We recently purchased a new loan doc system. Our old system's HELOC contracts quoted the line's rate as index + margin = initial rate (i.e. 4.75 + 1.00 = 5.75%). The new system does not seem to have that same capability and quotes only the margin & the initial rate (i.e. "index + 1.00 = 5.75%").

I have searched Reg Z and cannot find anything that says we must specifically quote what the index/prime rate is at the time the line is closed. Is quoting the index a requirement and I missed seeing it?

I do not remember anything in Regulation Z that requires disclosure of the index value at the closing, but the disclosure of the index value could be required under state law, or by other federal regulations. There is certainly enough information in the HELOC disclosure to warn the consumer to look up the index value.

12 CFR 226.5b(d)

(d) Content of disclosures. The creditor shall provide the following disclosures, as applicable:

(12) Disclosures for variable-rate plans. For a plan in which the annual percentage rate is variable, the following disclosures, as applicable:

(iii) The index used in making rate adjustments and a source of information about the index.
(iv) An explanation of how the annual percentage rate will be determined, including an explanation of how the index is adjusted, such as by the addition of a margin.
(v) A statement that the consumer should ask about the current index value, margin, discount or premium, and annual percentage rate.


etc. etc. etc.