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Regulation Z

Sec. 226.20 Subsequent disclosure requirements.

The Federal Reserve Board's Regulation Z (12 CFR Part 226) has been republished effective December 30, 2011, at 12 CFR Part 1026 as one of the regulations transferred to the Consumer Financial Protection Bureau under the Dodd-Frank Act. This section of the FRB regulation was republished as §1026.20 of the Bureau's regulation.

(a) Refinancings. A refinancing occurs when an existing obligation that was subject to this subpart is satisfied and replaced by a new obligation undertaken by the same consumer. A refinancing is a new transaction requiring new disclosures to the consumer. The new finance charge shall include any unearned portion of the old finance charge that is not credited to the existing obligation. The following shall not be treated as a refinancing:
     (1) A renewal of a single payment obligation with no change in the original terms.
     (2) A reduction in the annual percentage rate with a corresponding change in the payment schedule.
     (3) An agreement involving a court proceeding.
     (4) A change in the payment schedule or a change in collateral requirements as a result of the consumer's default or delinquency, unless the rate is increased, or the new amount financed exceeds the unpaid balance plus earned finance charge and premiums for continuation of insurance of the types described in Sec. 226.4(d).
     (5) The renewal of optional insurance purchased by the consumer and added to an existing transaction, if disclosures relating to the initial purchase were provided as required by this subpart.

(b) Assumptions. An assumption occurs when a creditor expressly agrees in writing with a subsequent consumer to accept that consumer as a primary obligor on an existing residential mortgage transaction. Before the assumption occurs, the creditor shall make new disclosures to the subsequent consumer, based on the remaining obligation. If the finance charge originally imposed on the existing obligation was an add-on or discount finance charge, the creditor need only disclose:
     (1) The unpaid balance of the obligation assumed.
     (2) The total charges imposed by the creditor in connection with the assumption.
     (3) The information required to be disclosed under Sec. 226.18(k), (l), (m), and (n).
     (4) The annual percentage rate originally imposed on the obligation.
     (5) The payment schedule under Sec. 226.18(g) and the total of payments under Sec. 226.18(h) based on the remaining obligation.

(c) Variable-rate adjustments. 45c An adjustment to the interest rate with or without a corresponding adjustment to the payment in a variable-rate transaction subject to Sec. 226.19(b) is an event requiring new disclosures to the consumer. At least once each year during which an interest rate adjustment is implemented without an accompanying payment change, and at least 25, but no more than 120, calendar days before a payment at a new level is due, the following disclosures, as applicable, must be delivered or placed in the mail:

     45c Information provided in accordance with variable-rate subsequent disclosure regulations of other federal agencies may be substituted for the disclosure required by paragraph (c) of this section.

     (1) The current and prior interest rates.
     (2) The index values upon which the current and prior interest rates are based.
     (3) The extent to which the creditor has foregone any increase in the interest rate.
     (4) The contractual effects of the adjustment, including the payment due after the adjustment is made, and a statement of the loan balance.
     (5) The payment, if different from that referred to in paragraph (c)(4) of this section, that would be required to fully amortize the loan at the new interest rate over the remainder of the loan term.

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