We just installed a new lending software for closed end consumer loans. If we are pushing the first payment date out, we are getting a violation that says Reg Z does not allow payments to go past 51 days. I have heard of not going 45 days back in the old days but the 51 days is new to me. Does anyone know what this is? Can't we go out farther as long as the APR/ finance charge, etc. reflects the correct figures?

Is it possible that the system won't allow the first payment to go past the point where a negative am would occur? I haven't heard anything regarding 51 days specifically. You might try a few different rates or payment amounts to see if it changes, or call the vendor.

Agreed - Reg. Z would permit you to go 180 days, 250 days or 777 days to first payment as long as f/c, APR, and payment schedule are disclosed accurately.

I think what they're referring to is Section 226.17(c)(4)(ii). This section says that in making disclosures and calculations, the creditor can ignore odd first payment periods that fall within certain parameters. For a loan between 1 and 10 years, you can ignore a difference in the first payment that is 11 days shorter or 21 days longer than the regular period. Thus, if a regular period is 30 days, you can ignore odd first payments of up to 51 days from the loan date.

In other words, Reg. Z permits you to pretend that the first payment period is the same as all the others if it's 51 days or less. That doesn't prohibit you from having a longer first payment period; it just means that if you have a longer first payment period, your disclosures have to take the extra time into account.