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#68080 - 03/18/03 04:35 PM
Re: Reg Z
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10K Club
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
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If the rate increased by .25% if the automatic payment is canceled, then yes it would be. You'd have to disclose the conditions and timing of the increase.
5. Examples of variable-rate transactions.
i. The following transactions, if they have a term greater than one year and are secured by the consumer's principal dwelling, constitute variable-rate transactions subject to the disclosure requirements of §226.19(b).
B. Preferred-rate loans where the terms of the legal obligation provide that the initial underlying rate is fixed but will increase upon the occurrence of some event, such as an employee leaving the employ of the creditor, and the note reflects the preferred rate. The disclosures under §§226.19(b)(1) and 226.19(b)(2)(v), (viii), (ix), and (xii) are not applicable to such loans.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#68083 - 03/18/03 07:32 PM
Re: Reg Z
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Diamond Poster
Joined: Oct 2000
Posts: 2,416
Pleasanton CA USA
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Wait, Dan. This is a Line of Credit. §226.19 only applies to Closed End Credit.
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Al Miller, CRCM Opinions expressed are my own and not necessarily shared by my employer.
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#68084 - 03/18/03 07:35 PM
Re: Reg Z
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Diamond Poster
Joined: Oct 2000
Posts: 2,416
Pleasanton CA USA
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Shirley, I am even more jealous. I wish I had an office (instead of a cubicle).
Oh well, I guess a cubicle is better than just a table in an open area. We have many people doing that during this refinance tidal wave.
_________________________
Al Miller, CRCM Opinions expressed are my own and not necessarily shared by my employer.
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#68088 - 03/18/03 08:04 PM
Re: Reg Z
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10K Club
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
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Shirley, I don't know the regulatory definition but I've considered them to be just that, loans with preferential rates. Such as the example in the reg where an employee gets a lower rate than the general public or you give someone a preferential rate for doing automatic payments, or for maintaining compensating balances, etc. A preferential rate loan is only consider a variable rate loan if the initial (preferential) rate will increase upon a certain condition and that condition must be disclosed. Maybe someone else can give you a better description.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#68089 - 03/18/03 08:05 PM
Re: Reg Z
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10K Club
Joined: Jul 2001
Posts: 83,219
Galveston, TX
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Dan - from my understanding you hit it right on the head.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#68090 - 03/18/03 09:05 PM
Re: Reg Z
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Diamond Poster
Joined: Oct 2000
Posts: 2,416
Pleasanton CA USA
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Dan, I apologize. I saw the "L" and read it as Line. Maybe if I could shut the door, I could read better. And, I'm surrounded with Marketing people. I've always said that a poor excuse is better than no excuse at all.
_________________________
Al Miller, CRCM Opinions expressed are my own and not necessarily shared by my employer.
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#68098 - 07/10/03 10:54 PM
Re: Reg Z
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New Poster
Joined: Jul 2003
Posts: 3
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Does anyone out their have an EXAMPLE of a disclosure they sent out only for a Preferred Rate that triggers the ARM disclosure requirement?
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#68099 - 08/21/03 12:54 AM
Re: Reg Z
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Anonymous
Unregistered
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I would also be interested in an example, if anyone has one to share.
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