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e-CFR
Data is current as of May 22, 2008

Title 12:
Banks and Banking
PART 226—TRUTH IN LENDING (REGULATION Z)

Subpart C—Closed-End Credit

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§ 226.20   Subsequent disclosure
requirements.

(a) Refinancings. A refinancing occurs when an existing
obligation that was subject to this subpart is satisfied and replaced by a
new obligation undertaken by the same consumer. A refinancing is a new
transaction requiring new disclosures to the consumer. The new finance
charge shall include any unearned portion of the old finance charge that
is not credited to the existing obligation. The following shall not be
treated as a refinancing:

(1) A renewal of a single payment obligation with no change in the
original terms.

(2) A reduction in the annual percentage rate with a corresponding
change in the payment schedule.

(3) An agreement involving a court proceeding.

(4) A change in the payment schedule or a change in collateral
requirements as a result of the consumer's default or delinquency, unless
the rate is increased, or the new amount financed exceeds the unpaid
balance plus earned finance charge and premiums for continuation of
insurance of the types described in §226.4(d).

(5) The renewal of optional insurance purchased by the consumer and
added to an existing transaction, if disclosures relating to the initial
purchase were provided as required by this subpart.

(b) Assumptions. An assumption occurs when a creditor expressly
agrees in writing with a subsequent consumer to accept that consumer as a
primary obligor on an existing residential mortgage transaction. Before
the assumption occurs, the creditor shall make new disclosures to the
subsequent consumer, based on the remaining obligation. If the finance
charge originally imposed on the existing obligation was an add-on or
discount finance charge, the creditor need only disclose:

(1) The unpaid balance of the obligation assumed.

(2) The total charges imposed by the creditor in connection with the
assumption.

(3) The information required to be disclosed under §226.18(k), (l),
(m), and (n).

(4) The annual percentage rate originally imposed on the
obligation.

(5) The payment schedule under §226.18(g) and the total of payments
under §226.18(h) based on the remaining obligation.

(c) Variable-rate adjustments. 45c An
adjustment to the interest rate with or without a corresponding adjustment
to the payment in a variable-rate transaction subject to §226.19(b) is an
event requiring new disclosures to the consumer. At least once each year
during which an interest rate adjustment is implemented without an
accompanying payment change, and at least 25, but no more than 120,
calendar days before a payment at a new level is due, the following
disclosures, as applicable, must be delivered or placed in the
mail:

45c Information provided in accordance with variable-rate
subsequent disclosure regulations of other federal agencies may be
substituted for the disclosure required by paragraph (c) of this
section.

(1) The current and prior interest rates.

(2) The index values upon which the current and prior interest rates
are based.

(3) The extent to which the creditor has foregone any increase in the
interest rate.

(4) The contractual effects of the adjustment, including the payment
due after the adjustment is made, and a statement of the loan balance.

(5) The payment, if different from that referred to in paragraph (c)(4)
of this section, that would be required to fully amortize the loan at the
new interest rate over the remainder of the loan term.

[46 FR 20892, Apr. 7, 1981, as amended at 52 FR 48671, Dec. 24,
1987]

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