Final Rules on Open-End Credit under Regulation Z, the Truth in Lending Act

CUNA
February 16, 2009 | COMMENTS

The Federal Reserve Board (Fed) has issued amendments to the open-end credit rules under Regulation Z, changes specifically applying to credit cards and merchant-specific credit plans. These requirements will generally not apply to home equity lines of credit (HELOCs).

The final rule includes comprehensive changes to the format, timing, and content requirement for five main types of open-end credit disclosures that are required under Regulation Z, the Truth in Lending Act (TILA). These include credit card application and solicitation disclosures, account-opening disclosures, periodic statements, change-in-term notices, and advertising provisions.

This final rule combines the proposals issued in June 2007 and in May 2008 and incorporates a number of provisions in the bankruptcy law that was enacted several years ago, including the provisions that address minimum payment disclosures. The final rule also includes numerous model forms and samples that may be used to comply with these new disclosure requirements.

In an earlier proposal, the Fed had considered requiring credit unions that use open-end multi-featured loan programs to provide additional closed-end disclosures for subaccounts that are created to finance specific items. In the final rule, the Fed has made changes to the requirements that apply to these programs, but it appears that credit unions may still use these programs, although operational changes may be necessary.

Compliance with these new requirements will be required by July 1, 2010. Disclosures that are received by consumers after that date will generally not be subject to these requirements if they are mailed, delivered, or otherwise provided by the creditor prior to this date. However, for the new change-in-terms and penalty rate disclosures, these must be used if the change takes place after July 1, 2010, regardless of when the notice is provided. All advertisements occurring or mailed after July 1, 2010 will be covered under the new advertising requirements.

If you have any questions or need a copy of the final rule, please feel free to contact Senior Vice President & Deputy General Counsel Mary Dunn at mdunn@cuna.com or Senior Assistant General Counsel Jeff Bloch at jbloch@cuna.com or by telephone at (800) 356-9655, extension 6736 or 6732. You may also access the rule on the Internet here.

> Read the full final rule analysis from CUNA here.