FORUM PROFILE

Re: HELOC Statement and the wording finance/interest charge

Home Forums Truth in Lending/ Regulation Z HELOC Statement and the wording finance/interest charge Re: HELOC Statement and the wording finance/interest charge

#3059
rcooper
Keymaster

Take a look at 12 CFR 1026.7(a)(6). It gives you a roadmap of how the finance charge on HELOC statements should be laid out. Basically, you need to identify the finance charges in general and then list the specific charge(s) that make up the finance charge. This will include the interest/periodic rate. For example, you may have a header on your statement that says “Finance Charge Calculation” then you would list specific charge(s) that makes up the FC and show the dollar amount of that charge as the FC. The individual items that make up the FC are detailed and if that includes interest/period rate then it is labelled as such. The commentary below breaks out how you may and may not itemize your finance charges.

Regulation Z Official Interpretation:
1026.7(a)(6)(i): Finance Charges
1. Total. A total finance charge amount for the plan is not required.
2. Itemization—types of finance charges. Each type of finance charge (such as periodic rates, transaction charges, and minimum charges) imposed during the cycle must be separately itemized; for example, disclosure of only a combined finance charge attributable to both a minimum charge and transaction charges would not be permissible. Finance charges of the same type may be disclosed, however, individually or as a total. For example, five transaction charges of $1 may be listed separately or as $5.
3. Itemization—different periodic rates. Whether different periodic rates are applicable to different types of transactions or to different balance ranges, the creditor may give the finance charge attributable to each rate or may give a total finance charge amount. For example, if a creditor charges 1.5% per month on the first $500 of a balance and 1% per month on amounts over $500, the creditor may itemize the two components ($7.50 and $1.00) of the $8.50 charge, or may disclose $8.50.

Keep in mind that the periodic rate(s) along with the corresponding APR are required to be disclosed as well. See 12 CFR 1026.7(a)(4) and the Official Interpretation at https://www.bankersonline.com/regs/12-1026/12-1026-007.html.

“These are my opinions and they do not constitute legal advice.”