(a) Refinancings. A refinancing occurs when an existing obligation that was subject to this subpart is satisfied and replaced by a new obligation undertaken by the same consumer. A refinancing is a new transaction requiring new disclosures to the consumer. The new finance charge shall include any unearned portion of the old finance charge that is not credited to the existing obligation. The following shall not be treated as a refinancing:
(1) A renewal of a single payment obligation with no change in the original terms.
(2) A reduction in the annual percentage rate with a corresponding change in the payment schedule.
(3) An agreement involving a court proceeding.
(4) A change in the payment schedule or a change in collateral requirements as a result of the consumer's default or delinquency, unless the rate is increased, or the new amount financed exceeds the unpaid balance plus earned finance charge and premiums for continuation of insurance of the types described in § 226.4(d).
(5) The renewal of optional insurance purchased by the consumer and added to an existing transaction, if disclosures relating to the initial purchase were provided as required by this subpart.
(b) Assumptions. An assumption occurs when a creditor expressly agrees in writing with a subsequent consumer to accept that consumer as a primary obligor on an existing residential mortgage transaction. Before the assumption occurs, the creditor shall make new disclosures to the subsequent consumer, based on the remaining obligation. If the finance charge originally imposed on the existing obligation was an add-on or discount finance charge, the creditor need only disclose:
(1) The unpaid balance of the obligation assumed.
(2) The total charges imposed by the creditor in connection with the assumption.
(3) The information required to be disclosed under § 226.18(k), (l), (m), and (n).
(4) The annual percentage rate originally imposed on the obligation.
(5) The payment schedule under § 226.18(g) and the total of payments under § 226.18(h) based on the remaining obligation.
(c) Variable-rate adjustments.45c An adjustment to the interest rate with or without a corresponding adjustment to the payment in a variable-rate transaction subject to § 226.19(b) is an event requiring new disclosures to the consumer. At least once each year during which an interest rate adjustment is implemented without an accompanying payment change, and at least 25, but no more than 120, calendar days before a payment at a new level is due, the following disclosures, as applicable, must be delivered or placed in the mail:
45c Information provided in accordance with variable-rate subsequent disclosure regulations of other federal agencies may be substituted for the disclosure required by paragraph (c) of this section.
(1) The current and prior interest rates.
(2) The index values upon which the current and prior interest rates are based.
(3) The extent to which the creditor has foregone any increase in the interest rate.
(4) The contractual effects of the adjustment, including the payment due after the adjustment is made, and a statement of the loan balance.
(5) The payment, if different from that referred to in paragraph (c)(4) of this section, that would be required to fully amortize the loan at the new interest rate over the remainder of the loan term.
[46 FR 20892, Apr. 7, 1981, as amended at 52 FR 48671, Dec. 24, 1987]
Notes of Decisions
Sheppard v. GMAC Mortg. Corp. (In Re Sheppard), 299 B.R. 753 (Bankr. E.D. Pa. 2003).
· cites it 9× “The regulations, however, do define certain narrow circumstances where further disclosure is mandated. They include certain residential mortgage and variable rate transactions, 12 C.”
Motley v. Homecomings Fin., LLC, 557 F. Supp. 2d 1005 (D. Minnesota 2008).
· cites it 4× “In Count II, Plaintiffs allege that Homecomings violated 12 C.F.R. § 226.20 (c)(4), which was promulgated by the Federal Reserve Board pursuant to the TILA as part of “Regulation Z.”
Hubbard v. Fid. Fed. Bank, 824 F. Supp. 909 (C.D. Cal. 1993).
· cites it 6× “Subsequent Disclosures — 12 C.F.R. § 226.20 Defendant also seeks summary judgment or summary adjudication as to plaintiffs’ claim that the Bank violated 12 C.”
John A. Begala v. Pnc Bank, Ohio, Nat'l Ass'n, 163 F.3d 948 (6th Cir. 1999).
· cites it 2× “19 , refinancings, assumptions, and variable rate adjustments, 12 C.F.R. § 226.20 , and circumstances where early disclosures are rendered inaccurate prior to the date of consummation, 12 C.”
Jones v. Mid-Penn Consum. Disc. Co. (In Re Jones), 79 B.R. 233 (Bankr. E.D. Pa. 1987).
· cites it 4× “We are thus left with considering whether either of the first two violations alleged by the Debt- or occurred in the second transaction have merit. D. APPLICABLE STATE LAW AUTHORIZES THE REBATE FORMULA UTILIZED BY THE LENDER The claim that the Lender improperly included “any…”
Thorp Loan & Thrift Co. v. Buckles (In Re Buckles ), 189 B.R. 752 (Bankr. D. Minn. 1995).
· cites it 3× “” 12 CFR § 226.20 (a). Under ITT’s argument, the mere act of making two disclosures would not raise the possibility of a violation of the TILA, so long as the discrete costs attributable to each of two successive extensions of credit are properly and separately set forth on a…”
Scott v. Wells Fargo Home Mortg. Inc., 326 F. Supp. 2d 709 (E.D. Va. 2003).
“12 C.F.R. § 226.20 (a)(4). First, Plaintiffs’ TILA claim is without merit with respect to both mortgages because Plaintiffs’ right of rescission has expired.”
Hart v. GMAC Mortg. Corp. (In Re Hart), 246 B.R. 709 (Bankr. D. Mass. 2000).
· cites it 2× “The Debtor argues that Regulation Z, 12 C.F.R. § 226.20 (a), does not exempt the 1993 *725 Loan Modification Agreement from disclosure because the maturity was lengthened and the number of payments increased beyond that remaining in the existing transaction, even though the…”
Sheedy v. Deutsche Bank Nat'l Trust Co., 801 F.3d 12 (1st Cir. 2015).
“Additionally, Sheedy argues that the Secured Creditors cannot avoid liability under TILA by relying on disclosures given as part of the loan obtained when she transferred’the property to herself in 2003 because, being a refinancing transaction, the 2004 Transaction required…”
— 12 C.F.R. § 226.20(A) — 1 case
— 12 C.F.R. § 226.20(A)(2) — 1 case
— 12 C.F.R. § 226.20(c)(1)(5) — 1 case
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