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New Reg Z - Workout Loan

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Question: 
Do I need to supply an early disclosures/TIL and follow the new Reg Z rules for a matured loan that is considered a workout due to default/delinquencies?
Answer: 

Generally, situations leading to workouts such as default or delinquency are considered beyond the scope of the consumer protections. This borrower is not making a decision or choice. Instead, the borrower and creditor are working out a compromise, so disclosures are not required.

Disclosures can be a very nice thing to do. Another consideration would be that when you are working with a consumer who has already encountered problems with repayment, you want to be very careful. Disclosures even though not required, could be a nice thing to do, but be sure that they are correct.

At a minimum, you should give the consumer information about the workout rate and payment schedule. Since disclosures aren't required, you can do this in whatever format works for your systems.

First published on BankersOnline.com 7/12/10

First published on 07/12/2010

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