

Regulation
Z
Truth in Lending Act
Appendix A to Part 226Effect on State Laws
Appendix B to Part 226State Exemptions
Appendix C to Part 226Issuance of Staff Interpretations
Appendix D to Part 226Multiple Advance Construction
Loans
Appendix E to Part 226Rules For Card Issuers
That Bill On a TransactionByTransaction Basis
Appendix F to Part 226Annual Percentage Rate
Computations for Certain OpenEnd Credit Plans
Appendix G to Part 226OpenEnd Model Forms and
Clauses
Appendix H to Part 226ClosedEnd Model Forms
and Clauses
Appendix I to Part 226Federal Enforcement Agencies
Appendix J to Part 226Annual Percentage Rate
Computations For Closed End Credit Transactions
Appendix K to Part 226Total Annual Loan Cost
Rate Computations for Reverse Mortgage Transactions
Appendix L to Part 226Assumed Loan Periods for
Computations of Total Annual Loan Cost Rates
Appendix AEffect on State Laws
Request for Determination
A request for a determination that a
State law is inconsistent or that a State law is substantially
the same as the Act and regulation shall be in writing and addressed
to the Secretary, Board of Governors of the Federal Reserve System,
Washington, DC 20551. The request shall be made pursuant to the
procedures herein and the Board's Rules of Procedure (12 CFR Part
262).
Supporting Documents
A request for a determination shall
include the following items:
(1) The text of the State statute, regulation,
or other document that is the subject of the request.
(2) Any other statute, regulation, or
judicial or administrative opinion that implements, interprets,
or applies the relevant provision.
(3) A comparison of the State law with
the corresponding provision of the Federal law, including a full
discussion of the basis for the requesting party's belief that
the State provision is either inconsistent or substantially the
same.
(4) Any other information that the requesting
party believes may assist the Board in its determination.
Public Notice of Determination
Notice that the Board intends to make
a determination (either on request or on its own motion) will
be published in the Federal Register, with an opportunity for
public comment, unless the Board finds that notice and opportunity
for comment would be impracticable, unnecessary, or contrary to
the public interest and publishes its reasons for such decision.
Subject to the Board's Rules Regarding
Availability of Information (12 CFR Part 261), all requests made,
including any documents and other material submitted in support
of the requests, will be made available for public inspection
and copying.
Notice After Determination
Notice of a final determination will
be published in the Federal Register, and the Board will furnish
a copy of such notice to the party who made the request and to
the appropriate State official.
Reversal of Determination
The Board reserves the right to reverse
a determination for any reason bearing on the coverage or effect
of State or Federal law.
Notice of reversal of a determination
will be published in the Federal Register and a copy furnished
to the appropriate State official.
Appendix BState Exemptions
Application
Any State may apply to the Board for
a determination that a class of transactions subject to State
law is exempt from the requirements of the Act and this regulation.
An application shall be in writing and addressed to the Secretary,
Board of Governors of the Federal Reserve System, Washington,
DC 20551, and shall be signed by the appropriate State official.
The application shall be made pursuant to the procedures herein
and the Board's Rules of Procedure (12 CFR Part 262).
Supporting Documents
An application shall be accompanied
by:
(1) The text of the State statute or
regulation that is the subject of the application, and any other
statute, regulation, or judicial or administrative opinion that
implements, interprets, or applies it.
(2) A comparison of the State law with
the corresponding provisions of the Federal law.
(3) The text of the State statute or
regulation that provides for civil and criminal liability and
administrative enforcement of the State law.
(4) A statement of the provisions for
enforcement, including an identification of the State office that
administers the relevant law, information on the funding and the
number and qualifications of personnel engaged in enforcement,
and a description of the enforcement procedures to be followed,
including information on examination procedures, practices, and
policies. If an exemption application extends to federally chartered
institutions, the applicant must furnish evidence that arrangements
have been made with the appropriate Federal agencies to ensure
adequate enforcement of State law in regard to such creditors.
(5) A statement of reasons to support
the applicant's claim that an exemption should be granted.
Public Notice of Application
Notice of an application will be published,
with an opportunity for public comment, in the Federal Register,
unless the Board finds that notice and opportunity for comment
would be impracticable, unnecessary, or contrary to the public
interest and publishes its reasons for such decision.
Subject to the Board's Rules Regarding
Availability of Information (12 CFR Part 261), all applications
made, including any documents and other material submitted in
support of the applications, will be made available for public
inspection and copying. A copy of the application also will be
made available at the Federal Reserve Bank of each district in
which the applicant is situated.
Favorable Determination
If the Board determines on the basis
of the information before it that an exemption should be granted,
notice of the exemption will be published in the Federal Register,
and a copy furnished to the applicant and to each Federal official
responsible for administrative enforcement.
The appropriate State official shall
inform the Board within 30 days of any change in its relevant
law or regulations. The official shall file with the Board such
periodic reports as the Board may require.
The Board will inform the appropriate
State official of any subsequent amendments to the Federal law,
regulation, interpretations, or enforcement policies that might
require an amendment to State law, regulation, interpretations,
or enforcement procedures.
Adverse Determination
If the Board makes an initial determination
that an exemption should not be granted, the Board will afford
the applicant a reasonable opportunity to demonstrate further
that an exemption is proper. If the Board ultimately finds that
an exemption should not be granted, notice of an adverse determination
will be published in the Federal Register and a copy furnished
to the applicant.
Revocation of Exemption
The Board reserves the right to revoke
an exemption if at any time it determines that the standards required
for an exemption are not met.
Before taking such action, the Board
will notify the appropriate State official of its intent, and
will afford the official such opportunity as it deems appropriate
in the circumstances to demonstrate that revocation is improper.
If the Board ultimately finds that revocation is proper, notice
of the Board's intention to revoke such exemption will be published
in the Federal Register with a reasonable period of time for interested
persons to comment.
Notice of revocation of an exemption
will be published in the Federal Register. A copy of such notice
will be furnished to the appropriate State official and to the
Federal officials responsible for enforcement. Upon revocation
of an exemption, creditors in that State shall then be subject
to the requirements of the Federal law.
Appendix CIssuance of Staff Interpretations
Official Staff Interpretations
Officials in the Board's Division of
Consumer and Community Affairs are authorized to issue official
staff interpretations of this regulation. These interpretations
provide the protection afforded under section 130(f) of the Act.
Except in unusual circumstances, such interpretations will not
be issued separately but will be incorporated in an official commentary
to the regulation which will be amended periodically.
Requests for Issuance of Official Staff Interpretations
A request for an official staff interpretation shall be in writing
and addressed to the Director, Division of Consumer and Community
Affairs, Board of Governors of the Federal Reserve System, Washington,
DC 20551. The request shall contain a complete statement of all
relevant facts concerning the issue, including copies of all pertinent
documents.
Scope of Interpretations
No staff interpretations will be issued approving creditors'
forms, statements, or calculation tools or methods. This restriction
does not apply to forms, statements, tools, or methods whose use
is required or sanctioned by a government agency.
Appendix DMultiple Advance Construction
Loans
Section 226.17(c)(6) permits creditors to treat multiple advance
loans to finance construction of a dwelling that may be permanently
financed by the same creditor either as a single transaction or
as more than one transaction. If the actual schedule of advances
is not known, the following methods may be used to estimate the
interest portion of the finance charge and the annual percentage
rate and to make disclosures. If the creditor chooses to disclose
the construction phase separately, whether interest is payable
periodically or at the end of construction, part I may be used.
If the creditor chooses to disclose the construction and the permanent
financing as one transaction, part II may be used.
Part IConstruction Period Disclosed Separately
A. If interest is payable only on the
amount actually advanced for the time it is outstanding:
1. Estimated interestAssume that onehalf
of the commitment amount is outstanding at the contract interest
rate for the entire construction period.
2. Estimated annual percentage rateAssume
a single payment loan that matures at the end of the construction
period. The finance charge is the sum of the estimated interest
and any prepaid finance charge. The amount financed for computation
purposes is determined by subtracting any prepaid finance charge
from onehalf of the commitment amount.
3. Repayment scheduleThe number and
amounts of any interest payments may be omitted in disclosing
the payment schedule under Sec. 226.18(g). The fact that interest
payments are required and the timing of such payments shall be
disclosed.
4. Amount financedThe amount financed
for disclosure purposes is the entire commitment amount less any
prepaid finance charge.
B. If interest is payable on the entire
commitment amount without regard to the dates or amounts of actual
disbursement:
1. Estimated interestAssume that the
entire commitment amount is outstanding at the contract interest
rate for the entire construction period.
2. Estimated annual percentage rateAssume
a single payment loan that matures at the end of the construction
period. The finance charge is the sum of the estimated interest
and any prepaid finance charge. The amount financed for computation
purposes is determined by subtracting any prepaid finance charge
from onehalf of the commitment amount.
3. Repayment scheduleInterest payments
shall be disclosed in making the repayment schedule disclosure
under Sec. 226.18(g).
Appendix ERules For Card Issuers That
Bill on a TransactionBy Transaction Basis
The following provisions of Subpart
B apply if credit cards are issued and (1) the card issuer and
the seller are the same or related persons; (2) no finance charge
is imposed; (3) consumers are billed in full for each use of the
card on a transactionbytransaction basis, by means of an invoice
or other statement reflecting each use of the card; and (4) no
cumulative account is maintained which reflects the transactions
by each consumer during a period of time, such as a month:
Section 226.6(d), and, as applicable,
Sec. 226.6(b) and (c). The disclosure required by Sec. 226.6(b)
shall be limited to those charges that are or may be imposed as
a result of the deferral of payment by use of the card, such as
late payment or delinquency charges.
Section 226.7(b) and Sec. 226.7(k). Creditors
may comply by placing the required disclosures on the invoice
or statement sent to the consumer for each transaction.
Section 226.9(a). Creditors may comply
by mailing or delivering the statement required by Sec. 226.6(d)
(See appendix G3) to each consumer receiving a transaction invoice
during a onemonth period chosen by the card issuer or by sending
either the statement prescribed by Sec. 226.6(d) or an alternative
billing error rights statement substantially similar to that in
appendix G4, with each invoice sent to a consumer.
Section 226.9(c).
Section 226.10.
Section 226.11. This section applies
when a card issuer receives a payment or other credit that exceeds
by more than $1 the amount due, as shown on the transaction invoice.
The requirement to credit amounts to an account may be complied
with by other reasonable means, such as by a credit memorandum.
Since no periodic statement is provided, a notice of the credit
balance shall be sent to the consumer within a reasonable period
of time following its occurrence unless a refund of the credit
balance is mailed or delivered to the consumer within 7 business
days of its receipt by the card issuer.
Section 226.12 including Sec. 226.12(c)
and (d), as applicable. Section 226.12(e) is inapplicable.
Section 226.13, as applicable. All references
to periodic statement shall be read to indicate the invoice or
other statement for the relevant transaction. All actions with
regard to correcting and adjusting a consumer's account may be
taken by issuing a refund or a new invoice, or by other appropriate
means consistent with the purposes of the section.
Section 226.15, as applicable.
Appendix FAnnual Percentage Rate Computations
for Certain OpenEnd Credit Plans
In determining the denominator of the
fraction under Sec. 226.14(c)(3), no amount will be used more
than once when adding the sum of the balances ^{1} subject
to periodic rates to the sum of the amounts subject to specific
transaction charges. In every case, the full amount of transactions
subject to specific transaction charges shall be included in the
denominator. Other balances or parts of balances shall be included
according to the manner of determining the balance subject to
a periodic rate, as illustrated in the following examples of accounts
on monthly billing cycles:
1 Where a portion
of the finance charge is determined by application of one or more
daily periodic rates, the phrase sum of the balances shall also
mean the average of daily balances.
1. Previous balancenone.
A specific transaction of $100 occurs
on the first day of the billing cycle. The average daily balance
is $100. A specific transaction charge of 3% is applicable to
the specific transaction. The periodic rate is 1\1/2\% applicable
to the average daily balance. The numerator is the amount of the
finance charge, which is $4.50. The denominator is the amount
of the transaction (which is $100), plus the amount by which the
balance subject to the periodic rate exceeds the amount of the
specific transactions (such excess in this case is 0), totaling
$100.
The annual percentage rate is the quotient
(which is 4\1/2\%) multiplied by 12 (the number of months in a
year), i.e., 54%.
2. Previous balance$100.
A specific transaction of $100 occurs
at the midpoint of the billing cycle. The average daily balance
is $150. A specific transaction charge of 3% is applicable to
the specific transaction. The periodic rate is 1\1/2\% applicable
to the average daily balance. The numerator is the amount of the
finance charge which is $5.25. The denominator is the amount of
the transaction (which is $100), plus the amount by which the
balance subject to the periodic rate exceeds the amount of the
specific transaction (such excess in this case is $50), totaling
$150. As explained in example 1, the annual percentage rate is
3\1/2\% x 12=42%.
3. If, in example 2, the periodic rate
applies only to the previous balance, the numerator is $4.50 and
the denominator is $200 (the amount of the transaction, $100,
plus the balance subject only to the periodic rate, the $100 previous
balance). As explained in example 1, the annual percentage rate
is 2\1/4\% x 12=27%.
4. If, in example 2, the periodic rate
applies only to an adjusted balance (previous balance less payments
and credits) and the consumer made a payment of $50 at the midpoint
of the billing cycle, the numerator is $3.75 and the denominator
is $150 (the amount of the transaction, $100, plus the balance
subject to the periodic rate, the $50 adjusted balance). As explained
in example 1, the annual percentage rate is 2\1/2\% x 12=30%.
5. Previous balance$100.
A specific transaction (check) of $100
occurs at the midpoint of the billing cycle. The average daily
balance is $150. The specific transaction charge is $.25 per check.
The periodic rate is 1\1/2\% applied to the average daily balance.
The numerator is the amount of the finance charge, which is $2.50
and includes the $.25 check charge and the $2.25 resulting from
the application of the periodic rate. The denominator is the full
amount of the specific transaction (which is $100) plus the amount
by which the average daily balance exceeds the amount of the specific
transaction (which in this case is $50), totaling $150. As explained
in example 1, the annual percentage rate would be 1\2/3\% x 12=20%.
6. Previous balancenone.
A specific transaction of $100 occurs
at the midpoint of the billing cycle. The average daily balance
is $50. The specific transaction charge is 3% of the transaction
amount or $3.00. The periodic rate is 1\1/2\% per month applied
to the average daily balance. The numerator is the amount of the
finance charge, which is $3.75, including the $3.00 transaction
charge and $.75 resulting from application of the periodic rate.
The denominator is the full amount of the specific transaction
($100) plus the amount by which the balance subject to the periodic
rate exceeds the amount of the transaction ($0). Where the specific
transaction amount exceeds the balance subject to the periodic
rate, the resulting number is considered to be zero rather than
a negative number ($50$100=$50). The denominator, in this case,
is $100. As explained in example 1, the annual percentage rate
is 3\3/4\% x 12=45%.
Appendix GOpenEnd Model Forms and Clauses
G1Balance Computation Methods Model Clauses (§§226.6 and 226.7)
G2Liability for Unauthorized Use Model Clause (§226.12)
G3Long Form Billing Error Rights Model Form (§§226.6 and 226.9)
G4Alternative Billing Error Rights Model Form (§226.9)
G5Rescission Model Form (When Opening an Account) (§226.15)
G6Rescission Model Form (For Each Transaction) (§226.15)
G7Rescission Model Form (When Increasing the Credit Limit)
(§226.15)
G8Rescission Model Form (When Adding a Security Interest) (§226.15)
G9Rescission Model Form (When Increasing the Security) (§226.15)
G10(A)(B)Application and Solicitations Model Forms (Credit
Cards) (§226.5a(b))
G10(C)Applications and Solicitations Model Form (Credit Cards)
(§226.5a(b)){{63089 p.6676.01}}
G11Applications and Solicitations Made Available to General
Public Model Clauses (§226.5a(e))
G12Charge Card Model Clause (When Access to Plan Offered by
Another (§226.9(f))
G13(A)Change in Insurance Provider Model Form (Combined Notice)
(§226.9(f)(2))
G14AHome Equity Sample
G14BHome Equity Sample
G14CHome Equity Sample (Repayment phase disclosed later)
G15Home Equity Model Clauses
G1BALANCE COMPUTATION METHODS MODEL CLAUSES
(a) Adjusted balance method
We figure [a portion of] the finance charge on your account by
applying the periodic rate to the "adjusted balance" of your account.
We get the "adjusted balance" by taking the balnace you owed at
the end of the previous billing cycle and subtracting [any unpaid
finance charges and] any payments and credits received during
the present billing cycle.
(b) Previous balance method
We figure [a portion of] the finance charge on your account by
applying the periodic rate to the amount you owe at the beginning
of each billing cycle [minus any unpaid finance charges.] We do
not subtract any payments or credits received during the billing
cycle. [The amount of payments and credits to your account this
billing cycle was $_________.]
(c) Average daily balance method (excluding current transactions)
We figure [a portion of] the finance charge on your account by
applying the periodic rate to the "average daily balance" of your
account (excluding current transactions). To get the "average
daily balance" we take the beginning balance of your account each
day and subtract any payments or credits [and any unpaid finance
charges]. We do not add in any new [purchases/advances/loans].
This gives us the daily balance. Then, we add all the daily balances
for the billing cycle together and divide the total by the number
of days in the billing cycle. This gives us the "average daily
balance."
(d) Average daily balance method (including current transactions)
We figure [a portion of] the finance charge on your account by
applying the periodic rate to the "average daily balance" of your
account (including current transactions). To get the "average
daily balance" we take the beginning balance of your account each
day, add any new [purchases/advances/loans], and sbutract any
payments or credits, [and unpaid fiance charges]. This gives us
the daily blance. Then, we add up all the daily balances for the
billing cycle and divide the total by the number of days in the
billing cycle. This gives us the "average daily balance."
(e) Ending balance method
We figure [a portion of] the finance charge on your account by
applying the periodic rate to the amount you owe at the end of
each cycle (including new purchases and deducting payments and
credits made during the billing cycle).
G2LIABILITY FOR UNAUTHORIZED USE MODEL CLAUSE
You may be liable for the unauthorized use of your credit card
[or other term that describes the credit card.] You will not be
liable for unauthorized use that occurs after you notify [name
of card issuer or its designee] at [address], orally or in writing,
of the loss, theft, or possible unauthorized use. In any case,
your liability will not exceed [insert $50 or any lesser amount
under agreement with the cardholder.] {{63089 p.6676.02}}
G3LONG FORM BILLING ERROR RIGHTS MODEL FORM
YOUR BILLING RIGHTS KEEP THIS NOTICE FOR FUTURE USE
This notice contains important information about your rights and
our responsibilities under the Fair Credit Billing Act.
Notify Us In Case of Errors or Questions About Your Bill
If you think your bill is wrong, or if you need more information
about a transaction on your bill, write us [on a separate sheet]
at [address] [the address listed on your bill]. Write to us as
soon as possible. We must hear from you no later than 60 days
after we sent you the first bill on which the error or problem
appeared. You can telephone us, but doing so will not preserve
your rights.
In your letter, give us the following information:
 Your name and account number.
 The dollar amount of the suspected error.
 Describe the error and explain, if you can, why you believe
there is an error. If you need more information, describe the
item you are not sure about.
If you have authorized us to pay your credit card bill automatically
from your savings or checking account, you can stop the payment
on any amount you think is wrong. To stop the payment your letter
must reach us three business days before the automatic payment is
scheduled to occur.
Your Rights and Our Responsibilities After We Receive Your Written
Notice
We must acknowledge your letter within 30 days, unless we have corrected
the error by then. Within 90 days, we must either correct the error
or explain why we believe the bill was correct.
After we receive your letter, we cannot try to collect any amount
you question, or report you as delinquent. We can continue to bill
you for the amount you question, including finance charges, and
we can apply any unpaid amount against your credit limit.
You do not have to pay any questioned amount while we are investigating,
but you are still obligated to pay the parts of your bill that are
not in question.
If we find that we made a mistake on your bill, you will not have
to pay any finance charges related to any questioned amount.
If we didn't make a mistake, you may have to pay finance charges,
and you will have to make up any missed payments on the questioned
amount. In either case, we will send you a statement of the amount
you owe and the date that it is due.
If you fail to pay the amount that we think you owe, we may report
you as delinquent. However, if our explanation does not satisfy
you and you write to us within ten days telling us that you still
refuse to pay, we must tell anyone we report you to that you have
a question about your bill. And, we must tell you the name of anyone
we reported you to. We must tell anyone we report you to that the
matter has been settled between us when it finally is.
If we don't follow these rules, we can't collect the first $50 of
the questioned amount, even if your bill was correct.
Special Rule for Credit Card Purchases
If you have a problem with the quality of property or services that
you purchased with a credit card, and you have tried in good faith
to correct the problem with the merchant, you may have the right
not to pay the remaining amount due on the property or services.
There are two limitations on this right:
(a) You must have made the purchase in your home state or, if not
within your home state, within 100 miles of your current mailing
address; and
(b) The purchase price must have been more than $50. These limitations
do not apply if we own or operate the merchant, or if we mailed
you the advertisement for the property or services.
G4ALTERNATIVE BILLING ERROR RIGHTS MODEL FORM
BILLING RIGHTS SUMMARY
In Case of Errors or Questions About Your Bill
If you think your bill is wrong, or if you need more information
about a transaction on your bill, write us [on a separate sheet]
at [address] [the address shown on your bill] as soon as possible.
We must hear from you no later than 60 days after we sent you the
first bill on which the error or problem {{42889 p.6676.03}} appeared.
You can telephone us, but doing so will not preserve your rights.
In your letter, give us the following information:
 Your name and account number.
 The dollar amount of the suspected error.
 Describe the error and explain, if you can, why you believe
there is an error. If you need more information, describe the
item you are unsure about.
You do not have to pay any amount in question while we are investigating,
but you are still obligated to pay the parts of your bill that are
not in question. While we investigate your question, we cannot report
you as delinquent or take any action to collect the amount you question.
Special Rule for Credit Card Purchases
If you have a problem with the quality of goods or services that
you purchased with a credit card, and you have tried in good faith
to correct the problem with the merchant, you may not have to pay
the remaining amount due on the goods or services.
You have this protection only when the purchase price was more than
$50 and the purchase was made in your home state or within 100 miles
of your mailing address. (If we own or operate the merchant, or
if we mailed you the advertisement for the property or services,
all purchases are covered regardless of amount or location of purchase.)
G5RESCISSION MODEL FORM (WHEN OPENING AN ACCOUNT)
NOTICE OF RIGHT TO CANCEL
1. Your Right to Cancel.
We have agreed to establish an openend credit account for you,
and you have agreed to give us a [mortgage/lien/security interest]
[on/in] your home as security for the account. You have a legal
right under federal law to cancel the account, without cost, within
three business days after the latest of the following events:
(1) the opening date of your account which is __________; or
(2) the date you received your TruthinLending disclosures; or
(3) the date you received this notice of your right to cancel the
account.
If you cancel the account, the [mortgage/lien/security interest]
[on/in] your home is also cancelled. Within 20 days of receiving
your notice, we must take the necessary steps to reflect the fact
that the [mortgage/lien/security interest] [on/in] your home has
been cancelled. We must return to you any money or property you
have given to us or to anyone else in connection with the account.
You may keep any money or property we have given you until we have
done the things mentioned above, but you must then offer to return
the money or property, if it is impractical or unfair for you to
return the property, you must offer its reasonable value. You may
offer to return the property at your home or at the location of
the property. Money must be returned to the address shown below.
If we do not take possession of the money or property within 20
calendar days of your offer, you may keep it without further obligation.
2. How to Cancel.
If you decide to cancel the account, you may do so by notifying
us, in writing, at (creditor's name and business address). You may
use any written statement that is signed and dated by you and states
your intention to cancel, or you may use this notice by dating and
signing below. Keep one copy of this notice no matter how you notify
us because it contains important information about your rights.
If you cancel by mail or telegram, you must send the notice no later
than midnight of (date) (or midnight of the third business day following
the latest of the three events listed above). If you send or deliver
your written notice to cancel some other way, it must be delivered
to the above address no later than that time.
I WISH TO CANCEL.
_____________________________________________
Consumer's Signature Date
G6RESCISSION MODEL FORM (FOR EACH TRANSACTION)
NOTICE OF RIGHT TO CANCEL
1. Your Right to Cancel.
We have extended credit to you under your openend credit account.
This extension of credit will increase the amount you owe on your
account. We already have a [ mortgage/lien/security interest] [on/in]
your home as security for your account. You have a legal right under
federal law to cancel the extension of credit, without cost, within
three business days after the latest of the following events:
(1) the date of the additional extension of credit which is ________;
or
(2) the date you received your TruthinLending disclosures; or
(3) the date you received this notice of your right to cancel the
additional extension of credit. If you cancel the additional extension
of credit, your cancellation will only apply to the additional amount
and to any increase in the [mortgage/lien/security interest] that
resulted because of the additional amount. It will not affect the
amount you presently owe, and it will not affect the [mortgage/lien/security
interest] we already have [on/in] your home. Within 20 calendar
days after we receive your notice of cancellation, we must take
the necessary steps to reflect the fact that any increase in the
[mortgage/lien/security interest] [on/in] your home has been cancelled.
We must also return to you any money or property you have given
to us or to anyone else in connection with this extension of credit.
You may keep any money or property we have given you until we have
done the things mentioned above, but you must then offer to return
the money or property. If it is impractical or unfair for you to
return the property, you must offer its reasonable value. You may
offer to return the property at your home or at the location of
the property. Money must be returned to the address shown below.
If we do not take possession of the money or property within 20
calendar days of your offer, you may keep it without further obligation.
2. How to Cancel.
If you decide to cancel the additional extension of credit, you
may do so by notifying us, in writing, at (creditor's name and business
address).
You may use any written statement that is signed and dated by you
and states your intention to cancel, or you may use this notice
by dating and signing below. Keep one copy of this notice no matter
how you notify us because it contains important information about
your rights.
If you cancel by mail or telegram, you must send the notice no later
than midnight of (date) (or midnight of the third business day following
the latest of the three events listed above). If you send or deliver
your written notice to cancel some other way, it must be delivered
to the above address no later than that time.
I WISH TO CANCEL.
______________________________________________________
Consumer's Signature Date
G7RESCISSION MODEL FORM (WHEN INCREASING THE CREDIT LIMIT)
NOTICE OF RIGHT TO CANCEL
1. Your Right to Cancel.
We have agreed to increase the credit limit on your openend credit
account. We have a [mortgage/lien/security interest] [on/in] your
home as security for your account. Increasing the credit limit will
increase the amount of the [mortgage/lien/security interest] [on/in]
your home. You have a legal right under federal law to cancel the
increase in your credit limit, without cost, within three business
days after the latest of the following events:
(a) the date of the increase in your credit limit which is ________;
or
(2) the date you received your TruthinLending disclosures; or
{{42889 p.6678}}
(3) the date you received this notice of your right to cancel the
increase in your credit limit. If you cancel, your cancellation
will apply only to the increase in your credit limit and to the
[mortgage/lien/security interest] that resulted from the increase
in your credit limit. It will not affect the amount you presently
owe, and it will not affect the [mortgage/lien/security interest]
we already have [on/in] your home. Within 20 calendar days after
we receive your notice of cancellation, we must take the necessary
steps to reflect the fact that any increase in the [mortgage/lien/security
interest] [on/in] your home has been cancelled. We must also return
to you any money or property you have given to us or to anyone else
in connection with this increase.
You may keep any money or property we have given you until we have
done the things mentioned above, but you must then offer to return
the money or property. If it is impractical or unfair for you to
return the property, you must offer its reasonable value. You may
offer to return the property at your home or at the location of
the property. Money must be returned to the address shown below.
If we do not take possession of the money or property within 20
calendar days of your offer, you may keep it without further obligation.
2. How to Cancel.
If you decide to cancel the increase in your credit limit, you may
do so by notifying us, in writing, at (creditor's name and business
address).
You may use any written statement that is signed and dated by you
and states your intention to cancel, or you may use this notice
by dating and signing below. Keep one copy of this notice no matter
how you notify us because it contains important information about
your rights.
If you cancel by mail or telegram, you must send the notice no later
than midnight of (date) (or midnight of the third business day following
the latest of the three events listed above). If you send or deliver
your written notice to cancel some other way, it must be delivered
to the above address no later than that time.
I WISH TO CANCEL.
______________________________________________________
Consumer's Signature Date
G8RESCISSION MODEL FORM (WHEN ADDING A SECURITY INTEREST)
NOTICE OF RIGHT TO CANCEL
1. Your Right to Cancel.
You have agreed to give us a [mortgage/lien/security interest] [on/in]
your home as security for your existing openend credit account.
You have a legal right under federal law to cancel the [mortgage/lien/security
interest], without cost, within three business days after the latest
of the following events:
(1) the date of the [mortgage/lien/security interest] which is _____;
or
(2) the date you received your TruthinLending disclosures; or
(3) the date you received this notice of your right to cancel the
[mortgage/lien/security interest]. If you cancel the [mortgage/lien/security
interest], your cancellation will apply only to the [mortgage/lien/security
interest]. It will not affect the amount you owe on your account.
Within 20 calendar days after we receive your notice of cancellation,
we must take the necessary steps to reflect that any [mortgage/lien/security
interest] [on/in] your home has been cancelled. We must also return
to you any money or property you have given to us or to anyone else
in connection with this increase.
You may keep any money or property we have given you until we have
done the things mentioned above, but you must then offer to return
the money or property. If it is impractical or unfair for you to
return the property, you must offer its reasonable value. You may
make the offer at your home or at the location of the property.
Money must be returned to the address shown below. If we do not
take possession of the money or property within 20 calendar days
of your offer, you may keep it without further obligation.
2. How to Cancel.
If you decide to cancel the [mortgage/lien/security interest], you
may do so by notifying us, in writing, at (creditor's name and business
address).
You may use any written statement that is signed and dated by you
and states your intention to cancel, or you may use this notice
by dating and signing below. Keep one copy of this notice no matter
how you notify us because it contains important information about
your rights.
If you cancel by mail or telegram, you must send the notice no later
than midnight of (date) (or midnight of the third business day following
the latest of the three events listed above). If you send or deliver
your written notice to cancel some other way, it must be delivered
to the above address no later than that time.
I WISH TO CANCEL.
_________________________
Consumer's Signature Date
G9RESCISSION MODEL FORM (WHEN INCREASING THE SECURITY)
NOTICE OF RIGHT TO CANCEL
1. Your Right to Cancel.
You have agreed to increase the amount of the [mortgage/lien/security
interest] [on/in] your home that we hold as security for your openend
credit account. You have a legal right under federal law to cancel
the increase, without cost, within three business days after the
latest of the following events:
(1) the date of the increase in the security which is ________;
or
(2) the date you received your TruthinLending disclosures; or
(3) the date you received this notice of your right to cancel the
increase in the security. If you cancel the increase in the security,
your cancellation will apply only to the increase in the amount
of the [mortgage/lien/security interest]. It will not affect the
amount you presently owe on your account, and it will not affect
the [mortgage/lien/security interest] we already have [on/in] your
home. Within 20 calendar days after we receive your notice of cancellation,
we must take the necessary steps to reflect that any increase in
the [mortgage/lien/security interest] [on/in] your home has been
cancelled. We must also return to you any money or property you
have given to us or to anyone else in connection with this increase.
Your may keep any money or property we have given you until we have
done the things mentioned above, but you must then offer to return
the money or property. If it is impractical or unfair for you to
return the property, you must offer its reasonable value. You may
offer to return the property at your home or at the location of
the property. Money must be returned to the address shown below.
If we do not take possession of the money or property within 20
calendar days of your offer, you may keep it without further obligation.
2. How to Cancel.
If you decide to cancel the increase in security, you may do so
by notifying us, in writing, at (creditor's name and business address).
You may use any written statement that is signed and dated by you
and states your intention to cancel, or you may use this notice
by dating and signing below. Keep one copy of this notice no matter
how you notify us because it contains important information about
your rights.
If you cancel by mail or telegram, you must send the notice no later
than midnight of (date) (or midnight of the third business day following
the latest of the three events listed above). If you send or deliver
your written notice to cancel some other way, it must be delivered
to the above address no later than that time.
I WISH TO CANCEL.
____________________
Consumer's Signature Date
G10(A) and G10(B) APPLICATIONS AND SOLICITATIONS MODEL FORM
(CREDIT CARDS) View Form
G10(C) APPLICATIONS AND SOLICITATIONS MODEL FORM (CHARGE CARDS)
View Form
G11APPLICATIONS AND SOLICITATIONS MADE AVAILABLE TO GENERAL
PUBLIC MODEL CLAUSES
(a) Disclosure of Required Credit Information
The information about the costs of the card described in this [application]
[solicitation]is accurate as of (month/year). This information may
have changed after that date. To find out what may have changed,
[call us at (telephone number)] [write to use at (address)].
(b) Disclosure With Account Opening Statement
To find out about changes in the information in this [application]
[solicitation], [call us at (telephone number)] [write to us at
(address)].
(c) No Disclosure of Credit Information
There are costs associated with the use of this card. To obtain
information about these costs, call us at (telephone number) or
write to us at (address).
G12CHARGE CARD MODEL CLAUSE (WHEN ACCESS TO PLAN OFFERED BY
ANOTHER)
This charge card may allow you to access credit offered by another
creditor. Our decision about issuing you a charge card will be independent
of the other creditor's decision about allowing you access to a
line of credit. Therefore, approval by us to issue you a card does
not constitute approval by the other creditor to grant you credit
privileges. If we issue you a charge card, you may receive it before
the other creditor decides whether or not to grant you credit privileges.
G13(A)CHANGE IN INSURANCE PROVIDER MODEL FORM (COMBINED NOTICE)
The credit card account you have with us is insured. This is to
notify you that we plan to replace your current coverage with insurance
coverage from a different insurer.
If we obtain insurance for your account from a different insurer,
you may cancel the insurance. [Your premium rate will increase to
$__per __.]
[Your coverage will be affected by the following:
 The elimination of a type of coverage previously provided
to you. [(explanation)] [See __of the attached policy for details.]
 A lowering of the age at which your coverage will terminate
or will become more restrictive. [(explanation)] [See __of the
attached policy or certificate for details.]
 A decrease in your maximum insurable loan balance, maximum
periodic benefit payment, maximum number of payments, or any
other decrease in the dollar amount {{63089 p.6678.04}} of
your coverage or benefits. [(explanation)] [See __of the attached
policy or certificate for details.]
 A restriction on the eligibility for benefits for you or others.
[(explanation)] [See __of the attached policy or certificate
for details.]
 A restriction in the definition of "disability" or other key
term of coverage. [(explanation)] [See__of the attached policy
or certificate for details.]
 The addition of exclusions or limitations that are broader
or other than those under the current coverage. [(explanation)]
[See __of the attached policy or certificate for details.]
 An increase in the elimination (waiting) period or a change
to nonretroactive coverage. [(explanation)] [See__of the attached
policy or certificate for details).]
[The name and mailing address of the new insurer providing the coverage
for your account is (name and address).]
G13(B)CHANGE IN INSURANCE PROVIDER MODEL FORM
We have changed the insurer providing the coverage for your account.
The new insurer's name and address are (name and address). A copy
of the new policy or certificate is attached.
You may cancel the insurance for your account.
G14AHOME EQUITY SAMPLE
IMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT
This disclosure contains important information about our Home Equity
Line of Credit. You should read it carefully and keep a copy for
your records.
Availability of Terms: To obtain the terms described below,
you must submit your application before January 1, 1990. If these
terms change (other than the annual percentage rate) and you decide,
as a result, not to enter into an agreement with us, you are entitled
to a refund of any fees that you have paid to us or anyone else
in connection with your application.
Security Interest: We will take a mortgage on your home.
You could lose your home if you do not meet the obligations in your
agreement with us.
Possible Actions: Under certain circumstances, we can (1)
terminate your line, require you to pay us the entire outstanding
balance in one payment, and charge you certain fees; (2) refuse
to make additional extensions of credit; and (3) reduce your credit
limit.
If you ask, we will give you more specific information concerning
when we can take these actions.
Minimum Payment Requirements: You can obtain advances of
credit for 10 years (the "draw period"). During the draw period,
payments will be due monthly. Your minimum monthly payment will
equal the greater of $100 or 1/360th of the outstanding balance
plus the finance charges that have accrued on the outstanding balance.
After the draw period ends, you will no longer be able to obtain
credit advances and must pay the outstanding balance over 5 years
(the "repayment period"). During the repayment period, payments
will be due monthly. Your minimum monthly payment will equal 1/60th
of the balance that was outstanding at the end of the draw period
plus the finance charges that have accrued on the remaining balance.
Minimum Payment Example: If you made only the minimum monthly
payments and took no other credit advances, it would take 15 years
to pay off a credit advance of $10,000 at an ANNUAL PERCENTAGE {{63089
p.6678.05}} RATE of 12%. During that period, you would make 120
monthly payments varying between $127.78 and $100.00 followed by
60 monthly payments varying between $187.06 and $118.08.
Fees and Charges: To open and maintain a line of credit,
you must pay the following fees to us:
 Application fee: $150 (due at application)
 Points: 1% of credit limit (due when account opened)
 Annual maintenance fee: $75 (due each year)
You also must pay certain fees to third parties to open a line.
These fees generally total between $500 and $900. If you ask, we
will give you an itemization of the fees you will have to pay to
third parties.
Minimum Draw and Balance Requirements: The minimum credit
advance you can receive is $500. You must maintain an outstanding
balance of at least $100.
Tax Deductibility: You should consult a tax advisor regarding
the deductibility of interest and charges for the line.
VariableRate Information: The line has a variablerate feature,
and the annual percentage rate (corresponding to the periodic rate)
and the minimum payment can change as a result.
The annual percentage rate includes only interest and not other
costs.
The annual percentage rate is based on the value of an index. The
index is the monthly average prime rate charged by banks and is
published in the Federal Reserve Bulletin. To determine the annual
percentage rate that will apply to your line, we add a margin to
the value of the index.
Ask us for the current index value, margin and annual percentage
rate. After you open a credit line, rate information will be provided
on periodic statements that we will send you.
Rate Changes: The annual percentage rate can change each
month. The maximum ANNUAL PERCENTAGE RATE that can apply is 18%.
Except for this 18% "cap," there is no limit on the amount by which
the rate can change during any oneyear period.
Maximum Rate and Payment Examples: If you had an outstanding
balance of $10,000 during the draw period, the minimum monthly payment
at the maximum ANNUAL PERCENTAGE RATE of 18% would be $177.78. This
annual percentage rate could be reached during the first month of
the draw period.
If you had an outstanding balance of $10,000 at the beginning of
the repayment period, the minimum monthly payment at the maximum
ANNUAL PERCENTAGE RATE of 18% would be $316.67. This annual percentage
rate could be reached during the first month of the repayment period.
Historical Example: The following table shows how the annual
percentage rate and the minimum monthly payments for a single $10,000
credit advance would have changed based on changes in the index
over the past 15 years. The index values are from September of each
year. While only one payment amount per year is shown, payments
would have varied during each year.
The table assumes that no additional credit advances were taken,
that only the minimum payments were made each month, and that the
rate remained constant during each year. It does not necessarily
indicate how the index or your payments will change in the future.
View Table
G14BHOME EQUITY SAMPLE
IMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT
This disclosure contains important information about our Home Equity
Line of Credit. You should read it carefully and keep a copy for
your records.
Availability of Terms: All of the terms described below are
subject to change.
If these terms change (other than the annual percentage rate) and
you decide, as a result, not to enter into an agreement with us,
you are entitled to a refund of any fees you paid to us or anyone
else in connection with your application.
Security Interest: We will take a mortgage on your home.
You could lose your home if you do not meet the obligations in your
agreement with us.
Possible Actions: We can terminate your line, require you
to pay us the entire outstanding balance in one payment, and charge
you certain fees if:
 You engage in fraud or material misrepresentation in connection
with the line.
 You do not meet the repayment terms.
 Your action or inaction adversely affects the collateral or
our rights in the collateral.
We can refuse to make additional extensions of credit or reduce
your credit limit if:
 The value of the dwelling securing the line declines significantly
below its appraised value for purposes of the line.
 We reasonably believe you will not be able to meet the repayment
requirements due to a material change in your financial circumstances.
 You are in default of a material obligation in the agreement.
 Government action prevents us from imposing the annual percentage
rate provided for or impairs our security interest such that
the value of the interest is less than 120 percent of the credit
line.
 A regulatory agency has notified us that continued advances
would constitute an unsafe and unsound practice.
 The maximum annual percentage rate is reached.
The initial agreement permits us to make certain changes to the
terms of the agreement at specified times or upon the occurrence
of specified events.
Minimum Payment Requirements: You can obtain advances of
credit for 10 years (the "draw period"). You can choose one of three
payment options for the draw period:
 Monthly interestonly payments. Under this option, your payments
will be due {{63089 p.6678.07}} monthly and will equal the
finance charges that accrued on the outstanding balance during
the preceding month.
 Quarterly interestonly payments. Under this option, your
payments will be due quarterly and will equal the finance charges
that accrued on the outstanding balance during the preceding
quarter.
 2% of the balance. Under this option, your payments will be
due monthly and will equal 2% of the outstanding balance on
your line plus finance charges that accrued on the outstanding
balance during the preceding month.
If the payment determined under any option is less than $50, the
minimum payment will equal $50 or the outstanding balance on your
line, whichever is less.
Under both the monthly and quarterly interestonly payment options,
the minimum payment will not reduce the principal that is outstanding
on your line.
After the draw period ends, you will no longer be able to obtain
credit advances and must repay the outstanding balance (the "repayment
period"). The length of the repayment period will depend on the
balance outstanding at the beginning of it. During the repayment
period, payments will be due monthly and will equal 3% of the outstanding
balance on your line plus finance charges that accrued on the outstanding
balance or $50, whichever is greater. Minimun Payment Examples:
If you took a single $10,000 advance and the ANNUAL PERCENTAGE RATE
was 9.52%.
 Under the monthly interestonly payment option, it would take
18 years and 1 month to pay off the advance if you made only
the minimum payments. During that period, you would make 120
payments of $79.33, followed by 96 payments varying between
$379.33 and $50 and one final payment of $10.75.
 Under the 2% of the balance payment option, it would take
10 years and 8 months to pay off the advance if you made only
the mininum payments. During that period, you would make 120
payments varying between $279.33 and $50, followed by 7 payments
of $50 and one final payment of $21.53.
Fees and Charges: To open and maintain a line of credit,
you must pay us the following fees:
 Application fee: $100 (due at application)
 Points: 1% of credit limit (due when account opened)
 Annual maintenance fee: $50 during the first 3 years, $75
thereafter (due each year)
You also must pay certain fees to third parties to open a line.
These fees generally total between $500 and $900. If you ask, we
will give you an itemization of the fees you will have to pay to
third parties.
Minimum Draw Requirement: The minimum credit advance that
you can receive is $200.
Tax Deductibility: You should consult a tax adviser regarding
the deductibility of interest and charges for the line.
VariableRate Feature: The line has a variablerate feature,
and the annual percentage rate (corresponding to the periodic rate)
and the minimum monthly payment can change as a result.
The annual percentage rate includes only interest and not other
costs.
The annual percentage rate is based on the value of an index. During
the draw period, the index is the monthly average prime rate charged
by banks. During the repayment period, the index is the weekly average
yield on U.S. Treasury securities adjusted to a constant maturity
of one year. Information on these indices is published in the Federal
Reserve Bulletin. To determine the annual percentage rate that will
apply to your line, we add a margin to the value of the index.
The initial annual percentage rate is "discounted"it is not based
on the index and margin used for later rate adjustments. The initial
rate will be in effect for the first year your credit line is open.
Ask us for the current index values, margin, discount and annual
percentage rate. After you open a credit line, rate information
will be provided on periodic statements that we send you.
Rate Changes: The annual percentage rate can change monthly.
The maximum ANNUAL PERCENTAGE RATE that can apply is 18%. Apart
from this rate "cap," there is no limit on the amount by which {{63089
p.6678.08}} the rate can change during any oneyear period.
Maximum Rate and Payment Examples: If the ANNUAL PERCENTAGE
RATE during the draw period equaled the 18% maximum and you had
an outstanding balance of $10,000:
 Under the monthly interestonly payment option, the minimum
monthly payment would be $150.
 Under the 2% of the balance payment option, the minimum monthly
payment would be $350.
This annual percentage rate could be reached during the first month
of the draw period.
If you had an outstanding balance of $10,000 during the repayment
period, the minimum monthly payment at the maximum ANNUAL PERCENTAGE
RATE of 18% would be $450. This annual percentage rate could be
reached during the first month of the repayment period.
Historical Example: The following table shows how the annual
percentage rate and the monthly payments for a single $10,000 credit
advance would have changed based on changes in the indices over
the past 15 years. For the draw period, the index values for the
prime rate are from September of each year. For the repayment period,
the index values for the yield on U.S. Treasury securities are from
the first week ending in July. While only one payment amount per
year is shown, payments under the 2% of the balance payment option
and during the repayment period would have varied during each year.
The table assumes that no additional credit advances were taken,
that only the minimum payments were made, and that the rate remained
constant during each year. It does not necessarily indicate how
the indices or your payments will change in the future.
View Table
G15HOME EQUITY MODEL CLAUSES
(a) Retention of Information: This disclosure contains important
information about our Home Equity Line of Credit. You should read
it carefully and keep a copy for your records.
(b) Availability of Terms: To obtain the terms described
below, you must submit your application before (date). However the
(description of terms) are subject to change.
or
All of the terms described below are subject to change.
If these terms change [(other than the annual percentage rate)]
and you decide, as a result, not to enter into an agreement with
us, you are entitled to a refund of any fees you paid to us or anyone
else in connection with your application.
(c) Security Interest: We will take a [security interest
in/mortgage on] your home. You could lose your home if you do not
meet the obligations in your agreement with us.
(d) Possible Actions: Under certain circumstances, we can
(1) terminate your line, require you to pay us the entire outstanding
balance in one payment [, and charge you certain fees]; (2) refuse
to make additional extensions of credit; (3) reduce your credit
limit [; and (4) make specific changes that are set forth in your
agreement with us].
If you ask, we will give you more specific information about when
we can take these actions.
or
Possible Actions: We can terminate your account, require
you to pay us the entire outstanding balance in one payment[, and
charge you certain fees] if:
 You engage in fraud or material misrepresentation in connection
with the line.
 You do not meet the repayment terms.
 Your action or inaction adversely affects the collateral or
our rights in the collateral.
We can refuse to make additional extensions of credit or reduce
your credit limit if:
 The value of the dwelling securing the line declines significantly
below its appraised value for purposes of the line.
 We reasonably believe you will not be able to meet the repayment
requirements due to a material change in your financial circumstances.
 You are in default of a material obligation in the agreement.
 Government action prevents us from imposing the annual percentage
rate provided for or impairs our security interest such that
the value of the interest is less than 120 percent of the credit
line.
 A regulatory agency has notified us that continued advances
would constitute an unsafe and unsound practice.
 The maximum annual percentage rate is reached.
[The initial agreement permits us to make certain changes to the
terms of the agreement at specified times or upon the occurrence
of specified events.]
(e) Minimum Payment Requirements: The length of the [draw
period/repayment period] is (length). Payments will be due (frequency).
Your minimum payment will equal (how payment determined).
[The minimum payment will not reduce the principal that is outstanding
on your line./The minimum payment will not fully repay the principal
that is outstanding on your line.] You will then be required to
pay the entire balance in a single "balloon" payment.
(f) Minimum Payment Example: If you made only the minimum
payments and took no other credit advances, it would take (length
of time) to pay off a credit advance of $10,000 at an ANNUAL PERCENTAGE
RATE of (recent rate). During that period, you would make (number)
(frequency) payments of $ __.
(g) Fees and Charges: To open and maintain a line of credit,
you must pay the following fees to us:
(Description of fee) [$ __/ __% of ___] (When payable)
(Description of fee) [$ __/ __% of ___] (When payable)
You also must pay certain fees to third parties. These fees generally
total [$ __/ __% of ___/between $ __and $ __]. If you ask, we will
give you an itemization of the fees you will have to pay to third
parties.
(h) Minimum Draw and Balance Requirements: The minimum credit
advance you can receive is $ __. You must maintain an outstanding
balance of at least $ __.
(i) Negative Amortization: Under some circumstances, your
payments will not cover the finance charges that accrue and "negative
amortization" will occur. Negative amortization will increase the
amount that you owe us and reduce your equity in your home.
(j) Tax Deductibility: You should consult a tax advisor regarding
the deductibility of interest and charges for the line.
(k) Other Products: If you ask, we will provide you with
information on our other available home equity lines.
(l) VariableRate Feature: The plan has a variablerate feature
and the annual percentage rate (corresponding to the periodic rate)
and the [minimum payment/term of the line] can change as a result.
The annual percentage rate includes only interest and not other
costs.
The annual percentage rate is based on the value of an index. The
index is the (identification of index) and is [published in/available
from] (source of information). To determine the annual percentage
rate that will apply to your line, we add a margin to the value
of the index.
[The initial annual percentage rate is "discounted"it is not based
on the index and margin used for later rate adjustments. The initial
rate will be in effect for (period).]
Ask us for the current index value, margin, [discount,] and annual
percentage rate. After you open a credit line, rate information
will be provided on periodic statements that we send you.
(m) Rate Changes: The annual percentage rate can change (frequency).
[The rate cannot increase by more than __percentage points in any
one year period./There is no limit on the amount by which the rate
can change in any one year period.] [The maximum ANNUAL PERCENTAGE
RATE that can apply is __%./The ANNUAL PERCENTAGE RATE cannot increase
by more than __ percentage points above the initial rate.] [Ask
us for the specific rate limitations that will apply to your credit
line.]
(n) Maximum Rate and Payment Examples: If you had an outstanding
balance of {{103196 p.6678.12}} $10,000, the minimum payment at
the maximum ANNUAL PERCENTAGE RATE of __% would be $ __. This annual
percentage rate could be reached (when maximum rate could be reached).
(o) Historical Example: The following table shows how the
annual percentage rate and the minimum payments for a single $10,000
credit advance would have changed based on changes in the index
over the past 15 years. The index values are from (when values are
measured). [While only one payment amount per year is shown, payments
would have varied during each year.]
The table assumes that no additional credit advances were taken,
that only the minimum payments were made, and that the rate remained
constant during each year. It does not necessarily indicate how
the index or your payments will change in the future.

ANNUAL Minimum Year Index Margin PERCENTAGE RATE Payment

(%) (%) (%) ($)
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989

Appendix H to Part 226ClosedEnd Model
Forms And Clauses
H1Credit Sale Model Form (§ 226.18)
H2Loan Model Form (§ 226.18)
H3Amount Financed Itemization Model Form (§ 226.18(c))
H4(A)VariableRate Model Clauses (§ 226.18(f)(1))
H4(B)VariableRate Model Clauses (§ 226.18(f)(2))
H4(C)VariableRate Model Clauses (§ 226.19(b))
H4(D)VariableRate Model Clauses (§ 226.20(c))
H5Demand Feature Model Clauses (§ 226.18(I))
H6Assumption Policy Model Clause (§ 226.18(q))
H7Required Deposit Model Clause (§ 226.18(r))
H8Rescission Model Form (General) (§ 226.23)
H9Rescission Model Form (Refinancing with Original Creditor)
(§ 226.23)
H10Credit Sale Sample
H11Installment Loan Sample
H12Refinancing Sample
H13Mortgage with Demand Feature Sample
H14Variable Rate Mortgage Sample (§ 226.19(b))
H15Graduated Payment Mortgage Sample
H16Mortgage Sample (§ 226.32)
H1CREDIT SALE MODEL FORM
View Form
H2LOAN MODEL FORM
View Form
H3AMOUNT FINANCED ITEMIZATION MODEL FORM
Itemization of the Amount Financed of $ __________________
$ ____________ Amount given to you directly
$ ____________ Amount paid on your account
Amount paid to others on your behalf
$ ____________ to [public officials] [credit bureau] [appraiser]
[insurance company]
$ ____________ to [name of another creditor]
$ ____________ to (other)
$ ____________ Prepaid finance charge
H4(A)VARIABLE RATE MODEL CLAUSES
The annual percentage rate may increase during the term of this
transaction if:
[the prime interest rate of (creditor) increases.]
[the balance in your deposit account falls below $________.]
[you terminate your employment with (employer) .]
[The interest rate will not increase above ____ %.]
[The maximum interest rate increase at one time will be ____%.]
[The rate will not increase more than once every (time period)
.]
Any increase will take the form of:
[higher payment amounts.]
[more payments of the same amount.]
[a larger amount due at maturity.]
Example based on the specific transaction
[If the interest rate increases by ____% in (time period),
[your regular payments will increase to $ ________ .]
[you will have to make ___additional payments.]
[your final payment will increase to $ ________ .]]
Example based on a typical transaction
[If your loan were for $ ________at ____% for (term) and the rate
increased to ____% in (time period),
[your regular payments would increase by $ ________ .]
[you would have to make ___additional payments.]
[your final payment would increase by $ ________ .]]
H4(B) VARIABLERATE MODEL CLAUSES
Your loan contains a variablerate feature. Disclosures about
the variablerate feature have been provided to you earlier.
H4(C) VARIABLERATE MODEL CLAUSES
This disclosure describes the features of the Adjustable Rate
Mortgage (ARM) program you are considering. Information on other
ARM programs is available upon request.
How Your Interest Rate and Payment are Determined
 Your interest rate will be based on [an index plus a margin]
[a formula].
 Your payment will be based on the interest rate, loan balance,
and loan term.
 [The interest rate will be based on (identification of index)
plus our margin. Ask for our current interest rate and margin.]
 [The interest rate will be based on (identification of formula).
Ask us for our current interest rate.]
 Information about the index [formula for rate adjustments] is
published [can be found] _____ .
 [The initial interest rate is not based on the (index) (formula)
used to make later adjustments. Ask us for the amount of current
interest rate discounts.]
How Your Interest Rate Can Change
 Your interest rate can change (frequency).
 [Your interest rate cannot increase or decrease more than
___percentage points at each adjustement.]
 Your interest rate cannot increase [or decrease] more than
___percentage points over the term of the loan.
How Your Payment Can Change
 Your payment can change (frequency) based on changes in the
interest rate.
 [Your payment cannot increase more than (amount of percentage)
at each adjustment.]
 You will be notified in writing ___days before the due date
of a payment at a new level. This notice will contain information
about your interest rates, payment amount, and loan balance.
 [You will be notified once each year during which interest
rate adjustments, but no payment adjustments, have been made
to your loan. This notice will contain information about your
interest rates, payment amount, and loan balance.]
 [For example, on a $10,000 [term] loan with an initial interest
rate of ___[(the rate shown in the interest rate column below
for the year 19___)] [(in effect (month) (year)], the maximum
amount that the interest rate can rise under this program is
___percentage points, to ___%, and the monthly payment can rise
from a firstyear payment of $___ to a maximum of $___ in the
___year. To see what your payments would be, divide your mortgage
amount by $10,000; then multiply the monthly payment by that
amount. (For example, the monthly payment for a mortgage amount
of $60,000 would be: $60,000 + $10,000 = 6; 6 x ___= $___ per
month.)]
Example
The example below shows how your payments would have changed under
this ARM program based on actual changes in the index from 1977
to 1991. This does not necessarily indicate how your index will
change in the future.
The example is based on the following assumptions:
Amount of loan........................................................$10,000
Term........................................................................_____
Change date..............................................................______
Payment adjustment..................................................(frequency)
Interest adjustment....................................................(frequency)
[Margin]{*}...............................................................______
Caps ___[periodic interest rate cap]
___lifetime interest rate cap
___[payment cap]
[Interest rate carryover]
[Negative amortization]
[Interest rate discount]{**}
Index.........................................(identification
of index or formula)
{* This is a margin we have used recently; your margin may be different.}
{** This is the amount of a discount we have provided recently;
your loan may be discounted by a different amount.}
Note: To see what your payments would have been during that period,
divide your mortgage amount by $10,000; then multiply the monthly
payment by that amount. (For example, in 1996 the monthly payment
for a mortgage amount of $60,000 taken out in 1982 would be: $60,000+$10,000=6;
6x____=$____per month.)
H4(D) VARIABLERATE MODEL CLAUSES
Your new interest rate will be _____%, which is based on an index
value of _____%.
Your previous interest rate was _____%, which was based on an index
value of _____%.
[The new interest rate does not reflect a change of ______percentage
points in the index value which was not added because of ______.]
[The new payment will be $_________.]
[Your new loan balance is $_________.]
[Your (new) (existing) payment will not be sufficient to cover the
interest due and the difference will be added to the loan amount.
The payment amount needed to pay your loan in full by the end of
the term at the new interest rate is $_______.]
[The following interest rate adjustments have been implemented this
year without changing your payment: ______. These interest rates
were based on the following index values: ______.]
H5DEMAND FEATURE MODEL CLAUSES
This obligation [is payable on demand.][has a demand feature.]
[All disclosures are based on an assumed maturity of one year.]
H6ASSUMPTION POLICY MODEL CLAUSE
Assumption: Someone buying your house [may, subject to conditions,
be allowed to] [cannot] assume the remainder of the mortgage on
the original terms.
H7REQUIRED DEPOSIT MODEL CLAUSE
The annual percentage rate does not take into account your required
deposit.
H8RESCISSION MODEL FORM (GENERAL)
NOTICE OF RIGHT TO CANCEL
Your Right to Cancel
You are entering into a transaction that will result in a [mortgage/lien/security
interest] [on/in] your home. You have a legal right under federal
law to cancel this transaction, without cost, within three business
days from whichever of the following events occurs last:
(1) the date of the transaction, which is ________; or
(2) the date you received your Truth in Lending disclosures; or
(3) the date you received this notice of your right to cancel.
If you cancel the transaction, the [mortgage/lien/security interest]
is also cancelled. Within 20 calendar days after we receive your
notice, we must take the steps necessary to reflect the fact that
the [mortgage/lien/security interest] [on/in] your home has been
cancelled, and we must return to you any money or property you have
given to us or to anyone else in connection with this transaction.
You may keep any money or property we have given you until we have
done the things mentioned above, but you must then offer to return
the money or property. If it is impractical or unfair for you to
return the property, you must offer its reasonable value. You may
offer to return the property at your home or at the location of
the property. Money must be returned to the address below. If we
do not take possession of the money or property within 20 calendar
days of your offer, you may keep it without further obligation.
How to Cancel
If you decide to cancel this transaction, you may do so by notifying
us in writing, at (creditor's name and business address).
You may use any written statement that is signed and dated by you
and states your intention to cancel, or you may use this notice
by dating and signing below. Keep one copy of this notice because
it contains important information about your rights.
If you cancel by mail or telegram, you must send the notice no later
than midnight of (date) (or midnight of the third business day following
the latest of the three events listed above). If you send or deliver
your written notice to cancel some other way, it must be delivered
to the above address no later than that time.
I WISH TO CANCEL
____________________
Consumer's Signature Date
H9RESCISSION MODEL FORM (REFINANCING WITH ORIGINAL CREDITOR)
NOTICE OF RIGHT TO CANCEL
Your Right to Cancel
You are entering into a new transaction to increase the amount of
credit previously provided to you.
Your home is the security for this new transaction. You have a legal
right under federal law to cancel this new transaction, without
cost, within three business days from whichever of the following
events occurs last:
(1) the date of this new transaction, which is ________; or
(2) the date you received your new Truth in Lending disclosures;
or
(3) the date you received this notice of your right to cancel.
If you cancel this new transaction, it will not affect any amount
that you presently owe. Your home is the security for that amount.
Within 20 calendar days after we receive your notice of cancellation
of this new transaction, we must take the steps necessary to reflect
the fact that your home does not secure the increase of credit.
We must also return any money you have given to us or anyone else
in connection with this new transaction.
You may keep any money we have given you in this new transaction
until we have done the things mentioned above, but you must then
offer to return the money at the address below.
If we do not take possession of the money within 20 calendar days
of your offer, you may keep it without further obligation.
How To Cancel
If you decide to cancel this new transaction, you may do so by notifying
us in writing, at
_________________________________________________________________
(Creditor's name and business address).
You may use any written statement that is signed and dated by you
and state your intention to cancel, or you may use this notice by
dating and signing below. Keep one copy of this notice because it
contains important information about your rights.
If you cancel by mail or telegram, you must send the notice no later
than midnight of
_________________________________________________________________
(Date)
_________________________________________________________________
(or midnight of the third business day following the latest of the
three events listed above).
If you send or deliver your written notice to cancel some other
way, it must be delivered to the above address no later than that
time.
I WISH TO CANCEL
_________________________________________________________________
Consumer's Signature
_________________________________________________________________
Date
H10CREDIT SALE SAMPLE
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H11INSTALLMENT LOAN SAMPLE
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H12REFINANCING SAMPLE
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H13MORTGAGE WITH DEMAND FEATURE SAMPLE
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H14VARIABLE RATE MORTGAGE SAMPLE
This disclosure describes the features of the adjustable rate mortgage
(ARM) program you are considering. Information on other ARM programs
is available upon request.
How Your Interest Rate and Payment are Determined
 Your interest rate will be based on an index rate plus a margin.
 Your payment will be based on the interest rate, loan balance,
and loan term.
The interest rate will be based on the weekly average yield on
United States Treasury securities adjusted to a constant maturity
of 1 year (your index), plus our margin. Ask us for our current
interest rate and margin.
Information about the index rate is published weekly in the Wall
Street Journal.
 Your interest rate will equal the index rate plus our margin
unless your interest rate "caps" limit the amount of change
in the interest rate.
How Your Interest Rate Can Change
 Your interest rate can change yearly.
 Your interest rate cannot increase or decrease more than 2
percentage points per year.
 Your interest rate cannot increase or decrease more than 5
percentage points over the term of the loan.
How Your Monthly Payment Can Change
 Your monthly payment can increase or decrease substantially
based on annual changes in the interest rate.
 [For example, on a $10,000, 30year loan with an initial interest
rate of 12.41 percent in effect in July 1996, the maximum amount
that the interest rate can rise under this program is 5 percentage
points, to 17.41 percent, and the monthly payment can rise from
a firstyear payment of $106.03 to a maximum of $145.34 in the
fourth year. To see what your payment is, divide your mortgage
amount by $10,000; then multiply the monthly payment by that
amount. (For example, the monthly payment for a mortgage amount
of $60,000 would be: $60,000$10,000=6; 6106.03=$636.18 per month.)
 You will be notified in writing 25 days before the annual
payment adjustment may be made. This notice will contain information
about your interest rates, payment amount and loan balance.]
Example The example below shows how your payments would have
changed under this ARM program based on actual changes in the
index from 1982 to 1996. This does not necessarily indicate
how your index will change in the future. The example is based
on the following assumptions:
Amount ................................................
$10,000
Term ....................................................
30 years
Payment adjustment ..............................
1 year
Interest adjustment ................................
1 year
Margin ..................................................
3 percentage points
Caps____2 percentage points annual interest rate
_____ 5 percentage points lifetime interest rate
Index _______Weekly average yield on U.S. Treasury securities adjusted
to a constant maturity of one year.
Year(as of 1st week ending in July)

Index (%)

Margin* (percentage points)

Interest Rate (%)

Monthly Payment ($)

Remaining Balance ($)

1982 
14.41 
3 
17.41 
145.90 
9,989.37 
1983 
9.78 
3 
**15.41 
129.81 
9,969.66 
1984 
12.17 
3 
15.17 
127.91 
9,945.51 
1985 
7.66 
3 
**13.17 
112.43 
9,903.70 
1986 
6.36 
3 
***12.41 
106.73 
9,848.94 
1987 
6.71 
3 
***12.41 
106.73 

1988 
7.52 
3 
***12.41 
106.73 
9,716.88 
1989 

3 
***12.41 
106.73 
9,637.56 
1990 

3 
***12.41 
106.73 
9,547.83 
1991 

3 
***12.41 
106.73 
9,446.29 
1992 

3 
***12.41 
106.73 
9,331.56 
1993 

3 
***12.41 
106.73 
9,201.61 
1994 

3 
***12.41 
106.73 
9,054.72 
1995 

3 
***12.41 
106.73 
8,888.52 
1996 

3 
***12.41 
106.73 
8,700.37 
*This is a margin we have used recently; your margin may be different.
**This interest rate reflects a 2 percentage point annual interest
rate cap.
***This interest rate reflects a 5 percentage point lifetime interest
rate cap.
Note: To see what your payments would have been during that period,
divide your mortgage amount by $10,000; then multiply the monthly
payment by that amount. (For example, in 1996 the monthly payment
for a mortgage amount of $60,000 taken out in 1982 would be: $60,000/$10,000=6;
6x$106.73=$640.38.)
•You will be notified in writing 25 days before the annual payment
adjustment may be made. This notice will contain information about
your interest rates, payment amount and loan balance.]
H15GRADUATED PAYMENT MORTGAGE SAMPLE
(Sample not available at this time.)
H16MORTGAGE SAMPLE
You are not required to complete this agreement merely because you
have received these disclosures or have signed a loan application.
If you obtain this loan, the lender will have a mortgage on your
home. You could lose your home, and any money you have put into
it, if you do not meet your obligations under the loan.
The annual percentage rate on your loan will be ______%.
Your regular _[frequency]_ payment will be $_______.
[Your interest rate may increase. Increases in the interest rate
could increase your payment. The highest amount your payment could
increase is to $________.]
Appendix IFederal Enforcement Agencies
The following list indicates which federal
agency enforces Regulation Z for particular classes of businesses.
Any questions concerning compliance by a particular business should
be directed to the appropriate enforcement agency. Terms that
are not defined in the Federal Deposit Insurance Act (12 U.S.C.
1813(s)) shall have the meaning given to them in the International
Banking Act of 1978 (12 U.S.C. 3101).
National banks and federal branches and federal agencies of foreign
banks
District office of the Office of the Comptroller of the Currency
for the district in which the institution is located.
State member banks, branches and agencies of foreign banks (other
than federal branches, federal agencies, and insured state branches
of foreign banks), commercial lending companies owned or controlled
by foreign banks, and organizations operating under section 25
or 25A of the Federal Reserve Act
Federal Reserve Bank serving the district in which the institution
is located.
Nonmember insured banks and insured state branches of foreign
banks
Federal Deposit Insurance Corporation Regional director for the
region in which the institution is located.
Savings institutions insured under the Savings Association Insurance
Fund of the FDIC and federally chartered savings banks insured
under the Bank Insurance Fund of the FDIC (but not including statechartered
savings banks insured under the Bank Insurance Fund).
Office of Thrift Supervision Regional
Director for the region in which the institution is located.
Federal Credit Unions
Regional office of the National Credit
Union Administration serving the area in which the Federal credit
union is located.
Air Carriers
Assistant General Counsel for Aviation
Enforcement and Proceedings, Department of Transportation, 400
Seventh Street, SW., Washington, DC 20590.
Creditors Subject to Packers and Stockyards Act
Nearest Packers and Stockyards Administration
area supervisor.
Federal Land Banks, Federal Land Bank Associations, Federal Intermediate
Credit Banks and Production Credit Associations.
Farm Credit Administration, 490 L'Enfant
Plaza, SW., Washington, DC 20578.
Retail, Department Stores, Consumer
Finance Companies, All Other Creditors, and All Nonbank Credit
Card Issuers (Creditors operating on a local or regional basis
should use the address of the FTC Regional Office in which they
operate.)
Division of Credit Practices, Bureau
of Consumer Protection, Federal Trade Commission, Washington,
DC 20580.
Appendix JAnnual Percentage Rate Computations
for ClosedEnd Credit Transactions
(a) Introduction
(1) Section 226.22(a) of Regulation
Z provides that the annual percentage rate for other than open
end credit transactions shall be determined in accordance with
either the actuarial method or the United States Rule method.
This appendix contains an explanation of the actuarial method
as well as equations, instructions and examples of how this method
applies to single advance and multiple advance transactions.
(2) Under the actuarial method, at the
end of each unitperiod (or fractional unitperiod) the unpaid
balance of the amount financed is increased by the finance charge
earned during that period and is decreased by the total payment
(if any) made at the end of that period. The determination of
unitperiods and fractional unitperiods shall be consistent with
the definitions and rules in paragraphs (b) (3), (4) and (5) of
this section and the general equation in paragraph (b)(8) of this
section.
(3) In contrast, under the United States
Rule method, at the end of each payment period, the unpaid balance
of the amount financed is increased by the finance charge earned
during that payment period and is decreased by the payment made
at the end of that payment period. If the payment is less than
the finance charge earned, the adjustment of the unpaid balance
of the amount financed is postponed until the end of the next
payment period. If at that time the sum of the two payments is
still less than the total earned finance charge for the two payment
periods, the adjustment of the unpaid balance of the amount financed
is postponed still another payment period, and so forth.
(b) Instructions and Equations for the
Actuarial Method
(1) General
Rule
The annual percentage rate shall be
the nominal annual percentage rate determined by multiplying the
unitperiod rate by the number of unitperiods in a year.
(2) Term
of the Transaction
The term of the transaction begins on the date of its consummation,
except that if the finance charge or any portion of it is earned
beginning on a later date, the term begins on the later date.
The term ends on the date the last payment is due, except that
if an advance is scheduled after that date, the term ends on the
later date. For computation purposes, the length of the term shall
be equal to the time interval between any point in time on the
beginning date to the same point in time on the ending date.
(3) Definitions
of Time Intervals
(i) A period is the interval of time
between advances or between payments and includes the interval
of time between the date the finance charge begins to be earned
and the date of the first advance thereafter or the date of the
first payment thereafter, as applicable.
(ii) A common period is any period that
occurs more than once in a transaction.
(iii) A standard interval of time is
a day, week, semimonth, month, or a multiple of a week or a month
up to, but not exceeding, 1 year.
(iv) All months shall be considered equal.
Full months shall be measured from any point in time on a given
date of a given month to the same point in time on the same date
of another month. If a series of payments (or advances) is scheduled
for the last day of each month, months shall be measured from
the last day of the given month to the last day of another month.
If payments (or advances) are scheduled for the 29th or 30th of
each month, the last day of February shall be used when applicable.
(4) Unitperiod
(i) In all transactions other than a
single advance, single payment transaction, the unitperiod shall
be that common period, not to exceed 1 year, that occurs most
frequently in the transaction, except that
(A) If 2 or more common periods occur
with equal frequency, the smaller of such common periods shall
be the unitperiod; or
(B) If there is no common period in the
transaction, the unitperiod shall be that period which is the
average of all periods rounded to the nearest whole standard interval
of time. If the average is equally near 2 standard intervals of
time, the lower shall be the unitperiod.
(ii) In a single advance, single payment
transaction, the unit period shall be the term of the transaction,
but shall not exceed 1 year.
(5) Number
of Unitperiods Between 2 Given Dates
(i) The number of days between 2 dates
shall be the number of 24 hour intervals between any point in
time on the first date to the same point in time on the second
date.
(ii) If the unitperiod is a month, the
number of full unitperiods between 2 dates shall be the number
of months measured back from the later date. The remaining fraction
of a unitperiod shall be the number of days measured forward
from the earlier date to the beginning of the first full unitperiod,
divided by 30. If the unitperiod is a month, there are 12 unitperiods
per year.
(iii) If the unitperiod is a semimonth
or a multiple of a month not exceeding 11 months, the number of
days between 2 dates shall be 30 times the number of full months
measured back from the later date, plus the number of remaining
days. The number of full unitperiods and the remaining fraction
of a unitperiod shall be determined by dividing such number of
days by 15 in the case of a semimonthly unitperiod or by the
appropriate multiple of 30 in the case of a multimonthly unitperiod.
If the unitperiod is a semimonth, the number of unitperiods
per year shall be 24. If the number of unitperiods is a multiple
of a month, the number of unitperiods per year shall be 12 divided
by the number of months per unitperiod.
(iv) If the unitperiod is a day, a week,
or a multiple of a week, the number of full unitperiods and the
remaining fractions of a unit period shall be determined by dividing
the number of days between the 2 given dates by the number of
days per unitperiod. If the unitperiod is a day, the number
of unitperiods per year shall be 365. If the unit period is
a week or a multiple of a week, the number of unitperiods per
year shall be 52 divided by the number of weeks per unitperiod.
(v) If the unitperiod is a year, the
number of full unitperiods between 2 dates shall be the number
of full years (each equal to 12 months) measured back from the
later date. The remaining fraction of a unitperiod shall be
(A) The remaining number of months divided
by 12 if the remaining interval is equal to a whole number of
months, or
(B) The remaining number of days divided
by 365 if the remaining interval is not equal to a whole number
of months.
(vi) In a single advance, single payment
transaction in which the term is less than a year and is equal
to a whole number of months, the number of unitperiods in the
term shall be 1, and the number of unitperiods per year shall
be 12 divided by the number of months in the term or 365 divided
by the number of days in the term.
(vii) In a single advance, single payment
transaction in which the term is less than a year and is not equal
to a whole number of months, the number of unitperiods in the
term shall be 1, and the number of unitperiods per year shall
be 365 divided by the number of days in the term.
(6) Percentage
Rate for a Fraction of a Unitperiod
The percentage rate of finance charge for
a fraction (less than 1) of a unitperiod shall be equal to such
fraction multiplied by the percentage rate of finance charge per
unitperiod.
Appendix K to Part 226Total Annual Loan
Cost Rate Computations for Reverse Mortgage Transactions
(a) Introduction. Creditors are required
to disclose a series of total annual loan cost rates for each
reverse mortgage transaction. This appendix contains the equations
creditors must use in computing the total annual loan cost rate
for various transactions, as well as instructions, explanations,
and examples for various transactions. This appendix is modeled
after Appendix J of this part (Annual Percentage Rates Computations
for Closedend Credit Transactions); creditors should consult
Appendix J of this part for additional guidance in using the formulas
for reverse mortgages.
(b) Instructions and equations for the
total annual loan cost rate.
(1) General rule. The total annual loan
cost rate shall be the nominal total annual loan cost rate determined
by multiplying the unit period rate by the number of unitperiods
in a year.
(2) Term of the transaction. For purposes
of total annual loan cost disclosures, the term of a reverse mortgage
transaction is assumed to begin on the first of the month in which
consummation is expected to occur. If a loan cost or any portion
of a loan cost is initially incurred beginning on a date later
than consummation, the term of the transaction is assumed to begin
on the first of the month in which that loan cost is incurred.
For purposes of total annual loan cost disclosures, the term ends
on each of the assumed loan periods specified in Sec. 226.33(c)(6).
(3) Definitions of time intervals.
(i) A period is the interval of time
between advances.
(ii) A common period is any period that
occurs more than once in a transaction.
(iii) A standard interval of time is
a day, week, semimonth, month, or a multiple of a week or a month
up to, but not exceeding, 1 year.
(iv) All months shall be considered to
have an equal number of days.
(4) Unitperiod.
(i) In all transactions other than singleadvance,
singlepayment transactions, the unitperiod shall be that common
period, not to exceed one year, that occurs most frequently in
the transaction, except that:
(A) If two or more common periods occur
with equal frequency, the smaller of such common periods shall
be the unitperiod; or
(B) If there is no common period in the
transaction, the unitperiod shall be that period which is the
average of all periods rounded to the nearest whole standard interval
of time. If the average is equally near two standard intervals
of time, the lower shall be the unitperiod.
(ii) In a singleadvance, singlepayment
transaction, the unit period shall be the term of the transaction,
but shall not exceed one year.
(5) Number of unitperiods between two
given dates.
(i) The number of days between two dates
shall be the number of 24 hour intervals between any point in
time on the first date to the same point in time on the second
date.
(ii) If the unitperiod is a month, the
number of full unitperiods between two dates shall be the number
of months. If the unitperiod is a month, the number of unitperiods
per year shall be 12.
(iii) If the unitperiod is a semimonth
or a multiple of a month not exceeding 11 months, the number of
days between two dates shall be 30 times the number of full months.
The number of full unitperiods shall be determined by dividing
the number of days by 15 in the case of a semimonthly unitperiod
or by the appropriate multiple of 30 in the case of a multimonthly
unitperiod. If the unitperiod is a semimonth, the number of
unitperiods per year shall be 24. If the number of unit periods
is a multiple of a month, the number of unitperiods per year
shall be 12 divided by the number of months per unitperiod.
(iv) If the unitperiod is a day, a week,
or a multiple of a week, the number of full unitperiods shall
be determined by dividing the number of days between the two given
dates by the number of days per unitperiod. If the unitperiod
is a day, the number of unitperiods per year shall be 365. If
the unitperiod is a week or a multiple of a week, the number
of unitperiods per year shall be 52 divided by the number of
weeks per unitperiod.
(v) If the unitperiod is a year, the
number of full unitperiods between two dates shall be the number
of full years (each equal to 12 months).
(6) Symbols. The symbols used to express
the terms of a transaction in the equation set forth in paragraph
(b)(8) of this appendix are defined as follows:
A(INF)j=The amount of each periodic or lumpsum advance to the
consumer
under the
reverse mortgage transaction.
i=Percentage rate of the total annual loan cost per unitperiod,
expressed
as a decimal equivalent.
j=The number of unitperiods until the jth advance.
n=The number of unitperiods between consummation and repayment
of the
debt.
P(INF)n=Min (Bal(INF)n, Val(INF)n). This is the maximum amount
that the
creditor
can be repaid at the specified loan term.
Bal(INF)n=Loan balance at time of repayment, including all costs
and
fees incurred
by the consumer (including any shared
appreciation
or shared equity amount) compounded to time n at
the creditor's
contract rate of interest.
Val(INF)n=Val(INF)0 (1 + [greeks])^{y}, where Val(INF)0
is the
property
value at consummation, [greeks] is the assumed
annual
rate of appreciation for the dwelling, and y is the
number
of years in the assumed term. Val(INF)n must be reduced
by the
amount of any equity reserved for the consumer by
agreement
between the parties, or by 7 percent (or the amount
or percentage
specified in the credit agreement), if the
amount
required to be repaid is limited to the net proceeds of
sale.
[greekS]=The summation operator.
w=The number of unitperiods per year.
I=wi x 100=the nominal total annual loan cost rate.
(7) General equation. The total annual
loan cost rate for a reverse mortgage transaction must be determined
by first solving the following formula, which sets forth the relationship
between the advances to the consumer and the amount owed to the
creditor under the terms of the reverse mortgage agreement for
the loan cost rate per unitperiod (the loan cost rate per unitperiod
is then multiplied by the number of unit periods per year to
obtain the total annual loan cost rate I; that is, I = wi):
(8) Solution of general equation by iteration
process. (i) The general equation in paragraph (b)(7) of this
appendix, when applied to a simple transaction for a reverse mortgage
loan of equal monthly advances of $350 each, and with a total
amount owed of $14,313.08 at an assumed repayment period of two
years, takes the special form: Using the iteration procedures
found in steps 1 through 4 of (b)(9)(i) of Appendix J of this
part, the total annual loan cost rate, correct to two decimals,
is 48.53%.
(ii) In using these iteration procedures,
it is expected that calculators or computers will be programmed
to carry all available decimals throughout the calculation and
that enough iterations will be performed to make virtually certain
that the total annual loan cost rate obtained, when rounded to
two decimals, is correct. Total annual loan cost rates in the
examples below were obtained by using a 10digit programmable
calculator and the iteration procedure described in Appendix J
of this part.
(9) Assumption for discretionary cash
advances. If the consumer controls the timing of advances made
after consummation (such as in a credit line arrangement), the
creditor must use the general formula in paragraph (b)(7) of this
appendix. The total annual loan cost rate shall be based on the
assumption that 50 percent of the principal loan amount is advanced
at closing, or in the case of an openend transaction, at the
time the consumer becomes obligated under the plan. Creditors
shall assume the advances are made at the interest rate then in
effect and that no further advances are made to, or repayments
made by, the consumer during the term of the transaction or plan.
(10) Assumption for variablerate reverse
mortgage transactions. If the interest rate for a reverse mortgage
transaction may increase during the loan term and the amount or
timing is not known at consummation, creditors shall base the
disclosures on the initial interest rate in effect at the time
the disclosures are provided.
(11) Assumption for closing costs. In
calculating the total annual loan cost rate, creditors shall assume
all closing and other consumer costs are financed by the creditor.
(c) Examples of total annual loan cost
rate computations.
(1) Lumpsum advance at consummation.
Lumpsum advance to consumer at consummation: $30,000
Total of consumer's loan costs financed at consummation: $4,500
Contract interest rate: 11.60%
Estimated time of repayment (based on life expectancy of a consumer
at
age 78): 10 years
Appraised value of dwelling at consummation: $100,000
Assumed annual dwelling appreciation rate: 4%
P(INF)10 = Min (103,385.84, 137,662.72)
i = .1317069438
Total annual loan cost rate (100(.1317069438 x 1)) = 13.17%
(2) Monthly advance beginning at consummation.
Monthly advance to consumer, beginning at consummation: $492.51
Total of consumer's loan costs financed at consummation: $4,500
Contract interest rate: 9.00%
Estimated time of repayment (based on life expectancy of a consumer
at
age 78):
10 years
Appraised value of dwelling at consummation: $100,000
Assumed annual dwelling appreciation rate: 8%
[GRAPHIC] [TIFF OMITTED] TR24MR95.011
Total annual loan cost rate (100(.009061140 x 12))=10.87%
(3) Lump sum advance at consummation
and monthly advances thereafter.
Lump sum advance to consumer at consummation: $10,000
Monthly advance to consumer, beginning at consummation: $725
Total of consumer's loan costs financed at consummation: $4,500
Contract rate of interest: 8.5%
Estimated time of repayment (based on life expectancy of a consumer
at
age 75):
12 years
Appraised value of dwelling at consummation: $100,000
Assumed annual dwelling appreciation rate: 8%
[GRAPHIC] [TIFF OMITTED] TR24MR95.012
Total annual loan cost rate (100(.007708844 x 12)) = 9.25%
(d) Reverse mortgage model form and
sample form.
(1) Model form.
Total Annual Loan Cost Rate
Loan Terms
Age of youngest borrower:
Appraised property value:
Interest rate:
Monthly advance:
Initial draw:
Line of credit:
Initial Loan Charges
Closing costs:
Mortgage insurance premium:
Annuity cost:
Monthly Loan Charges
Servicing fee:
Other Charges:
Mortgage insurance:
Shared Appreciation:
Repayment Limits

Total annual loan cost rate

Assumed annual appreciation 2year loan [ ]year [ ]year [ ]year
term loan term loan term loan term

0%...................................... [ ]
4%...................................... [ ]
8%...................................... [ ]

The cost of any reverse mortgage loan depends
on how long you keep the loan and how much your house appreciates
in value. Generally, the longer you keep a reverse mortgage, the
lower the total annual loan cost rate will be.
This table shows the estimated cost of
your reverse mortgage loan, expressed as an annual rate. It illustrates
the cost for three [four] loan terms: 2 years, [half of life expectancy
for someone your age,] that life expectancy, and 1.4 times that
life expectancy. The table also shows the cost of the loan, assuming
the value of your home appreciates at three different rates: 0%,
4% and 8%.
The total annual loan cost rates in this
table are based on the total charges associated with this loan.
These charges typically include principal, interest, closing costs,
mortgage insurance premiums, annuity costs, and servicing costs
(but not costs when you sell the home).
The rates in this table are estimates.
Your actual cost may differ if, for example, the amount of your
loan advances varies or the interest rate on your mortgage changes.
Signing an Application or Receiving These Disclosures Does Not Require
You To Complete This Loan
(2) Sample Form.
Total Annual Loan Cost Rate
Loan Terms
Age of youngest borrower: 75
Appraised property value: $100,000
Interest rate: 9%
Monthly advance: $301.80
Initial draw: $1,000
Line of credit: $4,000
Initial Loan Charges
Closing costs: $5,000
Mortgage insurance premium: None
Annuity cost: None
Monthly Loan Charges
Servicing fee: None
Other Charges
Mortgage insurance: None
Shared Appreciation: None
Repayment Limits
Net proceeds estimated at 93% of projected home sale

Total annual loan cost rate

Assumed annual appreciation 2year loan [6year 12year 17year
term loan term] loan term loan term

0%...................................... 39.00% [14.94%] 9.86% 3.87%
4%...................................... 39.00% [14.94%] 11.03% 10.14%
8%...................................... 39.00% [14.94%] 11.03% 10.20%

The cost of any reverse mortgage loan depends
on how long you keep the loan and how much your house appreciates
in value. Generally, the longer you keep a reverse mortgage, the
lower the total annual loan cost rate will be.
This table shows the estimated cost of
your reverse mortgage loan, expressed as an annual rate. It illustrates
the cost for three [four] loan terms: 2 years, [half of life expectancy
for someone your age,] that life expectancy, and 1.4 times that
life expectancy. The table also shows the cost of the loan, assuming
the value of your home appreciates at three different rates: 0%,4%
and 8%.
The total annual loan cost rates in this
table are based on the total charges associated with this loan.
These charges typically include principal, interest, closing costs,
mortgage insurance premiums, annuity costs, and servicing costs
(but not disposition costscosts when you sell the home).
The rates in this table are estimates.
Your actual cost may differ if, for example, the amount of your
loan advances varies or the interest rate on your mortgage changes.
Signing an Application or Receiving These Disclosures Does Not
Require You To Complete This Loan
Appendix L to Part 226Assumed Loan Periods
for Computations of Total Annual Loan Cost Rates
(a) Required tables. In calculating
the total annual loan cost rates in accordance with Appendix K
of this part, creditors shall assume three loan periods, as determined
by the following table.
(b) Loan periods.
(1) Loan Period 1 is a twoyear loan
period.
(2) Loan Period 2 is the life expectancy
in years of the youngest borrower to become obligated on the reverse
mortgage loan, as shown in the U.S. Decennial Life Tables for
19791981 for females, rounded to the nearest whole year.
(3) Loan Period 3 is the life expectancy
figure in Loan Period 3, multiplied by 1.4 and rounded to the
nearest full year (life expectancy figures at .5 have been rounded
up to 1).
(4) At the creditor's option, an additional
period may be included, which is the life expectancy figure in
Loan Period 2, multiplied by .5 and rounded to the nearest full
year (life expectancy figures at .5 have been rounded up to 1).

Loan period
Loan period [Optional 2 (life Loan period
Age of youngest borrower 1 (in loan period expectancy) 3 (in
years)
(in years)] (in years) years)

62................................................ 2 [11] 21 29
63................................................ 2 [10] 20 28
64................................................ 2 [10] 19 27
65................................................ 2 [9] 18 25
66................................................ 2 [9] 18 25
67................................................ 2 [9] 17 24
68................................................ 2 [8] 16 22
69................................................ 2 [8] 16 22
70................................................ 2 [8] 15 21
71................................................ 2 [7] 14 20
72................................................ 2 [7] 13 18
73................................................ 2 [7] 13 18
74................................................ 2 [6] 12 17
75................................................ 2 [6] 12 17
76................................................ 2 [6] 11 15
77................................................ 2 [5] 10 14
78................................................ 2 [5] 10 14
79................................................ 2 [5] 9 13
80................................................ 2 [5] 9 13
81................................................ 2 [4] 8 11
82................................................ 2 [4] 8 11
83................................................ 2 [4] 7 10
84................................................ 2 [4] 7 10
85................................................ 2 [3] 6 8
86................................................ 2 [3] 6 8
87................................................ 2 [3] 6 8
88................................................ 2 [3] 5 7
89................................................ 2 [3] 5 7
90................................................ 2 [3] 5 7
91................................................ 2 [2] 4 6
92................................................ 2 [2] 4 6
93................................................ 2 [2] 4 6
94................................................ 2 [2] 4 6
95 and over....................................... 2 [2] 3 4

SubPart A  General
SubPart B  OpenEnd Credit
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SubPart C  ClosedEnd Credit
SubPart D  Miscellaneous
Subpart E  Special Rules
for Certain Home Mortgage Transactions
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