I just want to verify that for the July changes there are not changes that will affect HELOC periodic statements.

Saal---YOUR QUESTION was regarding Change In Terms notification for open end non-credit card account. We are going to increase rates and implement a floor on our personal lines of credit.

My comment:
We offer a personal Line of Credit with a variable rate and the account can be used for occasional overdraft protection. The account cannot be accessed by a card. There could be a debit card tied to the checking account with overdraft protection but that access card does not directly access the line of credit.

Our account forms vendor told us that if we had a floor we had to abide by limits in 226.55 for credit cards. The additional restrictions apply because according to 226.9 if you have a floor the variable rate is under the bank's control and several additional restrictions apply.

I am still confused as to why 226.55 applies since the line is not accessed by a credit card.

This one has left me confused-- Just thought I would share the floor information with you before you jumped in.

My bank does not offer credit cards but we have an overdraft protection line of credit and HELOCs. I know that we have to make changes to the statement format for the overdraft lines so that statements mailed on or after 7/1/10 are compliant. The final rule says that for HELOCs subject to section 226.5b of Reg. Z you do not have to comply with the statement format changes of the 2/22/10 final rule. You can wait for the FRB to issue a final rule regarding the 8/26/09 HELOC proposal. If you have HELOCs that were issued prior to November 7, 1989 and thus were not subject to section 226.5b, then I believe you have to comply with the new statement format requirements and some of the other provisions.

If our service bureau is changing over all open-end credit statements to the new format, do we have to send a notice of change in terms to all existing customers since their credit line agreements that included the 226.6 disclosures referrred to finance charges and now the statements will be referring to interest charges? I would think you would need to say that whereever the term finance charge appears in your credit line agreement, please substitute the phrase "Interest charge." I'm saying this because I recall that there is something that requires consistency of terminology.

Does anyone use LaserPro? I have reviewed our Laser Pro updates for the new Reg Z requirements effective July 1, 2010. The question I have is in regards to our check loans which are NON-HELOC consumer purpose personal lines of credit....there is not an APR disclosure with the Laser Pro note. The overdraft is activated by a check that overdraws the consumers check that over draws the checking account. Is there anything we need to be concerned about here with the new Reg? Any help would be appreciated. Thank you.

Bump.

I don't know for sure, but I wouldn't think that a reg required change in terminology on the periodic statement would require a change in terms notice. If it does, we'll all be sending change in terms notices to all our open-end credit customers because they'll all have the old "finance charge" terminology in the notes.

Question - now that the regulators have defined a variable rate (based on an external index)that has a floor rate as being within our control and requiring the 45 day advance notice. We need to change our Personal Credit Line product to one that is conducive to sending change in terms notices 45 days in advance. Our current product rate MAY change each month.

So, our credit officer would like to state that the rate is a fixed rate that may change at our discretion. I've been unable to see anything that would prohibit this and wanted to see if anyone else knew of a prohibitive factor in the reg.

walden, I think if you look at the regulation, probably where it discusses the table info, you can't call something fixed that can change. I don't know any way around the 45-day notice if you change it later on, but you can't call it fixed unless you meet the restrictions the reg imposes.


(we discontinued our non ODP-type personal LOC because we decided it was going to be too difficult to administer).

I think this is what I was thinking about:

If an annual percentage rate is required to be presented in a tabular format pursuant to paragraph (a)(3)(i) or (a)(3)(iii) of this section, the term fixed, or a similar term, may not be used to describe such rate unless the creditor also specifies a time period that the rate will be fixed and the rate will not increase during that period, or if no such time period is provided, the rate will not increase while the plan is open.

I didn't see these issues addressed yet so hopefully someone can clarify a couple of things for me re: O/end LOCs, not credit card- or HE- related. I'm so confused....

Currently, our LOC disclosure (Fed box) discloses the approved APR, daily periodic rate, approved LOC and due date. I'm thinking we do away with this "Fed box" info and replace it with the new account opening discl but can't determine if I use G-17B or G-17D for a LOC? Does anyone know?

Also, none of the account opening samples in G-17 show the disclosure of the periodic rate, yet according 226.6(b)(4)(i)(A) it sounds like we have to disclose the periodic rate. Are periodic rates required to be disclosed?

Lastly, only a creditor - in connection with sales, i.e. applying for credit at JC Penney's, can disclose a range of APRs at account opening/approval...correct? [226.6(b)(2)(i)(E)]

For anyone who can reply, I THANK YOU!

I used 17D for our RR product because it most closely resembled the product itself.

Our periodic rate is in the disclosure body, not in the schumer box.

Not sure about your third question...will look up your reference and see what it's referring to.

I'm not finding this specific reference:

[226.6(b)(2)(i)(E)]

However, stopping at (i), I do not see where this pertains to charge cards...it applies when you have more than one APR for a particular category:

(i) Annual percentage rate . Each periodic rate that may be used to compute the finance charge on an outstanding balance for purchases, a cash advance, or a balance transfer, expressed as an annual percentage rate (as determined by § 226.14(b)). When more than one rate applies for a category of transactions, the range of balances to which each rate is applicable shall also be disclosed. The annual percentage rate for purchases disclosed pursuant to this paragraph shall be in at least 16-point type, except for the following: A penalty rate that may apply upon the occurrence of one or more specific events.


The only (E) reference I see pertains to APR's varying by state.

Thanks Joker.

Thanks, RR!

The reference that I gave appears on page 584 of rule...and yes, it does talk about APRs that vary by state, too. The heading starts: (E) Point of sale where APRs vary by state or based on creditworthiness and from what I understand, it talks about establishing a LOC in person in connection with financing the purchse of goods or services...just making sure that someone else is reading this section the same way I am as I have a manager that wants to use this to give a range of rates at account opening and I say we cannot. Thoughts?

I have another question...the "returned payment fee" listed on the disclosure, under "Penalty Fees".....I am assuming that this is a fee that a creditor may charge and is different from (in addition to) an "NSF"/returned check fee. Does anyone have any thoughts on how to interpret that fee disclosure requirement? We charge one fee for on-us and another fee for non on-us returns.

Returned payment fee is the NSF-related fee that is charged to the open-end account (not to a deposit account)

Waldensouth,

I really don't say this very often but I think your credit officer is right. Based on the following Commentary sections, it seems permissible to establish product that does not meet the variable rate requirements but that the rate may change. However, this product would require a 45 day notice requirement. If the products meets the variable rate requirements such as tied to an index, etc. and the rate is changing in accordance to your account agreement, you would not need to send a rate change notice.

Commentary to 226.6(b)(4)(ii) Variable-rate accounts.
1. Variable-rate disclosures—coverage.
ii. Examples of open-end plans that permit the rate to change and are not considered variable-rate include:
A. Rate changes that are invoked under a creditor’s contract reservation to increase the rate without reference to such an index or formula (for example, a plan that simply provides that the creditor reserves the right to raise its rates).

Commentary to 226.9(c)(2) Rules affecting open-end (not home-secured) plans .
1. Changes initially disclosed . Except as provided in § 226.9(g)(1), no notice of a change in terms need be given if the specific change is set forth initially, such as rate increases under a properly disclosed variable-rate plan in accordance with § 226.9(c)(2)(v)(C). In contrast, notice must be given if the contract allows the creditor to increase the rate at its discretion.

Does anyone know if the + and - is mandatory in the "Summary of Account Activity" box by each dollar amount of activity? Our current mock-up does not include +/-, but I am afraid that since it is in the Appendix G models we need to program that into our statements. Any opinions?

My opinion is yes, do the programming. You may have some really unusual situations in which you have reversed certain debits and credits, and have to put the net amounts in categories that imply addition when the transaction summary says subtraction, and vice versa.

This question is re: "Transaction Charges" under 226.5a(b)(4) and 226.6(b)(2)(iv). The rule provides no examples so I'm hoping for some clarification. Is the intention to disclose the transaction charges that actually only "hit" the credit card balance? Or, are we required to disclose say a card replacement fee even if that fee is charged to a deposit account and not the credit card?

We use Laser Pro and also have a check accessed PLOC and an overdraft line of credit,and their new release includes the revised Credit Agreement and Disclosure which includes the APR and fees disclosures in the tabular format that will be required 7/1/10. It also discloses the APR in the agreement section as it has in the past. We're in the process of setting it up and testing right now.

And yes, you need to meet the updated disclosure requirements for your personal lines of credit and overdraft lines of credit.

In regards to open-end credit secured by RE; is a 'change in terms' notice required to be provided to a borrower if they have signed a new Agreement? Our processor want us to code renewals and/or extension of terms so that a message appears on the billing statement regarding change in terms and we would then provide the borrower with an insert.

We use LaserPro as well. It just came up today that the new tabular format Account Opening Disclosure is combined with the Credit Agreement. We have some folks who would prefer to combine the tabular Account Opening Disclosure with the application form and Billing Rights Disclosure. Is that possible?

The final rule for the 8/22/10 CCARDA provisions: http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20100615a1.pdf

Also, I've added to my original chart to include non-CCARDA changes to open-end credit rules.

All Open-end Credit (including home secured)
226.5(a)(1)
226.5(a)(2)(i)
226.5(b)(1)(i)
226.5(b)(2)(i)
226.5(b)(2)(ii)(B) (if you have a grace period)
226.5(c), (d), (e)
226.8
226.9(a)
226.10 (except (b)(3), (e), and (f)
226.11(a), (b)
226.12 (for accounts with credit card access)
226.13
226.14 (except (c)
226.16(a)
226.16(e), (f)
226.57(c)

Open-end Credit Not Home Secured
All of the “All Open-end Credit” rules, plus:
226.5(a)(2)(iii)
226.5(a)(3)(iii), (iv), (v), (vii)
226.5(b)(1)(ii), (iv)
226.6(b)
226.7(b)(except 226.7(b)(11) and (12)
226.9(c)(2)(i), (ii), (iii), (iv)(A), (iv)(D), (v), (vi)
226.9(g)
226.16(b), (c), (g), (h)

HELOC
All of the “All Open-end Credit” rules, plus:
226.5(a)(2)(ii)
226.5(a)(3)(ii)
226.5(b)(4)
226.6(a)
226.7(a)
226.9(c)(1)
226.14(c)
226.16(d)
226.30(b)

Regulation Z (recently amended sections that apply to HELOCs and Open-end Credit—Not Home Secured)
Subpart A—General: 226.1-226.4
Subpart B—Open-end Credit 226.5-226.16
Subpart D—Miscellaneous 226.30
Subpart G—Special Rules Applicable to Credit Card Accounts and Open-End Credit Offered to College Students 226.51-226.58

226.1 Authority, Purpose, Coverage, Organization, Enforcement, and Liability
226.2 Definitions and Rules of Construction
226.3 Exempt Transactions
226.4 Finance Charge
226.5 General Disclosure Requirements (226.5a Credit and Charge Card Applications and Solicitations; 226.5b Requirements for Home Equity Plans)
226.6 Account Opening Disclosures
226.7 Periodic Statement
226.8 Identifying Transactions on Periodic Statements
226.9 Subsequent Disclosure Requirements
226.10 Payments
226.11 Treatment of Credit Balances; Account Termination
226.12 Special Credit Card Provisions
226.13 Billing Error Resolution
226.14 Determination of Annual Percentage Rate
226.15 Right of Rescission
226.16 Advertising
226.30 Limitations on Rates
226.57 Reporting and Marketing Rules for College Student Open-end Credit

ok, someone help me out. In the 2/22 rules it had 226.9(c)(2) and (g) as applying to all open-end (not-home secured) consumer credit plans. Starting on page 14 of the final rule that came out today it discusses these sections.

On page 16 it states:
Consistent with the approach that the Board has taken in implementing other provitions of the Credit Card Act that apply to credit card accounts under an open-end consumer credit plan, [these sections] apply to "credit card accounts under an open-end (not home-secured) consumer credit plan...." Therefore...overdraft lines of credit accessed by a debit card are not subject to the new requirements [in those sections].

Even when I go to the sections in the final rule it states:
Rules affecting open-end (not home-secured) plans...For plans other than home-equity plans.

So, wouldn't overdraft lines of credit still be included?