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Truth in Lending: Appendix D Multiple-Advance Construction Loans

1. General rule. Appendix D provides a special procedure that creditors may use, at their option, to estimate and disclose the terms of multiple-advance construction loans when the amounts or timing of advances is unknown at consummation of the transaction.

Truth in Lending: Appendix F Optional Annual Percentage Rate Computations for Creditors Offering Open-End Credit Plans Secured by a Consumer’s Dwelling

1. Daily rate with specific transaction charge. If the finance charge results from a charge relating to a specific transaction and the application of a daily periodic rate, see comment 14(c)(3)-2 for guidance on an appropriate calculation method.

[74 Fed. Reg. 5244 (Jan. 29, 2009); 75 Fed. Reg. 7848 (Feb. 22, 2010); 75 Fed. Reg. 7925 (Feb. 22, 2010); 76 Fed. Reg. 79,772 (Dec. 22, 2011)]

Truth in Lending: Appendix G Open-End Model Forms and Clauses

1. Models G-1 and G-1(A). The model disclosures in G-1 and G-1(A) (different balance computation methods) may be used in both the account-opening disclosures under § 1026.6 and the periodic disclosures under § 1026.7. As is clear from the models given, “shorthand” descriptions of the balance computation methods are not sufficient, except where § 1026.7(b)(5) applies.

Truth in Lending: Appendix H Closed-End Forms and Clauses

Editor’s Note992

1. Models H-1 and H-2.

i. Creditors may make several types of changes to closed-end model forms H-1 (credit sale) and H-2 (loan) and still be deemed to be in compliance with the regulation, provided that the required disclosures are made clearly and conspicuously. Permissible changes include the addition of the information permitted by § 1026.17(a)(1) and “directly related” information as set forth in the commentary to § 1026.17(a).

Truth in Lending: 1. General

1. General. The calculation of total annual loan cost rates under appendix K is based on the principles set forth and the estimation or “iteration” procedure used to compute annual percentage rates under appendix J. Rather than restate this iteration process in full, the regulation cross-references the procedures found in appendix J. In other aspects the appendix reflects the special nature of reverse mortgage transactions. Special definitions and instructions are included where appropriate.

Truth in Lending: (b)(5) Number of unit-periods between two given dates.

1. Assumption as to when transaction begins. The computation of the total annual loan cost rate is based on the assumption that the reverse mortgage transaction begins on the first day of the month in which consummation is estimated to occur. Therefore, fractional unit-periods (used under appendix J for calculating annual percentage rates) are not used.

Truth in Lending: (b)(9) Assumption for discretionary cash advances.

1. Amount of credit. Creditors should compute the total annual loan cost rates for transactions involving discretionary cash advances by assuming that 50 percent of the initial amount of the credit available under the transaction is advanced at closing or, in an open-end transaction, when the consumer becomes obligated under the plan. (For the purposes of this assumption, the initial amount of the credit is the principal loan amount less any costs to the consumer under § 1026.33(c)(1).)

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).