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Truth in Lending: Appendix O to Part 1026—Illustrative Written Source Documents for Higher-Priced Mortgage Loan Appraisal Rules
Editor’s Note336
A creditor acts with reasonable diligence under § 1026.35(c)(4)(vi)(A) if the creditor bases its determination on information contained in written source documents, such as:
Truth in Lending: Appendix P to Part 1026—[Reserved]
Editor’s Note337
[78 Fed. Reg. 6408 (Jan. 30, 2013)]
Truth in Lending: Appendix Q to Part 1026—Standards for Determining Monthly Debt and Income
[Removed.338]
[78 Fed. Reg. 6408 (Jan. 30, 2013); 78 Fed. Reg. 44,718 (July 24, 2013); 85 Fed. Reg. 86,308 (Dec. 29, 2020); 86 Fed. Reg. 22,844 (Apr. 30, 2021)]
Truth in Lending: H-28(A) Mortgage Loan Transaction Loan Estimate—Spanish Language Model Form
Editor’s Note316
Description: This is a blank model Loan Estimate that illustrates the application of the content requirements in § 1026.37, and is translated into the Spanish language as permitted by § 1026.37(o)(5)(ii). This form provides two variations of page one, four variations of page two, and four variations of page three, reflecting the variable content requirements in § 1026.37.
Truth in Lending: Listing of Regulation Z Provisions
Section
SUBPART A—GENERAL
Truth in Lending: 31(h) Corrections and unintentional violations.
Editor’s Note264
1. Notice requirements.265 Notice of a violation pursuant to § 1026.31(h)(1) or (2) should be in writing. The notice should make the consumer aware of the choices available under § 1026.31(h)(1)(iii) and (2)(iii). For notice to be adequate, the consumer should have at least 60 days in which to consider the available options and communicate a choice to the creditor or assignee.
Truth in Lending: Amendment History
[66 Fed. Reg. 65,620 (Dec. 20, 2001); 74 Fed. Reg. 23,305 (May 19, 2009); 76 Fed. Reg. 79,772 (Dec. 22, 2011); 78 Fed. Reg. 6856 (Jan. 31, 2013)]
Truth in Lending: 32(a)(3) Determination of annual percentage rate.
Editor’s Note308
1. In general.309 The guidance set forth in the commentary to § 1026.17(c)(1) and in § 1026.40 addresses calculation of the annual percentage rate disclosures for closed-end credit transactions and open-end credit plans, respectively. Section 1026.32(a)(3) requires a different calculation of the annual percentage rate solely to determine coverage under § 1026.32(a)(1)(i).
Truth in Lending: 32(b) Definitions.
Paragraph 32(b)(1).314
1. Known at or before consummation.315 Section 1026.32(b)(1) includes in points and fees for closed-end credit transactions those items listed in § 1026.32(b)(1)(i) through (vi) that are known at or before consummation. The following examples clarify how to determine whether a charge or fee is known at or before consummation.
Truth in Lending: 32(b)(4)(i) Closed-end credit.
Editor’s Note374
Editor’s Note375
1. Total loan amount; examples.376 Below are several examples showing how to calculate the total loan amount for closed-end mortgage loans, each using a $10,000 amount borrowed, a $300 appraisal fee, and $400 in prepaid finance charges. A $500 single premium for optional credit unemployment insurance is used in one example.
Truth in Lending: 32(c)(2) Annual percentage rate.
Editor’s Note382
Truth in Lending: 32(c)(4) Variable-rate.
1. Calculating “worst-case” payment example.388 For a closed-end credit transaction, creditors may rely on instructions in § 1026.19(b)(2)(viii)(B) for calculating the maximum possible increases in rates in the shortest possible timeframe, based on the face amount of the note (not the hypothetical loan amount of $10,000 required by § 1026.19(b)(2)(viii)(B)).
Truth in Lending: 32(c)(5) Amount Borrowed.
1. Optional insurance; debt-cancellation coverage. This disclosure is required when the amount borrowed in a refinancing includes premiums or other charges for credit life, accident, health, or loss-of-income insurance, or debt-cancellation coverage (whether or not the debt-cancellation coverage is insurance under applicable law) that provides for cancellation of all or part of the consumer’s liability in the event of the loss of life, health, or income or in the case of accident. See comment 4(d)(3)-2 and comment app.
Truth in Lending: 32(d) Limitations.
1. Additional prohibitions applicable under other sections.389 Section 1026.34 sets forth certain prohibitions in connection with mortgage credit subject to § 1026.32, in addition to the limitations in § 1026.32(d). Further, § 1026.35 prohibits certain practices in connection with transactions that meet the coverage test in § 1026.35(a).
Truth in Lending: 32(d)(1)(i) Balloon Payment.
1. Regular periodic payments.390 The repayment schedule for a high-cost mortgage must fully amortize the outstanding principal balance through “regular periodic payments.” A payment is a “regular periodic payment” if it is not more than two times the amount of other payments. For purposes of open-end credit plans, the term “regular periodic payment” or “periodic payment” means the required minimum periodic payment.
Truth in Lending: 32(d)(2) Negative Amortization.
1. Negative amortization.393 The prohibition against negative amortization in a high-cost mortgage does not preclude reasonable increases in the principal balance that result from events permitted by the legal obligation unrelated to the payment schedule.
Truth in Lending: 32(d)(4) Increased Interest Rate.
1. Variable-rate transactions. The limitation on interest rate increases does not apply to rate increases resulting from changes in accordance with the legal obligation in a variable-rate transaction, even if the increase occurs after default by the consumer.
Truth in Lending: 32(d)(5) Rebates.
1. Calculation of refunds. The limitation applies only to refunds of precomputed (such as add-on) interest and not to any other charges that are considered finance charges under § 1026.4 (for example, points and fees paid at closing). The calculation of the refund of interest includes odd-days interest, whether paid at or after consummation.