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Truth in Lending: 40(d)(7) Fees Imposed by Creditor.

1. Applicability. The fees referred to in § 1026.40(d)(7) include items such as application fees, points, annual fees, transaction fees, fees to obtain checks to access the plan, and fees imposed for converting to a repayment phase that is provided for in the original agreement. This disclosure includes any fees that are imposed by the creditor to use or maintain the plan, whether the fees are kept by the creditor or a third party.

Truth in Lending: 40(d)(8) Fees Imposed by Third Parties to Open a Plan.

1. Applicability. Section 1026.40(d)(8) applies only to fees imposed by third parties to open the plan. Thus, for example, this section does not require disclosure of a fee imposed by a government agency at the end of a plan to release a security interest. Fees to be disclosed include appraisal, credit report, government agency, and attorneys fees. In cases where property insurance is required by the creditor, the creditor either may disclose the amount of the premium or may state that property insurance is required.

Truth in Lending: 40(d)(9) Negative Amortization.

1. Disclosure required. In transactions where the minimum payment will not or may not be sufficient to cover the interest that accrues on the outstanding balance, the creditor must disclose that negative amortization will or may occur. This disclosure is required whether or not the unpaid interest is added to the outstanding balance upon which interest is computed. A disclosure is not required merely because a loan calls for non-amortizing or partially amortizing payments.

Truth in Lending: 40(d)(12) Disclosures for Variable-Rate Plans.

1. Variable-rate provisions. Sample forms in appendix G-14 provide illustrative guidance on the variable-rate rules.

Paragraph 40(d)(12)(iv)

1. Determination of annual percentage rate. If the creditor adjusts its index through the addition of a margin, the disclosure might read, “Your annual percentage rate is based on the index plus a margin.” The creditor is not required to disclose a specific value for the margin.

Paragraph 40(d)(12)(viii)

Truth in Lending: 40(e) Brochure.

1. Substitutes. A brochure is a suitable substitute for the home equity brochure, “What You Should Know About Home Equity Lines of Credit,” (available on the Bureau’s Web site) if it is, at a minimum, comparable to that brochure in substance and comprehensiveness. Creditors are permitted to provide more detailed information than is contained in that brochure.

Truth in Lending: 40(f) Limitations on Home Equity Plans.

1. Coverage. Section 1026.40(f) limits both actions that may be taken and language that may be included in contracts, and applies to any assignee or holder as well as to the original creditor. The limitations apply to the draw period and any repayment period, and to any renewal or modification of the original agreement.

Paragraph 40(f)(1)

Truth in Lending: 40(g) Refund of Fees.

1. Refund of fees required. If any disclosed term, including any term provided upon request pursuant to § 1026.40(d), changes between the time the early disclosures are provided to the consumer and the time the plan is opened, and the consumer as a result decides to not enter into the plan, a creditor must refund all fees paid by the consumer in connection with the application. All fees, including credit report fees and appraisal fees, must be refunded whether such fees are paid to the creditor or directly to third parties.

Truth in Lending: 40(h) Imposition of Nonrefundable Fees.

1. Collection of fees after consumer receives disclosures. A fee may be collected after the consumer receives the disclosures and brochure and before the expiration of three days, although the fee must be refunded if, within three days of receiving the required information, the consumer decides to not enter into the agreement. In such a case, the consumer must be notified that the fee is refundable for three days.

Truth in Lending: Amendment History

[66 Fed. Reg. 17,340 (Mar. 30, 2001); 72 Fed. Reg. 63,476 (Nov. 9, 2007); 72 Fed. Reg. 71,059 (Dec. 14, 2007); 74 Fed. Reg. 5244 (Jan. 29, 2009); 75 Fed. Reg. 7848 (Feb. 22, 2010); 75 Fed. Reg. 7925 (Feb. 22, 2010); 75 Fed. Reg. 66,583 (Oct. 28, 2010); 76 Fed. Reg. 79,772 (Dec. 22, 2011); 86 Fed. Reg. 69,716 (Dec. 8, 2021); 88 Fed. Reg. 30,598 (May 11, 2023)]

Truth in Lending: 41(b) Timing of the periodic statement.

Editor’s Note786

1. Reasonably prompt time.787 Section 1026.41(b) requires that the periodic statement be delivered or placed in the mail no later than a reasonably prompt time after the payment due date or the end of any courtesy period. Delivering, emailing or placing the periodic statement in the mail within four days of the close of the courtesy period of the previous billing cycle generally would be considered reasonably prompt.

Truth in Lending: 41(d)(4) Transaction Activity.

Editor’s Note805

1. Meaning.806 Transaction activity includes any transaction that credits or debits the amount currently due. This is the same amount that is required to be disclosed under § 1026.41(d)(1)(iii). Examples of such transactions include, without limitation:

i. Payments received and applied;

ii. Payments received and held in a suspense account;

Truth in Lending: 41(e)(4)(ii) Small servicer defined.

Editor’s Note815

Editor’s Note816

1. Mortgage loans considered.817 Pursuant to § 1026.41(a)(1), the mortgage loans considered in determining status as a small servicer are closed-end consumer credit transactions secured by a dwelling, subject to the exclusions in § 1026.41(e)(4)(iii).