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6500 - Consumer Protection
{{8-29-08 p.6641}}
PART 226TRUTH IN LENDING (REGULATION Z)
Subpart AGeneral
Sec. 226.1
Authority, purpose, coverage, organization, enforcement and liability.
226.2
Definitions and rules of construction.
226.3
Exempt transactions.
226.4
Finance charge.
Subpart BOpen-End Credit
226.5
General disclosure requirements.
226.5a
Credit and charge card applications and solicitations.
226.5b
Requirements for home equity plans.
226.6
Initial disclosure statement.
226.7
Periodic statement.
226.8
Identification of transactions.
226.9
Subsequent disclosure requirements.
226.10
Prompt crediting of payments.
226.11
Treatment of credit balances.
226.12
Special credit card provisions.
226.13
Billing error resolution.
226.14
Determination of annual percentage rate.
226.15
Right of rescission.
226.16
Advertising.
Subpart CClosed-End Credit
226.17
General disclosure requirements.
226.18
Content of disclosures.
226.19
Certain residential mortgage and variable-rate transactions.
226.20
Subsequent disclosure requirements.
226.21
Treatment of credit balances.
226.22
Determination of annual percentage rate.
226.23
Right of rescission.
226.24
Advertising.
Subpart DMiscellaneous
226.25
Record retention.
226.26
Use of annual percentage rate in oral disclosures.
226.27
Spanish language disclosures.
226.28
Effect on state laws.
226.29
State exemptions.
226.30
Limitation on rates.
Subpart ESpecial Rules for Certain Home Mortgage Transactions
226.31
General rules.
226.32
Requirements for certain closed-end home mortgages.
226.33
Requirements for reverse mortgages.
226.34
Prohibited acts or practices in connection with credit secured by a
consumer's dwelling.
226.35
Prohibited acts or practices in connection with higher-priced mortgage
loans
226.36
Prohibited acts or practices in connection with credit secured by a
consumer's principal dwelling.
Appendix AEffect on
state laws.
Appendix BState
exemptions.
Appendix CIssuance
of staff interpretations.
Appendix DMultiple
advance construction loans.
{{8-29-08 p.6642}} Appendix ERules for
card issuers that bill on a transaction-by-transaction basis.
Appendix FAnnual
percentage rate computations for certain open-end credit plans.
Appendix GOpen-end
model forms and clauses.
Appendix HClosed-end
model forms and clauses.
Appendix IFederal
enforcement agencies.
Appendix JAnnual
percentage rate computations for closed-end credit transactions.
Appendix KTotal
annual loan cost rate computations for reverse mortgage transactions.
Appendix LAssumed
loan periods for computations of total annual loan cost rates.
AUTHORITY: 12 U.S.C.
3806; 15 U.S.C. 1604 and
1637(c)(5) and
1639(1).
SOURCE: The provisions of this Part 226 appear at 46 Fed. Reg.
20892, April 7, 1981, effective October 1, 1982, and 58 Fed. Reg.
50512, September 28, 1993, except as otherwise provided.
Subpart AGeneral
§ 226.1 Authority, purpose, coverage, organization, enforcement
and liability.
(a) Authority. This regulation, known as Regulation Z,
is issued by the Board of Governors of the Federal Reserve System to
implement the federal Truth in Lending Act, which is contained in title
I of the Consumer Credit Protection Act, as amended (15 U.S.C. 1601
et seq.). This regulation also implements title XII, section
1204 of the Competitive Equality Banking Act of 1987 (Pub. L. 100--86,
101 Stat. 552). Information-collection requirements contained in this
regulation have been approved by the Office of Management and Budget
under the provisions of 44 U.S.C. 3501 et seq. and have been
assigned OMB No. 7100--0199.
(b) Purpose. The purpose of this regulation is to
promote the informed use of consumer credit by requiring disclosures
about its terms and cost. The regulation also gives consumers the right
to cancel certain credit transactions that involve a lien on a
consumer's principal dwelling, regulates certain credit card practices,
and provides a means for fair and timely resolution of credit billing
disputes. The regulation does not govern charges for consumer credit.
The regulation requires a maximum interest rate to be stated in
variable-rate contracts secured by the consumer's dwelling. It also
imposes limitations on home equity plans that are subject to the
requirements of § 226.5b and
mortgages that are subject to the requirements of
§ 226.32. The regulation
prohibits certain acts or practices in connection with credit secured
by a consumer's principal dwelling.
(c) Coverage. (1) In general, this regulation applies
to each individual or business that offers or extends credit when four
conditions are met: (i) the credit is offered or extended to consumers;
(ii) the offering or extension of credit is done
regularly; 1
(iii) the credit is subject to a finance charge or is payable by a
written agreement in more than 4 installments; and (iv) the credit is
primarily for personal, family, or household purposes.
(2) If a credit card is involved, however, certain provisions
apply even if the credit is not subject to a finance charge, or is not
payable by a written agreement in more than 4 installments, or if the
credit card is to be used for business purposes.
(3) In addition, certain requirements of § 226.5b apply to
persons who are not creditors but who provide applications for home
equity plans to consumers.
(d) Organization. The regulation is divided into
subparts and appendices as follows:
(1) Subpart A contains general information. It sets forth: (i)
the authority, purpose, coverage, and organization of the regulation;
(ii) the definitions of basic terms; (iii) the transactions that are
exempt from coverage; and (iv) the method of determining the finance
charge.
(2) Subpart B contains the rules for open-end credit. It requires
that initial disclosures and periodic statements be provided, as well
as additional disclosures for credit and charge card applications and
solicitations and for home equity plans subject to the requirements of
§§ 226.5a and 226.5b,
respectively. It also describes special rules that apply to credit card
transactions, treatment of payments and credit balances, procedures for
resolving credit billing errors, annual percentage rate calculations,
rescission requirements, and advertising rules.
{{8-29-08 p.6643}}
(3) Subpart C relates to closed-end credit. It contains rules on
disclosures, treatment of credit balances, annual percentage rate
calculations, rescission requirements, and advertising.
(4) Subpart D contains rules on oral disclosures, Spanish
language disclosure in Puerto Rico, record retention, effect on state
laws, state exemptions, and rate limitations.
(5) Subpart E contains special rules for mortgage transactions.
Section 226.32 requires certain disclosures and provides limitations
for loans that have rates and fees above specified amounts. Section
226.33 requires disclosures, including the total annual loan cost rate,
for reverse mortgage transactions. Section 226.34 prohibits specific
acts and practices in connection with mortgage transactions that are
subject to § 226.32. Section 226.35 prohibits specific acts and
practices in connection with higher-priced mortgage loans, as defined
in § 226.35(a). Section 226.36 prohibits specific acts and practices
in connection with credit secured by consumer's principal dwelling.
(6) Several appendices contain information such as the procedures
for determinations about state laws, state exemptions and issuance of
staff interpretations, special rules for certain kinds of credit plans,
a list of enforcement agencies, and the rules for computing annual
percentage rates in closed-end credit transactions and total annual
loan cost rates for reverse mortgage transactions.
(e) Enforcement and liability. Section 108 of the act
contains the administrative enforcement provisions. Sections 112, 113,
130, 131, and 134 contain provisions relating to liability for failure
to comply with the requirements of the act and the regulation. Section
1204(c) of Title XII of the Competitive Equality Banking Act of 1987,
Pub. L. No. 100--86, 101 Stat. 552, incorporates by reference
administrative enforcement and civil liability provisions of sections
108 and 130 of the act.
[Codified to 12 C.F.R. § 226.1]
[Section 226.1 amended at 49 Fed. Reg. 46991, November 30, 1984,
effective December 31, 1984; 52 Fed. Reg. 43181, November 9, 1987,
effective December 9, 1987; 54 Fed. Reg. 13865, April 6, 1989,
effective April 3, 1989, but compliance is optional until August 31,
1989; 54 Fed. Reg. 24686, June 9, 1989, effective June 7, 1989, but
compliance is optional until November 7, 1989; 60 Fed. Reg. 15471,
March 24, 1995, effective March 22, 1995, compliance is optional until
October 1, 1995; 66 Fed. Reg. 65617, December 20, 2001, effective
December 20, 2001, but compliance is mandatory as of October 1, 2002;
73 Fed. Reg 44599, July 30, 2008, effective October 1,
2009]
§ 226.2 Definitions and rules of construction.
(a) Definitions. For purposes of this regulation, the
following definitions apply:
(1) Act means the Truth in Lending Act (15 U.S.C. 1601
et seq. ).
(2) Advertisement means a commercial message in any
medium that promotes, directly or indirectly, a credit transaction.
(3) [Reserved] 2
(4) Billing cycle or cycle means the
interval between the days or dates of regular periodic statements.
These intervals shall be equal and no longer than a quarter of a year.
An interval will be considered equal if the number of days in the cycle
does not vary more than four days from the regular day or date of the
periodic statement.
(5) Board means the Board of Governors of the Federal
Reserve System.
(6) "Business day" means a day on which the
creditor's offices are open to the public for carrying on substantially
all of its business functions. However, for purposes of rescission
under §§ 226.15 and 226.23, and for purposes of § 226.19(a)(1)(ii)
and § 226.31, the term means all calendar days except Sundays and the
legal public holidays specified in 5 U.S.C. 6103(a), such as New Year's
Day, the birthday of Martin Luther King, Jr., Washington's Birthday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving Day, and Christmas Day.
(7) Card issuer means a person that issues a credit
card or that person's agent with respect to the card.
(8) Cardholder means a natural person to whom a credit
card is issued for consumer credit purposes, or a natural person who
has agreed with the card issuer to pay consumer credit obligations
arising from the issuance of a credit card to another natural person.
For
{{8-29-08 p.6644}}purposes of § 226.12(a) and (b), the
term includes any person to whom a credit card is issued for any
purpose, including business, commercial, or agricultural use, or a
person who has agreed with the card issuer to pay obligations arising
from the issuance of such a credit card to another person.
(9) Cash price means the price at which a creditor, in
the ordinary course of business, offers to sell for cash the property
or service that is the subject of the transaction. At the creditor's
option, the term may include the price of accessories, services related
to the sale, service contracts and taxes and fees for license, title,
and registration. The term does not include any finance charge.
(10) Closed-end credit means consumer credit other
than "open-end credit" as defined in this section.
(11) Consumer means a cardholder or a natural person
to whom consumer credit is offered or extended. However, for purposes
of rescission under §§ 226.15 and 226.23, the term also includes a
natural person in whose principal dwelling a security interest is or
will be retained or acquired, if that person's ownership interest in
the dwelling is or will be subject to the security interest.
(12) Consumer credit means credit offered or extended
to a consumer primarily for personal, family, or household purposes.
(13) Consummation means the time that a consumer
becomes contractually obligated on a credit transaction.
(14) Credit means the right to defer payment of debt
or to incur debt and defer its payment.
(15) Credit card means any card, plate, coupon book,
or other single credit device that may be used from time to time to
obtain credit. "Charge card" means a credit card on an
account for which no periodic rate is used to compute a finance charge.
(16) Credit sale means a sale in which the seller is a
creditor. The term includes a bailment or lease (unless terminable
without penalty at any time by the consumer) under which the consumer:
(i) Agrees to pay as compensation for use a sum substantially
equivalent to, or in excess of, the total value of the property and
services involved; and
(ii) Will become (or has the option to become), for no additional
consideration or for nominal consideration, the owner of the property
upon compliance with the agreement.
(17) Creditor means:
(i) A person (A) who regularly extends consumer
credit 3
that is subject to a finance charge or is payable by written agreement
in more than four installments (not including a downpayment), and (B)
to whom the obligation is initially payable, either on the face of the
note or contract, or by agreement when there is no note or contract.
(ii) For purposes of
§§ 226.4(c)(8) (discounts),
226.9(d) (Finance charge
imposed at time of transaction), and
226.12(e) (Prompt notification
of returns and crediting of refunds), a person that honors a credit
card.
(iii) For purposes of subpart B, any card issuer that extends
either open-end credit or credit that is not subject to a finance
charge and is not payable by written agreement in more than four
installments.
(iv) For purposes of subpart B (except for the credit and charge
card disclosures contained in
§§ 226.5a and 226.9(e) and
(f), the finance charge disclosures contained in
§§ 226.6(a) and
226.7(d) through (g) and the
right of rescission set forth in
§ 226.15) and
subpart C, any card issuer
that extends closed-end credit that is subject to a finance charge or
is payable by written agreement in more than four installments.
(18) Downpayment means an amount, including the value
of any property used as a trade-in, paid to a seller to reduce the cash
price of goods or services purchased in a credit
{{8-29-08 p.6645}}sale transaction. A deferred portion of a
downpayment may be treated as part of the downpayment if it is payable
not later than the due date of the second otherwise regularly scheduled
payment and is not subject to a finance charge.
(19) Dwelling means a residential structure that
contains one to four units, whether or not that structure is attached
to real property. The term includes an individual condominium unit,
cooperative unit, mobile home, and trailer, if it is used as a
residence.
(20) Open-end credit means consumer credit extended by
a creditor under a plan in which:
(i) The creditor reasonably contemplates repeated transactions;
(ii) The creditor may impose a finance charge from time to time
on an outstanding unpaid balance; and
(iii) The amount of credit that may be extended to the consumer
during the term of the plan (up to any limit set by the creditor) is
generally made available to the extent that any outstanding balance is
repaid.
(21) Periodic rate means a rate of finance charge that
is or may be imposed by a creditor on a balance for a day, week, month,
or other subdivision of a year.
(22) Person means a natural person or an organization,
including a corporation, partnership, proprietorship, association,
cooperative, estate, trust, or government unit.
(23) Prepaid finance charge means any finance charge
paid separately in cash or by check before or at consummation of a
transaction, or withheld from the proceeds of the credit at any time.
(24) Residential mortgage transaction means a
transaction in which a mortgage, deed of trust, purchase money security
interest arising under an installment sales contract, or equivalent
consensual security interest is created or retained in the consumer's
principal dwelling to finance the acquisition or initial construction
of that dwelling.
(25) Security interest means an interest in property
that secures performance of a consumer credit obligation and that is
recognized by state or federal law. It does not include incidental
interests such as interests in proceeds, accessions, additions,
fixtures, insurance proceeds (whether or not the creditor is a loss
payee or beneficiary), premium rebates, or interests in after-acquired
property. For purposes of disclosure under
§§ 226.6 and
226.18, the term does not
include an interest that arises solely by operation of law. However,
for purposes of the right of rescission under
§§ 226.15 and
226.23, the term does include
interests that arise solely by operation of law.
(26) State means any state, the District of Columbia,
the Commonwealth of Puerto Rico, and any territory or possession of the
United States.
(b) Rules of construction. For purposes of this
regulation, the following rules of construction apply:
(1) Where appropriate, the singular form of a word includes the
plural form and plural includes singular.
(2) Where the words "obligation" and "transaction"
are used in this regulation, they refer to a consumer credit obligation
or transaction, depending upon the context. Where the word
"credit" is used in this regulation, it means "consumer
credit" unless the context clearly indicates otherwise.
(3) Unless defined in this regulation, the words used have the
meanings given to them by state law or contract.
(4) Footnotes have the same legal effect as the text of the
regulation.
(5) Where the word "amount" is used in this regulation to
describe disclosure requirements, it refers to a numerical amount.
[Codified to 12 C.F.R. § 226.2]
[Section 226.2 amended at 46 Fed. Reg. 29246, June 1,
1981; 47 Fed. Reg. 7392, February 19, 1982; 48 Fed. Reg. 14886, April
6, 1983, effective October 1, 1982; 54 Fed. Reg. 13865, April 6, 1989,
effective April 3, 1989, but compliance is optional until August 31,
1989; 60 Fed. Reg. 15471, March 24, 1995, effective March 22, 1995,
compliance is optional until October 1, 1995; 61 Fed. Reg. 49245,
September 19, 1996, effective October 21, 1996; 69 Fed. Reg. 16773,
March 31, 2004; 73 Fed Reg. 44599, July 30, 2008, effective October 1,
2009]
{{8-29-08 p.6646}}
§ 226.3 Exempt transactions.
This regulation does not apply to the following:
(a) Business, commercial, agricultural, or organizational
credit. 4
(1) An extension of credit primarily for a business, commercial or
agricultural purpose.
(2) An extension of credit to other than a natural person,
including credit to government agencies or instrumentalities.
(b) Credit over $25,000 not secured by real property or a
dwelling. An extension of credit not secured by real property, or
by personal property used or expected to be used as the principal
dwelling of the consumer, in which the amount financed exceeds $25,000
or in which there is an express written commitment to extend credit in
excess of $25,000.
(c) Public utility credit. An extension of credit that
involves public utility services provided through pipe, wire, other
connected facilities, or radio or similar transmission (including
extensions of such facilities), if the charges for service, delayed
payment, or any discounts for prompt payment are filed with or
regulated by any government unit. The financing of durable goods or
home improvements by a public utility is not exempt.
(d) Securities or commodities accounts. Transactions
in securities or commodities accounts in which credit is extended by a
broker-dealer registered with the Securities and Exchange Commission or
the Commodity Futures Trading Commission.
(e) Home fuel budget plans. An installment agreement
for the purchase of home fuels in which no finance charge is imposed.
(f) Student loan programs. Loans made, insured, or
guaranteed pursuant to a program authorized by title IV of the Higher
Education Act of 1965 (20 U.S.C. 1070 et seq.).
[Codified to 12 C.F.R. § 226.3]
[Section 226.3 amended at 48 Fed. Reg. 14886, April 6, 1983,
effective October 1, 1982]
§ 226.4 Finance charge.
(a) Definition. The finance charge is the cost of
consumer credit as a dollar amount. It includes any charge payable
directly or indirectly by the consumer and imposed directly or
indirectly by the creditor as an incident to or a condition of the
extension of credit. It does not include any charge of a type payable
in a comparable cash transaction.
(1) Charges by third parties. The finance charge
includes fees and amounts charged by someone other than the creditor,
unless otherwise excluded under this section, if the creditor:
(i) requires the use of a third party as a condition of or an
incident to the extension of credit, even if the consumer can choose
the third party; or
(ii) retains a portion of the third-party charge, to the extent
of the portion retained.
(2) Special rule; closing agent charges. Fees charged
by a third party that conducts the loan closing (such as a settlement
agent, attorney, or escrow or title company) are finance charges only
if the creditor:
(i) Requires the particular services for which the consumer is
charged;
(ii) Requires the imposition of the charge; or
(iii) Retains a portion of the third-party charge, to the extent
of the portion retained.
(3) Special rule; mortgage broker fees. Fees charged
by a mortgage broker (including fees paid by the consumer directly to
the broker or to the creditor for delivery to the broker) are finance
charges even if the creditor does not require the consumer to use a
mortgage broker and even if the creditor does not retain any portion of
the charge.
(b) Example of finance charge. The finance charge
includes the following types of charges, except for charges
specifically excluded by paragraphs (c) through (e) of this
section:
{{10-31-96 p.6647}}
(1) Interest, time price differential, and any amount payable
under an add-on or discount system of additional charges.
(2) Service, transaction, activity, and carrying charges,
including any charge imposed on a checking or other transaction account
to the extent that the charge exceeds the charge for a similar account
without a credit feature.
(3) Points, loan fees, assumption fees, finder's fees, and
similar charges.
(4) Appraisal, investigation, and credit report fees.
(5) Premiums or other charges for any guarantee or insurance
protecting the creditor against the consumer's default or other credit
loss.
(6) Charges imposed on a creditor by another person for
purchasing or accepting a consumer's obligation, if the consumer is
required to pay the charges in cash, as an addition to the obligation,
or as a deduction from the proceeds of the obligation.
(7) Premiums or other charges for credit life, accident, health,
or loss-of-income insurance, written in connection with a credit
transaction.
(8) Premiums or other charges for insurance against loss of or
damage to property, or against liability arising out of the ownership
or use of property, written in connection with a credit transaction.
(9) Discounts for the purpose of inducing payment by a means
other than the use of credit.
(10) Debt cancellation fees. Charges or premiums paid
for debt cancellation coverage written in connection with a credit
transaction, whether or not the debt cancellation coverage is insurance
under applicable law.
(c) Charges excluded from the finance charge. The
following charges are not finance charges:
(1) Application fees charged to all applicants for credit,
whether or not credit is actually extended.
(2) Charges for actual unanticipated late payment, for exceeding
a credit limit or for delinquency, default, or a similar occurrence.
(3) Charges imposed by a financial institution for paying items
that overdraw an account, unless the payment of such items and the
imposition of the charge were previously agreed upon in writing.
(4) Fees charged for participation in a credit plan, whether
assessed on an annual or other periodic basis.
(5) Seller's points.
(6) Interest forfeited as a result of an interest reduction
required by law on a time deposit used as security for an extension of
credit.
(7) Real-estate related fees. The following fees in a
transaction secured by real property or in a residential mortgage
transaction, if the fees are bona fide and reasonable in amount:
(i) Fees for title examination, abstract of title, title
insurance, property survey, and similar purposes.
(ii) Fees for preparing loan-related documents, such as deeds,
mortgages, and reconveyance or settlement documents.
(iii) Notary, and credit report fees.
(iv) Property appraisal fees or fees for inspections to assess
the value or condition of the property if the service is performed
prior to closing, including fees related to pest infestation or flood
hazard determinations.
(v) Amounts required to be paid into escrow or trustee accounts
if the amounts would not otherwise be included in the finance charge.
(8) Discounts offered to induce payment for a purchase by cash,
check, or other means, as provided in § 167(b) of the act.
(d) Insurance and debt cancellation
coverage. (1) Voluntary credit. Premiums for credit
life, accident, health, or loss-of-income insurance may be excluded
from the finance charge if the following conditions are met:
{{10-31-96 p.6648}}
(i) The insurance coverage is not required by the creditor, and
this fact is disclosed in writing.
(ii) The premium for the initial term of insurance coverage is
disclosed. If the term of insurance is less than the term of the
transaction, the term of insurance also shall be disclosed. The premium
may be disclosed on a unit-cost basis only in open-end credit
transactions, closed-end credit transactions by mail or telephone under
§ 226.17(g), and certain
closed-end credit transactions involving an insurance plan that limits
the total amount of indebtedness subject to coverage.
(iii) The consumer signs or initials an affirmative written
request for the insurance after receiving the disclosures specified in
this paragraph. Any consumer in the transaction may sign or initial the
request.
(2) Premiums for insurance against loss of or damage to property,
or against liability arising out of the ownership or use of
property, 5
may be excluded from the finance charge if the following conditions are
met:
(i) The insurance coverage may be obtained from a person of the
consumer's choice, 6
and this fact is disclosed.
(ii) If the coverage is obtained from or through the creditor,
the premium for the initial term of insurance coverage shall be
disclosed. If the term of insurance is less than the term of the
transaction, the term of insurance shall also be disclosed. The premium
may be disclosed on a unit-cost basis only in open-end credit
transactions, closed-end credit transactions by mail or telephone under
§ 226.17(g), and certain
closed-end credit transactions involving an insurance plan that limits
the total amount of indebtedness subject to coverage.
(3) Voluntary debt cancellation fees. (i) Charges or
premiums paid for debt cancellation coverage of the type specified in
paragraph (d)(3)(ii) of this section may be excluded from the finance
charge, whether or not the coverage is insurance, if the following
conditions are met:
(A) The debt cancellation agreement or coverage is not required
by the creditor, and this fact is disclosed in writing;
(B) The fee or premium for the initial term of coverage is
disclosed. If the term of coverage is less than the term of the credit
transaction, the term of coverage also shall be disclosed. The fee or
premium may be disclosed on a unit-cost basis only in open-end credit
transactions, closed-end credit transactions by mail or telephone under
§ 226.17(g), and certain closed-end credit transactions involving a
debt cancellation agreement that limits the total amount of
indebtedness subject to coverage;
(C) The consumer signs or initials an affirmative written request
for coverage after receiving the disclosures specified in this
paragraph. Any consumer in the transaction may sign or initial the
request.
(ii) Paragraph (d)(3)(i) of this section applies to fees paid for
debt cancellation coverage that provides for cancellation of all or
part of the debtor's liability for amounts exceeding the value of the
collateral securing the obligation, or in the event of the loss of
life, health, or income or in case of accident.
(e) Certain security interest charges. If itemized and
disclosed, the following charges may be excluded from the finance
charge:
(1) Taxes and fees prescribed by law that actually are or will be
paid to public officials for determining the existence of or for
perfecting, releasing, or satisfying a security interest.
(2) The premium for insurance in lieu of perfecting a security
interest to the extent that the premium does not exceed the fees
described in paragraph (e)(1) of this section that otherwise would be
payable.
{{12-31-07 p.6648.01}}
(3) Taxes on security instruments. Any tax levied on
security instruments or on documents evidencing indebtedness if the
payment of such taxes is a requirement for recording the instrument
securing the evidence of indebtedness.
(f) Prohibited offsets. Interest, dividends, or other
income received or to be received by the consumer on deposits or
investments shall not be deducted in computing the finance charge.
[Codified to 12 C.F.R. § 226.4]
[Section 226.4 amended at 61 Fed. Reg. 49245, September 19, 1996,
effective October 21, 1996]
1 The meaning of "regularly" is explained in the
definition of "creditor" in § 226.2(a). Go Back to Text
2 [Reserved] Go Back to Text
3 A person regularly extends consumer credit only if it
extended credit (other than credit subject to the requirements of
§ 226.32) more than 25 times
(or more than five times for transactions secured by a dwelling) in the
preceding calendar year. If a person did not meet these numerical
standards in the preceding calendar year, the numerical standards shall
be applied to the current calendar year. A person regularly extends
consumer credit if, in any 12-month period, the person originates more
than one credit extension that is subject to the requirements of
§ 226.32 or one or more such credit extensions through a mortgage
broker. Go Back to Text
4 The provisions in
§ 226.12(a) and (b)
governing the issurance of credit cards and the liability for their
unauthorized use apply to all credit cards, even if the credit cards
are issued for use in connection with extensions of credit that
otherwise are exempt under this section. Go Back to Text
5 This includes single interest insurance if the insurer waives
all right of subrogation against the consumer. Go Back to Text
6 A creditor may reserve the right to refuse to accept, for
reasonable cause, an insurer offered by the consumer. Go Back to Text
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