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Reg Z Disclosures- Overdraft Repayment Plan

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Question: 
Regarding overdraft repayment plans: Reg Z disclosures will be triggered if the loan is payable by written agreement in more than 4 installments. So, as long as the written agreement says 4 or less payments, may the consumer make bi-weekly payments totalling 8 payments until paid in full and still be compliant without giving Reg Z disclosures?
Answer: 

The "more than 4 payment" rule only comes into play when determining whether you are a creditor subject to Regulation Z. If the credit in question results from overdraft of a deposit account, then you are a depository institution and are licensed to make a wide variety of credit extensions that meet the "more than 4" test. Section 1026.1(c) considers you to be a creditor subject to all of Regulation Z.

Exemptions of certain types of credit are found in Section 1026.3, but none is tied to the number of payments or imposition of a Finance Charge.

In short, the loan you describe is covered and you must give applicable closed-end credit disclosures.

First published on BankersOnline.com 3/25/13

First published on 03/25/2013

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