If an amount of money is extended to a potential employee as part of a benefits package in the form of a forgivable loan would this transaction be disclosed just like any other consumer loan? With a TILA disclosure and note detailing the terms? Would we need to provide a Fed Box TILA disclosure or could this information be provided in a letter form with the offer?

Would this be in a severance package situation? A forgivable loan should be a taxable event to the borrower.

From what I understand it would be. The agreement/loan would be in place of a signing bonus. A set amount provided based on an agreement to remain with the company for XX time. For example, $15000 and agreement to stay 5 years. After year one $3000 is forgiven and reported as compensation to the employee. Year 2, another $3000 is forgiven. If they leave after year 2, they would owe back the balance of the loan ($9000) at the initially provided term and rate.

I was asked if we needed to include a Fed box disclosure. My thoughts are yes you do, but would like some input if others have done something like this in their shop.

You need to give us a few more details to replace my guesses about the agreement, but this may not be "credit" (as defined in Section 1026.2(a)(14).

I'm guessing that the agreement calls for the candidate to remain in the bank's employ for 5 years--at which time the full $15,000 will be forgiven. I'm also guessing that there are no fees and that no interest will be charged if the candidate remains employed for 5 years.

For closed-end credit, Section 1026.17(c)(1) tells us to base all calculations and disclosures on the terms of the legal obligation between the parties. If, as I guessed above, the basic agreement calls for the candidate to continue his/her employment for at least 5 years, then all the remaining details about earlier termination are contingencies, not the primary agreement.

Reg. Z's definition of "credit" is "the right to defer payment of debt or to incur debt and defer its payment." When the new hire carries out his/her promise to remain for 5 years, the contract requires no payment of any kind. No payment means no credit, no credit means no consumer credit, and no consumer credit means no Reg. Z coverage.