. Multifeatured plans
• 5. Daily rate on daily balances
• 6. Explanation of balance computation method
172
![Page 173: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/173.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(5)]
• 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
![Page 174: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/174.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(6)]
• 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
![Page 175: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/175.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(6)]
• 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
![Page 176: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/176.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(6)]
• Regulatory Commentary• 7(a)(6)(i) Finance Charges
• 3. Itemization - different periodic rates
• 4. Multifeatured plans
• 5. Finance charges not added to account
• 6. Finance charges other than periodic rates
• 7. Accrued finance charges allocated from payments
• 8. Start-up fees
176
![Page 177: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/177.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(6)]
• Regulatory Commentary• 7(a)(6)(ii) Other Charges
• 1. Identification
• 2. Date
• 3. Total
• 4. Itemization - types of other charges
177
![Page 178: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/178.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(7)]
• 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
![Page 179: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/179.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(8)]
• Regulatory Discussion• The eighth item to be disclosed is the grace
period
• Regulatory Text
• Regulatory Commentary• 1. Terminology
179
![Page 180: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/180.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(9)]
• 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
![Page 181: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/181.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(10)]
• 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
![Page 182: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/182.jpg)
Periodic Statement Content[12 CFR § 1026.7(a)(10)]
• Regulatory Commentary• 1. Credit balances
• 2. Multifeatured plans
• 3. Accrued finance charges allocated from payments
182
![Page 183: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/183.jpg)
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
![Page 184: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/184.jpg)
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
![Page 185: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/185.jpg)
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
![Page 186: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/186.jpg)
HELOC Payments
Presented by
Young & Associates
186
![Page 187: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/187.jpg)
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
![Page 188: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/188.jpg)
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
![Page 189: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/189.jpg)
Specific Requirements for Payments [12 CFR § 1026.10(b)]
• 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
![Page 190: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/190.jpg)
Specific Requirements for Payments [12 CFR § 1026.10(b)]
• Regulatory Text• (b) Specific requirements for payments
• (4) Nonconforming payments
• (i) In general
• (ii) Payment methods promoted by creditor
190
![Page 191: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/191.jpg)
Specific Requirements for Payments [12 CFR § 1026.10(b)]
• 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
![Page 192: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/192.jpg)
Specific Requirements for Payments [12 CFR § 1026.10(b)]
• 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
![Page 193: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/193.jpg)
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
![Page 194: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/194.jpg)
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
![Page 195: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/195.jpg)
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
• Regulatory Commentary
195
![Page 196: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/196.jpg)
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
![Page 197: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/197.jpg)
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
![Page 198: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/198.jpg)
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
![Page 199: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/199.jpg)
HELOC Billing Error Resolution
Presented by
Young & Associates
199
![Page 200: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/200.jpg)
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
![Page 201: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/201.jpg)
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
![Page 202: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/202.jpg)
Definition of Billing Error [12 CFR § 1026.13(a)]
• 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
![Page 203: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/203.jpg)
Definition of Billing Error [12 CFR § 1026.13(a)]
• 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
![Page 204: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/204.jpg)
Definition of Billing Error [12 CFR § 1026.13(a)]
• Regulatory Commentary• Paragraph 13(a)(5)
• 1. Computational errors
• Paragraph 13(a)(6)• 1. Documentation requests
204
![Page 205: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/205.jpg)
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
![Page 206: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/206.jpg)
Billing Error Notice [12 CFR § 1026.13(b)]
• 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
![Page 207: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/207.jpg)
Billing Error Notice [12 CFR § 1026.13(b)]
• 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
![Page 208: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/208.jpg)
Billing Error Notice [12 CFR § 1026.13(b)]
• Regulatory Commentary• Paragraph 13(b)(2)
• 1. Identity of the consumer
208
![Page 209: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/209.jpg)
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
![Page 210: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/210.jpg)
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
![Page 211: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/211.jpg)
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
![Page 212: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/212.jpg)
Rules Pending Resolution [12 CFR § 1026.13(d)]
• 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
![Page 213: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/213.jpg)
Rules Pending Resolution [12 CFR § 1026.13(d)]
• 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
![Page 214: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/214.jpg)
Rules Pending Resolution [12 CFR § 1026.13(d)]
• Regulatory Commentary• 13(d)(2) Adverse Credit Reports Prohibited
• 1. Report of dispute
• 2. Person
• 3. Creditor's agent
214
![Page 215: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/215.jpg)
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
![Page 216: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/216.jpg)
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
![Page 217: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/217.jpg)
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
![Page 218: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/218.jpg)
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
![Page 219: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/219.jpg)
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
![Page 220: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/220.jpg)
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
![Page 221: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/221.jpg)
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
![Page 222: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/222.jpg)
Creditor’s Rights and Duties after Resolution
[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
![Page 223: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/223.jpg)
Creditor’s Rights and Duties after Resolution
[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
![Page 224: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/224.jpg)
Creditor’s Rights and Duties after Resolution
[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
![Page 225: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/225.jpg)
Creditor’s Rights and Duties after Resolution
[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
![Page 226: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/226.jpg)
Creditor’s Rights and Duties after Resolution
[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
![Page 227: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/227.jpg)
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
• Regulatory Commentary - None
227
![Page 228: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/228.jpg)
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
![Page 229: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/229.jpg)
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
![Page 230: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/230.jpg)
HELOC Determination of APR
Presented by
Young & Associates
230
![Page 231: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/231.jpg)
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
![Page 232: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/232.jpg)
General Rule [12 C.F.R. § 1026.14(a)]
• 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
![Page 233: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/233.jpg)
General Rule [12 C.F.R. § 1026.14(a)]
• 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
![Page 234: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/234.jpg)
General Rule [12 C.F.R. § 1026.14(a)]
• 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
![Page 235: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/235.jpg)
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
![Page 236: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/236.jpg)
Optional Effective APR [12 C.F.R. § 1026.14(c)]
• Used by software
• For your review
236
![Page 237: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/237.jpg)
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
![Page 238: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/238.jpg)
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
![Page 239: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/239.jpg)
HELOC Limitations
Presented by
Young & Associates
239
![Page 240: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/240.jpg)
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
![Page 241: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/241.jpg)
Limitations on Home Equity Plans [12 C.F.R. § 1026.40(f)]
• 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
![Page 242: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/242.jpg)
Limitations on Home Equity Plans [12 C.F.R. § 1026.40(f)]
• Regulatory Text• (f) Limitations on home equity plans
• (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
![Page 243: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/243.jpg)
Limitations on Home Equity Plans [12 C.F.R. § 1026.40(f)]
• Regulatory Text• (f) Limitations on home equity plans
• (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
![Page 244: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/244.jpg)
Limitations on Home Equity Plans [12 C.F.R. § 1026.40(f)]
• 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
![Page 245: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/245.jpg)
Limitations on Home Equity Plans [12 C.F.R. § 1026.40(f)]
• 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
![Page 246: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/246.jpg)
Limitations on Home Equity Plans [12 C.F.R. § 1026.40(f)]
• 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
![Page 247: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/247.jpg)
Limitations on Home Equity Plans [12 C.F.R. § 1026.40(f)]
• 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
![Page 248: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/248.jpg)
Limitations on Home Equity Plans [12 C.F.R. § 1026.40(f)]
• 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
![Page 249: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/249.jpg)
HELOC Change in Terms
Presented by
Young & Associates
249
![Page 250: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/250.jpg)
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
![Page 251: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/251.jpg)
Change in Terms [12 CFR § 1026.9(c)(1)]
• 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
![Page 252: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/252.jpg)
Change in Terms [12 CFR § 1026.9(c)(1)]
• 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
![Page 253: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/253.jpg)
Change in Terms [12 CFR § 1026.9(c)(1)]
• Regulatory Discussion
• Regulatory Text
• Regulatory Commentary• 9(c)(1)(ii) Notice not Required
• 1. Changes not requiring notice
• 2. Skip features
253
![Page 254: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/254.jpg)
Change in Terms [12 CFR § 1026.9(c)(1)]
• Regulatory Discussion
• Regulatory Text
• Regulatory Commentary• 9(c)(1)(iii) Notice to Restrict Credit
• 1. Written request for reinstatement
• 2. Notice not required
254
![Page 255: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/255.jpg)
HELOC Subsequent Disclosures (Omitted from Manual)
Presented by
Young & Associates
255
![Page 256: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/256.jpg)
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
![Page 257: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/257.jpg)
Any Final
HELOCQuestions
![Page 258: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/258.jpg)
Any Final
Questions
258
![Page 259: Fourth Quarter 2021 CBC](https://reader034.vdocument.in/reader034/viewer/2022042101/6256777d8ffecf09a26f5eab/html5/thumbnails/259.jpg)
Please Stay healthy
Thanks for participating
259