[Federal Register Volume 59, Number 29 (Friday, February 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3249]


[[Page Unknown]]

[Federal Register: February 11, 1994]


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FEDERAL RESERVE SYSTEM

12 CFR Part 226

[Regulation Z; Docket No. R-0828]

 

Depository Institutions Disaster Relief Act of 1993: Truth in 
Lending Act

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Order; temporary exceptions.

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SUMMARY: The Depository Institutions Disaster Relief Act of 1993 
temporarily authorizes the Board to take immediate action to make 
exceptions to the Truth in Lending Act and Regulation Z (which 
implements the Act) for transactions in an area the President has 
declared to be a major disaster area. In accordance with this law, the 
Board is granting temporary relief form certain provisions of 
Regulation Z governing waivers by consumers of the right to rescind 
certain home-secured loans, so that borrowers in disaster-affected 
communities in California can gain easier access to loan funds for 
emergency purposes. The relief from Regulation Z provided that a 
consumer's need to obtain funds immediately shall be regarded as a bona 
fide personal financial emergency for purposes of Regulation Z, and the 
use of preprinted forms for consumers to waive the right of rescission 
is permitted; provided that the home securing the extension of credit 
is located in the disaster area. A consumer must still provide the 
creditor with a signed, dated waiver statement that a personal 
financial emergency exists.

DATES: This order is effective as of February 11, 1994, and expires in 
the areas of California affected by the earthquake on October 31, 1994.

FOR FURTHER INFORMATION CONTACT: Jane Jensen Gell, Staff Attorney, or 
Adrienne Hurt, Managing Counsel (202/452-2412), Division of Consumer 
and Community Affairs, Board of Governors of the Federal Reserve 
System. For the hearing impaired only, Telecommunications Device for 
the Deaf (TDD), Dorothea Thompson (202/452-3544), Board of Governors of 
the Federal Reserve System, 20th and C Streets, NW., Washington, DC 
20551.

SUPPLEMENTARY INFORMATION: On January 17, 1994, an earthquake 
devastated areas in California. The President declared the affected 
communities major disaster areas. To facilitate recovery from major 
disasters, the Depository Institutions Disaster Relief Act of 1993 
(DIDRA), Pub. L. 103-76, 107 Stat. 752 (1993), was enacted into law on 
August 12, 1993. Section 2 of DIDRA authorizes the Board, until 
February 12, 1994, to take immediate action to make temporary 
exceptions to the Truth in Lending Act (TILA) and Regulation Z for 
transactions in an area the President has declared to be a major 
disaster area, pursuant to section 401 of the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5170.
    Under the TILA and Regulation Z, with some exceptions, a consumer 
has the right to cancel a credit obligation that is secured by the 
consumer's principal dwelling. Because of the risk of loss of the 
consumer's home in the event of default, there is a mandatory waiting 
period for three days before funds can be disbursed in order to give 
consumers an opportunity to reflect on the loan terms and to elect to 
cancel the transaction.
    A consumer may modify or waive this right of rescission to meet a 
bona fide personal financial emergency. Regulation Z, 12 CFR 226.15(e) 
and 23(e), require that the consumer must provide the creditor a 
written, signed and dated waiver statement that describes the 
emergency. The wavier statement may not be executed on a preprinted 
form.
    Based on the Board's experience in monitoring compliance with 
Regulation Z, the Board has determined that the three-day waiting 
period that provides a consumer the opportunity to rescind a loan, and 
the restriction on the use of a preprinted form to execute a waiver of 
the right of rescission, may disadvantage borrowers in the major 
disaster areas who are in immediate need of the loan proceeds. 
Therefore, the Board believes that granting relief in these situations 
can reasonably be expected to produce benefits to the public that 
outweigh possible adverse effects.\1\
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    \1\Similar action has been taken by the Board in connection with 
areas declared major disaster areas as a result of floods in the 
Midwest (58 FR 40582 (1993)), hurricanes in Florida, Louisiana and 
Hawaii and civil unrest in California (57 FR 53545 (1992)).
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    Accordingly, pursuant to its authority under section 2 of DIDRA, 
provided that the dwelling securing the extension of credit is located 
in an area of California that was declared a major disaster by the 
President under section 401 of the Robert T. Stafford Disaster Relief 
and Emergency Assistance Act, 42 U.S.C. 5170, as a result of the 
January 17, 1994 earthquake in California,\2\ the Board hereby:
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    \2\Such areas now include Los Angeles, Orange, and Ventura 
counties.
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    (1) Determines that a consumer's need to obtain funds immediately 
shall be regarded as a bona fide personal financial emergency for 
purposes of Secs. 226.15(e) and 226. 23(e) of Regulation Z; and
    (2) Grants relief from Secs. 226.15(e) and 226.23(e) of Regulation 
Z to permit the use of preprinted forms for consumers to waive the 
right of rescission. The Board notes that consumers must still provide 
creditors with signed, dated waiver statements in these transactions. 
The relief from Regulation Z provided in this Order shall expire on 
October 31, 1994
    By order of the Board of Governors of the Federal Reserve 
System, dated February 7, 1994.
William W. Wiles,
Secretary of the Board.
[FR Doc. 94-3249 Filed 2-10-94; 8:45 am]
BILLING CODE 6210-01-F