(a) Refinancings. A refinancing occurs when an existing obligation
that was subject to this subpart is satisfied and replaced by a new
obligation undertaken by the same consumer. A refinancing is a new
transaction requiring new disclosures to the consumer. The new finance
charge shall include any unearned portion of the old finance charge
that is not credited to the existing obligation. The following shall
not be treated as a refinancing:
(1) A renewal of a single payment obligation
with no change in the original terms.
(2) A reduction in the annual percentage
rate with a corresponding change in the payment schedule.
(3) An agreement involving
a court proceeding.
(4) A change in the payment schedule or a change in collateral requirements
as a result of the consumer’s default or delinquency, unless the rate
is increased, or the new amount financed exceeds the unpaid balance
plus earned finance charge and premiums for continuation of insurance
of the types described in section 226.4(d).
(5) The renewal of optional insurance purchased
by the consumer and added to an existing transaction, if disclosures
relating to the initial purchase were provided as required by this
subpart.
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(b) Assumptions. An assumption occurs when a creditor expressly agrees in writing
with a subsequent consumer to accept that consumer as a primary obligor
on an existing residential mortgage transaction. Before the assumption
occurs, the creditor shall make new disclosures to the subsequent
consumer, based on the remaining obligation. If the finance charge
originally imposed on the existing obligation was an add-on or discount
finance charge, the creditor need only disclose:
(1) The unpaid balance of the obligation
assumed.
(2) The total
charges imposed by the creditor in connection with the assumption.
(3) The information required
to be disclosed under section 226.18(k), (l), (m), and (n).
(4) The annual percentage
rate originally imposed on the obligation.
(5) The payment schedule under section
226.18(g) and the total of payments under section 226.18(h), based
on the remaining obligation.
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(c)
Variable-rate adjustments. 45c An adjustment to the interest
rate with or without a corresponding adjustment to the payment in
a variable-rate transaction subject to section 226.19(b) is an event
requiring new disclosures to the consumer. At least once each year
during which an interest rate adjustment is implemented without an
accompanying payment change, and at least 25, but no more than 120,
calendar days before a payment at a new level is due, the following
disclosures, as applicable, must be delivered or placed in the mail:
(1) The current and prior interest rates.
(2) The index values
upon which the current and prior interest rates are based.
(3) The extent to which the
creditor has forgone any increase in the interest rate.
(4) The contractual effects
of the adjustment, including the payment due after the adjustment
is made, and a statement of the loan balance.
(5) The payment, if different from that
referred to in paragraph (c)(4) of this section, that would be required
to fully amortize the loan at the new interest rate over the remainder
of the loan term.
