I am throwing this question out to Lucy, Mary Beth, and any banks in the 4th Circuit (Maryland, North Carolina, South Carolina, Virginia and West Virgina):
A recent decison by the 4th Circuit Court has impacted how we can make Truth-in-Lending Act disclosures. The court interpreted 12 CFR §226.17 of Reg. Z to mean that a lender must make these disclosures in writing and in a form the borrower may keep prior to consummation of the loan. In defining prior to consummation, the court has stated that the customer must have the ability to use these disclosures to compare the various credit terms available [to him] by other sellers. (Polk v. Crown Auto, Inc. F.3d 691, (2000). This means that reviewing the disclosures and then immediately having the customer sign the loan papers is now going to be a violation of law! The Maryland Banker's Assoc. is asking all member banks to write to the Fed, asking them to interpret this section of the Reg. but that may take a while. I would like to know what other banks in the 4th Circuit are doing to comply with this court decision. Are you giving the borrower the TILA disclosures when they apply for the loan? Do you have any suggestions on the most effective way to make sure these disclosures are given well in advance of consummation?
Thanks for your input.

Other than general consternation at the court's interpretation, I am not aware of major changes in procedures and forms -- yet.
The first hope is that the FRB will clear this up in their commentary proposal. If the FRB acts quickly, they should be able to have this "cleared up" by April 2001. But, as they are busy with other things -- like expanding HMDA -- they might miss this deadline.

In the meantime, I am suggesting that banks do one of several things: make TIL disclosures on a separate paper and give it to the customer before they sign the note; or give an extra copy of the combined disclosures/note document to the consumer before requiring them to sign the note. Also have them sign some sort of acknowledgment that they have received separate disclosures in a form that they could keep before they were asked to sign the note.