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Advertising No Closing Costs

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We are currently advertising that we have no closing costs associated with our HELOC products. Is it true that as of October 1, 2009, if we continue to advertise no closing costs this becomes a trigger term and requires additional disclosures? If so, what additional disclosures are required?

It is not a new requirement - it has been there for years. No closing costs is a negative reference.

226.16(d) Additional requirements for home equity plans--(1) Advertisement of terms that require additional disclosures. If any of the terms required to be disclosed under Sec. 226.6(a) or (b) or the payment terms of the plan are set forth, affirmatively or negatively, in an advertisement for a home equity plan subject to the requirements of Sec. 226.5b, the advertisement also shall clearly and conspicuously set forth the following:

(i) Any loan fee that is a percentage of the credit limit under the plan and an estimate of any other fees imposed for opening the plan, stated as a single dollar amount or a reasonable range.

(ii) Any periodic rate used to compute the finance charge, expressed as an annual percentage rate as determined under section Sec. 226.14(b).

(iii) The maximum annual percentage rate that may be imposed in a variable-rate plan.

First published on 9/28/09

First published on 09/28/2009

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