We recently recieved a newsletter from a law firm that states, "When made in paper form, the home equity disclosure required by Regulation Z section 226.5b(d) is one of the regulation Z disclosures that does not have to be provided in a form the consumer can keep. While the interim rules require that all electronic disclosures be provided in a form the consumer can keep, the home equity plan disclosure is excepted from both the consumer consent requirement and the conditions that apply to disclosures posted on the creditor's website..."

However, the commentary for §226.5b(d) refers the reader to §226.6(e), which states that the creditor shall disclose (in writing and in a form the consumer may keep)the variable rate disclosures in §226.5b(d) unless those disclosures (originally)provided with the application were in a form the consumer could keep.

We have always given the consumer written pre-application disclosures for HELOCs. Because they were in writing, they were, by their nature, in a form the consumer could keep.

OK...I'm confused! First, the information under 226.5b(d) must be provided in writing prior to application. However, when speaking of e-disclosures, am I to understand that once we make the disclosures avaialble electronically, that not only does the consumer not have to consent to recieve them this way, but we also do not have to make them available electronically for the 90 days mandated by the e-regs?

Leslie

First, disclosures provided in writing are not necessarily, by nature, in a form the consumer can keep. The regs anticipated that some lenders may choose to print the required disclosures as part of the application form. In this case, the disclosures are in writing, but once the application is turned back in to the lender, they are not in a form that can be kept.

That said, however, I think your legal firm is taking a very liberal stance on the requirements. First, there is the requirement of 226.5(b)(d)(1) which requires you to include a statement that the consumer should make or otherwise retain a copy of the disclosures. The commentary clarifies that this requirement only applies in those instances where the disclosures are not provided in a retainable format (for example as part of the application). This means there is still a presumption of retainability - the reg has just put the burden of retaining on the consumer rather than the lender (what a nice switch). Second, with regard to consumer consent to receive electronically - both the Reg Z intermim rules and the E-SIGN legislation on which they were based, requires affirmative consent in order for any electronic disclosure to be substituted for any disclosure required to be in writing. There is no intent or statement that requires consent only for disclosures required to be in writing and retainable. This is where I think the author of your letter has gone too far.

Of course, that's just my opinion. I may be wrong!

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Opinions expressed are my own, and do not necessarily reflect those of my employer.