I need help getting unconfused. Our bank's web site loan products page states the following about our home equity line of credit - "Prime + 1/2% margin." Since we have not stated any fees (226.6a & b), do we have to disclose the additional items in 226.16(d)? I'm sure this is real clear to someone, but I've been stewing in Reg. Z too long to be able to think straight. P.S. - Sorry about the mis-post in the UCC 9 forum.

------------------

I can't seem to find anything in the regs that prohibits a printed ad (or web site) from stating "prime + 1/2" but you can't quote this to consumers. Here's what the Reg says:

§226.26 Use of annual percentage rate in oral disclosures.
(a) Open-end credit. In an oral response to a consumer’s inquiry about the cost of open-end credit, only the annual percentage rate or rates shall be stated, except that the periodic rate or rates also may be stated. If the annual percentage rate cannot be determined in advance because there are finance charges other than a periodic rate, the corresponding annual percentage rate shall be stated, and other cost information may be given.

My gut tells me you should state the APR for the Home Equity line or not give any rate information. Does everyone know what the prime rate is? Now, if you do quote the APR, you then trigger several things as outlined in 226.16(d).

[This message has been edited by David Dickinson (edited 07-13-2001).]

David, shouldn't that be quote the APR but if you state it in the ad, then other disclosures apply?

De Vonne: I'm not sure what you are asking. If I quote a rate to a consumer, I must state the APR and use that term. Therefore, my concern to Complyguy is that if he quotes a rate on his web page, it should be stated as an APR. "Prime + 1/2" is not an APR and I don't think that it meets the clear and conspicuous test either. Furthermore, if he does quote an APR, he then triggers other disclosures.

You are correct about the APR as a trigger. But if he says "prime plus 1/2", wouldn't that make the APR readily determinable thus, triggering the other disclosures. For example, (I'm using 226.24c as an illustration even though it applies to closed end credit); if he uses "80% financing available", that in turn indicates a 20% down payment, which is a triggering term. I would say any numerical reference to the APR for the open end would require the other disclosures. What do you think?

OK, now I understand. I agree, but I'm going one step further - I don't think "prime + 1/2" is permissable, because you must state the "APR" when quoting rates to consumers and this web ad hasn't done that.

In conclusion, I think that the web ad should quote the current APR and the triggered disclosures.

Sorry. Somehow, I posted the same reply twice.

[This message has been edited by David Dickinson (edited 07-13-2001).]

I agree with you David. Using "prime plus 1/2" can only cause headaches.