(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. The creditor
shall make the disclosures required by this subpart clearly and conspicuously
in writing, in a form that the consumer may keep. The disclosures
required by this subpart may be provided to the consumer in electronic
form, subject to compliance with the consumer consent and other applicable
provisions of the Electronic Signatures in Global and National Commerce
Act (E-Sign Act) (15 U.S.C. 7001 et seq.).
6-5971.1
(c) Timing of disclosure.
(1) Disclosures
for high-cost mortgages. The creditor shall furnish the disclosures
required by section 1026.32 at least three business days prior to
consummation or account opening of a high-cost mortgage as defined
in section 1026.32(a).
(i) Change
in terms. After complying with this paragraph (c)(1) and prior
to consummation or account opening, 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 required
by paragraph (c)(1)(i) of this section by telephone if the consumer
initiates the change and if, prior to or at consummation or account
opening:
(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 or account opening,
as applicable.
(iii) Consumer’s
waiver of waiting period before consummation or account opening. The consumer may, after receiving the disclosures required by this
paragraph (c)(1), modify or waive the three-day waiting period between
delivery of those disclosures and consummation or account opening
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 use printed forms pursuant
to section 1026.23(e)(2).
(2) Disclosures
for reverse mortgages. The creditor shall furnish the disclosures
required by section 1026.33 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.
6-5971.2
(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 section 1026.15 or section
1026.23, 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 1026), although new disclosures may be
required for mortgages covered by section 1026.32 under paragraph
(c) of this section, section 1026.9(c), section 1026.19, or section
1026.20.
(g) Accuracy
of annual percentage rate. For purposes of section 1026.32, the
annual percentage rate shall be considered accurate, and may be used
in determining whether a transaction is covered by section 1026.32,
if it is accurate according to the requirements and within the tolerances
under section 1026.22 for closed-end credit transactions or 1026.6(a)
for open-end credit plans. The finance charge tolerances for rescission
under section 1026.23(g) or (h) shall not apply for this purpose.
(h) Corrections and unintentional
violations. A creditor or assignee in a high-cost mortgage, as
defined in section 1026.32(a), who, when acting in good faith, failed
to comply with any requirement under section 129 of the Act will not
be deemed to have violated such requirement if the creditor or assignee
satisfies either of the following sets of conditions:
(1) (i) Within
30 days of consummation or account opening and prior to the institution
of any action, the consumer is notified of or discovers the violation;
(ii) Appropriate restitution
is made within a reasonable time; and
(iii) Within a reasonable time, whatever
adjustments are necessary are made to the loan or credit plan to either,
at the choice of the consumer:
(A) Make the loan or credit plan
satisfy the requirements of 15 U.S.C. 1631-1651; or
(B) Change the terms of the loan or credit
plan in a manner beneficial to the consumer so that the loan or credit
plan will no longer be a high-cost mortgage.
(2) (i) Within 60 days of the creditor’s
discovery or receipt of notification of an unintentional violation
or bona fide error and prior to the institution of any action,
the consumer is notified of the compliance failure;
(ii) Appropriate restitution is made
within a reasonable time; and
(iii) Within a reasonable time, whatever
adjustments are necessary are made to the loan or credit plan to either,
at the choice of the consumer:
(A) Make the loan or credit plan
satisfy the requirements of 15 U.S.C. 1631-1651; or
(B) Change the terms of the loan or credit
plan in a manner beneficial to the consumer so that the loan or credit
plan will no longer be a high-cost mortgage.
