Does Reg Z require that the TIL include a statement under "Security", that the lender has a contractual right of setoff in the borrower's deposit accounts, when there is a right of setoff included in the Promissory Note? This is on a consumer real estate purchase transaction. Do you need to include the property being purchased, as well as, the right of setoff statement under the security section of the TIL?

Do you need to include the property being purchased, as well as, the right of setoff statement under the security section of the TIL?

No, but you do need to be sure your loan documents contract for the right to offset.

Our note does contract for the right to setoff but we have some loan products showing the right to setoff on the TIL disclosure and some not.

I just want to know if we need to include the right to setoff on the TIL disclosures or not. And if so, is there some documentation that states this?

The right of offset is an operation of law.


2(a)(25) Security Interest

2. Exclusions. The general definition of security interest excludes three groups of interests: incidental interests, interests in after-acquired property, and interests that arise solely by operation of law. These interests may not be disclosed with the disclosures required under §1026.18, but the creditor is not precluded from preserving these rights elsewhere in the contract documents, or invoking and enforcing such rights, if it is otherwise lawful to do so. If the creditor is unsure whether a particular interest is one of the excluded interests, the creditor may, at its option, consider such interests as security interests for Truth in Lending purposes.