[Code of Federal Regulations]

[Title 12, Volume 3]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR226.31]



[Page 310-311]

 

                       TITLE 12--BANKS AND BANKING

 

                   CHAPTER II--FEDERAL RESERVE SYSTEM

 

PART 226_TRUTH IN LENDING (REGULATION Z)--Table of Contents

 

     Subpart E_Special Rules for Certain Home Mortgage Transactions

 

Sec. 226.31  General rules.



    Source: Reg. Z, 60 FR 15471, Mar. 24, 1995, unless otherwise noted.





    (a) Relation to other subparts in this part. The requirements and 

limitations of this subpart are in addition to and not in lieu of those 

contained in other subparts of this part.

    (b) Form of disclosures--(1) General. The creditor shall make the 

disclosures required by this subpart clearly and conspicuously in 

writing, in a form that the consumer may keep.

    (2) Electronic communication. For rules governing the electronic 

delivery of disclosures, including a definition of electronic 

communication, see Sec. 226.36.

    (c) Timing of disclosure--(1) Disclosures for certain closed-end 

home mortgages. The creditor shall furnish the disclosures required by 

Sec. 226.32 at least three business days prior to consummation of a 

mortgage transaction covered by Sec. 226.32.

    (i) Change in terms. After complying with paragraph (c)(1) of this 

section and prior to consummation, if the creditor changes any term that 

makes the disclosures inaccurate, new disclosures shall be provided in 

accordance with the requirements of this subpart.

    (ii) Telephone disclosures. A creditor may provide new disclosures 

by telephone if the consumer initiates the change and if, at 

consummation:

    (A) The creditor provides new written disclosures; and

    (B) The consumer and creditor sign a statement that the new 

disclosures were provided by telephone at least three days prior to 

consummation.

    (iii) Consumer's waiver of waiting period before consummation. The 

consumer may, after receiving the disclosures required by paragraph 

(c)(1) of this section, modify or waive the three-day waiting period 

between delivery of those disclosures and consummation if the consumer 

determines that the extension of credit is needed to meet a bona fide 

personal financial emergency. To modify or waive the right, the consumer 

shall give the creditor a dated written statement that describes the 

emergency, specifically modifies or waives the waiting period, and bears 

the signature of all the consumers entitled to the waiting period. 

Printed forms for this purpose are prohibited, except when creditors are 

permitted to



[[Page 311]]



use printed forms pursuant to Sec. 226.23(e)(2).

    (2) Disclosures for reverse mortgages. The creditor shall furnish 

the disclosures required by Sec. 226.33 at least three business days 

prior to:

    (i) Consummation of a closed-end credit transaction; or

    (ii) The first transaction under an open-end credit plan.

    (d) Basis of disclosures and use of estimates--(1) Legal Obligation. 

Disclosures shall reflect the terms of the legal obligation between the 

parties.

    (2) Estimates. If any information necessary for an accurate 

disclosure is unknown to the creditor, the creditor shall make the 

disclosure based on the best information reasonably available at the 

time the disclosure is provided, and shall state clearly that the 

disclosure is an estimate.

    (3) Per-diem interest. For a transaction in which a portion of the 

interest is determined on a per-diem basis and collected at 

consummation, any disclosure affected by the per-diem interest shall be 

considered accurate if the disclosure is based on the information known 

to the creditor at the time that the disclosure documents are prepared.

    (e) Multiple creditors; multiple consumers. If a transaction 

involves more than one creditor, only one set of disclosures shall be 

given and the creditors shall agree among themselves which creditor must 

comply with the requirements that this part imposes on any or all of 

them. If there is more than one consumer, the disclosures may be made to 

any consumer who is primarily liable on the obligation. If the 

transaction is rescindable under Sec. 226.15 or Sec. 226.23, however, 

the disclosures shall be made to each consumer who has the right to 

rescind.

    (f) Effect of subsequent events. If a disclosure becomes inaccurate 

because of an event that occurs after the creditor delivers the required 

disclosures, the inaccuracy is not a violation of Regulation Z (12 CFR 

part 226), although new disclosures may be required for mortgages 

covered by Sec. 226.32 under paragraph (c) of this section, Sec. 

226.9(c), Sec. 226.19, or Sec. 226.20.

    (g) Accuracy of annual percentage rate. For purposes of Sec. 

226.32, the annual percentage rate shall be considered accurate, and may 

be used in determining whether a transaction is covered by Sec. 226.32, 

if it is accurate according to the requirements and within the 

tolerances under Sec. 226.22. The finance charge tolerances for 

rescission under Sec. 226.23(g) or (h) shall not apply for this 

purpose.



[Reg. Z, 60 FR 15471, Mar. 24, 1995, as amended at 60 FR 29969, June 7, 

1995; 61 FR 49247, Sept. 19, 1996; 66 FR 17339, Mar. 30, 2001]