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Truth in Lending: (b)(10) Assumption for variable-rate reverse mortgage transactions.

1. Initial discount or premium rate. Where a variable-rate reverse mortgage transaction includes an initial discount or premium rate, the creditor should apply the same rules for calculating the total annual loan cost rate as are applied when calculating the annual percentage rate for a loan with an initial discount or premium rate (see the commentary to § 1026.17(c)).

Truth in Lending: (d)(2) Sample form.

1. General. The “clear and conspicuous” standard for reverse mortgage disclosures does not require disclosures to be printed in any particular type size. Disclosures may be made on more than one page, and use both the front and the reverse sides, as long as the pages constitute an integrated document and the table disclosing the total annual loan cost rates is on a single page.

Truth in Lending: Appendix L Assumed Loan Periods for Computations of Total Annual Loan Cost Rates

1. General. The life expectancy figures used in appendix L are those found in the U.S. Decennial Life Tables for women, as rounded to the nearest whole year and as published by the U. S. Department of Health and Human Services. The figures contained in appendix L must be used by creditors for all consumers (men and women). Appendix L will be revised periodically by the Bureau to incorporate revisions to the figures made in the Decennial Tables.

[76 Fed. Reg. 79,772 (Dec. 22, 2011)]

Truth in Lending: 9(g)(4) Exception for Decrease in Credit Limit

1. The following illustrates the requirements of § 1026.9(g)(4). Assume that a creditor decreased the credit limit applicable to a consumer’s account and sent a notice pursuant to § 1026.9(g)(4) on January 1, stating among other things that the penalty rate would apply if the consumer’s balance exceeded the new credit limit as of February 16. If the consumer’s balance exceeded the credit limit on February 16, the creditor could impose the penalty rate on that date.

Truth in Lending: 9(g)(4) Exception for Decrease in Credit Limit.

1. The following illustrates the requirements of § 1026.9(g)(4). Assume that a creditor decreased the credit limit applicable to a consumer’s account and sent a notice pursuant to § 1026.9(g)(4) on January 1, stating among other things that the penalty rate would apply if the consumer’s balance exceeded the new credit limit as of February 16. If the consumer’s balance exceeded the credit limit on February 16, the creditor could impose the penalty rate on that date.

Truth in Lending: 55(b)(7) Index Replacement and Margin Change Exception.

1948. Replacing LIBOR. A card issuer may use either the provision in § 1026.55(b)(7)(i) or (ii) to replace a LIBOR index used under the plan so long as the applicable conditions are met for the provision used. Neither provision, however, excuses the card issuer from noncompliance with contractual provisions. The following examples illustrate when a card issuer may use the provisions in § 1026.55(b)(7)(i) or (ii) to replace a LIBOR index on the plan.

Truth in Lending: 59(h) Exceptions.

1. Transition from LIBOR. The exception to the requirements of this section does not apply to rate increases already subject to § 1026.59 prior to the transition from the use of a LIBOR index as the index in setting a variable rate to the use of a different index in setting a variable rate where the change from the use of a LIBOR index to a different index occurred in accordance with § 1026.55(b)(7)(i) or (ii).

Truth in Lending: 34(a)(6) Recommended default.

Editor’s Note429

1. Facts and circumstances.430 Whether a creditor or mortgage broker “recommends or encourages” default for purposes of § 1026.34(a)(6) depends on all of the relevant facts and circumstances.

2. Examples.431

Truth in Lending: 34(a)(8)(i) General.

Editor’s Note432

Editor’s Note433

1. For purposes of § 1026.34(a)(8), in connection with an open-end credit plan, the amount of the payment past due is the required minimum periodic payment as provided under the terms of the open-end credit agreement.434

Truth in Lending: 34(b) Prohibited acts or practices for dwelling-secured loans; structuring loans to evade high-cost mortgage requirements.

Editor’s Note442

1. Examples.443

i. A creditor structures a transaction in violation of § 1026.34(b) if, for example, the creditor structures a loan that would otherwise be a high-cost mortgage as two or more loans, whether made consecutively or at the same time, for example, to divide the loan fees to avoid the points and fees threshold for high-cost mortgages in § 1026.32(a)(1)(ii).

Truth in Lending: Amendment History

[66 Fed. Reg. 65,620 (Dec. 20, 2001); 73 Fed. Reg. 44,610 (July 30, 2008); 76 Fed. Reg. 79,772 (Dec. 22, 2011); 78 Fed. Reg. 6967 (Jan. 31, 2013); 78 Fed. Reg. 30,739 (May 23, 2013); 78 Fed. Reg. 60,382 (Oct. 1, 2013); 78 Fed. Reg. 63,006 (Oct. 23, 2013); 81 Fed. Reg. 84,369 (Nov. 22, 2016); 82 Fed. Reg. 18,975 (Apr. 25, 2017); 83 Fed. Reg. 6364 (Feb. 13, 2018)]

Truth in Lending: 1. Principal dwelling

1. Principal dwelling.453 Section 1026.35(b)(1) applies to principal dwellings, including structures that are classified as personal property under State law. For example, an escrow account must be established on a higher-priced mortgage loan secured by a first lien on a manufactured home, boat, or trailer used as the consumer’s principal dwelling. See the commentary under §§ 1026.2(a)(19) and(24), 1026.15, and 1026.23.

Truth in Lending: 35(b)(1) Requirement to escrow for property taxes and insurance.

Editor’s Note454

1. Administration of escrow accounts.455 Section 1026.35(b)(1) requires creditors to establish an escrow account for payment of property taxes and premiums for mortgage-related insurance required by the creditor before the consummation of a higher-priced mortgage loan secured by a first lien on a principal dwelling. Section 6 of RESPA, 12 U.S.C. 2605, and Regulation X, 12 CFR 1024.17, address how escrow accounts must be administered.

Truth in Lending: 35(b)(3) Cancellation.

Editor’s Note497

1. Termination of underlying debt obligation.498 Section 1026.35(b)(3)(i) provides that, in general, an escrow account required by § 1026.35(b)(1) may not be cancelled until the underlying debt obligation is terminated or the consumer requests cancellation at least five years after consummation. Methods by which an underlying debt obligation may be terminated include, among other things, repayment, refinancing, rescission, and foreclosure.

Truth in Lending: 35(c)(1)(i) Certified or Licensed Appraiser.

Editor’s Note501

1. USPAP.502 The Uniform Standards of Professional Appraisal Practice (USPAP) are established by the Appraisal Standards Board of the Appraisal Foundation (as defined in 12 U.S.C. 3350(9)). Under § 1026.35(c)(1)(i), the relevant USPAP standards are those found in the edition of USPAP and that are in effect at the time the appraiser signs the appraiser’s certification.

Truth in Lending: 35(c)(3)(i) In General.

Editor’s Note528

Editor’s Note529

1. Written appraisal—electronic transmission.530 To satisfy the requirement that the appraisal be “written,” a creditor may obtain the appraisal in paper form or via electronic transmission.