Recordkeeping and Disclosure Requirements in Connection with Regulation Z (Truth in Lending) and Section 227.28 of Regulation AA (Unfair or Deceptive Acts or Practices (UDAP))
ICR 200812-7100-001 · OMB 7100-0199 · Historical Active
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Recordkeeping and Disclosure Requirements in Connection with Regulation Z (Truth in Lending) and Section 227.28 of Regulation AA (Unfair or Deceptive Acts or Practices (UDAP))
Truth In Lending Act (TILA) and Regulation Z ensure adequate disclosure of the costs and terms of credit to consumers. For open-end credit, creditors are required to disclose information about the initial costs and terms and to provide periodic statements of account activity, notices of changes in terms, and statements of rights concerning billing error procedures. The regulation also requires specific types of disclosures for credit and charge card accounts, and home-equity plans. For closed-end loans, such as mortgage and installment loans, cost disclosures are required to be provided prior to consummation. Special disclosures are required of certain products, such as reverse mortgages, certain variable-rate loans, and certain mortgages with rates and fees above specified thresholds. TILA and Regulation Z also contain rules concerning credit advertising. To ease the burden and cost of complying with Regulation Z (particularly for small entities), the Federal Reserve provides model forms, which are appended to the regulation. Creditors are required to retain evidence of compliance for twenty-four months (subpart D, section 226.25), but the regulation does not specify the types of records that must be retained.
On June 14 2007, a notice of proposed rulemaking was published in the Federal Register for public comment (72 FR 32948). The Federal Reserve proposed changes to format, timing, and content requirements for the five main types of disclosures governed by Regulation Z: (1) application and solicitation disclosures; (2) account opening disclosures; (3) periodic statement disclosures; (4) change-in-terms notices; and (5) advertising provisions. The goal of the proposed revisions is to improve the effectiveness of TILA disclosures throughout the life of an open-end (not home-secured) plan. The proposed revisions are intended to provide the most essential information to consumers at the point in time the information would be most useful to them. The comment period expired October 12, 2007. The Federal Reserve received over 2,500 comments on the June 2007 proposal.
On May 19, 2008, a second notice of proposed rulemaking was published in the Federal Register for public comment (73 FR 28866). The Federal Reserve sought comment on a limited number of additional revisions to the regulation and commentary. New proposed amendments address creditors responsibilities to establish reasonable instructions for receiving timely payments and when a due date falls on a weekend or holiday. Creditors responsibilities when investigating a claim of unauthorized transactions or an allegation of a billing error are also addressed. Advertisements for deferred interest plans would be required to provide additional information about how interest could be imposed. The Federal Reserve also proposes to revise the recordkeeping and disclosure requirements of Regulation Z, by adding the disclosure requirements in Section 227.14(b) of Regulation A. The information collection would be renamed as the recordkeeping and disclosure requirements associated with Regulation Z (Truth in Lending) and Section 227.14(b) of Regulation AA (Unfair or Deceptive Acts or Practices). The comment period expired July 18, 2008. The Federal Reserve received over 450 comments on the May 2008 proposal.
On January 29, 2009, a notice of final rulemaking was published in the Federal Register adopting the amendments largely as proposed, with mandatory compliance July 1, 2010 (74 FR 5244). Except as otherwise noted, the changes apply solely to open-end credit. Disclosures accompanying credit card applications and solicitations must highlight fees and reasons penalty rates might be applied, such as for paying late. Creditors are required to summarize key terms at account opening and when terms are changed. Specific fees are identified that must be disclosed to consumers in writing before an account is opened, and creditors are given flexibility regarding how and when to disclose other fees imposed as part of the open-end plan. Costs for interest and fees are separately identified for the cycle and year to date. A Creditor is required to give 45 days advance notice prior to certain changes in terms and before the rate applicable to a consumerÂs account is increased as a penalty. Rules of general applicability such as the definition of open-end credit, dispute resolution procedures, and payment processing limitations apply to all open-end plans, including home-equity lines of credit. Rules regarding the disclosure of debt cancellation and debt suspension agreements are revised for both closed-end and open-end credit transactions. Loans taken against employer-sponsored retirement plans are exempt from TILA coverage.
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
RegZ.R1286.20090210.omb.doc
RegZ.R1286.20081218.nfrm.pr.pdf
Subpart B - Open-end credit (Initial Disclosures)