[Federal Register Volume 60, Number 57 (Friday, March 24, 1995)]
[Rules and Regulations]
[Pages 15463-15477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7231]
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FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Regulation Z; Docket No. R-0858]
Truth in Lending
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board is publishing amendments to Regulation Z (Truth in
Lending). The amendments implement changes made to the Truth in Lending
Act by the Riegle Community Development and Regulatory Improvement Act
of 1994. The law imposes new disclosure requirements and substantive
limitations on closed-end home equity mortgage loans bearing rates or
fees above a certain percentage or amount. The amendments provide
protection to consumers entering into these mortgages. The law also
imposes new disclosure requirements to assist consumers in comparing
the cost of reverse mortgage transactions, which provide periodic
advances primarily to elderly homeowners and rely principally on the
home's value for repayment.
DATES: This rule is effective March 22, 1995. Compliance is optional
until October 1, 1995.
FOR FURTHER INFORMATION CONTACT: Jane Ahrens, Senior Attorney, or Kyung
Cho-Miller, Sheilah Goodman, or Kurt Schumacher, Staff Attorneys,
Division of Consumer and Community Affairs, Board of Governors of the
Federal Reserve System, at (202) 452-3667 or 452-2412; for the hearing
impaired only, Dorothea Thompson, Telecommunications Device for the
Deaf, at (202) 452-3544.
SUPPLEMENTARY INFORMATION:
I. Background
The purpose of the Truth in Lending Act (15 U.S.C. 1601-1666j) is
to promote the informed use of consumer credit. The act requires
creditors to disclose credit terms and the cost of credit as an annual
percentage rate (APR). The act requires additional disclosures for
loans secured by a consumer's home, and permits consumers to cancel
certain transactions that involve their principal dwelling. The act is
implemented by the Board's Regulation Z (12 CFR part 226).
The Home Ownership and Equity Protection Act of 1994 (HOEPA),
contained in the Riegle Community Development and Regulatory
Improvement Act of 1994 (Community Development Act), Pub. L. 103-325,
108 Stat. 2160, amends the Truth in Lending Act (TILA). Section 152 of
the HOEPA adds a new section 129 dealing with certain mortgages bearing
rates or fees above a certain percentage or amount. Section 154 adds a
new section 138 dealing with reverse mortgage transactions.
The HOEPA was enacted in September 1994, and directs the Board to
issue final regulations within 180 days. Section 155 provides that the
statutory provisions and the Board's rules shall apply on the October 1
following six months after the final regulation is issued. It also
states that the final rule governs all mortgage transactions having
rates or fees above a certain percentage or amount (``Section 32
mortgages,'' as found in Sec. 226.32 of the regulation) consummated
after the mandatory effective date. The Board has determined that the
same compliance rule applies to reverse mortgage transactions
consummated after October 1, 1995.
[[Page 15464]]
II. Regulatory Provisions
In December 1994, the Board published a proposed rule amending
Regulation Z, to implement the new law (59 FR 61832, December 2, 1994).
The Board received about 100 comments on the proposal. About 85 percent
were from creditors or other businesses potentially affected by the
proposal (and their trade associations); the remainder were mainly from
consumer groups and individuals. Commenters generally supported the
Board's proposal, although some believe the act's provisions are
detrimental to consumers seeking credit. In large measure, the
regulatory amendments that the Board has adopted in the final rule
follow the proposal; technical suggestions or concerns raised by
commenters are addressed in the final rule. The section-by-section
descriptions given below provide interpretive guidance to creditors
until autumn 1995, when an update to the Official Staff Commentary to
the regulation will be proposed.
III. Section-by-Section Analysis
Section 226.2--Definitions and Rules of Construction
2(a) Definitions
2(a)(17) Creditor
Section 226.2(a)(17) n.3 implements section 152(c) of the HOEPA and
defines coverage in terms of the number of Section 32 mortgage
transactions that will subject a lender to the TILA. The regulation
parallels the statute. A creditor includes a person originating--during
any 12-month period--two or more Section 32 mortgage loans, or one or
more such mortgage loans through a mortgage broker. Thus, for example,
a person that originates one Section 32 mortgage during a 12-month
period is not covered. A person that originates three home-secured
loans, two of which are secured by Section 32 mortgages, will be
required to comply with the TILA for the latter two transactions.
Persons making fewer than five home-secured loans during a calendar
year--that do not meet the definition of a Section 32 mortgage--are not
subject to the act.
Subpart B--Open-End Credit
Section 226.5b--Requirements for Home Equity Plans
5b(f) Limitations on Home Equity Plans
The TILA generally restricts creditors' ability to terminate open-
end plans and demand repayment to narrowly drawn circumstances, such as
when the consumer fails to make payments or takes actions that
adversely affect the creditor's security. Section 154(c) of the HOEPA
excludes reverse mortgage transactions from these restrictions. The
legislative history states that the statutory amendment codifies the
Board's existing interpretation regarding a creditor's ability to
accelerate an open-end reverse mortgage loan in accordance with the
credit contract, specifically, upon the consumer's death. The
regulatory amendment reflects that legislative intent.
Subpart C--Closed-End Credit
Section 226.23--Right of Rescission
23(a) Consumer's Right to Rescind
Section 152(b) of the HOEPA provides that Section 32 mortgage
disclosures and certain practices involving these loans are
``material'' for purposes of the TILA. The amendments to footnote 48 of
the regulation implement the change. Consumers are provided with the
right to rescind a Section 32 mortgage if a creditor fails to furnish
the disclosures under Sec. 226.32(c) or if the loan documents include a
credit term under Sec. 226.32(d).
Subpart D--Miscellaneous
Section 226.28--Effect on State Laws
28(b) Equivalent Disclosure Requirements
Section 152(e) of the HOEPA provides that the procedure for
substituting substantially similar state law disclosures for federal
TILA requirements does not apply to state disclosure requirements for
Section 32 mortgages. The amendments reflect this limitation.
Subpart E--Special Rules for Certain Home Mortgage Transactions
The amendments to the TILA (section 129 dealing with mortgages
having rates or fees above a certain percentage or amount and section
138 dealing with reverse mortgage transactions) layer disclosure and
timing requirements onto the requirements already imposed for these
consumer credit transactions. The Board has implemented these
provisions by adding a new subpart E to the regulation: Sec. 226.31
addresses general requirements such as timing and format rules;
Sec. 226.32 contains rules relating to mortgages having rates or fees
above a certain percentage or amount; and Sec. 226.33 addresses reverse
mortgages.
Section 226.31--General Rules
31(a) Relation to Other Subparts
Section 31(a) explicitly states that the requirements and
limitations of Subpart E are in addition to--not in lieu of--
requirements and limitations contained in other subparts of the
regulation. For example, Subpart C requires creditors to provide
disclosures at the time of application and prior to consummation for
closed-end variable-rate loans that are secured by the consumer's
principal dwelling and have a term greater than one year. If these
transactions are also mortgage loans subject to Sec. 226.32, Subpart E
requires creditors to provide the special disclosures at least three
business days prior to the consummation.
31(c) Timing of Disclosures
31(c)(1) Disclosures for Certain Closed-end Home Mortgage Disclosures
Implementing section 129(b) of the TILA, the regulation requires a
three-day ``cooling off'' period between the time a consumer is
furnished with special disclosures about a mortgage subject to
Sec. 226.32 (Section 32 mortgage) and the time the consumer becomes
obligated under the loan. Some commenters suggested that the final rule
should provide flexibility in the timing requirements to facilitate
delivery by mail or the contemporaneous delivery of other required
disclosures. The Board believes, however, that the act requires that
consumers considering a Section 32 mortgage loan be given the special
disclosures at least three business days before completing the
transaction, regardless of the creditor's method of delivering these
disclosures or the timing of other disclosures.
31(c)(1)(i) Change in Terms
Implementing section 129(b)(2) of the act, the regulation requires
creditors to provide new Section 32 mortgage disclosures if, after
giving the disclosures to the consumer and before consummation, the
creditor changes any terms that make the disclosures inaccurate. New
disclosures are triggered by a changed term only if it affects the APR,
for example, or other disclosures set forth in Sec. 226.32(c).
Commenters requested guidance on the scope of ``terms'' for which such
a change could trigger new disclosures. The Board believes the scope
extends both to a change in the terms of the loan agreement, as well as
to a change in any charge associated with closing the loan.
31(c)(1)(iii) Consumer's Waiver of Waiting Period Before Consummation
Section 129(b)(3) of the TILA authorizes the Board to permit the
consumer to modify or waive the right to the three-day waiting period
to meet bona fide personal financial emergencies. Sections 226.15(e)
and 226.23(e) of the regulation discuss [[Page 15465]] waivers of the
right to rescind to meet bona fide personal financial emergencies.
Comment was solicited on whether the Board should provide a similar
provision for waivers of the three-day waiting period on Section 32
mortgages.
In response to comments received and upon further analysis, the
Board is adding a new paragraph providing that the consumer may modify
or waive the three-day waiting period between delivery of Section 32
mortgage disclosures and consummation, if the consumer determines that
the extension of credit is needed to meet a bona fide personal
financial emergency.
Some commenters requested that the Board identify specific
circumstances that are bona fide personal financial emergencies.
Generally, the facts surrounding individual situations will determine
whether the standard is met and the consumer may waive the three-day
waiting period before consummation. The Board believes, however, that
consummating a Section 32 mortgage loan to prevent the sale of the
consumer's home at foreclosure is a bona fide personal financial
emergency.
For example, if the consumer's home is scheduled to be sold at
foreclosure within the three-day waiting period, the consumer could
waive the waiting period to consummate the Section 32 mortgage loan and
forestall the foreclosure. The consumer may exercise the waiver,
however, only after receiving the disclosures required by paragraph
(c)(1).
31(c)(2) Disclosures for Reverse Mortgages
Section 138 of the TILA requires creditors to furnish additional
disclosures to consumers for a reverse mortgage transaction at least
three business days prior to consummation. Under the statute, timing
requirements for closed-end credit are often tied to the consummation
of the transaction, and the regulation parallels the statute for
closed-end reverse mortgage loans. However, reverse mortgage loans may
also be structured as open-end credit plans. In that case, the
regulation provides that the disclosures must be given at least three
business days prior to the first transaction under the open-end credit
plan or before the consumer becomes obligated on the plan. (See
official staff interpretations of Sec. 226.5(b)(1) in Supplement I of
this part.)
Conforming Paragraphs
Paragraphs (d), (e), and (f) mirror provisions in subparts B and C
(Sec. 226.5 and Sec. 226.17).
31(g) Accuracy of Annual Percentage Rate
Creditors offering mortgages subject to Sec. 226.32 must include
the APR as part of the new Section 32 mortgage disclosures. In response
to comments received, the regulation clarifies that the APR shall be
calculated in accordance with Sec. 226.22, which provides guidance for
calculating an APR (and provides a tolerance for minor calculation
errors) for transactions covered by Subpart C (closed-end). Commenters
also suggested that the regulation should provide a tolerance for
errors made in calculating payment amounts for the Section 32 mortgage
loan disclosure. No tolerance exists for any such calculation errors
under Subpart C, and the Board has not adopted a tolerance for payment
amounts in Section 32 mortgage disclosures.
Section 226.32--Requirements for Certain Closed-End Home Mortgages
32(a) Coverage
Section 103(aa) of the TILA defines the mortgages covered by new
section 129 based on the rates charged and fees paid. The proposal
referred to those mortgages as high-rate, high-fee mortgages. Many
commenters opposed the label, stating that early versions of the
legislation had been revised to delete any identification of the
covered mortgages with their relative cost. The final rule follows the
statutory approach.
32(a)(1)(i)
The statute covers mortgages that charge rates above a specified
standard. The rate-based test is tied to Treasury securities having
terms comparable to the loan's maturity, and several commenters asked
for more guidance on how creditors may determine if a particular
transaction meets that test. The proposal cited the Board's Selected
Interest Rates (statistical release H-15) as an example of a readily
available source that identifies Treasury securities (bills, notes, and
bonds) with maturities of 1, 2, 3, 5, 7, 10, 20, and 30 years. The same
figures are published in other widely available sources, such as major
financial and metropolitan newspapers.
Commenters also sought guidance for selecting the proper maturity
for loan maturities that do not match those of Treasury securities. The
Board believes that creditors could use rounding. For example, if a
creditor must compare the APR to Treasury securities with either seven-
year or ten-year maturities, the APR for an eight-year loan would be
compared to securities with a seven-year maturity; a nine-year loan
would be compared to securities with a ten-year maturity. If the loan
maturity is exactly halfway between the maturities for two published
Treasury securities, the creditor would compare the APR to the yield
for the lower Treasury security.
The act and regulation require creditors to compare the APR to
yields as of the fifteenth day of the month immediately preceding the
month in which the application for credit is received. Commenters asked
the Board to clarify when an application is deemed to be received. The
Board believes an application is received when it reaches the creditor
in any of the ways applications are normally transmitted, even if the
consumer did not provide all the information required for the creditor
to make the credit decision. (See official staff interpretations of
Sec. 226.19(a)(1) in Supplement I of this part.)
32(a)(1)(ii)
The statute covers mortgages if the total points and fees payable
by the consumer at or before loan closing exceed the greater of $400 or
8 percent of the total loan amount. The Board contemplates that any
adjustment to the $400 dollar amount will be published with the
proposed updates to Regulation Z's official staff commentary (in the
autumn of each year). The adjustment will be based on the annual
percentage change in the Consumer Price Index (as reported on June 1)
and will be effective on January 1 of the following year.
Many commenters asked for further guidance to determine the ``total
loan amount.'' Some suggested using the face amount of the note; others
suggested using the ``amount financed'' as calculated according to
Sec. 226.18(b). The Board believes the statute requires creditors to
omit from the ``total loan amount'' any additional costs that may be
incurred at closing--and included in the face amount of the note if
financed by the creditor--when determining whether the ratio of fees to
the total loan amount exceeds 8 percentage points. Thus, the ``total
loan amount'' is the amount financed, as defined in Sec. 226.18(b),
less any items that are required to be disclosed under Sec. 226.4(c)(7)
and that are not excluded as fees under paragraph (b)(1)(iii) of this
section.
32(a)(2)
Section 103(aa) of the TILA provides that the Section 32 mortgage
rules do not apply to a residential mortgage transaction, a reverse
mortgage transaction, or an open-end credit plan. The regulation tracks
those exceptions. [[Page 15466]]
32(b) Definitions
32(b)(1) Points and Fees
Section 103(aa) of the TILA defines points and fees as all finance
charges (except interest or the time-price differential), all
compensation paid to mortgage brokers, and all items identified in
section 106(e) (other than amounts held for future payment of taxes). A
charge is excluded from the definition if the charge is reasonable, the
creditor receives no direct or indirect compensation from the charge,
and the charge is not paid to an affiliate of the creditor.
The Board believes the Congress intended a broad application of the
term ``compensation,'' including, for example, amounts paid to brokers
by creditors in addition to amounts paid by consumers. Many commenters
considered this interpretation too expansive, and suggested that broker
fees should only be considered ``fees'' if the broker is required by
the creditor as a condition of obtaining the credit. (See official
staff interpretations of Sec. 226.4(a) in Supplement I of this part.)
RESPA requires creditors to provide consumers with estimates of
closing costs--including fees paid by creditors to brokers--for certain
real-estate secured loans (Regulation X, 24 CFR 3500, Appendix A, fact
pattern 12). The Board believes that including in the total fee
calculation all broker fees required to be disclosed under RESPA is
consistent with the intent of the Congress and addresses the
commenters' concerns about broker fees that are unknown to the
creditor.
Section 103(aa) authorizes the Board to identify other charges that
are appropriate to include in the total fee calculation. The conference
report cites credit insurance premiums as an example of fees that could
be included, if evidence showed that the premiums were being used to
circumvent the statute. Several commenters, mostly insurance industry
representatives, opposed the regulation's including premiums for credit
life insurance that is purchased at the consumer's option.
Section 158 of the HOEPA requires the Board (in consultation with
its Consumer Advisory Council) to conduct public hearings that examine
home equity loans in the marketplace and the adequacy of federal laws
(including the new rules affecting Section 32 mortgages and reverse
mortgage transactions) in protecting consumers--particularly low-income
consumers. The statute provides that the initial hearing must be held
prior to September 1997, and the Board contemplates that the first
hearing will occur sometime in 1996. The Board believes the hearings
may provide an appropriate forum to explore whether any particular
charges should be included in the total fee calculation. The regulation
does not identify any additional fees at this time.
32(b)(2) Affiliate
Section 129(k) of the TILA defines ``affiliate'' for purposes of
the Section 32 mortgage rules by a statutory reference to the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(k)). That act defines
affiliate as any company that controls, is controlled by, or is under
common control with another company. It also defines ``company'' and
defines when one company is considered to ``control'' another (12
U.S.C. 1841(a) and (b)). The proposal defined the term by a statutory
reference; to ease compliance, the final rule adds a brief narrative.
32(c) Disclosures
The regulation tracks the disclosure requirements of section
129(a). In response to comments, a new H-16--Mortgage Sample has been
added to Appendix H. Creditors using it properly will be deemed to be
in compliance with the regulation for those disclosures.
32(c)(3) Regular Payment
The act requires creditors to disclose the amount of the regular
``monthly'' payment. In response to comments received and upon further
analysis, the final regulation clarifies that the disclosure
contemplates monthly or other regularly scheduled periodic payments,
such as monthly, bimonthly, or quarterly.
32(c)(4) Variable-rate
The law requires creditors offering variable-rate transactions to
disclose a monthly payment based on an interest rate cap required for
consumer contracts by a provision in the Competitive Equality Banking
Act of 1987 (CEBA), which is implemented in Sec. 226.30. The
legislative history provides that in calculating the maximum payment
based on the interest rate cap, creditors should assume the maximum
possible increases in rates in the shortest possible timeframe.
Paragraph Sec. 226.19(b)(2)(x)--which requires a similar maximum
payment disclosure for adjustable-rate mortgage transactions--provides
guidance for calculating the maximum possible increases in rates in the
shortest possible timeframe.
32(d) Limitations
Section 129 of the TILA prohibits mortgage creditors covered by
Sec. 226.32 from including several terms in their contracts. In large
measure, the final regulation follows the proposal. In the proposal,
the headings for and substantive limitations in paragraphs (d)(1) and
(d)(2) were inadvertently reversed; the error has been corrected.
32(d)(1)(i) Balloon Payment
Under the act and regulation, the repayment schedule for a Section
32 mortgage loan with a term of less than five years must fully
amortize the outstanding principal balance through regular periodic
payments. Many commenters requested further guidance on the phrase
``regular periodic'' payments. Some were concerned that small interest-
only payments with occasional payments of principal would be
prohibited, and the lack of flexibility in designing a payment schedule
would ultimately be detrimental to consumers. Others suggested defining
a ``regular periodic payment'' as one that is not more than twice the
amount of other payments. The Board has adopted this approach and
believes it reflects the intent of the Congress and provides certainty
in compliance.
32(d)(1)(ii) Exception
Section 129(l)(1) of the TILA authorizes the Board to create
exemptions to the limitations set forth in paragraph (d) and paragraph
(e) of this section, upon a finding that the exemption is in the
interest of the borrowing public and will apply only to mortgage
products or categories of products that maintain and strengthen home
ownership and protect equity. The legislative history expresses the
Congress's concern that the legislation might inappropriately apply to
some government loans or short-term ``bridge'' construction loans. It
also states that in granting the exemption authority to the Board, the
Congress intended that the Board consider exemptions on a product-by-
product basis.
Based on the legislative history, the comments received and upon
further analysis, the Board is creating a narrowly drawn exemption from
the balloon payment limitation for mortgage loans subject to
Sec. 226.32 with maturities of less than one year, if the purpose of
the loan is a ``bridge'' loan connected with the acquisition or
construction of a dwelling intended to become the consumer's principal
dwelling. These ``bridge'' loans remain subject to all other provisions
of the section. [[Page 15467]]
32(d)(2) Negative Amortization
The act and regulation prohibit payment schedules with regular
periodic payments that may result in increases to the principal
balance. Technical changes to the regulation are made for clarity. The
Board believes that the prohibition does not extend to increases in the
principal balance unrelated to the payment schedule, such as when a
consumer fails to obtain property insurance and the creditor purchases
insurance and adds the premium to the consumer's principal balance.
32(d)(4) Increased Interest Rate
The act and regulation prohibit creditors from increasing the
interest rate after default. This prohibition does not prevent a
creditor offering a variable-rate loan from changing the rate, if, for
example, the rate is tied to an index and the index increases after the
consumer has defaulted on the obligation.
32(d)(5) Rebates
Section 129(d) of the TILA restricts how creditors may calculate
refunds of interest when a Section 32 mortgage loan is accelerated due
to a consumer's default. The regulation clarifies that the paragraph
covers limitation on refunds of interest (not other charges--points,
for example--that are considered finance charges under Sec. 226.4). The
calculation would include odd-days interest, whether paid at or after
consummation.
32(d)(6) Prepayment Penalties
Section 129(c) of the TILA generally bars creditors from including
a prepayment penalty in a Section 32 mortgage contract. The statute
includes, as a prepayment penalty, refunds of unearned interest
calculated less favorably than the actuarial method defined in section
933(d) of the Housing and Community Development Act of 1992 (HCDA).
The legislative history provides that where the actuarial method,
as defined by state law, provides a refund that is greater than the
refund received under the HCDA definition, creditors should apply state
law to determine if a refund is a prepayment penalty for a Section 32
mortgage. The legislative history states that the reference to the HCDA
is not intended to be exclusive, and that penalties based on a
percentage of the outstanding balance or on the number of months of
interest are also prohibited.
32(d)(7) Prepayment Penalty Exception
Section 129(c)(2) of the TILA allows creditors to include a
prepayment penalty clause in a Section 32 mortgage loan under narrowly
drawn circumstances. To include a prepayment penalty clause in the loan
documents, a creditor must verify that the consumer's monthly debt-to-
income ratio is 50 percent or less. The Board believes that in
calculating the consumer's monthly debts and income to determine the
debt-to-income ratio, creditors may rely on widely accepted
underwriting standards, such as those published by the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation, the
Federal Housing Administration, or the Veteran's Administration. A
creditor using one of these standards and determining that the
consumer's monthly debt-to-income ration is 50 percent or less will be
deemed to meet the requirements of this provision. The Board believes
this safe harbor provides consistency and eases compliance.
32(e) Prohibited Acts and Practices
Section 129(l)(2) of the TILA authorizes the Board to prohibit acts
or practices in connection with mortgage loans that the Board finds to
be unfair, deceptive, or designed to evade the Section 32 mortgage
rules. The Board also may prohibit acts or practices related to
refinancing mortgage loans that the Board finds are associated with
abusive lending practices or that are not in the borrower's interest.
Neither the proposal nor the final regulation identifies any prohibited
practices pursuant to this authority.
Section 157 of the HOEPA requires the Board to conduct a study and
make recommendations to the Congress regarding, in part, the adequacy
of federal laws protecting consumers with open-end credit plans secured
by the consumer's principal dwelling. The study must be completed
within eighteen months after the amendments are adopted. The Board
believes the study and the hearing required by the HOEPA will assist
the Board in determining whether certain acts or practices should be
prohibited.
32(e)(1) Repayment Ability
Section 129(h) of the TILA prohibits creditors extending mortgage
loans subject to Sec. 226.32 from engaging in a pattern or practice of
extending such credit to consumers based on the consumer's collateral
without regard to the consumer's repayment ability, including the
consumer's current and expected income, current obligations, and
employment. Commenters requested that ``pattern or practice'' be
defined; however, the Board believes a determination whether a creditor
engages in a pattern or practice will depend on individual fact
situations. Thus, the final regulation--like the proposal--does not
define the phrase.
Paragraph (d)(7) permits creditors to assess a prepayment penalty
if, in part, the creditor verifies that the consumer's monthly debt to
income ratio is 50 percent or less. In the supplementary materials
accompanying the proposal, the Board stated that creditors could rely
on information provided by the consumer in connection with paragraph
(d)(7) when considering a consumer's ability to repay the debt. Many
commenters were concerned that the Board intended to incorporate the
income verification and debt-to-income ratio requirements into
paragraph (e)(1). These concerns are unfounded. There is no debt-to-
income ratio requirement for paragraph (e)(1). The information provided
to creditors in connection with paragraph (d)(7) may be used to
demonstrate that the creditor considered the consumer's income and
obligations before extending the credit. Other information--for
example, information about gift income, expected retirement payments,
or other unverifiable income--may also be considered. The Board
believes any expected income can be considered by the creditor, other
than equity income obtainable by the consumer through the foreclosure
of a Section 32 mortgage with the creditor.
32(e)(2) Home Improvement Contracts
Section 129(i) of the TILA restricts how creditors may disburse
proceeds to contractors under a home improvement contract secured by a
mortgage subject to Sec. 226.32. The regulation reflects the statutory
requirement that the creditor must disburse the proceeds by an
instrument payable to the consumer or jointly to the consumer and the
contractor. The Board believes that if the contractor and the consumer
are joint payees, the instrument must name as payees all consumers who
are primarily obligated on the note.
Alternatively, the regulation provides that at the election of the
consumer, the creditor can disburse the proceeds through an escrow
agent in accordance with terms established in a written agreement
signed by the consumer, the creditor, and the contractor prior to the
disbursement. The Board solicited comment on whether further guidance
was needed regarding the use of a third party escrow agent, including
an agent that is an affiliate of the creditor. The Board believes that
RESPA adequately protects consumers dealing with an escrow agent that
is an affiliate of the creditor. RESPA prohibits creditors from
requiring the use of an affiliate, and [[Page 15468]] requires
disclosures to be furnished if the consumer opts to use the services of
an escrow agent that is in a ``controlled business arrangement'' with
the creditor (Regulation X, 24 CFR 3500.15).
32(e)(3) Notice to Assignee
The act and regulation require persons who sell or assign mortgages
covered by Sec. 226.32 to furnish a notice of the potential liability
under the TILA. In response to comments received, the notice more
directly discloses an assignee's potential liability.
Section 226.33--Requirements for Reverse Mortgages
33(a) Definition
Section 154 of the HOEPA defines a ``reverse mortgage'' as a
nonrecourse transaction that is secured by the consumer's principal
dwelling and that ties repayment (other than upon default) to the
homeowner's death or permanent move from or transfer of the home. The
definition in the regulation tracks the statute.
A nonrecourse transaction limits the homeowner's liability to no
more than the proceeds of the sale of the home (unless a lesser amount
is provided for in the credit obligation, such as by an equity
reservation or an equity conservation agreement between the consumer
and creditor). Neither the statute nor the regulation defines
``nonrecourse transactions.'' Similarly, specific acts of default for
purposes of the reverse mortgage rules are not defined. Neither the act
nor the legislative history identifies such acts, and the Board
believes that the determination of ``default'' is most appropriately
left to the legal obligation between the parties and state or other
law.
33(b) Content of Disclosures
Section 138 of the TILA establishes a new standard to measure the
cost of reverse mortgage credit. The statute requires reverse mortgage
creditors to disclose a good faith projection of the total cost of the
credit to the consumer, by means of a table of annual interest rates.
The legislative history states that the Congress contemplated a
disclosure scheme modeled after the matrix disclosure currently
required by section 255 of the National Housing Act and implemented by
the Department of Housing and Urban Development's (HUD's) Home Equity
Conversion Mortgage (HECM) program. The Board's regulation reflects
that approach, except as noted below.
The regulation requires creditors to use the term ``total annual
loan cost rate'' rather than ``annual interest rate'' in complying with
this section. The statute uses but does not mandate the term ``annual
interest rate,'' and the Board believes that a different term will
avoid possible confusion with the disclosure of the ``annual percentage
rate'' (APR) required by other parts of the regulation. The term
``total annual loan cost rate'' is unlikely to be confused with the APR
and is a more accurate description of the percentage cost of reverse
mortgages than ``annual interest rate.'' For example, the rate may
reflect costs other than interest, such as annuity premiums, appraisal
fees, and a percentage of any appreciation in the consumer's home.
Section 138(a)(1) of the TILA requires creditors to disclose total
annual loan cost rates for not less than three projected appreciation
rates and not less than three credit transaction periods, as determined
by the Board. HUD's HECM matrix similarly discloses nine ``average
annual percentage rates'' based on three assumed annual home
appreciation rates and three assumed loan terms. As discussed below,
the Board has adopted the HECM model which requires the tabular
disclosure of nine total annual loan cost rates, as described below.
The regulation permits an additional assumed loan term, as described
below.
The HECM matrix is accompanied by a listing of the basic factors
used in calculating the projected total cost of credit, such as the age
of the borrower, the value of the consumer's home, etc., and a brief
discussion of some assumptions used in calculating the rates in the
matrix. The regulation requires that the matrix be accompanied by a
listing of key factors used in calculating the total annual loan cost
rates, along with a brief narrative that helps consumers to interpret
the rates disclosed in the matrix. (See the supplementary material
accompanying proposed Appendix K for further discussion of the model
disclosure.)
33(c) Projected Total Cost of Credit
Section 138 (a) and (b) of the TILA identify factors creditors must
consider when calculating the projected total cost of credit and the
corresponding total annual loan cost rates. The regulation lists those
requirements in paragraph (c) of this section. (The mathematical
formula for determining the total annual loan cost rate is contained in
Appendix K.)
33(c)(1) Costs to Consumer
Section 138(b)(2) of the TILA includes in the projected total cost
of credit all costs and charges to the consumer, including the costs of
any annuity that the consumer purchases (if any) as part of the reverse
mortgage transaction. The regulation parallels the statute, except that
the term ``associated'' has been deleted.
The Board believes the Congress intended a broad application of the
terms ``costs and charges.'' For example, the Board believes all costs
and charges connected with the reverse mortgage transaction must be
included in the projected total cost of credit, whether or not the
charge is deemed to be a finance charge under Subpart A of the
regulation.
Some creditors require or permit consumers to purchase an annuity
as part of the transaction that immediately, or at some future time,
supplements or replaces the creditor's payments. The law and regulation
require the amount paid by the consumer for the annuity to be included
as a cost to the consumer. This is the case whether the purchase is
made through the creditor or a third party, or whether the purchase is
mandatory or voluntary.
The HECM program does not include disposition costs as a part of
the total annual loan cost rate, and the regulation follows that
approach. Few commenters addressed the issue; they were about evenly
split on whether to include disposition costs as part of the total
annual loan cost rate. Based on these comments and upon further
analysis, the Board has retained the rule as proposed.
33(c)(2) Advances to Consumer
Section 138(b)(3) of the TILA requires creditors to consider in the
projected total cost of credit all advances to and for the benefit of
the consumer, including annuity payments received by the consumer from
an annuity purchased as part of the reverse mortgage transaction. The
regulation generally tracks the statute, with slight modifications for
clarity.
33(c)(3) Additional Creditor Compensation
Section 138(b)(1) of the TILA and the regulation include, in the
total cost of a reverse mortgage loan, any shared appreciation or
equity that the creditor is entitled to receive pursuant to the credit
contract. For example, creditors sometimes offer a reduced interest
rate in exchange for a portion of the appreciation or equity that may
be realized when the dwelling is sold.
33(c)(4) Limitations on Consumer Liability
Section 138(b)(4) of the TILA requires creditors to consider in the
projected total cost of credit any limitation on the
[[Page 15469]] consumer's liability under the reverse mortgage loan.
This includes, for example, equity conservation agreements. These
agreements protect a portion of the equity in the dwelling for the
consumer or the consumer's estate.
This paragraph also applies to the nonrecourse provision that is a
part of any credit contract meeting the definition of a reverse
mortgage transaction. (See paragraph (a) of this section.) Some reverse
mortgage transactions provide that a consumer's liability will not
exceed a specific percentage of the projected home value, say 75
percent. Other reverse mortgages set the consumer's maximum liability
at the ``net proceeds'' available from the sale of the home. That is,
if a consumer sells the home for $100,000 and brokerage commissions and
other incidental selling costs were $7,000, the creditor would receive
no more than $93,000--the net proceeds of the sale.
The Board believes that the purposes of the reverse mortgage
disclosures are enhanced if the calculations of projected total costs
for ``net proceeds'' recourse limitations are based on uniform
assumptions about the costs associated with the sale of the home. Thus,
if a contract does not otherwise specify a percentage for net proceeds,
creditors must assume closing costs of 7 percent, which approximates
the amounts paid for typical brokerage fees and other incidental costs.
The Board solicited comment on this approach. Most commenters agreed
both with the approach and the use of the 7 percent figure.
33(c)(5) Assumed Annual Appreciation Rates
Section 138(a)(1) of the TILA requires each total annual loan cost
rate to be based on one of (at least) three projected appreciation
rates for the consumer's dwelling. The regulation tracks the
appreciation rates used in HUD's HECM program. That is, the total
annual loan cost rates are based on assumed annual home appreciation
rates of 0 percent, 4 percent, and 8 percent. HUD's program based the 4
percent annual appreciation rate on its assessment of long-term
averages of historical housing appreciation rates. The 0 percent and 8
percent rates help consumers understand the potential costs and
benefits of the loan if their dwelling does not appreciate in value at
all, or if its value appreciated at a rate double the 4 percent rate.
Commenters were about equally divided on the use of these assumed
appreciation rates. Those that opposed the proposed figures believed
that 0 percent, 3 percent, and 6 percent would be more appropriate.
Based on the comments received and upon further analysis, the Board
believes that the percentages used by HUD are appropriate estimates for
reverse mortgage disclosures, and are required by the final rule.
33(c)(6) Assumed Loan Period
Section 138(a)(1) of the TILA also requires each total annual loan
cost rate to be based on one of (at least) three credit transaction
periods, as determined by the Board, including a short-term reverse
mortgage, a term equaling the actuarial life expectancy of the
consumer, and ``such longer term as the Board deems appropriate.'' The
proposed regulation tracked the assumed loan periods required under the
HECM program: a period of two years, a period equal to the consumer's
life expectancy, and a period equal to approximately 1.4 times the
consumer's life expectancy (the creditor would use the life expectancy
of the youngest consumer in transactions involving multiple borrowers).
The statute authorizes the Board to require total annual loan cost
rates for more than three assumed loan periods. In the proposed rule,
the Board noted that, depending on the age of the borrower, a
significant time interval could exist between the shortest loan period
(two years) and the consumer's life expectancy. Accordingly, the Board
solicited comment on whether other assumed loan periods, such as an
assumed loan period of one-half of the life expectancy figure, should
be added to the regulation; and if so, whether calculations based on
the additional assumed loan periods should be required or optional.
About 10 commenters addressed this point, and views were mixed.
Some believed an additional assumed loan period equal to one-half of
the life expectancy figure would assist consumers in better
understanding the costs of the reverse mortgage transaction in the
event that, for example, they move permanently from the dwelling either
sooner or later than anticipated; commenters were split on whether the
additional period should be mandatory or optional. Those commenters
opposing an additional assumed loan period expressed concern about
increased compliance burden and possible consumer confusion.
Based on the comments received and upon further analysis, the Board
is permitting creditors to add a fourth assumed loan period equal to
one-half of the life expectancy figure. Use of the additional period is
permissive, to promote flexibility. The Board believes consumers will
benefit by receiving information about the transaction's costs for a
``midpoint'' assumed loan period, given the potential of an event such
as a permanent move from the home during the borrower's lifetime. The
benefits to the consumer outweigh any additional compliance burden: For
lenders offering reverse mortgage transactions not covered by the HECM
program, the compliance burden of choosing to implement a new
disclosure scheme based on four (rather than three) assumed loan
periods is not significant; HECM lenders will revise their disclosures
to comply with other requirements, such as the narrative required in
the model form, in any event, and are not required to add the fourth
loan period to their forms.
Appendix K--Total Annual Loan Cost Rate Computations for Reverse
Mortgage Transactions
The final regulation bases the calculation of total annual loan
cost rates on a commonly used computation tool, an internal rate of
return formula. The formula uses the estimation or ``iteration''
procedure required to compute APRs under Appendix J of this part.
However, Appendix J is written in the context of forward (not reverse)
mortgages. The formulas are similar to those in Appendix J; however, to
ease compliance and avoid confusion about terminology, definitions and
instructions appropriate for reverse mortgages are placed in Appendix
K. The final rule tracks the proposal, except as noted below.
(b) Instructions and Equations for the Total Annual Loan Cost Rate
(b)(5) Number of Unit-Periods Between Two Given Dates
The total annual loan cost rates are based on an assumption that
the reverse mortgage transaction begins on the first day of the month
in which consummation is estimated to occur. The total annual loan cost
rates are good-faith projections based on a number of assumptions. The
Board believes that using the fractional unit-periods required under
Appendix J for calculating APRs is unnecessary for these disclosures,
and has omitted many of the definitions relating to time intervals.
(b)(8) Solution of General Equation by Iteration Process
Rather than restate the iteration process required to be used in
determining total annual loan cost rates under the appendix, the
regulation refers lenders to Appendix J of this
[[Page 15470]] regulation for the procedures to be followed.
(b)(9) Assumption for Discretionary Cash Advances
Some reverse mortgage transactions permit the consumer to control
when advances are received. The regulation requires creditors to use a
special assumption for calculating the total annual loan cost rate in
this case. Creditors must assume that 50 percent of the amount of the
credit line is advanced when the consumer becomes obligated under the
transaction (at the interest rate then in effect) and that no further
advances are made during the remaining term. The Board believes this
assumption is appropriate for reverse mortgage credit lines, given that
the amount and timing of advances (and, thus, the estimated interest
owed) are within the consumer's control. The assumption used in the
final rule also is consistent with HUD'S HECM program (and with
Appendix D's requirements for an estimated interest figure when the
amount and timing of construction loan advances are unknown).
Creditors should follow this approach for estimating interest on
open-end reverse mortgage credit lines. Once the interest figure is
determined, creditors should use the general equation in section (b)(8)
of this appendix to calculate the total annual loan cost rate.
(b)(10) Assumption for Variable-Rate Reverse Mortgage Transactions
Regulation Z provides that to calculate the APR, creditors offering
variable-rate transactions must base disclosures on the initial
interest rate and not assume the rate will increase. The Board proposed
adopting the same convention for calculating total annual loan cost
rates, and solicited comment on whether the assumption used in HUD's
HECM program--the ``expected interest rate''--was more appropriate. The
majority of commenters favored the use of the initial interest rate and
the Board has adopted this approach in the final rule. Commenters also
requested information on how to calculate the total annual loan cost
rate when there is an initial discount rate. Creditors should apply the
same rules for calculating the annual loan cost rate as are applied
when calculating an APR for a loan with an initial discount rate
(Sec. 226.17(c)).
(b)(11) Assumption for Closing Costs
The regulation requires creditors to assume all closing and other
consumer costs are financed by the creditor. These costs are generally
financed as a part of the transaction, and the Board believes this
assumption provides uniformity.
(c) Examples of Total Annual Loan Cost Rate Computations
Three examples are provided to assist creditors in calculating the
total annual loan cost rate. Some figures have been corrected, and
interest rates have been added to the examples.
Reverse Mortgage Model Form and Sample Form
The regulation requires that the matrix be accompanied by a
disclosure substantially similar to the model form in this paragraph.
Reverse mortgages are complicated transactions, and the Board believes
a uniform disclosure will enhance consumer understanding of the
proposed transaction and promote informed comparison shopping.
The model form and sample form are placed in this appendix, because
they apply to both open-end and closed-end reverse mortgage
transactions. This avoids publishing the forms twice, in Appendix G
(Open-end model forms and clauses) and Appendix H (Closed-end model
forms and clauses). The sample form has technical corrections to some
figures.
Appendix L--Assumed Loan Periods for Calculation of Total Annual Loan
Cost Rates
The law requires the total annual loan cost rate disclosures for
reverse mortgage transactions to be based on at least three assumed
loan periods, as determined by the Board. The regulation tracks the
assumed loan period requirements of HUD's HECM program (two years, a
period equal to the youngest consumer's life expectancy, and a period
1.4 times that consumer's life expectancy), and adds an optional
additional loan period equal to one-half of the youngest consumer's
life expectancy.
The Board proposed using the U.S. Decennial Life Tables for the
life expectancy figures. These tables are published by the Department
of Health and Human Services and are widely available to the public.
The Board solicited comment on other sources of such data. Most
commenters agreed with the use of the U.S. Decennial Life Tables, and
the requirement to use those tables has been adopted in the final rule.
The figures in the appendix are based on data currently available, that
is, on tables for 1979-1981, as rounded to the nearest whole year. The
Board contemplates updating the figures as data are published
periodically.
The regulation tracks the HECM program's use of female life
expectancy figures for calculating total annual loan cost rates for all
borrowers, as women are estimated to comprise the majority of borrowers
under existing reverse mortgage programs.
IV. Regulatory Flexibility Analysis
The Board's Office of the Secretary has prepared an economic impact
statement on the amendments to Regulation Z. A copy of the analysis may
be obtained from Publications Services, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551, at (202) 452-3245.
V. Paperwork Reduction Act
In accordance with section 3507 of the Paperwork Reduction Act of
1980 (44 U.S.C. 35; 5 CFR 1320.13), the amendments were reviewed by the
Board under the authority delegated to the Board by the Office of
Management and Budget after consideration of comments received during
the public comment period.
Regulation Z requires creditors offering mortgages subject to
Sec. 226.32 and creditors offering reverse mortgage transactions to
furnish to consumers at least three days prior to consummation a one-
time notice disclosing costs of the loan and reminding consumers that
signing an application or receiving disclosures does not require the
consumer to complete the transaction. Model forms are adopted to ease
compliance for creditors furnishing Section 32 and reverse mortgage
disclosures.
The Board believes that the types of mortgage products that trigger
these additional disclosures are not typically offered by state member
banks; thus, the requirements have only a negligible impact on the
paperwork burden for state member banks. Any estimates of paperwork
burden for institutions other than state member banks that are affected
by the amendments would be provided by the federal agency or agencies
that supervise these lenders.
List of Subjects in 12 CFR Part 226
Advertising, Credit, Federal Reserve System, Mortgages, Reporting
and recordkeeping requirements, Truth in lending.
For the reasons set forth in the preamble, the Board amends 12 CFR
part 226 as set forth below:
PART 226--TRUTH IN LENDING (REGULATION Z)
1. The authority citation for part 226 continues to read as
follows:
Authority: 12 U.S.C. 3806; 15 U.S.C. 1604 and 1637(c)(5).
2. Section 226.1 is amended as follows: [[Page 15471]]
a. Paragraph (b) is revised;
b. Paragraph (d)(5) is redesignated as paragraph (d)(6);
c. A new paragraph (d)(5) is added; and
d. Redesignated paragraph (d)(6) is revised.
The revisions and addition read as follows:
Sec. 226.1 Authority, purpose, coverage, organization, enforcement and
liability.
* * * * *
(b) The purpose of this regulation is to promote the informed use
of consumer credit by requiring disclosures about its terms and cost.
The regulation gives consumers the right to cancel certain credit
transactions that involve a lien on a consumer's principal dwelling,
regulates certain credit card practices, and provides a means for fair
and timely resolution of credit billing disputes. The regulation does
not govern charges for consumer credit. The regulation requires a
maximum interest rate to be stated in variable-rate contracts secured
by the consumer's dwelling. It also imposes limitations on home equity
plans that are subject to the requirements of Sec. 226.5b and mortgages
that are subject to the requirements of Sec. 226.32.
* * * * *
(d) * * *
(5) Subpart E relates to mortgage transactions covered by
Sec. 226.32 and reverse mortgage transactions. It contains rules on
disclosures, fees, and total annual loan cost rates.
(6) Several appendices contain information such as the procedures
for determinations about state laws, state exemptions and issuance of
staff interpretations, special rules for certain kinds of credit plans,
a list of enforcement agencies, and the rules for computing annual
percentage rates in closed-end credit transactions and total annual
loan cost rates for reverse mortgage transactions.
* * * * *
3. In Sec. 226.2, footnote 3 in paragraph (a)(17)(i) is revised to
read as follows:
Sec. 226.2 Definitions and rules of construction.
(a) * * *
(17) * * *
(i) * * *3 * * *
\3\A person regularly extends consumer credit only if it
extended credit (other than credit subject to the requirements of
Sec. 226.32) more than 25 times (or more than 5 times for
transactions secured by a dwelling) in the preceding calendar year.
If a person did not meet these numerical standards in the preceding
calendar year, the numerical standards shall be applied to the
current calendar year. A person regularly extends consumer credit
if, in any 12-month period, the person originates more than one
credit extension that is subject to the requirements of Sec. 226.32
or one or more such credit extensions through a mortgage broker.
---------------------------------------------------------------------------
* * * * *
4. In Sec. 226.5b, paragraph (f)(2) introductory text is revised
and a new paragraph (f)(4) is added to read as follows:
Sec. 226.5b Requirements for home equity plans.
* * * * *
(f) * * *
(2) Terminate a plan and demand repayment of the entire outstanding
balance in advance of the original term (except for reverse mortgage
transactions that are subject to paragraph (f)(4) of this section)
unless:
* * * * *
(4) For reverse mortgage transactions that are subject to
Sec. 226.33, terminate a plan and demand repayment of the entire
outstanding balance in advance of the original term except:
(i) In the case of default;
(ii) If the consumer transfers title to the property securing the
note;
(iii) If the consumer ceases using the property securing the note
as the primary dwelling; or
(iv) Upon the consumer's death.
* * * * *
5. In Sec. 226.23, footnote 48 in paragraph (a)(3) is revised to
read as follows:
Sec. 226.23 Right of rescission.
(a) * * *
(3) * * *\48\ * * *
\48\The term ``material disclosures'' means the required
disclosures of the annual percentage rate, the finance charge, the
amount financed, the total payments, the payment schedule, and the
disclosures and limitations referred to in Sec. 226.32 (c) and (d).
---------------------------------------------------------------------------
* * * * *
6. In Sec. 226.28, the first sentence of paragraph (b) is revised
to read as follows:
Sec. 226.28 Effect on State laws.
* * * * *
(b) Equivalent disclosure requirements. If the Board determines
that a disclosure required by state law (other than a requirement
relating to the finance charge, annual percentage rate, or the
disclosures required under Sec. 226.32) is substantially the same in
meaning as a disclosure required under the act or this regulation,
creditors in that state may make the state disclosure in lieu of the
federal disclosure. * * *
* * * * *
7. Part 226 is amended by adding a new Subpart E to read as
follows:
Subpart E--Special Rules for Certain Home Mortgage Transactions
Sec.
226.31 General rules.
226.32 Requirements for certain closed-end home mortgages.
226.33 Requirements for reverse mortgages.
Subpart E--Special Rules for Certain Home Mortgage Transactions
Sec. 226.31 General rules.
(a) Relation to other subparts in this part. The requirements and
limitations of this subpart are in addition to and not in lieu of those
contained in other subparts of this part.
(b) Form of disclosures. The creditor shall make the disclosures
required by this subpart clearly and conspicuously in writing, in a
form that the consumer may keep.
(c) Timing of disclosure--(1) Disclosures for certain closed-end
home mortgages. The creditor shall furnish the disclosures required by
Sec. 226.32 at least three business days prior to consummation of a
mortgage transaction covered by Sec. 226.32.
(i) Change in terms. After complying with paragraph (c)(1) of this
section and prior to consummation, if the creditor changes any term
that makes the disclosures inaccurate, new disclosures shall be
provided in accordance with the requirements of this subpart.
(ii) Telephone disclosures. A creditor may provide new disclosures
by telephone if the consumer initiates the change and if, at
consummation:
(A) The creditor provides new written disclosures; and
(B) The consumer and creditor sign a statement that the new
disclosures were provided by telephone at least three days prior to
consummation.
(iii) Consumer's waiver of waiting period before consummation. The
consumer may, after receiving the disclosures required by paragraph
(c)(1) of this section, modify or waive the three-day waiting period
between delivery of those disclosures and consummation if the consumer
determines that the extension of credit is needed to meet a bona fide
personal financial emergency. To modify or waive the right, the
consumer shall give the creditor a dated written statement that
describes the emergency, specifically modifies or waives the waiting
period, and bears the signature of all the consumers entitled to the
waiting period. Printed forms for this purpose are prohibited, except
when creditors are permitted to use printed forms pursuant to
Sec. 226.23(e)(2).
(2) Disclosures for reverse mortgages. The creditor shall furnish
the [[Page 15472]] disclosures required by Sec. 226.33 at least three
business days prior to:
(i) Consummation of a closed-end credit transaction; or
(ii) The first transaction under an open-end credit plan.
(d) Basis of disclosures and use of estimates. Disclosures shall
reflect the terms of the legal obligation between the parties. If any
information necessary for accurate disclosure is unknown to the
creditor, the creditor shall make the disclosure based on the best
information reasonably available and shall state clearly that the
disclosure is an estimate.
(e) 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 Sec. 226.15 or Sec. 226.23, however,
the disclosures shall be made to each consumer who has the right to
rescind.
(f) 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 Regulation Z
(12 CFR part 226), although new disclosures may be required for
mortgages covered by Sec. 226.32 under paragraph (c) of this section,
Sec. 226.9(c), Sec. 226.19, or Sec. 226.20.
(g) Accuracy of annual percentage rate. For purposes of
Sec. 226.32, the annual percentage yield shall be considered accurate
if it is accurate according to the requirements and within the
tolerances set forth in Sec. 226.22.
Sec. 226.32 Requirements for certain closed-end home mortgages.
(a) Coverage. (1) Except as provided in paragraph (a)(2) of this
section, the requirements of this section apply to a consumer credit
transaction that is secured by the consumer's principal dwelling, and
in which either:
(i) The annual percentage rate at consummation will exceed by more
than 10 percentage points the yield on Treasury securities having
comparable periods of maturity to the loan maturity as of the fifteenth
day of the month immediately preceding the month in which the
application for the extension of credit is received by the creditor; or
(ii) The total points and fees payable by the consumer at or before
loan closing will exceed the greater of 8 percent of the total loan
amount, or $400; the $400 figure shall be adjusted annually on January
1 by the annual percentage change in the Consumer Price Index that was
reported on the preceding June 1.
(2) This section does not apply to the following:
(i) A residential mortgage transaction.
(ii) A reverse mortgage transaction subject to Sec. 226.33.
(iii) An open-end credit plan subject to subpart B of this part.
(b) Definitions. For purposes of this subpart, the following
definitions apply:
(1) For purposes of paragraph (a)(1)(ii) of this section, points
and fees mean:
(i) All items required to be disclosed under Sec. 226.4(a) and
226.4(b), except interest or the time-price differential;
(ii) All compensation paid to mortgage brokers; and
(iii) All items required to be disclosed under Sec. 226.4(c)(7)
(other than amounts held for future payment of taxes) unless the charge
is reasonable, the creditor receives no direct or indirect compensation
in connection with the charge, and the charge is not paid to an
affiliate of the creditor.
(2) Affiliate means any company that controls, is controlled by, or
is under common control with another company, as set forth in the Bank
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.).
(c) Disclosures. In addition to other disclosures required by this
part, in a mortgage subject to this section the creditor shall disclose
the following:
(1) Notices. The following statement: ``You are not required to
complete this agreement merely because you have received these
disclosures or have signed a loan application. If you obtain this loan,
the lender will have a mortgage on your home. You could lose your home,
and any money you have put into it, if you do not meet your obligations
under the loan.''
(2) Annual percentage rate. The annual percentage rate.
(3) Regular payment. The amount of the regular monthly (or other
periodic) payment.
(4) Variable-rate. For variable-rate transactions, a statement that
the interest rate and monthly payment may increase, and the amount of
the single maximum monthly payment, based on the maximum interest rate
required to be disclosed under Sec. 226.30.
(d) Limitations. A mortgage transaction subject to this section may
not provide for the following terms:
(1)(i) Balloon payment. For a loan with a term of less than five
years, a payment schedule with regular periodic payments that when
aggregated do not fully amortize the outstanding principal balance.
(ii) Exception. The limitations in paragraph (d)(1)(i) of this
section do not apply to loans with maturities of less than one year, if
the purpose of the loan is a ``bridge'' loan connected with the
acquisition or construction of a dwelling intended to become the
consumer's principal dwelling.
(2) Negative amortization. A payment schedule with regular periodic
payments that cause the principal balance to increase.
(3) Advance payments. A payment schedule that consolidates more
than two periodic payments and pays them in advance from the proceeds.
(4) Increased interest rate. An increase in the interest rate after
default.
(5) Rebates. A refund calculated by a method less favorable than
the actuarial method (as defined by section 933(d) of the Housing and
Community Development Act of 1992, 15 U.S.C. 1615(d)), for rebates of
interest arising from a loan acceleration due to default.
(6) Prepayment penalties. Except as allowed under paragraph (d)(7)
of this section, a penalty for paying all or part of the principal
before the date on which the principal is due. A prepayment penalty
includes computing a refund of unearned interest by a method that is
less favorable to the consumer than the actuarial method, as defined by
section 933(d) of the Housing and Community Development Act of 1992.
(7) Prepayment penalty exception. A mortgage transaction subject to
this section may provide for a prepayment penalty otherwise permitted
by law (including a refund calculated according to the rule of 78s) if:
(i) The penalty can be exercised only for the first five years
following consummation;
(ii) The source of the prepayment funds is not a refinancing by the
creditor or an affiliate of the creditor; and
(iii) At consummation, the consumer's total monthly debts
(including amounts owed under the mortgage) do not exceed 50 percent of
the consumer's monthly gross income, as verified by the consumer's
signed financial statement, a credit report, and payment records for
employment income.
(e) Prohibited acts and practices. A creditor extending mortgage
credit subject to this section may not:
(1) Repayment ability. Engage in a pattern or practice of extending
such credit to a consumer based on the consumer's collateral if,
considering the consumer's current and expected income, current
obligations, and [[Page 15473]] employment status, the consumer will be
unable to make the scheduled payments to repay the obligation.
(2) Home improvement contracts. Pay a contractor under a home
improvement contract from the proceeds of a mortgage covered by this
section, other than:
(i) By an instrument payable to the consumer or jointly to the
consumer and the contractor; or
(ii) At the election of the consumer, through a third-party escrow
agent in accordance with terms established in a written agreement
signed by the consumer, the creditor, and the contractor prior to the
disbursement.
(3) Notice to assignee. Sell or otherwise assign a mortgage subject
to this section without furnishing the following statement to the
purchaser or assignee: ``Notice: This is a mortgage subject to special
rules under the federal Truth in Lending Act. Purchasers or assignees
of this mortgage could be liable for all claims and defenses with
respect to the mortgage that the borrower could assert against the
creditor.''
Sec. 226.33 Requirements for reverse mortgages.
(a) Definition. For purposes of this subpart, reverse mortgage
transaction means a nonrecourse consumer credit obligation in which:
(1) A mortgage, deed of trust, or equivalent consensual security
interest securing one or more advances is created in the consumer's
principal dwelling; and
(2) Any principal, interest, or shared appreciation or equity is
due and payable (other than in the case of default) only after:
(i) The consumer dies;
(ii) The dwelling is transferred; or
(iii) The consumer ceases to occupy the dwelling as a principal
dwelling.
(b) Content of disclosures. In addition to other disclosures
required by this part, in a reverse mortgage transaction the creditor
shall provide the following disclosures in a form substantially similar
to the model form found in paragraph (d) of Appendix K of this part:
(1) Notice. A statement that the consumer is not obligated to
complete the reverse mortgage transaction merely because the consumer
has received the disclosures required by this section or has signed an
application for a reverse mortgage loan.
(2) Total annual loan cost rates. A good-faith projection of the
total cost of the credit, determined in accordance with paragraph (c)
of this section and expressed as a table of ``total annual loan cost
rates,'' using that term, in accordance with Appendix K of this part.
(3) Itemization of pertinent information. An itemization of loan
terms, charges, the age of the youngest borrower and the appraised
property value.
(4) Explanation of table. An explanation of the table of total
annual loan cost rates as provided in the model form found in paragraph
(d) of Appendix K of this part.
(c) Projected total cost of credit. The projected total cost of
credit shall reflect the following factors, as applicable:
(1) Costs to consumer. All costs and charges to the consumer,
including the costs of any annuity the consumer purchases as part of
the reverse mortgage transaction.
(2) Payments to consumer. All advances to and for the benefit of
the consumer, including annuity payments that the consumer will receive
from an annuity that the consumer purchases as part of the reverse
mortgage transaction.
(3) Additional creditor compensation. Any shared appreciation or
equity in the dwelling that the creditor is entitled by contract to
receive.
(4) Limitations on consumer liability. Any limitation on the
consumer's liability (such as nonrecourse limits and equity
conservation agreements).
(5) Assumed annual appreciation rates. Each of the following
assumed annual appreciation rates for the dwelling:
(i) 0 percent.
(ii) 4 percent.
(iii) 8 percent.
(6) Assumed loan period. (i) Each of the following assumed loan
periods, as provided in Appendix L of this part:
(A) Two years.
(B) The actuarial life expectancy of the consumer to become
obligated on the reverse mortgage transaction (as of that consumer's
most recent birthday). In the case of multiple consumers, the period
shall be the actuarial life expectancy of the youngest consumer (as of
that consumer's most recent birthday).
(C) The actuarial life expectancy specified by paragraph
(c)(6)(i)(B) of this section, multiplied by a factor of 1.4 and rounded
to the nearest full year.
(ii) At the creditor's option, the actuarial life expectancy
specified by paragraph (c)(6)(i)(B) of this section, multiplied by a
factor of .5 and rounded to the nearest full year.
9. In Part 226, Appendix H is amended by:
a. Revising the appendix heading;
b. Revising the table of contents at the beginning of the appendix;
and
c. Adding a new H-16 Mortgage Sample in numerical order.
The revisions and additions read as follows:
Appendix H to Part 226--Closed-End Model Forms and Clauses
H-1--Credit Sale Model Form (Sec. 226.18)
H-2--Loan Model Form (Sec. 226.18)
H-3--Amount Financed Itemization Model Form (Sec. 226.18(c))
H-4(A)--Variable-Rate Model Clauses (Sec. 226.18(f)(1))
H-4(B)--Variable-Rate Model Clauses (Sec. 226.18(f)(2))
H-4(C)--Variable-Rate Model Clauses (Sec. 226.19(b))
H-4(D)--Variable-Rate Model Clauses (Sec. 226.20(c))
H-5--Demand Feature Model Clauses (Sec. 226.18(i))
H-6--Assumption Policy Model Clause (Sec. 226.18(q))
H-7--Required Deposit Model Clause (Sec. 226.18(r))
H-8--Rescission Model Form (General) (Sec. 226.23)
H-9--Rescission Model Form (Refinancing) (Sec. 226.23)
H-10--Credit Sale Sample
H-11--Installment Loan Sample
H-12--Refinancing Sample
H-13--Mortgage with Demand Feature Sample
H-14--Variable-Rate Mortgage Sample (Sec. 226.19(b))
H-15--Graduated Payment Mortgage Sample
H-16--Mortgage Sample (Sec. 226.32)
* * * * *
BILLING CODE 6210-01-P
[[Page 15474]]
[GRAPHIC][TIFF OMITTED]TR24MR95.014
BIlLING CODE 6210-01-C
* * * * *
10. In Part 226, a new Appendix K is added to read as follows:
Appendix K to Part 226--Total Annual Loan Cost Rate Computations for
Reverse Mortgage Transactions
(a) Introduction. Creditors are required to disclose a series of
total annual loan cost rates for each reverse mortgage transaction.
This appendix contains the equations creditors must use in computing
the total annual loan cost rate for various transactions, as well as
instructions, explanations, and examples for various transactions.
This appendix is modeled after Appendix J of this part (Annual
Percentage Rates Computations for Closed-end Credit Transactions);
creditors should consult Appendix J of this part for additional
guidance in using the formulas for reverse mortgages.
(b) Instructions and equations for the total annual loan cost
rate.
(1) General rule. The total annual loan cost rate shall be the
nominal total annual loan cost rate determined by multiplying the
unit-period rate by the number of unit-periods in a year.
(2) Term of the transaction. For purposes of total annual loan
cost disclosures, the term of a reverse mortgage transaction is
assumed to begin on the first of the month in which consummation is
expected to occur. If a loan cost or any portion of a loan cost is
initially incurred beginning on a date later than consummation, the
term of the transaction is assumed to begin on the first of the
month in which that loan cost is incurred. For purposes of total
annual loan cost disclosures, the term ends on each of the assumed
loan periods specified in Sec. 226.33(c)(6).
(3) Definitions of time intervals.
(i) A period is the interval of time between advances.
(ii) A common period is any period that occurs more than once in
a transaction.
(iii) A standard interval of time is a day, week, semimonth,
month, or a multiple of a week or a month up to, but not exceeding,
1 year.
(iv) All months shall be considered to have an equal number of
days.
(4) Unit-period.
(i) In all transactions other than single-advance, single-
payment transactions, the unit-period shall be that common period,
not to exceed one year, that occurs most frequently in the
transaction, except that:
(A) If two or more common periods occur with equal frequency,
the smaller of such common periods shall be the unit-period; or
(B) If there is no common period in the transaction, the unit-
period shall be that period which is the average of all periods
rounded to the nearest whole standard interval of time. If the
average is equally near two standard intervals of time, the lower
shall be the unit-period.
(ii) In a single-advance, single-payment transaction, the unit-
period shall be the term of the transaction, but shall not exceed
one year.
(5) Number of unit-periods between two given dates.
(i) The number of days between two dates shall be the number of
24-hour intervals between any point in time on the first date to the
same point in time on the second date.
(ii) If the unit-period is a month, the number of full unit-
periods between two dates shall be the number of months. If the
unit-period is a month, the number of unit-periods per year shall be
12.
(iii) If the unit-period is a semimonth or a multiple of a month
not exceeding 11 months, the number of days between two dates shall
be 30 times the number of full months. The number of full unit-
periods shall be determined by dividing the number of days by 15 in
the case of a semimonthly unit-period or by the appropriate multiple
of 30 in the case of a multimonthly unit-period. If the unit-period
is a semimonth, the number of unit-periods per year shall be 24. If
the number of unit-periods is a multiple of a month, the number of
unit-periods per year shall be 12 divided by the number of months
per unit-period.
(iv) If the unit-period is a day, a week, or a multiple of a
week, the number of full unit-periods shall be determined by
dividing the number of days between the two given dates by the
number of days per unit-period. If the unit-period is a day, the
number of unit-periods per year shall be 365. If the unit-period is
a week or a multiple of a week, the number of unit-periods per year
shall be 52 divided by the number of weeks per unit-period.
(v) If the unit-period is a year, the number of full unit-
periods between two dates shall be the number of full years (each
equal to 12 months).
(6) Symbols. The symbols used to express the terms of a
transaction in the equation set forth in paragraph (b)(8) of this
appendix are defined as follows:
Aj=The amount of each periodic or lump-sum advance to the
consumer under the reverse mortgage transaction.
i=Percentage rate of the total annual loan cost per unit-period,
expressed as a decimal equivalent.
j=The number of unit-periods until the jth advance.
n=The number of unit-periods between consummation and repayment of
the debt.
Pn=Min (Baln, Valn). This is the maximum amount that
the creditor can be repaid at the specified loan term.
Baln=Loan balance at time of repayment, including all costs and
fees incurred by the consumer (including any shared appreciation or
shared equity amount) compounded to time n at the creditor's
contract rate of interest.
Valn=Val0 (1 + )y, where Val0 is the
property value at consummation, is the assumed annual rate
of appreciation for the dwelling, and y is the number of years in
the assumed term. Valn must be reduced by the amount of any
equity reserved for the consumer by agreement between the parties,
or by 7 percent (or the amount or percentage specified in the credit
agreement), if the amount required to be repaid is limited to the
net proceeds of sale.
=The summation operator.
Symbols used in the examples shown in this appendix are defined
as follows:
[GRAPHIC][TIFF OMITTED]TR24MR95.015
[GRAPHIC][TIFF OMITTED]TR24MR95.007
w=The number of unit-periods per year. [[Page 15475]]
I=wi x 100=the nominal total annual loan cost rate.
(7) General equation. The total annual loan cost rate for a
reverse mortgage transaction must be determined by first solving the
following formula, which sets forth the relationship between the
advances to the consumer and the amount owed to the creditor under
the terms of the reverse mortgage agreement for the loan cost rate
per unit-period (the loan cost rate per unit-period is then
multiplied by the number of unit-periods per year to obtain the
total annual loan cost rate I; that is, I = wi):
[GRAPHIC][TIFF OMITTED]TR24MR95.008
(8) Solution of general equation by iteration process. (i) The
general equation in paragraph (b)(7) of this appendix, when applied
to a simple transaction for a reverse mortgage loan of equal monthly
advances of $350 each, and with a total amount owed of $14,313.08 at
an assumed repayment period of two years, takes the special form:
[GRAPHIC][TIFF OMITTED]TR24MR95.009
Using the iteration procedures found in steps 1 through 4 of
(b)(9)(i) of Appendix J of this part, the total annual loan cost
rate, correct to two decimals, is 48.53%.
(ii) In using these iteration procedures, it is expected that
calculators or computers will be programmed to carry all available
decimals throughout the calculation and that enough iterations will
be performed to make virtually certain that the total annual loan
cost rate obtained, when rounded to two decimals, is correct. Total
annual loan cost rates in the examples below were obtained by using
a 10-digit programmable calculator and the iteration procedure
described in Appendix J of this part.
(9) Assumption for discretionary cash advances. If the consumer
controls the timing of advances made after consummation (such as in
a credit line arrangement), the creditor must use the general
formula in paragraph (b)(7) of this appendix. The total annual loan
cost rate shall be based on the assumption that 50 percent of the
principal loan amount is advanced at closing, or in the case of an
open-end transaction, at the time the consumer becomes obligated
under the plan. Creditors shall assume the advances are made at the
interest rate then in effect and that no further advances are made
to, or repayments made by, the consumer during the term of the
transaction or plan.
(10) Assumption for variable-rate reverse mortgage transactions.
If the interest rate for a reverse mortgage transaction may increase
during the loan term and the amount or timing is not known at
consummation, creditors shall base the disclosures on the initial
interest rate in effect at the time the disclosures are provided.
(11) Assumption for closing costs. In calculating the total
annual loan cost rate, creditors shall assume all closing and other
consumer costs are financed by the creditor.
(c) Examples of total annual loan cost rate computations.
(1) Lump-sum advance at consummation.
Lump-sum advance to consumer at consummation: $30,000
Total of consumer's loan costs financed at consummation: $4,500
Contract interest rate: 11.60%
Estimated time of repayment (based on life expectancy of a consumer
at age 78): 10 years
Appraised value of dwelling at consummation: $100,000
Assumed annual dwelling appreciation rate: 4%
[GRAPHIC][TIFF OMITTED]TR24MR95.010
Total annual loan cost rate (100(.010843293 x 12)) = 13.01%
(2) Monthly advance beginning at consummation.
Monthly advance to consumer, beginning at consummation: $492.51
Total of consumer's loan costs financed at consummation: $4,500
Contract interest rate: 9.00%
Estimated time of repayment (based on life expectancy of a consumer
at age 78): 10 years
Appraised value of dwelling at consummation: $100,000
Assumed annual dwelling appreciation rate: 8%
[GRAPHIC][TIFF OMITTED]TR24MR95.011
Total annual loan cost rate (100(.009061140 x 12))=10.87%
(3) Lump sum advance at consummation and monthly advances
thereafter.
Lump sum advance to consumer at consummation: $10,000
Monthly advance to consumer, beginning at consummation: $725
Total of consumer's loan costs financed at consummation: $4,500
Contract rate of interest: 8.5%
Estimated time of repayment (based on life expectancy of a consumer
at age 75): 12 years
Appraised value of dwelling at consummation: $100,000
Assumed annual dwelling appreciation rate: 8%
[[Page 15476]]
[GRAPHIC][TIFF OMITTED]TR24MR95.012
Total annual loan cost rate (100(.007708844 x 12)) = 9.25%
(d) Reverse mortgage model form and sample form.
(1) Model form.
Total Annual Loan Cost Rate
Loan Terms
Age of youngest borrower:
Appraised property value:
Interest rate:
Monthly advance:
Initial draw:
Line of credit:
Initial Loan Charges
Closing costs:
Mortgage insurance premium:
Annuity cost:
Monthly Loan Charges
Servicing fee:
Other Charges:
Mortgage insurance:
Shared Appreciation:
Repayment Limits
------------------------------------------------------------------------
Total annual loan cost rate
Assumed annual ---------------------------------------------------
appreciation 2-year loan [ ]-year [ ]-year [ ]-year
term loan term] loan term loan term
------------------------------------------------------------------------
0%.................. [ ]
4%.................. [ ]
8%.................. [ ]
------------------------------------------------------------------------
The cost of any reverse mortgage loan depends on how long you
keep the loan and how much your house appreciates in value.
Generally, the longer you keep a reverse mortgage, the lower the
total annual loan cost rate will be.
This table shows the estimated cost of your reverse mortgage
loan, expressed as an annual rate. It illustrates the cost for three
[four] loan terms: 2 years, [half of life expectancy for someone
your age,] that life expectancy, and 1.4 times that life expectancy.
The table also shows the cost of the loan, assuming the value of
your home appreciates at three different rates: 0%, 4% and 8%.
The total annual loan cost rates in this table are based on the
total charges associated with this loan. These charges typically
include principal, interest, closing costs, mortgage insurance
premiums, annuity costs, and servicing costs (but not costs when you
sell the home).
The rates in this table are estimates. Your actual cost may
differ if, for example, the amount of your loan advances varies or
the interest rate on your mortgage changes.
Signing an Application or Receiving These Disclosures Does Not Require
You To Complete This Loan
(2) Sample Form.
Total Annual Loan Cost Rate
Loan Terms
Age of youngest borrower: 75
Appraised property value: $100,000
Interest rate: 9%
Monthly advance: $301.80
Initial draw: $1,000
Line of credit: $4,000
Initial Loan Charges
Closing costs: $5,000
Mortgage insurance premium: None
Annuity cost: None
Monthly Loan Charges
Servicing fee: None
Other Charges
Mortgage insurance: None
Shared Appreciation: None
Repayment Limits
Net proceeds estimated at 93% of projected home sale
------------------------------------------------------------------------
Total annual loan cost rate
Assumed annual ---------------------------------------------------
appreciation 2-year loan [6-year 12-year 17-year
term loan term] loan term loan term
------------------------------------------------------------------------
0%.................. 39.00% [14.94%] 9.86% 3.87%
4%.................. 39.00% [14.94%] 11.03% 10.14%
8%.................. 39.00% [14.94%] 11.03% 10.20%
------------------------------------------------------------------------
The cost of any reverse mortgage loan depends on how long you
keep the loan and how much your house appreciates in value.
Generally, the longer you keep a reverse mortgage, the lower the
total annual loan cost rate will be.
This table shows the estimated cost of your reverse mortgage
loan, expressed as an annual rate. It illustrates the cost for three
[four] loan terms: 2 years, [half of life expectancy for someone
your age,] that life expectancy, and 1.4 times that life expectancy.
The table also shows the cost of the loan, assuming the value of
your home appreciates at three different rates: 0%,4% and 8%.
The total annual loan cost rates in this table are based on the
total charges associated with this loan. These charges typically
include principal, interest, closing costs, mortgage insurance
premiums, annuity costs, and servicing costs (but not disposition
costs--costs when you sell the home).
The rates in this table are estimates. Your actual cost may
differ if, for example, the amount of your loan advances varies or
the interest rate on your mortgage changes.
Signing an Application or Receiving These Disclosures Does Not Require
You To Complete This Loan
11. In Part 226, a new Appendix L is added to read as follows:
Appendix L to Part 226--Assumed Loan Periods for Computations of Total
Annual Loan Cost Rates
(a) Required tables. In calculating the total annual loan cost
rates in accordance with Appendix K of this part, creditors shall
assume three loan periods, as determined by the following table.
(b) Loan periods.
(1) Loan Period 1 is a two-year loan period.
(2) Loan Period 2 is the life expectancy in years of the
youngest borrower to become obligated on the reverse mortgage loan,
as shown in the U.S. Decennial Life Tables for 1979-1981 for
females, rounded to the nearest whole year. [[Page 15477]]
(3) Loan Period 3 is the life expectancy figure in Loan Period
3, multiplied by 1.4 and rounded to the nearest full year (life
expectancy figures at .5 have been rounded up to 1).
(4) At the creditor's option, an additional period may be
included, which is the life expectancy figure in Loan Period 2,
multiplied by .5 and rounded to the nearest full year (life
expectancy figures at .5 have been rounded up to 1).
------------------------------------------------------------------------
Loan period
Age of youngest Loan period [Optional 2 (life Loan period
borrower 1 (in loan period expectancy) 3 (in
years) (in years)] (in years) years)
------------------------------------------------------------------------
62.................. 2 [11] 21 29
63.................. 2 [10] 20 28
64.................. 2 [10] 19 27
65.................. 2 [9] 18 25
66.................. 2 [9] 18 25
67.................. 2 [9] 17 24
68.................. 2 [8] 16 22
69.................. 2 [8] 16 22
70.................. 2 [8] 15 21
71.................. 2 [7] 14 20
72.................. 2 [7] 13 18
73.................. 2 [7] 13 18
74.................. 2 [6] 12 17
75.................. 2 [6] 12 17
76.................. 2 [6] 11 15
77.................. 2 [5] 10 14
78.................. 2 [5] 10 14
79.................. 2 [5] 9 13
80.................. 2 [5] 9 13
81.................. 2 [4] 8 11
82.................. 2 [4] 8 11
83.................. 2 [4] 7 10
84.................. 2 [4] 7 10
85.................. 2 [3] 6 8
86.................. 2 [3] 6 8
87.................. 2 [3] 6 8
88.................. 2 [3] 5 7
89.................. 2 [3] 5 7
90.................. 2 [3] 5 7
91.................. 2 [2] 4 6
92.................. 2 [2] 4 6
93.................. 2 [2] 4 6
94.................. 2 [2] 4 6
95 and over......... 2 [2] 3 4
------------------------------------------------------------------------
By order of the Board of Governors of the Federal Reserve
System, March 20, 1995.
William W. Wiles,
Secretary of the Board.
[FR Doc. 95-7231 Filed 3-23-95; 8:45 am]
BILLING CODE 6210-01-P