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Financial Institution Letters

Truth in Lending Act

FIL-127-97 (REVISED)
December 16, 1997

SUBJECT: Revisions to Regulation Z (Truth in Lending Act)

The Board of Governors of the Federal Reserve System has adopted final revisions to Regulation Z, which implements the Truth in Lending Act. The final rule, which is attached, took effect on November 21, 1997, but compliance is optional until October 1, 1998 (not December 22, 1997, as reported in FIL-127-97 dated December 10, 1997).

The revisions implement an amendment to the Truth in Lending Act contained in the Economic Growth and Regulatory Paperwork Reduction Act of 1996. The amendment permits creditors to provide a statement that the periodic payment on certain variable-rate loans may substantially increase or decrease together with a maximum interest rate and payment based on a $10,000 loan amount, instead of having to provide a 15-year historical example of index values. The Federal Reserve issued a proposed rule to implement the statutory changes in January 1997.

The changes to the regulation include:

  • Revisions to Section 226.19(b)(2), "Certain Variable-Rate Transactions," that permit creditors to provide either:


  • The historical 15-year example or


  • The maximum interest rate and payment for a $10,000 loan (assuming the maximum periodic increases in rates and payments under the loan program) and the initial interest rate and payment for that loan, along with a statement that the periodic payment may increase or decrease substantially depending on changes in the interest rate;


  • Revisions to Appendix H that provide new model forms and clauses for the revisions made to Section 226.19(b); and


  • Changes to the "Official Staff Commentary" in Sections 226.19(b)(2) and Appendix H that provide additional guidance on the revised disclosure requirements.

For further information about the new rule, please call:

  • Ms. Kyung H. Cho-Miller, Staff Attorney in the Federal Reserve System's Division of Consumer and Community Affairs, at (202) 452-3667;


  • Ken Baebel, Senior Review Examiner in the FDIC's Division of Compliance and Consumer Affairs (202-942-3086, e-mail:; or


  • Andrea Winkler, Counsel in the FDIC's Legal Division (202-736-0762, e-mail:

Carmen J. Sullivan

Attachment: Dec. 1 Federal Register, pages 63441-63447, available on the FDIC web site for FILs,

Distribution: FDIC-Supervised Banks (Commercial and Savings)

NOTE: Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 801 17th Street, N.W., Room 100, Washington, D.C. 20434 (800-276-6003 or (703) 562-2200).


Last Updated 07/16/1999

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