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#1357575 - 03/15/10 05:04 PM Re: Regulation Z - Open End changes - 7-1-10 Phoenix
focus Offline
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Ok, after much reading... To better define my above question:

We offer two different credit cards with a single fixed rate for each. Is it possible to craft the Account Opening Disclosure in such a way that it can be delivered with the application/solicitation/agreement, and have this packet apply to BOTH cards? (and of course, be compliant)

Bueller?

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#1357611 - 03/15/10 05:38 PM Re: Regulation Z - Open End changes - 7-1-10 focus
river girl Offline
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226.7(b)(11)The Due Date for a payment and any Late Payment Costs, including amount of the late payment fee and any increased APR that may be imposed as a result of a late payment......did this end up only required on credit card accounts? Or does it go with any open end (not home secured) consumer credit plan?

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#1357978 - 03/16/10 01:18 PM Re: Regulation Z - Open End changes - 7-1-10 river girl
Phoenix Offline
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southeast
from that table at FR 7663 - credit cards only:
§ 226.7(b)(11) ..... Credit card accounts under an open-end (not home-secured) consumer credit plan.
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#1365355 - 03/29/10 02:52 PM Re: Regulation Z - Open End changes - 7-1-10 Phoenix
Reed Offline
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I'm building a cheat sheet to keep handy while reading the final rule so that I can keep straight what applies when. We don't have credit cards, so I didn't include sections that only apply to credit cards. Feel free to add on to it to make it a more useful tool.

CCARDA—Open-end Credit Not Home Secured
226.5(a)(2)(iii)—February 22, 2010
226.7(b)(14)—July 1, 2010
226.9(c)(2)—February 22, 2010 [except 7/1/10 for tabular formatting 226.9(c)(2)(iv)(D)]
226.9(g)—February 22, 2010 [except 7/1/10 for formatting 226.9(g)(3)(ii)]
226.16(h)—July 1, 2010
Plus, don’t forget the December 2009 Rules (see footnote on page 7663 of the 2/22 final rule)

CCARDA—All Open-end Credit (including home secured)
226.5(b)(2)(ii)(B)—February 22, 2010
226.10(b)(2)(ii)—February 22, 2010
226.10(d)—February 22, 2010
226.16(f)—February 22, 2010
226.57(c)—July 1, 2010

December 2009 Rule—HELOC Only
226.6(a)—July 1, 2010
226.7(a)—July 1, 2010
226.9(c)(1)—July 1, 2010

CCARDA—Not sure about applicability
226.9(e)

Reg Z Sections
226.5—General Disclosures
226.7—Statements
226.9—Subsequent Disclosures
226.10—Processing Payments
226.16—Advertising
226.57—College Student Open-end Credit

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#1365785 - 03/29/10 08:54 PM Re: Regulation Z - Open End changes - 7-1-10 Reed
trout22 Offline
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Loan department has decided they'd like to increase interest rate on our consumer lines of credit. Here's the hoops to jump through so far that I've identified:
1. 226.9(c)(2)(i)(A) - 45 day advance notice (possibly more depending on state law)
2. 226.9(c)(2)(i)(A) - Notice to each customer who may be affected
3. 226.9(c)(2)(iv)(A)(3)- Customer has the right to opt-out, which does not trigger an obligation to immediately repay the obligation in full.
4. 226.9(c)(2)(iv)(A)(7) - "If the change in terms being disclosed is an increase in an annual percentage rate, the balances to which the increased rate will be applied. If applicable, a statement identifying the balances to which the current rate will continue to apply as of the effective date of the change in terms."
Does anyone know the 'if applicable' part? I've been unable to find these exceptions anywhere.

I'm reading into this for # 3 & 4 above that we would be required to separate out the 'old/initial' rate and balance, then after 45 days notice can officially raise the rate for all future transactions. Basically split the loan in two? Then, if the customer opts-out of the rate change, they couldn't have additional transactions but would continue to be able to repay the loan on the standard terms at the old interest rate?

I also seem to recall that when a payment comes in, the portion tied to the higher rate must be credited first - or did I dream that - maybe that's only for credit cards?

Also, the additional provisions under 226.55 appear to only apply to credit card accounts, correct?

This all seems like a systems/disclosure nightmare...

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#1366355 - 03/30/10 05:30 PM Re: Regulation Z - Open End changes - 7-1-10 trout22
trout22 Offline
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bump - anyone with thoughts or suggestions?

I read on pg 7693 of the final reg that section 226.9(c)(2)(iv) would only apply to credit cards. Maybe I've taken that out of context, but I am hopeful that is the case.

If so, we only have to provide 45 day advance notice to each customer affected... then can we apply the increased rate to the existing balance or just transactions going forward??

This is so confusing!

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#1368487 - 04/02/10 02:26 PM Re: Regulation Z - Open End changes - 7-1-10 trout22
trout22 Offline
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Just wanted to update - as it doesn't seem like anyone was anxious to jump into this particular topic, but I'm thinking that's just because we're all so confused about what portions apply to all open-end vs credit cards. I'd hate to jump in to respond when I wasn't sure of the answer myself!

Anyway, I spoke with our regulator yesterday. Section 226.9(c)(2) applies to all open-ended credit, with the exceptions listed - like 226.9(c)(2)(iv)(B) which specifically states credit card accounts. If you're still confused, there's a great chart on page 7 of the final 270 pg doc - pg 7663 of the 2/22 Fed Reserve for final Reg Z changes.

If you want to change your rates on consumer lines of credit, you have to jump through the disclosure hoops listed - including preserving the current rate on balances before the effective date, and only assessing the higher rate to new transactions after the effective date of the change. Which our system is not currently set up to do... so you may want to check into this now if you are considering raising interest rates.

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#1369283 - 04/05/10 04:07 PM Re: Regulation Z - Open End changes - 7-1-10 trout22
SaaL Offline
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The Texas Hill Country
My bank is in process of doing the same thing.

I would agree with you on everything you've stated, except the requirement to preserve the current rate as to existing balances. 226.55 contains the prohibition to increase rates on previous balances/transactions - and 226.55 is specific to credit card accounts. There is no similar prohibition on open-end non-credit card that I'm aware of.

As you've stated, you'll want to check your state laws regarding notifications. For us in Texas, they're even more restrictive than what Reg Z requires.
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#1370296 - 04/07/10 01:19 PM Re: Regulation Z - Open End changes - 7-1-10 Reed
upstateNY Offline
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New York State
Love your chart, thanks for that. I'm going to ask a really stupid question, but in the interest of saving some money....
My understanding is that the new Billing Error Rights Model Form G4A goes into effect on 07/01.

This notice is pre-printed on the back of our statements. Tossing out the existing supply will cost several thousand dollars and will make me very unpopular.

How are other banks handling this? Are you just biting the bullet and throwing out your forms?

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#1376240 - 04/19/10 03:33 PM Re: Regulation Z - Open End changes - 7-1-10 focus
river girl Offline
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Joined: Nov 2004
Posts: 1,005
Originally Posted By: focus
Ok, after much reading... To better define my above question:

We offer two different credit cards with a single fixed rate for each. Is it possible to craft the Account Opening Disclosure in such a way that it can be delivered with the application/solicitation/agreement, and have this packet apply to BOTH cards? (and of course, be compliant)

Bueller?


Focus-Did you get an answer on your question? I have the same question myself.

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#1376245 - 04/19/10 03:35 PM Re: Regulation Z - Open End changes - 7-1-10 Spring Alexander
river girl Offline
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Originally Posted By: Spring Alexander
Upstate,

Here is my final take on the open-end (non RE-secured) periodic statement changes. We are not making any changes to periodic statements until July as required for HELOCs... confusing in the ABA webinar, but after reading the final rule it's much more clear:

7(b)(13) Format Requirements
As adopted in the January 2009

Regulation Z Rule, Samples G-18(D) and G-18(E) in Appendix G to part 226 illustrate the requirement to group together the due date, late payment fee, penalty APR, ending balance, minimum payment due, and the repayment disclosures required by
§ 226.7(b)(12). Sample G-18(D) applies to credit cards and includes all of the above disclosures grouped together. Sample G-18(E) applies to non-credit card accounts, and includes all of the above disclosures except for the repayment disclosures because the repayment disclosures only apply to credit card accounts. Final rule adopts Sample G-18(D), G-18(F) and G-18(G) as proposed. In addition, as proposed, the final rule deletes Sample G-18(E) (which applies to noncredit
card accounts) as unnecessary. The formatting requirements in § 226.7(b)(13)generally are applicable only to credit card issuers because the due date, late payment fee,penalty APR, and repayment disclosures would apply only to a “credit card account under an open-end (not home-secured) consumer credit plan,” as that term is defined in § 226.2(a)(15)(ii).




Since the final rule deleted G-18(e) does that mean our periodic statements for open end non re-secured loaons can stay as they are?

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#1377023 - 04/20/10 01:39 PM Re: Regulation Z - Open End changes - 7-1-10 river girl
Phoenix Offline
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southeast
NO! (sorry for the shouting, but re-formatting is likely to take time)
Read the rest of 226.7b and 226.8 that DO apply to all open-end non-real estate LOCs and you'll see that things like aggregating YTD fees and interest, and grouping transactions properly, will cause you to reformat your statements. You'll want to adapt the credit card statement model sections outside of the one in the upper right hand corner to your needs -
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#1377373 - 04/20/10 06:03 PM Re: Regulation Z - Open End changes - 7-1-10 Phoenix
CompDat Offline
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Joined: Dec 2005
Posts: 553
USA
Does anyone have any reference to this regulation that makes sense? I have read this entire forum, and the Fed summary and it does not seem like anyone can tell what is required.

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#1378812 - 04/21/10 11:56 PM Re: Regulation Z - Open End changes - 7-1-10 CompDat
river girl Offline
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For the terminology changes effective July 1st.
Grace period now is How to avoid paying interest on purchases
Default APR is now Penalty APR
Fixed is now nan variable
Balance is now balances subject to interest rate
Finance charge and other charges are now charges that are imposed as part of the open-end credit plan
etc....

Do these terms change everywhere? On the periodic statement, the applications, the account opening disclosures, the open end disclosures at signing, in the advertising, etc.

If they aren't changing in each place....is there a chart or a good tool for when and where crazy

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#1381920 - 04/27/10 02:36 PM Re: Regulation Z - Open End changes - 7-1-10 RR Joker
15jwolander Offline
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PA
I need some help with Sec 226.5 (b) (2) (ii) (B) What is this referring to? I can follow it all the way until I get to the (B). Is this the part that states if the consumer will be unable to fulfill his obligations under the plan because of a major change in the consumers financial situation that we can not prohibit additional extensions of credit or reduce the credit limit? Am I reading this correctly?

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#1383464 - 04/29/10 01:25 PM Re: Regulation Z - Open End changes - 7-1-10 15jwolander
Phoenix Offline
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southeast
Are you sure you're in the latest and greatest version of Reg. Z? Your citation points to information about grace periods and mailing statements at least 21 days in advance of their due dates....
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From the end spring new beginnings.
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#1383479 - 04/29/10 01:38 PM Re: Regulation Z - Open End changes - 7-1-10 RR Joker
15jwolander Offline
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The citation was taken from the Credit Card Act from the sheet that indicates what applies to open end consumer and credit cards. I am not interested in the credit card side as we don't issue any. The reg Z edition is the one that is on Bankers Online and I don't see anything that refers to the 21 day notice as that is now a moot point for us. Thanks and help me get this straightened out.

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#1383541 - 04/29/10 03:01 PM Re: Regulation Z - Open End changes - 7-1-10 15jwolander
Reed Offline
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West Coast
Has anyone found anything (really, ANYTHING) that explains this mess? Any resource, any person, anything?!?!?

Oh, I mean anything FREE, of course. Because we don't actually have a budget this year frown

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#1383588 - 04/29/10 03:52 PM Re: Regulation Z - Open End changes - 7-1-10 RR Joker
upstateNY Offline
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New York State
Can someone PLEASE tell me which periodic statement format I should be using effective 07/01 for open-end, non-credit card, non-HELOC accounts? Is it G-18A, or F?

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#1383589 - 04/29/10 03:53 PM Re: Regulation Z - Open End changes - 7-1-10 Reed
Phoenix Offline
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southeast
15jwolander - I think a careful reading of the new 226.9(c) and (g) sections will get you closer to answering your questions. It sounds like your theory is more - what can we do if a borrower's creditworthiness diminishes, and yes, you can take action.
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#1383602 - 04/29/10 04:04 PM Re: Regulation Z - Open End changes - 7-1-10 15jwolander
RR Joker Offline
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Originally Posted By: 15jwolander
I need some help with Sec 226.5 (b) (2) (ii) (B) What is this referring to? I can follow it all the way until I get to the (B). Is this the part that states if the consumer will be unable to fulfill his obligations under the plan because of a major change in the consumers financial situation that we can not prohibit additional extensions of credit or reduce the credit limit? Am I reading this correctly?


The section you are referring to is "Grace period expiration date" (1), (2) and (3). I think you're in the wrong place.
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#1383607 - 04/29/10 04:11 PM Re: Regulation Z - Open End changes - 7-1-10 Phoenix
ahou Offline
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upstate, G-18(A) shows you what the guts should look like for both cr cards and LOC, while G-18(F) is the whole statement. As for G-18(F), you would exclude the cr card only stuff, such as the late pmt warning, min pmt warning etc. See 226.7(b)(11)&(12) for details on stuff to leave out. (stuff that applies only to cr cards)
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#1383735 - 04/29/10 06:01 PM Re: Regulation Z - Open End changes - 7-1-10 upstateNY
Reed Offline
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Reed
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West Coast
Originally Posted By: upstateNY
My understanding is that the new Billing Error Rights Model Form G4A goes into effect on 07/01.

This notice is pre-printed on the back of our statements. Tossing out the existing supply will cost several thousand dollars and will make me very unpopular.

How are other banks handling this? Are you just biting the bullet and throwing out your forms?


I have the same question. Anyone?

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#1383746 - 04/29/10 06:09 PM Re: Regulation Z - Open End changes - 7-1-10 ahou
RR Joker Offline
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I can tell from scanning through this thread that we are having so much fun with the next round of changes deadlines! eek

From what I can tell, Ready Reserve (bounce protection) Account disclosures are not required to be in tabular format due to the exception listed in 226.5a(5).

5) Exceptions. This section does not apply to:

(ii) Overdraft lines of credit tied to asset accounts accessed by check-guarantee cards or by debit cards;

Does anyone disagree with this statement? Is there ANYTHING required (that's new) for the inital disclosures on this type of account that I am missing here?

All I can find are periodic statement requirements, nothing for the contract itself.

Last edited by RR joker; 04/29/10 06:09 PM.
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#1383832 - 04/29/10 07:08 PM Re: Regulation Z - Open End changes - 7-1-10 RR Joker
ahou Offline
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226.5a contains requirements for cr and chg card applications and solicitations, not the acct opening disclosure. See 226.6(b) for acct opening disclosures (cr cards and LOC)
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