Circular
Official Staff Commentary to Regulation Z
April 16, 1998
Circular No. 11047

Revisions Regarding Increased Rates for Open-End Plans
Triggered by Certain Events
Compliance Optional Until October 1

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

The following is from a statement by the Board of Governors of the Federal Reserve System:

The Federal Reserve Board has published revisions to its Regulation Z (Truth in Lending) official staff commentary which applies and interprets the requirements of the Regulation.

The revisions are effective March 31. Compliance is optional until October 1, 1998.

The revisions provide guidance for open-end credit plans that increase rates triggered by late payments or by exceeding credit limits and that have deferred payment features. Proposed changes on how creditors may determine whether credit is an open-end plan or a closed-end transaction have been substantially modified in the final revisions.

In addition, the update discusses issues such as the treatment of annuity costs in reverse mortgage transactions and transaction fees imposed on checking accounts with overdraft protection.

A copy of the revisions to the Regulation Z staff commentary, as published in the Federal Register of April 6 is available as a file (pdf - 80kb) Questions on this matter may be directed to Janice A. Oser, Examining Officer, Compliance Examinations Department.