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Fed Box Disclosure for Consumer Loan Secured by CD

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Question: 
On a consumer loan secured by a certificate of deposit, is it required for the "Required Deposit" box to be checked in the Fed box disclosures?
Answer: 

Yes, under the specific conditions outlined in the regulation-

Required deposit. If the creditor requires the consumer to maintain a deposit as a condition of the specific transaction, a statement that the annual percentage rate does not reflect the effect of the required deposit.45

45 A required deposit need not include, for example: (1) An escrow account for items such as taxes, insurance or repairs; (2) a deposit that earns not less than 5 percent per year; or (3) payments under a Morris Plan.

First published on BankersOnline.com 3/21/11

First published on 03/21/2011

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