When and What: Coverage Rules for Lending Regulations: Regulation Z
Truth in Lending and Regulation Z apply to all consumer credit, that is, credit requested by a consumer and for the use of the consumer. Business loans are exempt from Regulation Z. The following coverage chart assumes that the application is from a consumer for consumer purposes.
Regulation/Rule Definition/Coverage Regulation Z: Rate Caps Any consumer loan with a variable rate feature that is secured by a dwelling and subject to Regulation Z. Section 226.30 Regulation Z: Home Equity Line of Credit Open-end credit plans secured by the consumer's dwelling Section 226.5b Regulation Z: Residential Mortgage Transaction A loan to finance the purchase or construction of the consumer's principal dwelling, and the lender takes a security interest in the dwelling.Section 226.2(a)(24) Regulation Z: Principal dwelling A consumer can have only one principal dwelling at a time, except that the purchase or construction of a dwelling that will become the principal residence is a residential mortgage transaction. Section 226.2(a)(24)-3 Regulation Z: Rescission: Open-end A credit plan in which a security interest is or will be retained or acquired in a consumer's principal dwelling. Section 226.15 Regulation Z: Rescission: Closed-end A credit transaction in which a security interest is or will be retained or acquired in a consumer's principal dwelling. Section 226.23 Regulation Z: Adjustable Rate Mortgage A credit transaction secured by the consumer's principal dwelling having a variable rate feature and a term of more than one year. Section 226.19(b) Regulation Z: High Cost Mortgage A consumer credit transaction secured by the consumer's principal dwelling and has either an APR that will exceed by more than 10 percentage points the Treasury securities with comparable yields, or total points and fees that will exceed the greater of $412 or 8 percent of the total loan amount. Section 226.32(a) Regulation Z: Reverse Mortgage A nonrecourse consumer credit obligation in which security is taken in the consumer's principal dwelling, more than one advance will be made, and is due and payable only after the consumer's death, the sale of the dwelling, or the consumer ceases to occupy the dwelling. Section 226.33(a) Regulation Z: Exemption for loans greater than $25,000 Extensions of credit over $25,000 are exempt unless secured by real property or by personal property expected to be used as the consumer's principal dwelling. Section 226.3(b)
Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 18 & 19, 12/96
First published on 12/01/1996