(a) Form of disclosures. Except for the disclosures required by
section 1026.19(e), (f), and (g):
(1) The creditor shall make the disclosures
required by this subpart clearly and conspicuously in writing, in
a form that the consumer may keep. The disclosures required by this
subpart may be provided to the consumer in electronic form, subject
to compliance with the consumer consent and other applicable provisions
of the Electronic Signatures in Global and National Commerce Act (E-Sign
Act) (15 U.S.C. 7001 et seq.). The disclosures required by
sections 1026.17(g), 1026.19(b), and 1026.24 may be provided to the
consumer in electronic form without regard to the consumer consent
or other provisions of the E-Sign Act in the circumstances set forth
in those sections. The disclosures shall be grouped together, shall
be segregated from everything else, and shall not contain any information
not directly related to the disclosures required under section 1026.18,
section 1026.20(c) and (d), or section 1026.47. The disclosures required
by section 1026.20(d) shall be provided as a separate document from
all other written materials. The disclosures may include an acknowledgment
of receipt, the date of the transaction, and the consumer’s name,
address, and account number. The following disclosures may be made
together with or separately from other required disclosures: The creditor’s
identity under section 1026.18(a), the variable rate example under
section 1026.18(f)(1)(iv), insurance or debt cancellation under section
1026.18(n), and certain security interest charges under section 1026.18(o).
The itemization of the amount financed under section 1026.18(c)(1)
must be separate from the other disclosures under section 1026.18, except
for private education loan disclosures made in compliance with section
1026.47.
(2) Except
for private education loan disclosures made in compliance with section
1026.47, the terms “finance charge” and “annual percentage rate,”
when required to be disclosed under section 1026.18(d) and (e) together
with a corresponding amount or percentage rate, shall be more conspicuous
than any other disclosure, except the creditor’s identity under section
1026.18(a). For private education loan disclosures made in compliance
with section 1026.47, the term “annual percentage rate,” and the corresponding
percentage rate must be less conspicuous than the term “finance charge”
and corresponding amount under section 1026.18(d), the interest rate
under section 1026.47(b)(1)(i) and (c)(1), and the notice of the right
to cancel under section 1026.47(c)(4).
(b) Time of disclosures. The creditor
shall make disclosures before consummation of the transaction. In
certain residential mortgage transactions, special timing requirements
are set forth in section 1026.19(a). In certain variable-rate transactions,
special timing requirements for variable-rate disclosures are set
forth in sections 1026.19(b) and 1026.20(c) and (d). For private education
loan disclosures made in compliance with section 1026.47, special
timing requirements are set forth in section 1026.46(d). In certain
transactions involving mail or telephone orders or a series of sales,
the timing of disclosures may be delayed in accordance with paragraphs
(g) and (h) of this section. This paragraph (b) does not apply to
the disclosures required by sections 1026.19(e), (f), and (g) and
1026.20(e).
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(c) Basis of disclosures
and use of estimates.
(1) The disclosures shall reflect the terms
of the legal obligation between the parties.
(2) (i) If any
information necessary for an accurate disclosure is unknown to the
creditor, the creditor shall make the disclosure based on the best
information reasonably available at the time the disclosure is provided
to the consumer, and shall state clearly that the disclosure is an
estimate.
(ii) For
a transaction in which a portion of the interest is determined on
a per-diem basis and collected at consummation, any disclosure affected
by the per-diem interest shall be considered accurate if the disclosure
is based on the information known to the creditor at the time that
the disclosure documents are prepared for consummation of the transaction.
(3) The
creditor may disregard the effects of the following in making calculations
and disclosures.
(i) That payments must be collected
in whole cents.
(ii)
That dates of scheduled payments and advances may be changed because
the scheduled date is not a business day.
(iii) That months have different numbers
of days.
(iv) The
occurrence of leap year.
(4) In making calculations and disclosures,
the creditor may disregard any irregularity in the first period that
falls within the limits described below and any payment schedule irregularity
that results from the irregular first period:
(i) For transactions
in which the term is less than 1 year, a first period not more than
6 days shorter or 13 days longer than a regular period;
(ii) For transactions in
which the term is at least 1 year and less than 10 years, a first
period not more than 11 days shorter or 21 days longer than a regular
period; and
(iii)
For transactions in which the term is at least 10 years, a first period
shorter than or not more than 32 days longer than a regular period.
(5) If an
obligation is payable on demand, the creditor shall make the disclosures
based on an assumed maturity of 1 year. If an alternate maturity date
is stated in the legal obligation between the parties, the disclosures
shall be based on that date.
(6) (i) A series of
advances under an agreement to extend credit up to a certain amount
may be considered as one transaction.
(ii) When a multiple-advance loan to
finance the construction of a dwelling may be permanently financed
by the same creditor, the construction phase and the permanent phase
may be treated as either one transaction or more than one transaction.
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(d) Multiple
creditors; multiple consumers. If a transaction involves more
than one creditor, only one set of disclosures shall be given and
the creditors shall agree among themselves which creditor must comply
with the requirements that this part imposes on any or all of them.
If there is more than one consumer, the disclosures may be made to
any consumer who is primarily liable on the obligation. If the transaction
is rescindable under section 1026.23, however, the disclosures shall
be made to each consumer who has the right to rescind.
(e) Effect of subsequent events. If a disclosure becomes inaccurate because of an event that occurs
after the creditor delivers the required disclosures, the inaccuracy
is not a violation of this part, although new disclosures may be required
under paragraph (f) of this section, section 1026.19, section 1026.20,
or section 1026.48(c)(4).
(f) Early disclosures. Except for private education
loan disclosures made in compliance with section 1026.47, if disclosures
required by this subpart are given before the date of consummation
of a transaction and a subsequent event makes them inaccurate, the
creditor shall disclose before consummation (subject to the provisions
of section 1026.19(a)(2), (e), and (f)):
(1) Any changed term unless the term was
based on an estimate in accordance with section 1026.17(c)(2) and
was labeled an estimate;
(2) All changed terms, if the annual percentage rate at the time
of consummation varies from the annual percentage rate disclosed earlier
by more than ⅛ of 1 percentage point in a regular transaction, or
more than¼ of 1 percentage point in an irregular transaction, as
defined in section 1026.22(a).
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(g) Mail or telephone orders—delay in disclosures. Except for private education loan disclosures made in compliance
with section 1026.47 and mortgage disclosures made in compliance with
section 1026.19(a) or (e), (f), and (g), if a creditor receives a
purchase order or a request for an extension of credit by mail, telephone,
or facsimile machine without face-to-face or direct telephone solicitation,
the creditor may delay the disclosures until the due date of the first
payment, if the following information for representative amounts or
ranges of credit is made available in written form or in electronic
form to the consumer or to the public before the actual purchase order
or request:
(1) The cash price or
the principal loan amount.
(2) The total sale price.
(3) The finance charge.
(4) The annual percentage rate, and if
the rate may increase after consummation, the following disclosures:
(i) The circumstances under which the rate may increase.
(ii) Any limitations on
the increase.
(iii)
The effect of an increase.
(5) The terms of repayment.
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(h) Series of sales—delay in
disclosures. Except for mortgage disclosures made in compliance
with section 1026.19(a) or (e), (f), and (g), if a credit sale is
one of a series made under an agreement providing that subsequent
sales may be added to an outstanding balance, the creditor may delay
the required disclosures until the due date of the first payment for
the current sale, if the following two conditions are met:
(1) The consumer has approved in writing
the annual percentage rate or rates, the range of balances to which
they apply, and the method of treating any unearned finance charge
on an existing balance.
(2) The creditor retains no security interest in any property after
the creditor has received payments equal to the cash price and any
finance charge attributable to the sale of that property. For purposes
of this provision, in the case of items purchased on different dates,
the first purchased is deemed the first item paid for; in the case
of items purchased on the same date, the lowest priced is deemed the
first item paid for.
(i) Interim student credit extensions. For
transactions involving an interim credit extension under a student
credit program for which an application is received prior to the mandatory
compliance date of sections 1026.46, 47, and 48, the creditor need
not make the following disclosures: the finance charge under section
1026.18(d), the payment schedule under section 1026.18(g), the total
of payments under section 1026.18(h), or the total sale price under
section 1026.18(j) at the time the credit is actually extended. The
creditor must make complete disclosures at the time the creditor and
consumer agree upon the repayment schedule for the total obligation.
At that time, a new set of disclosures must be made of all applicable
items under section 1026.18.
