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Regulation Z

Appendix H to Part 226—Closed-End Model Forms and Clauses

H–1 Credit Sale Model Form (§226.18)

H–2 Loan Model Form (§226.18)

H–3 Amount Financed Itemization Model Form (§226.18(c))

H–4(A) Variable-Rate Model Clauses (§226.18(f)(1))

H–4(B) Variable-Rate Model Clauses (§226.18(f)(2))

H–4(C) Variable-Rate Model Clauses (§226.19(b))

H–4(D) Variable-Rate Model Clauses (§226.20(c))

H–4(E) through (K) added eff. 10/25/2010, with compliance mandatory for applications received on or after 1/30/2011

H4(E) Fixed-Rate Mortgage Interest Rate and Payment Summary Model Clause ( 226.18(s))

H4(F) Adjustable-Rate Mortgage or Step- Rate Mortgage Interest Rate and Payment Summary Model Clause ( 226.18(s))

H4(G) Mortgage with Negative Amortization Interest Rate and Payment Summary Model Clause ( 226.18(s))

H4(H) Fixed-Rate Mortgage with Interest- Only Interest Rate and Payment Summary Model Clause ( 226.18(s))

H4(I) Adjustable-Rate Mortgage Introductory Rate Disclosure Model Clause ( 226.18(s)(2)(iii))

H4(J) Balloon Payment Disclosure Model Clause ( 226.18(s)(5))

H4(K) No Guarantee to Refinance Statement Model Clause ( 226.18(t))

H–5 Demand Feature Model Clauses (§226.18(i))

H–6 Assumption Policy Model Clause (§226.18(q))

H–7 Required Deposit Model Clause (§226.18(r))

H–8 Rescission Model Form (General) (§226.23)

H–9 Rescission Model Form (Refinancing (with Original Creditor)) (§226.23)

H–10 Credit Sale Sample

H–11 Installment Loan Sample

H–12 Refinancing Sample

H–13 Mortgage with Demand Feature Sample

H–14 Variable-Rate Mortgage Sample (§226.19(b))

H–15 Graduated-Payment Mortgage Sample

H–16 Mortgage Sample

H–17(A) Debt Suspension Model Clause

H–17(B) Debt Suspension Sample

H18 Private Education Loan Application and Solicitation Model Form

H19 Private Education Loan Approval Model Form

H20 Private Education Loan Final Model Form

H21 Private Education Loan Application and Solicitation Sample

H22 Private Education Loan Approval Sample

H23 Private Education Loan Final Sample


H-1--CREDIT SALE MODEL FORM

To View Form Click Here

H--2--LOAN MODEL FORM

To View Form Click Here

H--3--AMOUNT FINANCED ITEMIZATION MODEL FORM

Itemization of the Amount Financed of $ _______
$ _______ Amount given to you directly
$ _______ Amount paid on your account

Amount paid to others on your behalf
$ _______ to [public officials] [credit bureau] [appraiser] [insurance company]
$ _______ to [name of another creditor]
$ _______ to (other)
$ _______ Prepaid finance charge


H--4(A)--VARIABLE RATE MODEL CLAUSES

The annual percentage rate may increase during the term of this transaction if:
[the prime interest rate of (creditor) increases.]
[the balance in your deposit account falls below $________.]
[you terminate your employment with (employer) .]

[The interest rate will not increase above ____ %.]
[The maximum interest rate increase at one time will be ____%.]
[The rate will not increase more than once every (time period) .]

Any increase will take the form of:
[higher payment amounts.]
[more payments of the same amount.]
[a larger amount due at maturity.]

Example based on the specific transaction
[If the interest rate increases by ____% in (time period),
[your regular payments will increase to $ ________ .]
[you will have to make ___additional payments.]
[your final payment will increase to $ ________ .]]

Example based on a typical transaction
[If your loan were for $ ________at ____% for (term) and the rate increased to ____% in (time period),
[your regular payments would increase by $ ________ .]
[you would have to make ___additional payments.]
[your final payment would increase by $ ________ .]]

H--4(B) VARIABLE-RATE MODEL CLAUSES

Your loan contains a variable-rate feature. Disclosures about the variable-rate feature have been provided to you earlier.

H--4(C) VARIABLE-RATE MODEL CLAUSES

This disclosure describes the features of the Adjustable Rate Mortgage (ARM) program you are considering. Information on other ARM programs is available upon request.

How Your Interest Rate and Payment are Determined

  • Your interest rate will be based on [an index plus a margin] [a formula].
  • Your payment will be based on the interest rate, loan balance, and loan term.
-- [The interest rate will be based on (identification of index) plus our margin. Ask for our current interest rate and margin.]
-- [The interest rate will be based on (identification of formula). Ask us for our current interest rate.]
-- Information about the index [formula for rate adjustments] is published [can be found] _____ .
-- [The initial interest rate is not based on the (index) (formula) used to make later adjustments. Ask us for the amount of current interest rate discounts.]
How Your Interest Rate Can Change

  • Your interest rate can change (frequency).
  • [Your interest rate cannot increase or decrease more than ___percentage points at each adjustement.]
  • Your interest rate cannot increase [or decrease] more than ___percentage points over the term of the loan.


How Your Payment Can Change

  • Your payment can change (frequency) based on changes in the interest rate.
  • [Your payment cannot increase more than (amount of percentage) at each adjustment.]
  • You will be notified in writing ___days before the due date of a payment at a new level. This notice will contain information about your interest rates, payment amount, and loan balance.
  • [You will be notified once each year during which interest rate adjustments, but no payment adjustments, have been made to your loan. This notice will contain information about your interest rates, payment amount, and loan balance.]
  • [For example, on a $10,000 [term] loan with an initial interest rate of ___[(the rate shown in the interest rate column below for the year 19___)] [(in effect (month) (year)], the maximum amount that the interest rate can rise under this program is ___percentage points, to ___%, and the monthly payment can rise from a first-year payment of $___ to a maximum of $___ in the ___year. To see what your payments would be, divide your mortgage amount by $10,000; then multiply the monthly payment by that amount. (For example, the monthly payment for a mortgage amount of $60,000 would be: $60,000 + $10,000 = 6; 6 x ___= $___ per month.)]


Example

The example below shows how your payments would have changed under this ARM program based on actual changes in the index from 1977 to 1991. This does not necessarily indicate how your index will change in the future.

The example is based on the following assumptions:

Amount of loan...............................$10,000
Term........................................._____
Change date.................................._____
Payment adjustment...........................(frequency)
Interest adjustment..........................(frequency)
[Margin]{*}..................................______
Caps ___[periodic interest rate cap]
___lifetime interest rate cap
___[payment cap]
[Interest rate carryover]--
[Negative amortization]
[Interest rate discount]{**}
Index..........................(identification of index or formula)
{* This is a margin we have used recently; your margin may be different.}
{** This is the amount of a discount we have provided recently; your loan may be discounted by a different amount.}

Note: To see what your payments would have been during that period, divide your mortgage amount by $10,000; then multiply the monthly payment by that amount. (For example, in 1996 the monthly payment for a mortgage amount of $60,000 taken out in 1982 would be: $60,000+$10,000=6; 6x____=$____per month.)

H-4(D) VARIABLE-RATE MODEL CLAUSES

Your new interest rate will be _____%, which is based on an index value of _____%.

Your previous interest rate was _____%, which was based on an index value of _____%.

[The new interest rate does not reflect a change of ______percentage points in the index value which was not added because of ______.]
[The new payment will be $_________.]
[Your new loan balance is $_________.]
[Your (new) (existing) payment will not be sufficient to cover the interest due and the difference will be added to the loan amount. The payment amount needed to pay your loan in full by the end of the term at the new interest rate is $_______.]
[The following interest rate adjustments have been implemented this year without changing your payment: ______. These interest rates were based on the following index values: ______.]

H-4(E) Fixed Rate Mortgage Interest Rate and Payment Summary Model Clause

Model Clause H-4(E)

H-4(F) Adjustable-Rate Mortgage or Step-Rate Mortgage Interest Rate and Payment Summary Model Clause

Model Clause H-4(F)

H-4(G) Mortgage with Negative Amortization Interest Rate and Payment Summary Model Clause

Model Clause H-4(G)

H-4(H) Fixed Rate Mortgage with Interest Only Interest Rate and Payment Summary Model Clause

Model Clause H-4(H)

H-4(I) Introductory Rate Model Clause

[Introductory Rate Notice
You have a discounted introductory rate of _____% that ends after (period).
In the (period in sequence), even if market rates do not change, this rate will increase to ____%.]

H4(J)Balloon Payment Model Clause

[Final Balloon Payment due (date):
$ _________]

H4(K)“No-Guarantee-to-Refinance” Statement Model Clause

There is no guarantee that you will be able to refinance to lower your rate and payments.

H-5--DEMAND FEATURE MODEL CLAUSES

This obligation [is payable on demand.][has a demand feature.]
[All disclosures are based on an assumed maturity of one year.]

H-6--ASSUMPTION POLICY MODEL CLAUSE

Assumption: Someone buying your house [may, subject to conditions, be allowed to] [cannot] assume the remainder of the mortgage on the original terms.

H-7--REQUIRED DEPOSIT MODEL CLAUSE

The annual percentage rate does not take into account your required deposit.

H--8--RESCISSION MODEL FORM (GENERAL)

NOTICE OF RIGHT TO CANCEL
Your Right to Cancel
You are entering into a transaction that will result in a [mortgage/lien/security interest] [on/in] your home. You have a legal right under federal law to cancel this transaction, without cost, within three business days from whichever of the following events occurs last:

(1) the date of the transaction, which is ________; or
(2) the date you received your Truth in Lending disclosures; or
(3) the date you received this notice of your right to cancel.

If you cancel the transaction, the [mortgage/lien/security interest] is also cancelled. Within 20 calendar days after we receive your notice, we must take the steps necessary to reflect the fact that the [mortgage/lien/security interest] [on/in] your home has been cancelled, and we must return to you any money or property you have given to us or to anyone else in connection with this transaction. You may keep any money or property we have given you until we have done the things mentioned above, but you must then offer to return the money or property. If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address below. If we do not take possession of the money or property within 20 calendar days of your offer, you may keep it without further obligation.

How to Cancel

If you decide to cancel this transaction, you may do so by notifying us in writing, at (creditor's name and business address).

You may use any written statement that is signed and dated by you and states your intention to cancel, or you may use this notice by dating and signing below. Keep one copy of this notice because it contains important information about your rights.

If you cancel by mail or telegram, you must send the notice no later than midnight of (date) (or midnight of the third business day following the latest of the three events listed above). If you send or deliver your written notice to cancel some other way, it must be delivered to the above address no later than that time.

I WISH TO CANCEL

____________________

Consumer's Signature Date

H--9--RESCISSION MODEL FORM (REFINANCING WITH ORIGINAL CREDITOR)

NOTICE OF RIGHT TO CANCEL
Your Right to Cancel
You are entering into a new transaction to increase the amount of credit previously provided to you.

Your home is the security for this new transaction. You have a legal right under federal law to cancel this new transaction, without cost, within three business days from whichever of the following events occurs last:

(1) the date of this new transaction, which is ________; or
(2) the date you received your new Truth in Lending disclosures; or
(3) the date you received this notice of your right to cancel.

If you cancel this new transaction, it will not affect any amount that you presently owe. Your home is the security for that amount. Within 20 calendar days after we receive your notice of cancellation of this new transaction, we must take the steps necessary to reflect the fact that your home does not secure the increase of credit. We must also return any money you have given to us or anyone else in connection with this new transaction.

You may keep any money we have given you in this new transaction until we have done the things mentioned above, but you must then offer to return the money at the address below.

If we do not take possession of the money within 20 calendar days of your offer, you may keep it without further obligation.

How To Cancel
If you decide to cancel this new transaction, you may do so by notifying us in writing, at

_____________________________________
(Creditor's name and business address).

You may use any written statement that is signed and dated by you and state your intention to cancel, or you may use this notice by dating and signing below. Keep one copy of this notice because it contains important information about your rights.

If you cancel by mail or telegram, you must send the notice no later than midnight of

____________________________________
(Date)
____________________________________
(or midnight of the third business day following the latest of the three events listed above).

If you send or deliver your written notice to cancel some other way, it must be delivered to the above address no later than that time.

I WISH TO CANCEL

___________________________________
Consumer's Signature

___________________________________
Date
H--10--CREDIT SALE SAMPLE

To View Form Click Here

H--11--INSTALLMENT LOAN SAMPLE

To View Form Click Here

H--12--REFINANCING SAMPLE

To View Form Click Here

H--13--MORTGAGE WITH DEMAND FEATURE SAMPLE

To View Form Click Here

H-14--VARIABLE RATE MORTGAGE SAMPLE

This disclosure describes the features of the adjustable rate mortgage (ARM) program you are considering. Information on other ARM programs is available upon request.

How Your Interest Rate and Payment are Determined

  • Your interest rate will be based on an index rate plus a margin.
  • Your payment will be based on the interest rate, loan balance, and loan term.

--The interest rate will be based on the weekly average yield on United States Treasury securities adjusted to a constant maturity of 1 year (your index), plus our margin. Ask us for our current interest rate and margin.

--Information about the index rate is published weekly in the Wall Street Journal.
  • Your interest rate will equal the index rate plus our margin unless your interest rate "caps" limit the amount of change in the interest rate.

How Your Interest Rate Can Change

  • Your interest rate can change yearly.
  • Your interest rate cannot increase or decrease more than 2 percentage points per year.
  • Your interest rate cannot increase or decrease more than 5 percentage points over the term of the loan.


How Your Monthly Payment Can Change

  • Your monthly payment can increase or decrease substantially based on annual changes in the interest rate.
  • [For example, on a $10,000, 30-year loan with an initial interest rate of 12.41 percent in effect in July 1996, the maximum amount that the interest rate can rise under this program is 5 percentage points, to 17.41 percent, and the monthly payment can rise from a first-year payment of $106.03 to a maximum of $145.34 in the fourth year. To see what your payment is, divide your mortgage amount by $10,000; then multiply the monthly payment by that amount. (For example, the monthly payment for a mortgage amount of $60,000 would be: $60,000$10,000=6; 6106.03=$636.18 per month.)
  • You will be notified in writing 25 days before the annual payment adjustment may be made. This notice will contain information about your interest rates, payment amount and loan balance.] Example The example below shows how your payments would have changed under this ARM program based on actual changes in the index from 1982 to 1996. This does not necessarily indicate how your index will change in the future. The example is based on the following assumptions:


Amount ................................
$10,000
Term ...................................
30 years
Payment adjustment ...................
1 year
Interest adjustment ..................
1 year
Margin ...............................
3 percentage points

Caps____2 percentage points annual interest rate
_____ 5 percentage points lifetime interest rate
Index _______Weekly average yield on U.S. Treasury securities adjusted to a constant maturity of one year.

Year(as of 1st week ending in July)
Index (%)
Margin* (percentage points)
Interest Rate (%)
Monthly Payment ($)
Remaining Balance ($)
1982 14.41 3 17.41 145.90 9,989.37
1983 9.78 3 **15.41 129.81 9,969.66
1984 12.17 3 15.17 127.91 9,945.51
1985 7.66 3 **13.17 112.43 9,903.70
1986 6.36 3 ***12.41 106.73 9,848.94
6.71 3 ***12.41 106.73  
1988 7.52 3 ***12.41 106.73 9,716.88
1989   3 ***12.41 106.73 9,637.56
1990   3 ***12.41 106.73 9,547.83
1991   3 ***12.41 106.73 9,446.29
1992   3 ***12.41 106.73 9,331.56
1993   3 ***12.41 106.73 9,201.61
1994   3 ***12.41 106.73 9,054.72
1995   3 ***12.41 106.73 8,888.52
1996   3 ***12.41 106.73 8,700.37
*This is a margin we have used recently; your margin may be different.
**This interest rate reflects a 2 percentage point annual interest rate cap.
***This interest rate reflects a 5 percentage point lifetime interest rate cap.
Note: To see what your payments would have been during that period, divide your mortgage amount by $10,000; then multiply the monthly payment by that amount. (For example, in 1996 the monthly payment for a mortgage amount of $60,000 taken out in 1982 would be: $60,000/$10,000=6; 6x$106.73=$640.38.)
You will be notified in writing 25 days before the annual payment adjustment may be made. This notice will contain information about your interest rates, payment amount and loan balance.]

H--15--GRADUATED PAYMENT MORTGAGE SAMPLE

To View Form Click Here

H--16--MORTGAGE SAMPLE

To View Form Click Here

H–17(A) Debt Suspension Model Clause

Please enroll me in the optional [insert name of program], and bill my account the fee of [insert charge for the initial term of coverage]. I understand that enrollment is not required to obtain credit. I also understand that depending on the event, the protection may only temporarily suspend my duty to make minimum payments, not reduce the balance I owe. I understand that my balance will actually grow during the suspension period as interest continues to accumulate.

[To Enroll, Sign Here]/[To Enroll, Initial Here]. X_____

H–17(B) Debt Suspension Sample

Please enroll me in the optional [name of program], and bill my account the fee of $200.00. I understand that enrollment is not required to obtain credit. I also understand that depending on the event, the protection may only temporarily suspend my duty to make minimum payments, not reduce the balance I owe. I understand that my balance will actually grow during the suspension period as interest continues to accumulate.

To Enroll, Initial Here. X_____

H-18 - Private Education Loan Application and Solicitation Model Form

To View Form Click Here for page 1, and HERE for page 2.

H-19 - Private Education Loan Approval Model Form

To View Form Click Here for page 1, and HERE for page 2.

H-20 - Private Education Loan Final Model Form

To View Form Click Here for page 1, and HERE for page 2.

H-21 - Private Education Loan Application and Solicitation Example

To View Form Click Here for page 1, and HERE for page 2.

H-22 - Private Education Loan Approval Sample

To View Form Click Here for page 1, and HERE for page 2.

H-23 - Private Education Loan Final Sample

To View Form Click Here for page 1, and HERE for page 2.







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