HELOC historical table and SOFR

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Question:

Reg Z section 1026.40 requires us to disclose a historical table to reflect the most recent 15 years of index values. However, SOFR has only been available since 2018. Do we only need to disclose the years starting from 2018 even when the length of the plan is more than 15 years?

Answer:

Your question is a great example of things that can be found in the Official Interpretations of Regulation Z. In section 1026.40 (Requirements for home equity plans), subsection (d) (Content of disclosures), paragraph 12 (Disclosures for variable rate plans), subparagraph (xi), we see the requirement for that table of historical data.

The Official Interpretation of that subparagraph -- cited as comment 40(d)(12)(xi) -- comprises several numbered paragraphs. Paragraph 40(d)(12)(xi)-1 spells out the answer to your question in its last sentence: " If the values for an index have not been available for 15 years, a creditor need only go back as far as the values have been available and may start the historical example at the year for which values are first available."

For Regulation Z and most of the consumer-protection regulations that are posted in the BankersOnline Regulations pages, the Official Interpretations or Official Commentary have been broken down and included on the same page as the section of the regulation they pertain to. In some cases (Reg Z is an example), the Official Interpretations are broken down further and inserted following subsections of sections. For example, the Official Interpretations of Regulation Z subsection 1026.40(d) appear below subsection 1026.40(d).