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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