Regulation Z - Open End changes - 7-1-10

#3 Sticky

Is there going to be a thread on card act changes for Feb. 2010? Some of the Reg Z and Reg AA will get pulled into that implementation date.

I'm tagging onto this thread because of the effective date of 7/1/2010. However, I am learning and reading today that section 226.9(g)of the Interim Final Rule went into effect August 20, 2009 along with other provisions at that time.

"If a consumer engages in behavior that triggers penalty pricing on August 20, 2009, the creditor must comply with new Section 226.9(g) and, accordingly, must provide the consumer with a notice at least 45 days in advance of the effective date of the increase."(page 59)

BOL still lists the implementation date for this section as 7/1/2010. I have been so busy implementing the 21-day rule for open-end credit that this passage totally missed my radar. If it was buried in previous lengthy threads over that subject, then I missed it there too and I apologize for the question.

Is there any hope that I have misunderstood this shocking revelation????

"BOL still lists the implementation date for this section as 7/1/2010. "

It is in the current 226.9 section on BOL? You might want to check again. It was effective 8/20/09.

You are correct - my mistake - thanks!

Is anyone else concerned that there is a bill being presented to congress right now to move up to December 1 the February requirements? That would put them BEFORE the RESPA changes.....

I think I feel

Write your congressman (or woman)!
http://www.house.gov/apps/list/press/financialsvcs_dem/21malone_011_xml.pdf

It's HR 3639.

ALL remaining parts of the CARD Act would become due 12/1/09, including
- the look-back for all rate increases
- the requirement that all penalty fees be “reasonable and proportional”
- the gift card rules

Our best bet is to contact our Senators and Representatives as individual voters and say this just won’t work – it’s not a matter of desire. Banks know they need to meet consumers’ needs AND make sufficient $ to meet their safety and soundness requirements. Pushing up compliance deadlines will stress systems and processes beyond the breaking point, and force banks to reconsider whether they can serve retail customers at all, let alone in the manner these legislators desire.

We can’t wait for banking lobbying groups to act, and they are acting as best as they can. The reason Frank is already modifying the CPFA proposal is because of thousands of individual emails and phone calls and newspaper editorials that appeared, not contacts by a couple of dozen lobbying groups. We need to do the same here. Individuals vote; lobbying groups don’t.

It's HERE, round 2 of proposed interpretations, 841 pages: http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20090929a1.pdf

Comments DUE in 30 DAYS (10/29/09) - Happy Halloween!

Is anyone out there looking at doing a promotional convenience check mailing for the Christmas holidays? Would the disclosures for those checks need to be in the new table format required since the promotional rate would extend into the effective date of the Card Act (and possibily Reg Z)?

My phone is ringing off the hook from customers who do not want their DDL payment to change. (It is currently the statement cut day and is automatically deducted from their account on this day.) How are you all handling this? Can we put their payment day back on the statement cut day if that is their wish? I'd rather make my customers happy than abide by a law that was not clearly thought out and ill advised. What is my penalty for not complying? (My HELOCs are in compliance, no big deal for those.)

For those that wanted a specific payment date, we left them as is. I would just make a note in the file for these customers that they were informed of the change but opted to have the payment made sooner.

I thought that would be my course of action, but was looking for back up here. I finally called my lead examiner, (just got off the phone) and she told me under no uncertain circumstances would customers be "allowed" to keep their payment date. They have no choice but to accept this. It's finally happened...I live in a country where the government thinks it can make better decisions for me than I can.

Federal Reserve published proposed rule today in Federal Register regarding open-end credit.

http://edocket.access.gpo.gov/2009/pdf/E9-23733.pdf

Does this now mean that comments are due 11/21 rather than 10/29?

The proposed rule out today has a comment period that ends 11/20/09. The new rule also contains the other 3 rules that the Board has issued this year--however, I have not read anything that would change comment periods within these other rules. Its 210 pages--I am still reading

"The Board is aware that the existence of multiple concurrent Regulation Z rulemakings pertaining to open-end credit has the potential to cause confusion." 74 FR 54125

Whaaat?!?

I'm reading the proposal that was in my mail box today and it says the bank may adjust the due date from time to time, for example when the customer requests a new due date; however, the new date must be the same numerical date each month on an ongoing basis.

HR 3639 to move up implementation of CARD Act to 12/1/2009 passed House Financial Services Committee just now on voice vote. Bernanke's letter was read into the Committee debate without effect. HR 3639 now goes onto the entire House of Representatives.

I think I'm going to be sick on 226.58, the requirements to make card agreements available on our publicly available website with an addendum of 'pricing information' - not to mention allowing a customer to request via website or phone the same information for products that we no longer offer but still have open accounts for.

Maybe this will help you?

Credit Card Bill Includes ICBA-Advocated Exemption for Small Issuers
Following vigorous ICBA congressional outreach, the House Financial Services Committee approved an amendment that would exempt small issuers from legislation speeding up effective dates of new credit card regulations, representing a significant concession for community banks.
The ICBA-advocated amendment to the Expedited CARD Reform for Consumers Act (H.R. 3639), which was approved by the committee, would exempt credit card issuers with fewer than 2 million credit cards in circulation from having to meet the Dec. 1, 2009, effective date included in the legislation. Instead, community bank issuers would face the Feb. 22, 2010, and Aug. 22, 2010, effective dates already required by the Credit CARD Act.
The amendment, sponsored by Reps. Brad Sherman (D-Calif.) and Shelly Moore Capito (R-W.Va.), recognizes that community banks do not engage in the misleading practices targeted by these bills. Federal Reserve Chairman Ben Bernanke said this week that moving up the effective date would result in unintended consequences, particularly for smaller issuers.

The speedup date just passed the house.

http://news.moneycentral.msn.com/provide...amp;id=10634506

As an issuer of less than 2 million cards in our portfolio, how does the Credit Card Act of 2009 affect us in relation to this expedited enactment? We are in the process of notifying our customers in November of a rate increase effective in January.

Good question.

Stop buying [censored].com has a good breakdown - http://www.stopbuyingcrap.com/personal-finance/credit-card-act-2009/

SO do all the changes take effect now?

I'm having a hard time with that too - the edocket for the proprosed Feb 22 effective date also contains July 2010 items. How do you determine which part is applicable for Feb and which is for July?

This is how I understand it. Most of the remaining Cr Card Act provisions are effective 2-22-2010 with 2 that will be effective by May 2010. (reasonableness of penalty fees and int rate reductions) UDAP and Reg Z changes published in FR in Jan 09 are effective 7-1-2010. (Parts unaffected by the Cr Card Act - the rest will probably be amended or withdrawn)

<--- so thrilled we do not maintain our own credit card portfolio... heck we are still trying to comply witht he HELOC statement billing changes!

Do you do anything with gift cards?

No, they were such a money loser we dumped them a year or so ago.

Bah! Humbug.

we handle our credit card portfolio and while our processor is handling some system capabilities, we are still drowning with those items that are considered client driven or specifically on us (ex. toll free number for CCC info/ability to repay/posting of agreement)

So, does this new amendment to the CCARD Act mean that all of the work we did on our OD lines and HELOCS to get the billing right - was a waste of time and effort?

I am so thoroughly confused.

More so than usual.

Me too.

http://www.bankersonline.com/topstory/topstory.html

President Signs Credit CARD Act Amendment
On Friday, President Obama signed the Credit CARD Technical Corrections Act of 2009. The amendment adds language to section 163(a) of the Truth in Lending Act to restrict the new requirement for billing at least 21 days before the payment due date on open end credit plans to credit card accounts. The change will require the Federal Reserve Board to issue a conforming amendment to Regulation Z section 226.5(b)(2), where the 21-day billing rule was implemented as of August 22, 2009. Signings; Act 11/09/09

That sounds exactly right - we wasted time, effort, and money to change system billing parameters, notify customers, etc. - only to be told later that it wasn't required for non-credit card related open-end credit. Makes me not want to be proactive. Why should I try to be compliant as of the effective date of these new regs when 2-3 months later there is an amendment to say "Oh wait...we didn't mean that." Disheartening to say the least

<--- possibly thrilled that we are still out of compliance!!

@ JJ!

I'm serious! I wish we could confirm this means what we think it means.

Well, I definitely hope it's to all of our benefit - especially those who are still having problems with something we only had a grand total of maybe 60 days to implement.

I emailed our state's banking association this morning... they have been petitioning hard to have it reworked... waiting to see what their responce is.

Argh!!! We got the blasted thing implemented, it put my audit schedule in complete disarray (since I do both) and now the OCC is in at the end of this month and I am not ready. Argh! [/rant]

Sorry for the rant.

Better to be examined now while everything is still new QCdL. Oh, and ask lots of questions! (and share the answers, please. )

Does anyone know if the tabular requirements in 226.5(a.3) are subject to Feb implementation or July? I thought they were July requirements (except for the repayment table format on the statements).

This is enough to make a person go postal!

Tabular format requirements are part of the July 2010 requirements.

Great, I thought they were for July. With the Feb requirements mixed in with the July stuff on the edocket it is becoming difficult to develop an impact document with effective dates.

Amendment issued -> Short implementation time -> Scramble to comply -> Finish on time -> Amendment issued to fix "oops"


No wonder I'm bald. I hope this isn't a sign of things to come with this flurry of new stuff to deal with.

So, the million dollar question, if this means what we think it means, is are you going to change everything back? I am thinking no, but curious what eveyone else is thinking.

My guess is, lets not hold our breath.

My money says that the revised HELOC final rules next year will have some sort of billing change built into it. I can't see this going away.

We're going to leave it be. The work is already done.

Want me to get our examiner's opinion when they are in next week?

Here goes - this is what I came up with for Feb 22 requirements on credit cards (not including the 8/20 changes). I welcome any additions/corrections. Does anyone know if the ability for cardholders to reject requested balance transfers after they rec. disclosures (10 days after mailing) is for Feb or July? Thanks!!

Same Pmt Due Date (7.b)
Min Pmt Warning (7.b)
Late Pmt Warning (7.b)
Repayment Estimate (7.b)
Credit Counseling Info (7.b)
New Disclosures at Renewal if any changes were not previously provided (9.e)
Protected Balances due to CIT or Penalty Notices (55)
Reasonable Cut Off Time (10.b)
Ability to Repay (51)
Under 21 Account Opening and Line Increases (51.b)
Overlimit Fee Requirements (56)
Terms Provided to Board (58.d) (registerd by Feb 1)
Terms Provided Online (58.f)
Payment Allocation (53)
Fees for Making Payment (10.e)
Estate Debt Settlement (11.c)
6 Month Requirement for Temp Rates (55.b)
Double Cycle Billing (54)
Partial Grace (54)
Fixed Terminology (16.f)
25% Fee Limit for 1st year (52)
Removal of Penalty after 6 months of pmt (55)
New Account New Disclosures (5.b)

Where can I find the announcement or formal notice that certain sections of the CCAAct have been moved up to 2/22/2010? Is there a statement as to which sections of the reg have been moved up to 2/22/2010? I am trying to determine which sections apply to all open-end credit, not just credit cards.

check out Federal Register p. 54126, middle and right column.

Do the requirements in 226.10 that require setting reasonable cutoff times and crediting of payments that have been bumped up to February, include only credit cards or all open-end credit? (not helocs)

This is the way I understand it (could be wrong - it is so confusing):

The Credit Card Act applies the safe harbor 5 p.m. cut-off rule to all open-end credit plans and to all forms of pmt, including open-end (homesecured) credit. Proposed § 226.10(b)(2)(ii) (payments made in person) would also apply to all open-end credit. This is consistent with current § 226.10, which applies to all open-end credit.

And these "proposed" changes in the CCAct for § 226.10 have all been moved up to February 22nd?

Yes.

The final rule makes most of the provisions effective 30 days after publication. This approach allows institutions to receive, with only a minimal delay, a safe harbor for using the model privacy form but allows you to continue to use the alternative language (the old sample clauses) until the end of 2010.

Jan 1, 2012, model disclosures we use now will be removed and paragraph (g) which states the following will be removed (because it will no longer apply):

(g) Sample clauses. Sample clauses illustrating some of the notice content required by this section are included in Appendix B of this part. Use of a sample clause in a privacy notice provided on or before December 31, 2010, to the extent applicable, constitutes compliance with this part.

I get that 226.10 is for all open end credit, but sec. 226.10(b.3) would be for credit card payments only. In person payments on a credit card account would need to be accepted until close of business, but other open end payments would be until 5:00. So if a bank teller is open until 9:00 pm, then they have to accept payment until 9:00 on the payment due date?? We give a buffer from the due date and the time f/c and late fees assess. If we take a payment at 9:00 on a Sat., it would not process until Monday and due to the buffer no charges would appear on the acct. I assume the transaction date would have to read as the date for Saturday and not Monday.

At a branch - yup. Payment needs to be effective-dated the same day as it is received. Only possible wiggle room is if, after 5pm, no one at the branch can open any deposit account or fund a loan/line - see the 226.2 definition and OSC for business day.

I know part of the Credit Card Act also affects open-end credit other than actual "credit card" accounts. We already updated our periodic statements to meet the 21 days.

However,does anyone know if the other provisions also apply (see below) to other types of open-end credit or is it specific to "credit card" accounts only?? We don't issue "credit cards," but do offer lines of credit, overdraft protection, etc.

- Advance Notice of Significant Changes in Account Terms and Rate Increases
- Statement of the Right to Reject Changes in Terms
- Additional Disclosure for National Bank Customers

I wish they would stop issuing new rules affecting lending compliance for a little while so we can have a chance to get on top of everything. I know I could use the break.

We too offer lines of credit but no credit cards. The way I see it, the following section revisions will apply for us:

226.5(a)(2)(iii)- initial disclosures and use of "penalty apr"
226.5(b)(2)(ii)- Periodic statement 21 days prior to payment due date (but clarified credit card only with recent technical amendment)
226.7(b)(14) - Periodic statement and disclosure of deferred interest or similar program
226.9(c)(2) - Significant change in terms
226.9(g) - Increase in rate due to default or delinquency
226.10(b)(2)(ii) - Payment posting requirements
226.10(d) - Crediting of payments
226.16(f) - misleading terms in advertising
226.16(h) - deferred interest or similar offer - advertising
226.57(c) - marketing to college students

The Fed Register publication from October 21, 2009 re: proposed changes to Reg Z has a pretty nifty little chart about six pages in that breaks down the proposed revisions by type of credit - all open end, all open end not home secured, and credit card only. Really helpful.

Related to our open end lines of credit (not credit card), my bank is considering increasing our line of credit rates across the board - for existing balances as well as new advances. Of course would provide the required notices (Texas requires 90 days so the change wouldn't be effective until some time in the 2nd quarter) and allow for opt out - and we still need to do some risk assessment. My reading of the proposed changes to reg z would tell me this (increasing rates on existing balances)is and will still be allowed even after the February changes for open-end as long as there's no relationship to a credit card - but I'd like to get some concurrence before we move forward.

Agree? Disagree?

SaaL,

Thanks for your help and for the additional resource. I appreciate it! Maybe they can lighten up on the amount of changes next year.

"bump" - anyone?

Related to our open end lines of credit (not credit card), my bank is considering increasing our line of credit rates across the board - for existing balances as well as new advances. Of course would provide the required notices (Texas requires 90 days so the change wouldn't be effective until some time in the 2nd quarter) and allow for opt out - and we still need to do some risk assessment. My reading of the proposed changes to reg z would tell me this (increasing rates on existing balances)is and will still be allowed even after the February changes for open-end as long as there's no relationship to a credit card - but I'd like to get some concurrence before we move forward.

Agree? Disagree?

Is no one out there struggling with the Ability to Repay on preapproved credit card offers? Or what about how the single amendment for Pricing Info should look for the website agreement (especially if single agreement serves multiple cards)?

Forgive me if this has been answered. Is the gift card section effective 2/22/2010? I neglected to remember about the gift Cards!!!

I was thinking the gift card provisions are not effective until 8/22/2010. See the Reg E Proposal - comments were due by 12/21/09.

Pre-approved credit card offers usually come with a disclaimer that the offer is not guaranteed if the person does not meet the lender's criteria (Section 615 (d) of the Fair Credit Reporting Act.)

What this means is that you will have to do more work to open these accounts.

I have read the post and now a little confused. Our bank used to offer HELOCs but has discontinued. We have some on the books still. Are there any requirements coming up in Feb that would affect us? As of now, we don't put any new open ended credit on the books just existing ones are left out there.

REG Z is always confusing to me, especially open-end rules! We do not issue credit cards but do have lines of credit and HELOC's. Unless I have totally missed the mark...and this is so possible, it doesn't appear that PLC's and HELOC periodic statements will require changes to format. Am I right?

NO - PLCs DO require new statements and contracts, and you may wish to look at the HELOC proposal for statement changes there, too. 5pm payment processing is required on all types of credit, by 2/22/2010 if not sooner (closed-end already in effect)

Thanks Phoenix. You mentioned HELOC "proposal for statement changes...exactly which version or proposal are you referring to? Sorry but I am having a hard time pulling all of this together with the different publications with varing dates

http://www.federalreserve.gov/newsevents/press/bcreg/20090723a.htm

"May you live in interesting times...." Ah -

Thanks so very much!

On the cr card application/solicitation the bank has to disclose a "return pmt fee". The reg describes it as a fee to return a payment. Would this be an NSF fee they are referring to?

1. In regard to a change in term notice, if we are eliminating the over the limit fee because we will no longer allow the customer to exceed the cr limit on his cr card, do we have to send a chg in term notice?

I'm talking myself out of having to send the change in term notice because we are eliminating the over the limit fee. Does anyone have an opinion on this? Mgmt is breathing down my neck.

We've eliminated the fee as well....are not sending a notice. The change is to the customer's advantage. If anyone disagrees, please speak up.

we will be changing how excess payments are applied, eliminating the over limit fee, eliminating the floor, providing a phone number to call for counseling, adding the how long it will take to pay off the loan box to statements, etc...
Seems everything is to the consumer's advantage so from a regulatory standpoint, do we have to send a notice?
From a good PR standpoint, I say we should but management only wants to know if it is required to send.
Thanks

Can anyone give me some insight on how stored value/gift cards will be affected and when???? I can't find it anywhere......

There is a proposed Reg E rule (as a result of the Cr Card Act) out, but has not yet been made final.

I am now cautious on not sending any form of notice based on sec. 226.9e, where it mentions any card issuer that has changed/amended any term required to be disclosed but did not provide notice should do so before the account renews. It seems easier to send out a notice during the time of change to everyone vs. tracking on individual reissue date to send notice 30 days prior.

Help me please...I've been working 12+ hours a day plus weekends, holidays and my last 5 vacation days of 2009 trying to implement all these new regulations. For unsecured lines of cr periodic statements, don't they have to be in the new format and don't we have to aggregate fees & int charges for the period and YTD?

Yes - for non-card open-end accounts, by 7/1/2010.

I have a question regarding the payments section 226.10(b)(2)(ii), our current cut off time is 4pm. Does this mean we will have to change it to 5pm?

NEW QUESTION - So has anyone got the BOL e-mail for training that says, "New Final Credit Card Act applies to HELOCS"? What? Does that just mean the sections that are "all open-end consumer credit plans" will be applicable?

It's not saying everything applies to HELOCs, correct?

If so, then I've totally missed the boat. Please let me know what you all think. Thanks! :o)

So, have I missed it, or has there been a final rule published in reference to the proposal for HELOCs that was published 8-26-09?!?

Final rule has not come out yet.

thanks!

There are three sections of the current final rule that DO apply to HELOC. See page 6 of the 'double spaced version' that says this.

Provisions of January 2009 Regulation Z Rule Applicable to HELOCs.
The final rule incorporates several sections of the January 2009 Regulation Z Rule that are applicable only to home-equity lines of credit subject to the requirements of § 226.5b (HELOCs). In particular, the final rule includes new §§ 226.6(a), 226.7(a) and
226.9(c)(1), which are identical to the analogous provisions adopted in the January 2009 Regulation Z Rule. These sections, as discussed in the supplementary information to the January 2009 Regulation Z Rule, are intended to preserve the existing requirements of Regulation Z for home-equity lines of credit until the Board’s ongoing review of the rules that apply to HELOCs is completed.

could you so kindly post a link to that specific publication? Thanks in advance!

I don't have a link to the double-spaced document, but here's a link to the pdf. I think the sections applicable to HELOCs were just redesignations of existing requirements - nothing new. If I'm wrong, hopefully someone will correct me.

ah...I hope so...one less thing to dig through, but thanks for the link.

Deena, your link is to the 1/29/09 Federal Register which the FRB has announced they are withdrawing. I think the double-spaced document StevenD was referring to is the non-Federal Register format of the Reg. Z final rule that is effective 2/22/2010. Here's a link to it. http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20100112a1.pdf It is 1155 pages. Page 6 contains the wording StevenD quoted. This has not yet been published in the Federal Register.

If your bank is a member of the ABA and you have registered to access member-only content on their website, they have some good resources on the Credit CARD Act and Regulation Z amendments. http://www.aba.com/Members+Only/Regulatory/CreditCardAct.htm

They just posted a staff analysis today of the non-credit card provisions of the Reg. Z rule that is effective 2/22/10 with some provisions effective 7/1/10.

I wasn't sure because StevenD referenced the January 09 rule and that rule did have sections applicable to HELOCS (just redesignations), so I thought that's what he meant. It's so hard to keep all these Reg Z rules straight and unfortunately, we're not members of ABA so I can't access the materials you mentioned.

OK - I'm looking for any insight on how credit card issuers are treating the young consumer provisions. I am having a hard time noting the difference for account opening process - If a young consumer qualifies based on Ability to Pay criteria, they can be issued an account (Same if a consumer older than 21 applied). If a young consumer DOES NOT qualify based on Ability to Pay criteria, they are not issued an account (Same if a consumer older than 21 applied). Is the difference that if a young consumer that DOES NOT qualify as an individual, is now required to have a co-applicant that is at least 21 yrs old??? What if you had two applicants that were both young consumers and only one qualified????

Everything you said is correct, including the fact that the cosigner, guarantor, or joint applicant must be at least 21 and must be qualified based on the ability to pay criteria.

So the only way an account can have two young consumers (let's say a married couple that are both 18), would be for the primary applicant to have qualified on their own. If the primary does qualify on their own, the card issuer can then include the co-applicant's information in the Ability to Pay process to determine if that would impact the credit line approved. BUT a credit line increase can not be provided for accounts with young consumers only (credit line increase only provided for those accounts with co-apps that are 21 or older and approved by the co-app)

I think I am answering myself in regard to the accounts with two young consumers - a credit line increase can not be made to a young consumer account that was opened pursuant to (b)(1)(ii) unless the co-applicant that is at least 21 agrees (granted the young consumer is still not 21). Since a credit card account was opened with two young consumers (obviously the primary young consumer qualified independently), then it was NOT opened pursuant to (b)(1)(ii) - which requires the co-app to be 21 or older. A credit line increase can be provided to those accounts with two young consumers. PLEASE someone correct me if my rambling is wrong.

If the underage consumer wants a cr line increase and qualified by himself (and qualifies for the increase by himself) there is no cosigner, co-borrower or guarantor involved.

Thanks for the help guys. I appreciate you! :o)

Sorry, back on the young consumer issue Two concerns:
1.) If the application allows for joint income, how do you evaluate a young consumer individually to determine if the co-applicant is needed? Ex. Two young consumers and joint income is provided. Based on Ability To Pay, income is to be considered. Based on Young Consumers, must determine if primary can qualify on their own or if a co-app of 21 or older is needed. Can't use the joint income to evaluate independent ability to repay?

2.)In regards to two 'young' applicants that apply for an account, if the first 'young' applicant does not qualify on their own and we do an automatic check to determine if the age of the co-applicant is 21 or older (and it is not because these are two 'young' applicants) - How does the Adverse Action Notice work? Do you send a notice to the first/primary 'young' applicant and explain the reasons why they did not qualify was based on their individual reasons AND a co-applicant that is at least 21 is required?

I have a question about the ability to repay. Does that mean that we need to verify the income that is supplied by the appliccant for a credit card? I read it taht we are required to get an income amount from the applicant, but not necessarily have to require proof of the income.

I can't seem to find a response to this other than the reference to new disclosures at renewal. I have been getting new card agreements from some of the big issuers and am wondering if we are required to do so. We have only fixed-rate cards, and are eliminating the over limit fee and our penalty rate. Since those are positives, we are considering putting a notice in with the monthly statements. Our question is whether or not we have to disclose the new payment application rules (which is a change for us) since they don't seem to be required to be disclosed at account opening. Is the payment allocation method something that will need to be disclosed going forward?

We informed of the new payment allocation process in our inserts along with other items that were in the customer's favor (and really they couldn't opt out) - we did not add the paymnet allocation process in the agreement, as I do not think it is required.

Any takers on the young consumers??

I just listened to the two hour BOL Gigantic Reg Z changes Webex and they did a wonderful job summarizing this mess. Hats off to Marybeth and Jack.

But I'm walking away still not sure if the new account opening disclosures and periodic statement format go into effect on 02/22 for non-HELOC, consumer, over draft lines of credit and other non-HELOC consumer lines of credit.

And if so, am I the only one who's not prepared?

Please Help!!!

No, you aren't the only one who isn't prepared. I just sat through the webinar as well, and am still unclear if we need to make statement formatting changes for our other open-end (non-home secured) lines of credit.

.....I'm studying.....had to stop.....was going to post, but I noticed two of you already have. I have the same question. When are the G-10, G-17 and G-18 Models mandatory? The forms are not mentioned in the cool chart (on page 5) and are not "grayed" (which was how the 2-22 changes are indicated in the materials). Help, please.

I hope I'm right, but I have them scheduled for July!

In fact, Alphabet soup shows it effective 2/22, mandatory 7-1-2010...I feel better now.

Ok...the new periodic statement (G-18) is mandatory 2-22 because section 226.7(b)(11-13) is mandatory on 2-22-10.

So does the new 02/22 mandatory statement format include non-credit card, open-end consumer overdraft lines of credit?

And, is the new account opening disclosure mandatory for the above also on 02/22?

Sorry, still confused.

Confused as well.....the handy chart on page 5 indicates that 226.7(b)....periodic statement rules....only apply to Credit Cards. But for 226.7(b)(13), there is a check in every box.....applies to all four categories of loans. Why didn't they merely put an "x" in column 1 (applies to all open-end consumer credit plans)? But the statement Form (G-18) appears to only apply to credit cards........I think.

I don't know about the account opening disclosure....am wondering when that's applicable as well!

226.7(b)(11)Cr card info on periodic stmts must include due date and amount of any late payment fee and increased periodic rate goes into effect 2-22. 226.7(b)(12) min pmt warning, repay est & repay discl also go into effect 2-22 for cr card stmts.

The remaining format and content req for stmts go into effect in July.

Ahou, so is it your understanding that unless we offer credit cards, we have no changes to periodic statements that would impact our other open-end products on 02/22?

Any thoughts on the account opening disclosure?

That's interesting because the program materials for yesterday's seminar have everything that's mandatory on 2-22 shaded gray. All of the periodic statement requirements are shaded in gray:
226.7(b)(11)(i)(11)
226.7(b)(12)(i)& (F)(1)-(F)(2)
226.7(b)(12)(ii)(iii)(iv)(v)
226.7(b)(13)
The Fed document states same (docket R-1370 page 1). What am I missing?

So I'm not the only confused and frustrated one.

A large bank mailed out a letter dated 2/1/2010 that states "in response to a regulatory change, your line of credit account access using an ATM/Check Card will be removed Feb 22. this means that you will no longer be able to use an AMT machine to withdraw cash from your line of credit or transfer funds from your line of credit to another account. This change will not impact your home equity line of credit. Are they just being cautious or is this provision in the law?

[Ahou, so is it your understanding that unless we offer credit cards, we have no changes to periodic statements that would impact our other open-end products on 02/22?

Any thoughts on the account opening disclosure?]

The only periodic stmt requirements for Feb for non-cr cards is timing requirements/grace period expiration date, assuming you don't offer deferred interest.

Account opening disclosure tabular format is effective in Jul.

Spring, do you still feel that some of the recent posts conflict with the information provided at yesterday's webex?

The final rules indicate that when considering ability to repay, the issuer to consider debt to income, debt to assets or residual income. When considering income and assets, the rule indicates that the issuer would be permitted to rely on information provided by the consumer and in the credit report.The final rule further defines this to indicate that issuer may make a reasonable estimate of the consumer's income or assets based on "empirically derived, demonstrably and statistically sound models". Many of the credit bureaus are providing this as an option where validation of income and employment is done and an answer returned with the credit report. There is obviously a cost to use these services.

From everything I can read, you would either need to use one of these methods to test the reasonableness of the income/assets or you would need to verify the income via paystubs, tax returns, etc.

Regarding the Ability to Pay, yes that is the understanding we have as well. In the proposed rules it did not provide we could use a income estimator (empirically derived, demonstrably and statistically sound model). This would have impacted any pre-approved offers and reliance on 'old' information in line increase evaluations. You don't have to verify income but you would be at the mercy of the customer for providing realistic information for income. The final rules allowing this model was one of the only forms of relief provided for us.

I think the large bank is just being cautious.

More offensive is a regional furniture store chain that claimed that "no-no-no" plans were illegal after President's Day, as if that would be the reason the chain would stop offering them. Deferred interest plans remain legal; there are just a lot more and clearer disclosures involved with them....

YHWB - they also may be doing that change as result of the overdraft opt in requirements coming up (I think in July for Reg E).

That's what I would have thought too. I preface this by saying I have not read the new Reg Z rule in its entirety yet as I'm also trying to prep for an exam, but I THOUGHT I heard Jack say in the webinar yesterday that if the customer has a debit card that can overdraw the account and thereby lead to access of the OD line of credit, that card is covered under the credit card rules. I'm hoping I heard wrong.

I hope you heard wrong too!
Since 2/22 is right on top of us, did anyone have any final guidance on the young consumer requirement and what is needed to address single and joint applicants? Given the use of Ability To Pay, I gather that a single young consumer would be treated the same and that joint applicants could be treated the same (based on final rule where a joint applicant/accountholder can be considered on the collective ability of all applicants). Change based on requirement being that if a single young consumer applicant was denied, then they must have 21 or older added to the submitted application OTHERWISE they could re-apply as a new joint application and be treated the same based on the final's collective ability comment. Thoughts?

Glad I'm not the only confused one!

Here's what I've gathered so far - between the BOL and some other resources I have - in terms of the open-end, non-HELOC...still working on doing a similar chart for credit cards...feel free to post here if you've got one already that is clear Mark this up if you disagree in any way or have answers to the items I have questions on:

Open-End (Non-HELOC)

February 22, 2010

Change-in-Terms Notices
*Notice must be provided at least 45 days prior to the change (45-day timing doesn’t apply if consumer agreed to a particular change, but notice must still be given prior to effective date of change)

*Notice required for a change in any term disclosed in the key terms table given at account opening (still kind of wondering about this one since the “table” is not required until July – but, I think it refers to any change that will be in an item we would later have to put in the table)

*Notice required for a rate increase resulting from a consumer’s default or delinquency

Advertising
*May only refer to a “fixed” rate in limited circumstances – must specify the time period the rate will be fixed; if no time period is stated, rate will not increase while the plan is open.


July 1, 2010

Account-Opening Disclosures
*Certain key terms must be disclosed in a summary table at account opening similar to the table required for credit cards (format and content of account agreements) (Appendix G-17)

Periodic Statements
*Significant revisions to the format and content of periodic statement disclosures

*The “effective” APR has been eliminated (not sure if this is all open-end, or just HELOCs?)

*Payment amount due, late payment fee, and any penalty APR must be disclosed on the front side of the periodic statement (Note: I’m thinking the BOL webinar materials on 2/17/10 might show this as effective 2/22/10 – not sure which is correct - maybe eff. 2/22 but mandatory 7/1?) (Appendix G-18 – but not sure if that’s just for credit cards – G-18D references that it’s specific to credit cards)

Change-in-Terms Notices
*If the change-in-terms notice accompanies a periodic statement, it must be provided in a tabular format on the front side of the periodic statement (Appendix G-20)

Advertising
*New disclosures for plans to finance the purchase of goods or services

I'm hoping you heard wrong too!! My understanding is that if you can directly access your LOC via a debit/ATM card, then the credit card rules apply. If the card is tied to a deposit account and the LOC is accessed via OD protection transfer, no credit card rules. My vote is that the other bank is just being overly cautious. Hopefully someone will correct me if I am misunderstanding!!

I heard this too

This is from the BOL Alphabet Soup - Commentary for Regulation Z 226.12 that is effective 2/22/2010:

12(c)(1) General rule.

1. Situations excluded and included. The consumer may assert claims or defenses only when the goods or services are “purchased with the credit card.” This could include:

• Mail or telephone orders, if the purchase is charged to the credit card account.

But it would exclude:

• Use of a credit card to obtain a cash advance, even if the consumer then uses the money to purchase goods or services. Such a transaction would not involve “property or services purchased with the credit card.”

• The purchase of goods or services by use of a check accessing an overdraft account and a credit card used solely for identification of the consumer. (On the other hand, if the credit card is used to make partial payment for the purchase and not merely for identification, the right to assert claims or defenses would apply to credit extended via the credit card, although not to the credit extended on the overdraft line.)

• Purchases made by use of a check guarantee card in conjunction with a cash advance check (or by cash advance checks alone). See footnote 24. A cash advance check is a check that, when written, does not draw on an asset account; instead, it is charged entirely to an open-end credit account.

• Purchases effected by use of either a check guarantee card or a debit card when used to draw on overdraft credit lines (see footnote 24). The debit card exemption applies whether the card accesses an asset account via point-of-sale terminals, automated teller machines, or in any other way, and whether the card qualifies as an “access device” under Regulation E or is only a paper-based debit card. If a card serves both as an ordinary credit card and also as check guarantee or debit card, a transaction will be subject to this rule on asserting claims and defenses when used as an ordinary credit card, but not when used as a check guarantee or debit card

And for 226.13 Billing Error Resolution:

(i) Relation to Electronic Fund Transfer Act and Regulation E . If an extension of credit is incident to an electronic fund transfer, under an agreement between a consumer and a financial institution to extend credit when the consumer's account is overdrawn or to maintain a specified minimum balance in the consumer's account, the creditor shall comply with the requirements of Regulation E, 12 CFR 205.11 governing error resolution rather than those of paragraphs (a), (b), (c), (e), (f), and (h) of this section.



Commentary:
13(i) Relation to Electronic Fund Transfer Act and Regulation E.

1. Coverage. Credit extended directly from a non-overdraft credit line is governed solely by Regulation Z, even though a combined credit card/access device is used to obtain the extension.

2. Incidental credit under agreement. Credit extended incident to an electronic fund transfer under an agreement between the consumer and the financial institution is governed by § 226.13(i), which provides that certain error resolution procedures in both this regulation and Regulation E apply. Incidental credit that is not extended under an agreement between the consumer and the financial institution is governed solely by the error resolution procedures in Regulation E. For example, credit inadvertently extended incident to an electronic fund transfer, such as under an overdraft service not subject to Regulation Z, is governed solely by the Regulation E error resolution procedures, if the bank and the consumer do not have an agreement to extend credit when the consumer’s account is overdrawn.

3. Application to debit/credit transactions-examples. If a consumer withdraws money at an automated teller machine and activates an overdraft credit feature on the checking account:

i. An error asserted with respect to the transaction is subject, for error resolution purposes, to the applicable Regulation E provisions (such as timing and notice) for the entire transaction.

ii. The creditor need not provisionally credit the consumer’s account, under § 205.11(c)(2)(i) of Regulation E, for any portion of the unpaid extension of credit.

iii. The creditor must credit the consumer’s account under § 205.11(c) with any finance or other charges incurred as a result of the alleged error.

iv. The provisions of §§ 226.13(d) and (g) apply only to the credit portion of the transaction.

So from I can gather, if you have a Debit Card, here's how it shakes out concerning the claims and defenses and the Billing Error Resolution:

Claims and Defenses from Regulation Z do not apply to a transaction in which the cusomer used a debit card to purchase the goods or services. However, you also need to look at any contract you have with VISA/MC in this area, but those disputes would be under VISA/MC rules and not Regulation Z.

Billing Error Resolution applies to a debit card that is tied to an account that has a formal overdraft line of credit subject to Regulation Z. It does not apply if the debit card merely creates an overdraft. However, Regulation E Error Resolution rules may apply.

SaaL, thanks for the tip on the nifty little chart! Has anyone found that the chart has changed at all (in terms of which sections are applicable to what types of credit) from the proposed rule to the final rule, and the latest updates? I'm depending on this chart to get me through!

Upstate,

Here is my final take on the open-end (non RE-secured) periodic statement changes. We are not making any changes to periodic statements until July as required for HELOCs... confusing in the ABA webinar, but after reading the final rule it's much more clear:

7(b)(13) Format Requirements
As adopted in the January 2009

Regulation Z Rule, Samples G-18(D) and G-18(E) in Appendix G to part 226 illustrate the requirement to group together the due date, late payment fee, penalty APR, ending balance, minimum payment due, and the repayment disclosures required by
§ 226.7(b)(12). Sample G-18(D) applies to credit cards and includes all of the above disclosures grouped together. Sample G-18(E) applies to non-credit card accounts, and includes all of the above disclosures except for the repayment disclosures because the repayment disclosures only apply to credit card accounts. Final rule adopts Sample G-18(D), G-18(F) and G-18(G) as proposed. In addition, as proposed, the final rule deletes Sample G-18(E) (which applies to noncredit
card accounts) as unnecessary. The formatting requirements in § 226.7(b)(13)generally are applicable only to credit card issuers because the due date, late payment fee,penalty APR, and repayment disclosures would apply only to a “credit card account under an open-end (not home-secured) consumer credit plan,” as that term is defined in § 226.2(a)(15)(ii).

From Federal Reserve's website:

Standard payment dates and times.
Your credit card company must mail or deliver your credit card bill at least 21 days before your payment is due.
In addition Your due date should be the same date each month (for example, your payment is always due on the 15th or always due on the last day of the month).

The payment cut-off time cannot be earlier than 5 p.m. on the due date.

If your payment due date is on a weekend or holiday (when the company does not process payments), you will have until the following business day to pay. (For example, if the due date is Sunday the 15th, your payment will be on time if it is received by Monday the 16th before 5 p.m.).

Just reading over the Federal Reserve's final rule published yesterday in the federal register and ran across this on page 7667: "The Technical Correctiosn Act addressed these concerns by narrowing the application of the 21-day requirement in TILA Section 163(a) to credit cards. However, open-end consumer credit plans that provide a grace period remain subject to the 21-day requirement in Section 163(b)." Am I correct in understanding that all open-end consumer credit with a grace period is still subject to the 21 days??

Yes, but be sure to look at the definition of grace period. For the purpose of this reg, it's a period of time during which a consumer can avoid a finance charge if the balance is paid off (my paraphrase). It's not the period of time after the due date when a payment can be made without incurring a late charge.

Thanks, Deena! I was confusing grace period with courtesy period.

My understanding was the periodic statement changes would not affect open end consumer credit plans until July. (other than credit card accounts)
In the BOL webinar last week the chart on page 5 shows 226.7(b)(13) as effective 2/22/2010 for all open-end consumer credit plans.

On page 70 it states this section applies to all non-heloc plans. That has really confused me!

The details in the earlier post from Idaho make it sound like this change only applies to accounts with a credit card feature.

Can anyone explain what and if we need to be changing anything in February for HELOCs or regular lines of credit with no card access? [To comply with changes to .7(b)(13)]

I think .7(b)(13) will only apply to credit cards since it references sections .7(b)(11) and .7(b)(12) and both of those sections only apply to credit cards.

That is what it sounds like to me! thanks for your opinion.

Yes 13 applies only to cr cards.

I'm sorry if this has been asked and answered before. If a non-credit card open-end loan (non-home secured) has a "courtesy period" after the payment due date during which a payment can be made without incurring a late charge, does 226.10(d) (Crediting of payments when creditor does not receive or accept payments on due date) apply to the actual due date or the last day of the courtesy period? I thought it was the actual due date, but I just read the Q & A from the BOL webinar that was held on 2/16 and Question 5 seems to say it's the last day of the courtesy period.

Actually, when I read it again, there is also a reference to .7(b)(10) which does apply to all open-end except HELOCs, not just credit cards. So, this requirement was effective 2/22.

Deanna- Thanks- I now see how (b)(10) applies.

(b)(12)keeps referring to "card issuer". I don't see what portion of (b)(12) applies to an LOC if the plan cannot be accessed by a debit or credit card. You did so good the last time maybe you can put this in plain English as well!

(b)12 only applies to credit cards.

Anyone know the answer to this one?

This has me stumped. Customer applies for a $1000 LOC credit card on 2/26/10 and is approved at 15%. He maxes the card to the full $1000 and applies for a LOC increase on 4/26/10 only with the LOC increase app his credit shows deterioration and is now approved at 17%. Since the account is opened less than 1 year am I prohibited from applying the 17% to the account completely or am I allowed to charge 17% on the LOC increase and apply the 15% to the original 15% (this is not one of those consolidation of accounts that 226.55(b)(3)-3iiA is talking about).

Deanna,
In the 1100+ page version of the final rule
pages 832-833 give some examples that I found helpful.

Thanks, UGA Fan - That's what I was basing my original thought on (that it applies to the actual due date rather than the last day of the courtesy period). I got confused when I read this from the BOL webinar Q & A:


This answer, since it doesn't really address the courtesy period referenced in the question, implies (at least to me) that the reg applies to the last day of the courtesy period. Maybe I'm just reading or interpreting it wrong.

This question relates to the Webinar Jack and Mary Beth presented last week. On page 5 the table of Applicability and Effective Date shows that sec. 226.5(b)(2)(ii)(B) (periodic statement sent before end of grace period) applies to all open-end consumer credit plans. From all I have read, I believe this only applies to credit cards.
Also, the table shows that 226.7(b)(13) (format for due date, etc.) applis to all open-end consumer credit plans, all open-end (not home secured)consumer credt plans, credit card accounts under an open-end (not home secured)consumer credit plan, and Credit or charge card account subject to 226.5a. Again, I believe this section only applies to credit cards.
Can anyone confirm that these 2 sections apply only to credit cards?

The more I read the more confused I get regarding the 21 day statement requirement for open-end credit ( not credit cards) & HELOC's.
On both plans we offer a 10 day period after the due date, before a late charge is assessed. Where I am getting confused is "grace day" definintion. In our documents we refer to this 10 day period as grace days although interest does accrue. So, can we count these days in the 21 days? Does this even apply to HELOC's? I went looking through the HELOC proposed rules and I don't think it does, but boy am I confuse. Any help, direction etc. would be most appreciated.

There is a reference in 226.7(b)(13) to 226.7(b)(10) which does apply to all open-end except HELOCs, not just credit cards. So, this requirement was effective 2/22.


Section 226.5(b)(2)(ii)(B) applies to all open-end accounts (except home secured) that have a grace period. You need to look at the definition of grace period. It's not the same as a courtesy period and most bank open-end credit plans will not have a grace period.

After reading the reg AGAIN, I agree with you Deena. They really made it confusing by making 226.7(b)(11) and (12) apply only to credit cards and the rest of the 226.7(b) apply to all open-end (not home secured) credit plans.

Thanks.

I've posted this in a separate thread but I have had NO takers. Forgive me if this gets the 'duplicate posting' label. We are doing a convenience check mailing for credit cards, I need to know if the disclosure table is required now or if that is a July requirement AND do we have to put the go to rate (rate that applies after the promotional period ends) in the same line as the promotional rate (ex. 0% APR until October 2010, after that an APR of 10%). If anyone has input, PLEASE let me know.

F. Checks that access a credit card account (§ 226.9(b)). A creditor must comply with the disclosure requirements of § 226.9(b)(3) of the final rule for checks that access a credit account that are provided on or after July 1, 2010. Thus, for example, if a creditor mails access checks to a consumer on June 30, 2010, these checks are not required to comply with new § 226.9(b)(3), even if the consumer receives them on July 7, 2010.

Must be substantially similar to sample G-19

The PDF of the 2/22 final rule on the FRB website is incomplete; does anyone know where I can find a pdf of the final rule that is complete?

See my post in this thread .

Thanks much!

Thanks Ahou - I thought it was July. Someone in cards got a check mailing that used the table, it made me nervous since I had already said it wasn't needed now. You have so many issuers going ahead with implementing July changes, it just makes it harder to find the line in the sand. Any thoughts with using the go to rate in the same line as the promotional rate to be in close proximity?

Does anyone know where in Reg. Z the new payment spread is discussed?

Can you be more specific?

I'm sorry. I don't usually deal with Reg. Z and got stuck with this. Our core processor is making changes to how the payments on our unsecured lines of credit are spread between principal and interest. They say that it is due to a Reg. Z change.

The application of payments is a contractual issue and may also be governed under State law. I am not aware that Regulation Z addresses the application of payments.

Thanks Randy. That is what I was coming up with in my research. I usally deal with the deposit side only so I thought I was missing it. I will have to look into this further.

Question re: Credit Cards and Account Opening Disclosures....

The new regs talk about the requirement for a disclosure in table format to be issued at Account Opening on open-end credit, similar to the Schumer table disclosed in CC soliciations.

Does this mean that a second table needs to be disclosed for new CC accounts (esp. if we have one, fixed rate)? We've received conflicting opinions on this - our CC processor (who currently provides our CC app, agrmnt, and disclosures) thinks the disclosure we provide with the application and agreement suffices. The vendor we source our other disclosures from thinks we need to send a seperate Account Opening disclosure, to be mailed when we approve the account and order the card.

Question regarding Change In Terms notification for open end non-credit card account. We are going to increase rates and implement a floor on our personal lines of credit.

Will I need to comply with the July 1 Change In Terms notification requirements (tabular format, etc.) if my notice will go out prior to July 1 but will be effective after July 1?

I don't think so - I think it depends on when the notification was sent - but I'm so frazzled right now I'm not sure. While it might be easier to just do it, I'd like to know if I'm "required" to.

There's a section that may help, starting with Federal Register p. 7782, that goes through what to do as the various deadlines occur/approach:
"....For example, such a creditor may mail a change-in-terms notice to a consumer on February 20, 2010 disclosing a change effective on March 7, 2010. In contrast, a notice of a rate increase sent on February 22, 2010 would be required to comply with § 226.9(c)(2) of the final rule (except for the formatting requirements of § 226.9(c)(2)(iv)(D)), and thus the change disclosed in the notice could have an effective date no earlier than April 8, 2010...."

Read around that area, especially the following few pages, to see what may apply to your situation -

Thanks Phoenix! Exactly what I was looking for.

I am looking at the account opening disclosures for the open end loans.
G-17(a) (b) and (c) are credit card examples and G-17(d) is for line of credit.

What about for our open end collateralized loans? Do we use G-17(d) for those loans?

Also.... for our visa loans, the consumer comes into the branch and sits with a lender to open....do we only give the account-opening disclosure and not worry about the application and solicitation disclosures or would we give both sets of disclosures in that situation.

After reading this I'm confused regarding the 226.10(d) requirement regarding crediting payments when the creditor does not receive payments on the due date. Does this apply to the actual due date or the final date of the courtesy period? If it's the acutal due date, it would be a non-issue. Thanks!

Actual due date. Courtesy periods are just that - INformal.

Ok, after much reading... To better define my above question:

We offer two different credit cards with a single fixed rate for each. Is it possible to craft the Account Opening Disclosure in such a way that it can be delivered with the application/solicitation/agreement, and have this packet apply to BOTH cards? (and of course, be compliant)

Bueller?

226.7(b)(11)The Due Date for a payment and any Late Payment Costs, including amount of the late payment fee and any increased APR that may be imposed as a result of a late payment......did this end up only required on credit card accounts? Or does it go with any open end (not home secured) consumer credit plan?

from that table at FR 7663 - credit cards only:
§ 226.7(b)(11) ..... Credit card accounts under an open-end (not home-secured) consumer credit plan.

I'm building a cheat sheet to keep handy while reading the final rule so that I can keep straight what applies when. We don't have credit cards, so I didn't include sections that only apply to credit cards. Feel free to add on to it to make it a more useful tool.

CCARDA—Open-end Credit Not Home Secured
226.5(a)(2)(iii)—February 22, 2010
226.7(b)(14)—July 1, 2010
226.9(c)(2)—February 22, 2010 [except 7/1/10 for tabular formatting 226.9(c)(2)(iv)(D)]
226.9(g)—February 22, 2010 [except 7/1/10 for formatting 226.9(g)(3)(ii)]
226.16(h)—July 1, 2010
Plus, don’t forget the December 2009 Rules (see footnote on page 7663 of the 2/22 final rule)

CCARDA—All Open-end Credit (including home secured)
226.5(b)(2)(ii)(B)—February 22, 2010
226.10(b)(2)(ii)—February 22, 2010
226.10(d)—February 22, 2010
226.16(f)—February 22, 2010
226.57(c)—July 1, 2010

December 2009 Rule—HELOC Only
226.6(a)—July 1, 2010
226.7(a)—July 1, 2010
226.9(c)(1)—July 1, 2010

CCARDA—Not sure about applicability
226.9(e)

Reg Z Sections
226.5—General Disclosures
226.7—Statements
226.9—Subsequent Disclosures
226.10—Processing Payments
226.16—Advertising
226.57—College Student Open-end Credit

Loan department has decided they'd like to increase interest rate on our consumer lines of credit. Here's the hoops to jump through so far that I've identified:
1. 226.9(c)(2)(i)(A) - 45 day advance notice (possibly more depending on state law)
2. 226.9(c)(2)(i)(A) - Notice to each customer who may be affected
3. 226.9(c)(2)(iv)(A)(3)- Customer has the right to opt-out, which does not trigger an obligation to immediately repay the obligation in full.
4. 226.9(c)(2)(iv)(A)(7) - "If the change in terms being disclosed is an increase in an annual percentage rate, the balances to which the increased rate will be applied. If applicable, a statement identifying the balances to which the current rate will continue to apply as of the effective date of the change in terms."
Does anyone know the 'if applicable' part? I've been unable to find these exceptions anywhere.

I'm reading into this for # 3 & 4 above that we would be required to separate out the 'old/initial' rate and balance, then after 45 days notice can officially raise the rate for all future transactions. Basically split the loan in two? Then, if the customer opts-out of the rate change, they couldn't have additional transactions but would continue to be able to repay the loan on the standard terms at the old interest rate?

I also seem to recall that when a payment comes in, the portion tied to the higher rate must be credited first - or did I dream that - maybe that's only for credit cards?

Also, the additional provisions under 226.55 appear to only apply to credit card accounts, correct?

This all seems like a systems/disclosure nightmare...

bump - anyone with thoughts or suggestions?

I read on pg 7693 of the final reg that section 226.9(c)(2)(iv) would only apply to credit cards. Maybe I've taken that out of context, but I am hopeful that is the case.

If so, we only have to provide 45 day advance notice to each customer affected... then can we apply the increased rate to the existing balance or just transactions going forward??

This is so confusing!

Just wanted to update - as it doesn't seem like anyone was anxious to jump into this particular topic, but I'm thinking that's just because we're all so confused about what portions apply to all open-end vs credit cards. I'd hate to jump in to respond when I wasn't sure of the answer myself!

Anyway, I spoke with our regulator yesterday. Section 226.9(c)(2) applies to all open-ended credit, with the exceptions listed - like 226.9(c)(2)(iv)(B) which specifically states credit card accounts. If you're still confused, there's a great chart on page 7 of the final 270 pg doc - pg 7663 of the 2/22 Fed Reserve for final Reg Z changes.

If you want to change your rates on consumer lines of credit, you have to jump through the disclosure hoops listed - including preserving the current rate on balances before the effective date, and only assessing the higher rate to new transactions after the effective date of the change. Which our system is not currently set up to do... so you may want to check into this now if you are considering raising interest rates.

My bank is in process of doing the same thing.

I would agree with you on everything you've stated, except the requirement to preserve the current rate as to existing balances. 226.55 contains the prohibition to increase rates on previous balances/transactions - and 226.55 is specific to credit card accounts. There is no similar prohibition on open-end non-credit card that I'm aware of.

As you've stated, you'll want to check your state laws regarding notifications. For us in Texas, they're even more restrictive than what Reg Z requires.

Love your chart, thanks for that. I'm going to ask a really stupid question, but in the interest of saving some money....
My understanding is that the new Billing Error Rights Model Form G4A goes into effect on 07/01.

This notice is pre-printed on the back of our statements. Tossing out the existing supply will cost several thousand dollars and will make me very unpopular.

How are other banks handling this? Are you just biting the bullet and throwing out your forms?

Focus-Did you get an answer on your question? I have the same question myself.

Since the final rule deleted G-18(e) does that mean our periodic statements for open end non re-secured loaons can stay as they are?

NO! (sorry for the shouting, but re-formatting is likely to take time)
Read the rest of 226.7b and 226.8 that DO apply to all open-end non-real estate LOCs and you'll see that things like aggregating YTD fees and interest, and grouping transactions properly, will cause you to reformat your statements. You'll want to adapt the credit card statement model sections outside of the one in the upper right hand corner to your needs -

Does anyone have any reference to this regulation that makes sense? I have read this entire forum, and the Fed summary and it does not seem like anyone can tell what is required.

For the terminology changes effective July 1st.
Grace period now is How to avoid paying interest on purchases
Default APR is now Penalty APR
Fixed is now nan variable
Balance is now balances subject to interest rate
Finance charge and other charges are now charges that are imposed as part of the open-end credit plan
etc....

Do these terms change everywhere? On the periodic statement, the applications, the account opening disclosures, the open end disclosures at signing, in the advertising, etc.

If they aren't changing in each place....is there a chart or a good tool for when and where

I need some help with Sec 226.5 (b) (2) (ii) (B) What is this referring to? I can follow it all the way until I get to the (B). Is this the part that states if the consumer will be unable to fulfill his obligations under the plan because of a major change in the consumers financial situation that we can not prohibit additional extensions of credit or reduce the credit limit? Am I reading this correctly?

Are you sure you're in the latest and greatest version of Reg. Z? Your citation points to information about grace periods and mailing statements at least 21 days in advance of their due dates....

The citation was taken from the Credit Card Act from the sheet that indicates what applies to open end consumer and credit cards. I am not interested in the credit card side as we don't issue any. The reg Z edition is the one that is on Bankers Online and I don't see anything that refers to the 21 day notice as that is now a moot point for us. Thanks and help me get this straightened out.

Has anyone found anything (really, ANYTHING) that explains this mess? Any resource, any person, anything?!?!?

Oh, I mean anything FREE, of course. Because we don't actually have a budget this year

Can someone PLEASE tell me which periodic statement format I should be using effective 07/01 for open-end, non-credit card, non-HELOC accounts? Is it G-18A, or F?

15jwolander - I think a careful reading of the new 226.9(c) and (g) sections will get you closer to answering your questions. It sounds like your theory is more - what can we do if a borrower's creditworthiness diminishes, and yes, you can take action.

The section you are referring to is "Grace period expiration date" (1), (2) and (3). I think you're in the wrong place.

upstate, G-18(A) shows you what the guts should look like for both cr cards and LOC, while G-18(F) is the whole statement. As for G-18(F), you would exclude the cr card only stuff, such as the late pmt warning, min pmt warning etc. See 226.7(b)(11)&(12) for details on stuff to leave out. (stuff that applies only to cr cards)

I have the same question. Anyone?

I can tell from scanning through this thread that we are having so much fun with the next round of changes deadlines!

From what I can tell, Ready Reserve (bounce protection) Account disclosures are not required to be in tabular format due to the exception listed in 226.5a(5).

5) Exceptions. This section does not apply to:

(ii) Overdraft lines of credit tied to asset accounts accessed by check-guarantee cards or by debit cards;

Does anyone disagree with this statement? Is there ANYTHING required (that's new) for the inital disclosures on this type of account that I am missing here?

All I can find are periodic statement requirements, nothing for the contract itself.

226.5a contains requirements for cr and chg card applications and solicitations, not the acct opening disclosure. See 226.6(b) for acct opening disclosures (cr cards and LOC)

oh nice..that section isn't even in the final rule table of applicable sections..great, just great! It skips from .5 to .7!

My sentiments exactly. We don't issue credit cards, so what I did was go to that table of what applies to all open-end credit or open-end (not home secured) and begin to figure out what we needed to do. Now I feel like I'm missing relevant sections - such as these disclosure rules and maybe periodic statement rules??

great fun, huh!

Okay....I'm definitely behind in my new reg reading, but have finally started on the 7/1/10 Reg Z revisions. And yes.....I'M SOOOOO CONFUSED! HELP ME!!!!

we are a very vanilla bank and don't have credit cards. I have printed both the Jan. 29, 2009 Federal Register and the Feb 22, 2010 Federal Register. Which is it, or is it both? The Feb 22 register, I do see a table in there of the sections that must be complied with by 7/1/10, but from what I can tell, there's really nothing there for us other than a bit of jibberjash......the most I can tell from that is the 45-day requirement. What am I missing there?
As far as the Jan 2009 register, was that one retracted? I thought I had read that somewhere but maybe again....I'm confused. Because I see you guys talking about periodic statements........

Wait a minute....I might have it.....Let's see, the January 2009 register must still be complied with by 7/1/10; however the February 2010 register are those new provisions addressing the Credit Card Act that will also have to be complied with by 7/1/10......Correct????

Ya know, I'm not really sure. This one was so botched up, I mean really! I ended up mostly following the regulation posted here. I have done a table for our Ready Reserve (bounce protection LOC), changed the Notice of Changes to 45 days and further described our FC calculation info.

We decided to do away with our OE LOC's (unless over $25K)

I'm wondering just WHAT ELSE AM I MISSING. I know the statement will change and I'm not sure how we are going to handle that considering it's such a simple product and normally just appears in with the deposit account it's tied to. I'm hoping (assuming) JH is working on that issue!

I have been so caught up with other things going on like Reg E and just got done with a compliance exam. I am now ready to start in on the 7/1/2010 changes for Reg Z. We do not issue our own credit cards, they are outsourced. We do have a two open end products available, overdraft line of credit and HELOCs. From what I understand, the periodic statement requiret for HELOCs is still in the works but what changes do we need to comply with for the overdraft line of credit for periodic statements?

Let's see shopgirl...I did dig this up:

12-08 - final Reg Z rules to both content and format of OE (not home secured) disclosures eff 7-1-2010. 1-12-2010 board issued final rules implementing those portions of the CC Act, eff 2-22-10. The 1-2010 rule accelerated the effective date (2-22-10) of a number of the Change-in-Terms and advertising changes.

we are just like you - we have credit cards, but issued through another company, and we do HELOCs and overdraft lines. I thought I was all up to speed with the Reg Z changes, and thought that the only ones that affect us took place on Feb. 22nd, however, someone told me there are July 1st changes that will affect us too! Anyone know what these are? Any help is GREATLY appreciated!

Your OE (not re secured) LOC's will need a tabular format, I'm using G-17 for our overdraft lines.

Your statement layout will change.

HELOC's are not final yet. (unless I missed something along the way which is entirely possible at this point!)

This is the listing that I have compiled of 7/1/2010 changes that affect Home Equity Lines of Credit and it looks like most of the changes involve choices:

Account-opening disclosures - 226.6(5) may use Model Form G-3 Long Form Billing-Error Rights (same as current form) or use new model form G-3(A) for plans other than Home-Equity.

Subsequent disclosure requirements – 226.9(a)(2) which pertains to the short-form billing rights says that for Home Equity plans Model Form G-4 (same as current form) can be used or G-4(A) (form for plans other than Home Equity)

Periodic statement – 226.7
Creditors who offer home equity plans subject to 226.5b may use periodic statement requirements of 226.7(a) or alternatively use any of the requirements of (b) for open-end not home secured plans. Requirements of 226.7(a) are basically the same as the current requirements with the following changes:

1. A new exception was added as 226.7(a)(4)(ii) under periodic rates: An annual percentage rate that differs from the rate that would otherwise apply and is offered only for a promotional period need not be disclosed except in periods in which the offered rate is actually applied.
2. Under section 226.7(a)(7) Annual percentage rate, the phrase “At a creditor’s option” was added. However, if the creditor elects not to do this disclosure they must comply with 226.7(b)(6) regarding disclosure of interest and fees.
3. Under 226.7(a)(8), terminology was changed from “Free-ride period” to “Grace Period”.

I think we will use G17d for our account opening disclosure for the LOC. What model should the LOC follow for periodic statement?

G17d will be the one we use for our personal LOC's also. As for periodic statement, the only complete model forms in Appendix G are are G-18(F) and G-18(G)and both of these are for credit cards so I think we are on our own for LOC statements. Or perhaps I should say - at the mercy of the company used for processing.

Yes, I believe JH will be handling the statement end of things for us, so I haven't looked to closely at that.

Anyone a Fiserv bank?

Yes we are a Fiserv bank, have you received any communication from them in regards to the upcoming changes?

Fiserv/ITI - haven't heard anything yet.

Our credit card statements cut on the 24th of the month.
Is this an issue for the new requirement to disclose fees and interest for the month to date and the year to date?

226.7(b)(6)(ii) and (iii) refer to disclosing both interest and fees for statement period and calendar year to date. These sections also reference Sample G-18(A) which uses terminology of "Total fees for this Period" and "Total Interest for this Period". Following the language and format in G-18(A)should provide for compliance regardless of the statement date.

Thanks Raquel.
I have another question dealing with terminolgy changes.

We are updating the credit card application disclosure and account opening disclosure to replace the term "grace period" with "how to avoid paying interest on purchases".

We are also updating the front side of the periodic statement to replace "finance charge" with "interest charge" and "other charges" with "fees".

This might be a silly question but..... Do we also need to replace all of those terms on the account agreement and the back of the periodic statement where we explain how to compute the finance charge?

The application disclosures and the use of the heading "How to Avoid Paying Interest on Purchases" is used when all types of purchases have a grace period.

For the account opening disclosures, if a grace period is offered on all features of an account you use "How to Avoid Paying Interest". However, if a grace period is not offered on all features (such as cash advances), you must use "Paying Interest".

Fiserv SourceOne bank here. I have a communication from them about the new statement format. They are NOT following the models. Appears they are only meeing the basic requirements. Not in the office today. But could share more on MOnday if you contact me.

Do we need to disclose on the statements the new APR if the rate changes on i.e. Variable rate Lines of Credit at any time during the statement cycle.
(i.e. Eff 07/20 Loan Interest rate change from 5.00% to 6.00%)

In regards to credit card apps and solicitations, we do not currently issue credit cards, but we do provide "take home" applications on behalf of another card issuer. We do not currently accept completed applications to funnel through to the card issuer, but we direct the customer to either contact or mail the completed application to the issuing bank. Because of our limited involvement in this process, are we still subject to the disclosure requirements that go into effect on 7/1? What if we were to "funnel" applications through to the card issuer? This is an idea they have asked us to entertain.

Look at this from the customer's perspective - if the actual card issuer does NOT make appropriate changes by 7/1/10 - will your customers blame you or just the card issuer?

I have a question - Do fees for expedited services need to be disclosed in the table provided at account opening? Examples would be fees for an expedited payment or card. I cannot find in the regulation where its required, but a seminar presenter stated they were required to be in the table. Thoughts?

Thanks.

From the preamble:
"For example, a fee for expedited delivery of a credit card is
a charge imposed as part of the plan under § 226.6(b)(3) but is not required to be disclosed in the account-opening summary
table under § 226.6(b)(1) and (b)(2)."

We have overdraft lines of credit which are unsecured - are we required to put the disclosures in table format? (section 226.6, etc) If so, do all the requirements of the table apply to us, or only some?

I assume you are referring to the account opening table - yes, it must be in tabular format. You will have to read 226.6(b)(1) to see what the requirements are and whether they apply to your product.

agree. I'm planning to use a modified G17D.

I need help understanding a bit better Section 226.5a(d)(1) Credit and Charge Card Applications & Solicitations; Telephone Applications and Solicitations:

My bank promotes credit cards. The credit cards have our bank's name. However, the approval and servicing is done by a vendor (elan). We follow up via telephone with recently acquired customers a few weeks after a deposit account is established to discuss their needs and if we can meet their needs with any other products. During this telephone conversation we may mention credit cards. Would this be considered a "solicitation"? and do we have to follow this section's requirement of disclosig oral disclosures?

We have no fees on our ODP accounts. No late fees, no transaction fees, etc. Do I still have to have a "fee table" on my periodic statement? And if not, where does it say that in the Reg?
Thanks!!

Questions regarding the crediting of payments as is required in 226.10b.

How are all of you doing this? What if the customer comes in on a Saturday? Do you use the hours your branch is open. For example if a drive through is open until 5:30 but you accept payments until 5:00. What happens if a customer pays at 5:15 and it causes a late fee?

If a Bank merely provides credit card applications in it lobbies for other card issuers, would that make the Bank a card issuer (as an agent)? Also, what type of activities would qualify the Bank as a card issuer?

Our vendor just gave us what the back of the statement paper will look like. It has a section on Electronic Transfers...if a customer can access ODP line with debit card, do we need to include this?

I have the same question...does anyone know the answer to this question?

For personal line accounts (not RE secured) - if we do not allow access to the account via a debit or other type of card do we need to change our disclosures etc.

Our statement vendor is stating that we do have to include the late payment warning on our non-credit card open-end loans. My initial reaction was the same as yours since the reference to the warning in (b)(13) is to (b)(11), which is only for credit cards. I think the reg is ambiguous enough to interpret it either way but would like not to have to include this warning on every statement. Are others not including the late payment warning?

I don't believe it is required and our statement vendor is not doing this warning.

No answers. Still confused. Figured I'd wait a few weeks and see what shakes out - has anything shaken out??? Can anybody answer the below (or at least provide an opinion)?



N

I just got word from our vendor and they are going to put the late payment warning on open end lines of credit non RE secured.

I had this same question and found the answer in the offical staff interpretations (p. 7850):

The bank should determine if it is considered an agent by referencing the agreement between the bank and card issuer.

A financial institution may become the agent of the card issuer if an agreement between the institution and the card issuer provides that the cardholder may use a line of credit with the financial insitution to pay obligations incurred by use of the credit card.

I am working my way through this confusing mess as well & would like a quick clarification...

I am ready to go with our credit card accounts but I need to make sure I am making appropriate changes to our overdraft line of credit product. Am I correct in that 226.6(b) is applicable, which is the section covering account opening disclosures as well as 226.7(b) covering periodic statements? The account opening disclosures require a table but that would all be part of the note, right? Is there any requirement to change the application? If so, could you provide me with a cite for that requirement? Thanks so much for any guidance!

All non-dwelling secured lines need the account opening table and are subject to periodic stmt changes. Application/solicitation disclosure requirements apply only to cr cards.

Thanks ahou. Correct me if I am wrong, but wouldn't the account opening table appear in the note/account agreement? I guess I would think that this is something the vendor that provides our note would be updating but haven't heard a word on it.

Ours is separate. I don't remember seeing a requirement that the acct opening table be on a sep doc. If that is correct, it could be in the note as long as it is in the tabular format and meets all of the formatting/content requirements.

Okay, I think I got it. Thanks again for your help!

I started looking at some statements from the bigger banks and many of them have changed the verbiage on the back of their statements to read "interest Charges" instead of "Finance Charges". Not that the bigger banks are always right, but I assume they have a few more people in their compliance department than I do!

Is there model language that needs to be used?

The model language for the bal computation method uses "int chg"

if memory serves me, that's one of the language changes.
In fact, that's true in the Schumer disclosure as well...the language is now "minimum Interest Charge"/ Paying Interest, etc.

I just want to verify that for the July changes there are not changes that will affect HELOC periodic statements.

Saal---YOUR QUESTION was regarding Change In Terms notification for open end non-credit card account. We are going to increase rates and implement a floor on our personal lines of credit.

My comment:
We offer a personal Line of Credit with a variable rate and the account can be used for occasional overdraft protection. The account cannot be accessed by a card. There could be a debit card tied to the checking account with overdraft protection but that access card does not directly access the line of credit.

Our account forms vendor told us that if we had a floor we had to abide by limits in 226.55 for credit cards. The additional restrictions apply because according to 226.9 if you have a floor the variable rate is under the bank's control and several additional restrictions apply.

I am still confused as to why 226.55 applies since the line is not accessed by a credit card.

This one has left me confused-- Just thought I would share the floor information with you before you jumped in.

My bank does not offer credit cards but we have an overdraft protection line of credit and HELOCs. I know that we have to make changes to the statement format for the overdraft lines so that statements mailed on or after 7/1/10 are compliant. The final rule says that for HELOCs subject to section 226.5b of Reg. Z you do not have to comply with the statement format changes of the 2/22/10 final rule. You can wait for the FRB to issue a final rule regarding the 8/26/09 HELOC proposal. If you have HELOCs that were issued prior to November 7, 1989 and thus were not subject to section 226.5b, then I believe you have to comply with the new statement format requirements and some of the other provisions.

If our service bureau is changing over all open-end credit statements to the new format, do we have to send a notice of change in terms to all existing customers since their credit line agreements that included the 226.6 disclosures referrred to finance charges and now the statements will be referring to interest charges? I would think you would need to say that whereever the term finance charge appears in your credit line agreement, please substitute the phrase "Interest charge." I'm saying this because I recall that there is something that requires consistency of terminology.

Does anyone use LaserPro? I have reviewed our Laser Pro updates for the new Reg Z requirements effective July 1, 2010. The question I have is in regards to our check loans which are NON-HELOC consumer purpose personal lines of credit....there is not an APR disclosure with the Laser Pro note. The overdraft is activated by a check that overdraws the consumers check that over draws the checking account. Is there anything we need to be concerned about here with the new Reg? Any help would be appreciated. Thank you.

Bump.

I don't know for sure, but I wouldn't think that a reg required change in terminology on the periodic statement would require a change in terms notice. If it does, we'll all be sending change in terms notices to all our open-end credit customers because they'll all have the old "finance charge" terminology in the notes.

Question - now that the regulators have defined a variable rate (based on an external index)that has a floor rate as being within our control and requiring the 45 day advance notice. We need to change our Personal Credit Line product to one that is conducive to sending change in terms notices 45 days in advance. Our current product rate MAY change each month.

So, our credit officer would like to state that the rate is a fixed rate that may change at our discretion. I've been unable to see anything that would prohibit this and wanted to see if anyone else knew of a prohibitive factor in the reg.

walden, I think if you look at the regulation, probably where it discusses the table info, you can't call something fixed that can change. I don't know any way around the 45-day notice if you change it later on, but you can't call it fixed unless you meet the restrictions the reg imposes.


(we discontinued our non ODP-type personal LOC because we decided it was going to be too difficult to administer).

I think this is what I was thinking about:

If an annual percentage rate is required to be presented in a tabular format pursuant to paragraph (a)(3)(i) or (a)(3)(iii) of this section, the term fixed, or a similar term, may not be used to describe such rate unless the creditor also specifies a time period that the rate will be fixed and the rate will not increase during that period, or if no such time period is provided, the rate will not increase while the plan is open.

I didn't see these issues addressed yet so hopefully someone can clarify a couple of things for me re: O/end LOCs, not credit card- or HE- related. I'm so confused....

Currently, our LOC disclosure (Fed box) discloses the approved APR, daily periodic rate, approved LOC and due date. I'm thinking we do away with this "Fed box" info and replace it with the new account opening discl but can't determine if I use G-17B or G-17D for a LOC? Does anyone know?

Also, none of the account opening samples in G-17 show the disclosure of the periodic rate, yet according 226.6(b)(4)(i)(A) it sounds like we have to disclose the periodic rate. Are periodic rates required to be disclosed?

Lastly, only a creditor - in connection with sales, i.e. applying for credit at JC Penney's, can disclose a range of APRs at account opening/approval...correct? [226.6(b)(2)(i)(E)]

For anyone who can reply, I THANK YOU!

I used 17D for our RR product because it most closely resembled the product itself.

Our periodic rate is in the disclosure body, not in the schumer box.

Not sure about your third question...will look up your reference and see what it's referring to.

I'm not finding this specific reference:

[226.6(b)(2)(i)(E)]

However, stopping at (i), I do not see where this pertains to charge cards...it applies when you have more than one APR for a particular category:

(i) Annual percentage rate . Each periodic rate that may be used to compute the finance charge on an outstanding balance for purchases, a cash advance, or a balance transfer, expressed as an annual percentage rate (as determined by § 226.14(b)). When more than one rate applies for a category of transactions, the range of balances to which each rate is applicable shall also be disclosed. The annual percentage rate for purchases disclosed pursuant to this paragraph shall be in at least 16-point type, except for the following: A penalty rate that may apply upon the occurrence of one or more specific events.


The only (E) reference I see pertains to APR's varying by state.

Thanks Joker.

Thanks, RR!

The reference that I gave appears on page 584 of rule...and yes, it does talk about APRs that vary by state, too. The heading starts: (E) Point of sale where APRs vary by state or based on creditworthiness and from what I understand, it talks about establishing a LOC in person in connection with financing the purchse of goods or services...just making sure that someone else is reading this section the same way I am as I have a manager that wants to use this to give a range of rates at account opening and I say we cannot. Thoughts?

I have another question...the "returned payment fee" listed on the disclosure, under "Penalty Fees".....I am assuming that this is a fee that a creditor may charge and is different from (in addition to) an "NSF"/returned check fee. Does anyone have any thoughts on how to interpret that fee disclosure requirement? We charge one fee for on-us and another fee for non on-us returns.

Returned payment fee is the NSF-related fee that is charged to the open-end account (not to a deposit account)

Waldensouth,

I really don't say this very often but I think your credit officer is right. Based on the following Commentary sections, it seems permissible to establish product that does not meet the variable rate requirements but that the rate may change. However, this product would require a 45 day notice requirement. If the products meets the variable rate requirements such as tied to an index, etc. and the rate is changing in accordance to your account agreement, you would not need to send a rate change notice.

Commentary to 226.6(b)(4)(ii) Variable-rate accounts.
1. Variable-rate disclosures—coverage.
ii. Examples of open-end plans that permit the rate to change and are not considered variable-rate include:
A. Rate changes that are invoked under a creditor’s contract reservation to increase the rate without reference to such an index or formula (for example, a plan that simply provides that the creditor reserves the right to raise its rates).

Commentary to 226.9(c)(2) Rules affecting open-end (not home-secured) plans .
1. Changes initially disclosed . Except as provided in § 226.9(g)(1), no notice of a change in terms need be given if the specific change is set forth initially, such as rate increases under a properly disclosed variable-rate plan in accordance with § 226.9(c)(2)(v)(C). In contrast, notice must be given if the contract allows the creditor to increase the rate at its discretion.

Does anyone know if the + and - is mandatory in the "Summary of Account Activity" box by each dollar amount of activity? Our current mock-up does not include +/-, but I am afraid that since it is in the Appendix G models we need to program that into our statements. Any opinions?

My opinion is yes, do the programming. You may have some really unusual situations in which you have reversed certain debits and credits, and have to put the net amounts in categories that imply addition when the transaction summary says subtraction, and vice versa.

This question is re: "Transaction Charges" under 226.5a(b)(4) and 226.6(b)(2)(iv). The rule provides no examples so I'm hoping for some clarification. Is the intention to disclose the transaction charges that actually only "hit" the credit card balance? Or, are we required to disclose say a card replacement fee even if that fee is charged to a deposit account and not the credit card?

We use Laser Pro and also have a check accessed PLOC and an overdraft line of credit,and their new release includes the revised Credit Agreement and Disclosure which includes the APR and fees disclosures in the tabular format that will be required 7/1/10. It also discloses the APR in the agreement section as it has in the past. We're in the process of setting it up and testing right now.

And yes, you need to meet the updated disclosure requirements for your personal lines of credit and overdraft lines of credit.

In regards to open-end credit secured by RE; is a 'change in terms' notice required to be provided to a borrower if they have signed a new Agreement? Our processor want us to code renewals and/or extension of terms so that a message appears on the billing statement regarding change in terms and we would then provide the borrower with an insert.

We use LaserPro as well. It just came up today that the new tabular format Account Opening Disclosure is combined with the Credit Agreement. We have some folks who would prefer to combine the tabular Account Opening Disclosure with the application form and Billing Rights Disclosure. Is that possible?

The final rule for the 8/22/10 CCARDA provisions: http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20100615a1.pdf

Also, I've added to my original chart to include non-CCARDA changes to open-end credit rules.

All Open-end Credit (including home secured)
226.5(a)(1)
226.5(a)(2)(i)
226.5(b)(1)(i)
226.5(b)(2)(i)
226.5(b)(2)(ii)(B) (if you have a grace period)
226.5(c), (d), (e)
226.8
226.9(a)
226.10 (except (b)(3), (e), and (f)
226.11(a), (b)
226.12 (for accounts with credit card access)
226.13
226.14 (except (c)
226.16(a)
226.16(e), (f)
226.57(c)

Open-end Credit Not Home Secured
All of the “All Open-end Credit” rules, plus:
226.5(a)(2)(iii)
226.5(a)(3)(iii), (iv), (v), (vii)
226.5(b)(1)(ii), (iv)
226.6(b)
226.7(b)(except 226.7(b)(11) and (12)
226.9(c)(2)(i), (ii), (iii), (iv)(A), (iv)(D), (v), (vi)
226.9(g)
226.16(b), (c), (g), (h)

HELOC
All of the “All Open-end Credit” rules, plus:
226.5(a)(2)(ii)
226.5(a)(3)(ii)
226.5(b)(4)
226.6(a)
226.7(a)
226.9(c)(1)
226.14(c)
226.16(d)
226.30(b)

Regulation Z (recently amended sections that apply to HELOCs and Open-end Credit—Not Home Secured)
Subpart A—General: 226.1-226.4
Subpart B—Open-end Credit 226.5-226.16
Subpart D—Miscellaneous 226.30
Subpart G—Special Rules Applicable to Credit Card Accounts and Open-End Credit Offered to College Students 226.51-226.58

226.1 Authority, Purpose, Coverage, Organization, Enforcement, and Liability
226.2 Definitions and Rules of Construction
226.3 Exempt Transactions
226.4 Finance Charge
226.5 General Disclosure Requirements (226.5a Credit and Charge Card Applications and Solicitations; 226.5b Requirements for Home Equity Plans)
226.6 Account Opening Disclosures
226.7 Periodic Statement
226.8 Identifying Transactions on Periodic Statements
226.9 Subsequent Disclosure Requirements
226.10 Payments
226.11 Treatment of Credit Balances; Account Termination
226.12 Special Credit Card Provisions
226.13 Billing Error Resolution
226.14 Determination of Annual Percentage Rate
226.15 Right of Rescission
226.16 Advertising
226.30 Limitations on Rates
226.57 Reporting and Marketing Rules for College Student Open-end Credit

ok, someone help me out. In the 2/22 rules it had 226.9(c)(2) and (g) as applying to all open-end (not-home secured) consumer credit plans. Starting on page 14 of the final rule that came out today it discusses these sections.

On page 16 it states:
Consistent with the approach that the Board has taken in implementing other provitions of the Credit Card Act that apply to credit card accounts under an open-end consumer credit plan, [these sections] apply to "credit card accounts under an open-end (not home-secured) consumer credit plan...." Therefore...overdraft lines of credit accessed by a debit card are not subject to the new requirements [in those sections].

Even when I go to the sections in the final rule it states:
Rules affecting open-end (not home-secured) plans...For plans other than home-equity plans.

So, wouldn't overdraft lines of credit still be included?

I have a question about model form G-17(D). It appears that this is the form to use at account opening for an open end line of credit that is not dwelling secured.

What rate do we use for "APR for Cash Advances", the APR that is disclosed on the TIL?

Usually, it's the daily periodic rate annualized. I say that, but the only one we offer anymore has no fees involved, so it is fairly simple.

We offer an unsecured Overdraft Line of Credit. The LOC is linked to a checking account that has a debit card attached. We just received our updated proof from our document vendor that is in the required tabular format with the Billings Rights Notice however, an additional notice of "Your rights if you are dissatified with your Credit Card purchase". There is no Credit Card tied to the ODL or deposit account. The only card is a Debt/Atm card. Why would we want this Credit Card disclosure on our ODL agreement/note?

Good question. If your procedures for handling merchant disputes pretty much follow those credit card rules, then maybe this would be useful information for the customer?

Quick follow-up to the question...is it appropriate to remove the word "Cash" from this section so that modified it is "APR for Advances"? To me, the term "Cash Advances" is more for credit cards...

Our open end LOC statements for June 2010 that fall under the Reg Z change requirements are set to go out July 1st. Can we get away with sending the statements out in the old format (not changing to the new terminology requirements)?

I apologize if this has been discussed but I couldn't find it.

Anyone have a chance to digest this bit yet?

Any statments mailed on or after July 1 need to be in the new required format.

Thank you

Thanks UGA for the heads up. I feel like I've gone round and round on this. After reading the reg and OSC til I'm dizzy, I'm still convinced that the new variable rate restriction related to floors is for credit cards only - so, I called my state bankers association for a second time in a 5 month period to make sure their opinion hadn't changed that a floor on a non-credit card open end account is still allowed and doesn't require a CIT notice when the rate is increased from the floor to the index plus margin. The attorney I spoke with said that his opinion hadn't changed, but that he had been fielding some similar questions lately and said that this communication on removal of open end floors seems to be coming from some of the forms vendors (which is the impression I'm getting from reading the threads) through some private conversations they've had with the fed. Long and the short of it is that his opinion is that until we get a public statement from the fed that this restriction applies to all open end non home secured that it's related to credit card accounts only and that removal of the floor or cit notification isn't required.

ARGHHHHH! - this Credit Card Act is entirely too convoluted for words!

we have an open-end personal line of credit that our senior credit officer wants to get rid of because of the floor rate issue. He want's to convert some of the small ones to our Overdraft line of credit product. 226.9(c)(2)(iv) seems to cover change in terms notices. the opt-out referenced in (3) - does that only apply to credit cards? Do we have to have the old interest rate apply to the existing balance with the increased APR applying to future balances?

The floor rate issue doesn't apply to LOC.

Just saw our vendor's LOC statement. It looks nothing like the model form. Very frustrating.

ahou, I just saw our periodic statement yesterday and to be honest, I have been desperately trying to determine what needs to be there. We don't have credit cards so my concern is only for lines of credit. Our product is pretty vanilla as we are a conservative bank.

I have tried to understand what applies to them, but without a model form...I am lost. I can't even determine if information needs to be in a table format. i would appreciate any information as I am sure others would as well. I know I am on a rant, but this is beyond messed up. It should not have to be this difficult...

ahou - Not sure if you've read the sections of the OSC below or not. Our vendor's statements don't look anything like the model form either and I thought they were not in compliance, but then I found this in the OSC to the forms and now I think we're ok (the forms still aren't pretty, but at least I think they're in compliance).

10. Forms G-18(F)-(G). Forms G-18(F) and G-18(G) are intended as a compliance aid to illustrate front sides of a periodic statement, and how a periodic statement for open-end (not home-secured) plans might be designed to comply with the requirements of § 226.7. The samples contain information that is not required by Regulation Z. The samples also present information in additional formats that are not required by Regulation Z.

iv. Model Forms G-18(F) and G-18(G) demonstrate two examples of ways in which transactions could be presented on the periodic statement. Model Form G-18(G) presents transactions grouped by type and Model Form G-18(F) presents transactions in a list in chronological order. Neither of these approaches to presenting transactions is required; a creditor may present transactions differently , such as in a list grouped by authorized user or other means.

ahou (or anyone else that did this),
We have less than 1000 cards. Of those 0 (zero) have gone over their limit since 2/22. Which is good, but now we're thinking of doing this - no longer allowing card holders to go over their limit.

If we do that:
1. Must we send a change in terms?
2. We'd be changing the agreements. Must we send to all cardholders now?

I, like you, talked myself out of a change in terms, but I keep going in circles about it.

The worse thing about regulations is when you get little or no guidance. I'd much rather have a "measuring stick" than be left in the dark. For cr cards, there are more requirements. LOCs were kinda left out.

ahou,
Can you comment on my post just above yours?

I would say yes, if your existing agreement states that you allow them to go over the limit.

If your existing agreement states that you do not allow them to go over the limit, but if they do, you'll charge them a fee...then I'd say no because you have not changed your policy about allowing them to go over the limit, but are eliminating the fee. (you are not increasing or adding a fee)

The final rule for the 8/22/10 CCARDA provisions was published last week. I am unable to locate final rules for the 7/1/10 deadline? Was the final rule published - if so, where is it?

The final rule was published in the federal Register on 2/22/10.

Anybody have any ideas on this?

Do we need to send an updated credit agreement and account opening disclosure to our existing open-en non real estate secured loans on July 1?

Not in my opinion...your statement will change, however.

Thank you!

Any LaserPro users here?

If you charge a Inactive Fee ( A fee when the account has not been used in the past 12 months) where are you disclosing it?

When we choose the "Inactivity Fee" option, it places it in the "Set up and Maintenance Fees" box of the new form and then has this nice disclaimer:

NOTICE: Some of these set up and maintenance fees will be accessed before you begin using your account and will reduce the amount of credit you initially have available. Based on your initial lomit of $______, your credit limit will only be $_____.

You may still reject this plan, provided that you have not yet used the account or paid a fee after receiving a billing statement. If you do reject this plan, you are not responsible for any of these fees or charges.

Joker, I've missed something - I thought the only statement changes were to credit cards. 226.7(b)(14) applies to all open-end(not home secured) consumer credit plans but it only applies to a deferred interest disclosure. Please tell me what statement changes should occur on the loan side - not credit cards - where I can find that.

226.7(b) 226.8 & 226.9 cover both cr cards & LOC.

226.7(b)(11)&(12) only apply to cr cards. Read 226.7(b)(13) carefully - most of it applies to cr cards except for the ending bal.

So basically, unless changes are being made to the account - the statement changes involve:
1. the way we disclose transactions
2. the format - grouping together certain items.

I thought it was so nice of the regulators to give us that handy little chart at the beginning - but it apparently doesn't cover everything.

I just reviewed a statement produced by our vendor for our open ended non home secured line of credit. Everything seems to be correct but I question the statement peridoic rates may vary. They don't use those terms. By each daily periodic rate they have a (v) then at the bottom it states (v)= variable rate. Will this cause a problem?

Don't forget about the required terminology "Interest Charge" and "Interest Charged" plus "Total Interest", "Fees" and "Balance Subject to Interest Rate". Of course use "Annual Percentage Rate" too.

ahkcompliance, there is no required terminology for the variable rate disclosure - so you're ok.

Great! I didn't think there was any required terminology but wasn't sure. It has always been peridoic rates may vary.

We use LPL - we don't have an activity fee but do have an annual fee. We were fighting that NOTICE as well, but finally figured out we needed to go back in and enter a minimum credit limit for the plan (not for the line but for the product itself) because the 15% calculation is off of the plan minimum which we had at -0- and was triggering the NOTICE. Once we set our minimum, the NOTICE no longer appeared. Hope this helps.

Does anyone know if this change applies to an overdraft line of credit attached to a checking account?

Yes, we made the required changes to our overdraft line of credit that is tied to a checking.

Thanks, ahou, for your help and your lists. I took your list of sections that impact each and made a little book of sections that affect our open-end credit products non RE secured and another book for our HELOCs. We don't have credit cards.

Does the 45 day notice of default rate only apply to consumer unsecured RLOC's or would it also apply to a consumer RLOC secured by a certificate of deposit?

Thanks for any replys

I could be wrong, but I think it applies to anything other than RE secured.

I would agree to that as well.

Our programmers are struggling with th "Interest Charge Calculation" Box on the bottom of the periodic statement. We have PLOCs that may have a rate change during the statement cycle. We are identifying the rate change in the Interest Charged section, but cannot break down the different balances to identify what rate applied to what balance in the Interest Charged Calculation on the bottom. Our vendor has endorsed and provided a weighted rate and weighted balance for that section. Is this an acceptable solution?
Also, is it possible that this int. calculation box only applies to credit cards and I missed that? This is very difficult for PLOCs. Appreciate any input or help.

Deena, thanks for your response.

Is everyone keeping the phrase "finance charge" in credit line agreements for section 226.6(b) disclosures that will be provided on or after 7/1/10? Will you provide any explanation in the credit line agreements to explain that the term "interest charge" will appear on the periodic statements?

I've been looking at section 226.5(a)(2)(i) which says "Terminology used in providing the disclosures required by this subpart shall be consistent." Comment 4 of the OSC to this section says "Language used in disclosures required by this subpart must be close enough in meaning to relate the different disclosures; however, the language need not be identical."

Section 226.4 of Reg. Z still refers to finance charges and section 226.6(b) does not mandate the phrase interest charge except for the table required for credit card plans.

We have some loans set up as revolving lines of credit attached to a checking account for overdraft protection - I did not consider these accounts when looking at the Reg Z open end changes because they are consumer loans that are extended annually - should they be considered because they are revolving?

We have a RR account (with no actual maturity) that is tied like your's is and I had to make changes to our account opening disclosures, so I would say yes. The Schumer box content is what changed.

I'm sorry to ask such a simple question but we cannot seem to agree here on what needs to be disclosed as the ending balance (and thus the previous balance)on our overdraft LOCs. Some say that it's only the principal balance while others believe that it includes the interest due (our methodology does not seem to fit the one described in the OSC at 7(a)(1)3). What ending balance are others disclosing?

Thanks that helped!!

I was going to make a brief power point pres pertaining to the Reg Z changes eff on 7/1 to present to the lenders at a loan committee meeting tomorrow, but I am drowning in month-end and qtr-end stuff!

Has anyone already created a similar piece they would be willing to share?

We have an open-end consumer (not home secured) loan that is called Write a Loan. They access the line by writing a check. They do not have a credit card. It is not tied to their checking account.

We do not have to comply with 12 CFR 226.9(b)(3)... or do we?

Did anyone create a communication piece to customers about the changes to their statement and the terminology? If so, would you be willing to share?

Are there any Fiserv banks that offer a DDL product?

We're on Fiserv and have a DDL product.

Is the Over the Credit Limit opt-in/notification only applicable to college students? Since it is in 226.56 I am "assuming" that to be the case but at this point I'm not even sure what my name is! We don't have credit cards - just open-end personal credit lines and HELOCs. Talk about burn-out - need some reassurance that I havent totally lost it. Thanks

Help! I have found out our credit card program vendor does not handle the initial Reg Z disclosures. The form we currently have looks to be pretty outdated and I am looking for a kind soul to share their updated disclosure with me.

Our program is structured that we approve all applications, but a third party handles all the payments and statements. We carry the total balance on our books as they are our cards, as well as handle all collection activities.

As I dig deeper into this, now I am wondering about initial disclosure requirements for Debit cards as well.

Both of these areas have now fallen to me to make sure they are compliant - again, help!

I have a protected balance question and need help. If I have an account with a protected balance and the account then goes delinquent, can I increase the APR on the protected balance to the penalty APR?

Any help is GREATLY appreciated.

Does anyone know if the upcoming changes regarding Credit Cards, specifically, how much can be charged on late fees, overlimit fees, and returned check fees, will be applicable to all open-end lines of credit?

It's just credit cards (for now) AND, it's only consumer CC.

Can anyone help with my protected balance question? If I have a protected balance can I increase the APR on that balance if the customer defaults?

I hate to beat a dead horse or attempt to bring him back to life...but would anyone be willing to share how they handled the payment cut-off requirements? I have read through the posts, but wanted to see if there was any consist position in the final decision making. If you don't mind would you please include your regulator name.

Thanks for the assistance!!