(a) Form of disclosures.
(1) 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 USC 7001
et seq.). The disclosures required by sections
226.17(g), 226.19(b), and 226.24 may be provided to the consumer in
electronic form without regard to the consumer consent or other provisions
of the E-Sign Act in the circumstances set forth in those sections.
The disclosures shall be grouped together, shall be segregated from
everything else, and shall not contain any information not directly
related
37 to
the disclosures required under section 226.18 or section 226.47.
38 The itemization
of the amount financed under section
226.18(c)(1) must be separate
from the other disclosures under section 226.18, except for private
education loan disclosures made in compliance with section 226.47.
(2) Except for private
education loan disclosures made in compliance with section 226.47,
the terms “finance charge” and “annual percentage rate,” when required
to be disclosed under section 226.18 (d) and (e) together with a corresponding
amount or percentage rate, shall be more conspicuous than any other
disclosure, except the creditor’s identity under section
226.18(a). For private education loan disclosures made in compliance
with section 226.47, the term “annual percentage rate,” and the corresponding
percentage rate must be less conspicuous than the term “finance charge”
and corresponding amount under section 226.18(d), the interest rate
under sections 226.47(b)(1)(i) and (c)(1), and the notice of the right
to cancel under section 226.47(c)(4).
(b) Time of disclosures. The creditor
shall make disclosures before consummation of the transaction. In
certain residential mortgage transactions, special timing requirements
are set forth in section 226.19(a). In certain variable-rate transactions,
special timing requirements for variable-rate disclosures are set
forth in section 226.19(b) and section 226.20(c). For private education
loan disclosures made in compliance with section 226.47, special timing
requirements are set forth in section 226.46(d). In certain transactions
involving mail or telephone orders or a series of sales, the timing
of disclosures may be delayed in accordance with paragraphs (g) and
(h) of this section.
6-821
(c) Basis
of disclosures and use of estimates.
(1) The disclosures shall reflect the terms
of the legal obligation between the parties.
(2) (i)
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 to the consumer, and shall state clearly that the disclosure
is an estimate.
(ii)
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 for consummation
of the transaction.
(3) The creditor may disregard the effects
of the following in making calculations and disclosures:
(i) That
payments must be collected in whole cents.
(ii) That dates of scheduled payments
and advances may be changed because the scheduled date is not a business
day.
(iii) That
months have different numbers of days.
(iv) The occurrence of leap year.
(4) In making
calculations and disclosures, the creditor may disregard any irregularity
in the first period that falls within the limits described below and
any payment schedule irregularity that results from the irregular
first period—
(i) for transactions in which the term
is less than 1 year, a first period not more than 6 days shorter or
13 days longer than a regular period;
(ii) for transactions in which the term
is at least 1 year and less than 10 years, a first period not more
than 11 days shorter or 21 days longer than a regular period; and
(iii) for transactions
in which the term is at least 10 years, a first period shorter than
or not more than 32 days longer than a regular period.
(5) If an obligation is
payable on demand, the creditor shall make the disclosures based on
an assumed maturity of one year. If an alternate maturity date is
stated in the legal obligation between the parties, the disclosures
shall be based on that date.
(6) (i) A series of
advances under an agreement to extend credit up to a certain amount
may be considered as one transaction.
(ii) When a multiple-advance loan to
finance the construction of a dwelling may be permanently financed
by the same creditor, the construction phase and the permanent phase
may be treated as either one transaction or more than one transaction.
6-822
(d) 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 regulation 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 226.23, however, the disclosures
shall be made to each consumer who has the right to rescind.
(e) 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 this regulation, although new disclosures may
be required under paragraph (f) of this section, section 226.19, section
226.20, or section 226.48(c)(4).
(f)
Early disclosures. Except for private education
loan disclosures made in compliance with section 226.47, if disclosures
required by this subpart are given before the date of consummation
of a transaction and a subsequent event makes them inaccurate, the
creditor shall disclose before consummation (subject to the provisions
of section
226.19(a)(2) and section
226.19(a)(5)(iii))
39 —(1) any changed term unless
the term was based on an estimate in accordance with section 226.17(c)(2)
and was labelled an estimate;
(2) all changed terms, if the annual percentage
rate at the time of consummation varies from the annual percentage
rate disclosed earlier by more than ⅛ of 1 percentage point in a regular
transaction, or more than ¼ of 1 percentage point in an irregular
transaction, as defined in section 226.22(a).
6-823
(g) Mail or telephone orders—delay in disclosures. Except for private education loan disclosures made in compliance
with section 226.47, if a creditor receives a purchase order or a
request for an extension of credit by mail, telephone, or facsimile
machine without face-to-face or direct telephone solicitation, the
creditor may delay the disclosures until the due date of the first
payment, if the following information for representative amounts or
ranges of credit is made available in written form or in electronic
form to the consumer or to the public before the actual purchase order
or request:
(1) The cash price or
the principal loan amount.
(2) The total sale price.
(3) The finance charge.
(4) The annual percentage rate, and if
the rate may increase after consummation, the following disclosures:
(i) The circumstances under which the rate may increase.
(ii) Any limitations on
the increase.
(iii)
The effect of an increase.
(5) The terms of repayment.
6-824
(h) Series of sales—delay
in disclosures. If a credit sale is one of a series made under
an agreement providing that subsequent sales may be added to an outstanding
balance, the creditor may delay the required disclosures until the
due date of the first payment for the current sale, if the following
two conditions are met:
(1) The consumer has approved in writing
the annual percentage rate or rates, the range of balances to which
they apply, and the method of treating any unearned finance charge
on an existing balance.
(2) The creditor retains no security interest in any property after
the creditor has received payments equal to the cash price and any
finance charge attributable to the sale of that property. For purposes
of this provision, in the case of items purchased on different dates,
the first purchased is deemed the first item paid for; in the case
of items purchased on the same date, the lowest priced is deemed the
first item paid for.
(i) Interim student credit extensions. For
transactions involving an interim credit extension under a student
credit program for which an application is received prior to the mandatory
compliance date of sections 226.46, 47, and 48, the creditor need not
make the following disclosures: the finance charge under section 226.18(d),
the payment schedule under section 226.18(g), the total of payments
under section 226.18(h), or the total sale price under section 226.18(j)
at the time the credit is actually extended. The creditor must make
complete disclosures at the time the creditor and consumer agree upon
the repayment schedule for the total obligation. At that time, a new
set of disclosures must be made of all applicable items under section
226.18.
