The Regulation Z Commentary Update is Out!

The Federal Reserve Board released its final revisions to the Regulation Z Official Staff Commentary on March 28, 1996. We'll have a detailed analysis for you in the next issue. In the meantime, here are some highlights.

The Commentary for the high cost mortgage rules and reverse mortgage rules are substantially unchanged from the proposal. Important features include the treatment of total cost of the credit - not to be confused with total finance charge - and the requirement that the consumer receive the disclosures at least three days before becoming obligated.

In a move to protect creditors from more lawsuits, the Commentary now clarifies that the itemization of amount financed may include in the "amount paid to others" an amount or percentage that the creditor retains. It is now permissible, but not necessary, to state that the itemization may reflect that the creditor has retained a portion of the amount paid to others. It is not necessary to disclose the specific amount retained.

Other provisions clarify the correct procedure for investigating a cardholder claim and how to treat the disputed balance and the amount that is not in dispute.

It is also important to note what is not in the new Commentary. Rules implementing the Truth in Lending Act Amendments of 1995 have not yet been issued. The new Commentary provisions do not include treatment of these new provisions. The FRB will provide rules and guidance on the finance charge tolerances and other provisions at a later date.

Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 6, 4/96