[Federal Register Volume 59, Number 29 (Friday, February 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3249]
[[Page Unknown]]
[Federal Register: February 11, 1994]
=======================================================================
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Regulation Z; Docket No. R-0828]
Depository Institutions Disaster Relief Act of 1993: Truth in
Lending Act
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Order; temporary exceptions.
-----------------------------------------------------------------------
SUMMARY: The Depository Institutions Disaster Relief Act of 1993
temporarily authorizes the Board to take immediate action to make
exceptions to the Truth in Lending Act and Regulation Z (which
implements the Act) for transactions in an area the President has
declared to be a major disaster area. In accordance with this law, the
Board is granting temporary relief form certain provisions of
Regulation Z governing waivers by consumers of the right to rescind
certain home-secured loans, so that borrowers in disaster-affected
communities in California can gain easier access to loan funds for
emergency purposes. The relief from Regulation Z provided that a
consumer's need to obtain funds immediately shall be regarded as a bona
fide personal financial emergency for purposes of Regulation Z, and the
use of preprinted forms for consumers to waive the right of rescission
is permitted; provided that the home securing the extension of credit
is located in the disaster area. A consumer must still provide the
creditor with a signed, dated waiver statement that a personal
financial emergency exists.
DATES: This order is effective as of February 11, 1994, and expires in
the areas of California affected by the earthquake on October 31, 1994.
FOR FURTHER INFORMATION CONTACT: Jane Jensen Gell, Staff Attorney, or
Adrienne Hurt, Managing Counsel (202/452-2412), Division of Consumer
and Community Affairs, Board of Governors of the Federal Reserve
System. For the hearing impaired only, Telecommunications Device for
the Deaf (TDD), Dorothea Thompson (202/452-3544), Board of Governors of
the Federal Reserve System, 20th and C Streets, NW., Washington, DC
20551.
SUPPLEMENTARY INFORMATION: On January 17, 1994, an earthquake
devastated areas in California. The President declared the affected
communities major disaster areas. To facilitate recovery from major
disasters, the Depository Institutions Disaster Relief Act of 1993
(DIDRA), Pub. L. 103-76, 107 Stat. 752 (1993), was enacted into law on
August 12, 1993. Section 2 of DIDRA authorizes the Board, until
February 12, 1994, to take immediate action to make temporary
exceptions to the Truth in Lending Act (TILA) and Regulation Z for
transactions in an area the President has declared to be a major
disaster area, pursuant to section 401 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5170.
Under the TILA and Regulation Z, with some exceptions, a consumer
has the right to cancel a credit obligation that is secured by the
consumer's principal dwelling. Because of the risk of loss of the
consumer's home in the event of default, there is a mandatory waiting
period for three days before funds can be disbursed in order to give
consumers an opportunity to reflect on the loan terms and to elect to
cancel the transaction.
A consumer may modify or waive this right of rescission to meet a
bona fide personal financial emergency. Regulation Z, 12 CFR 226.15(e)
and 23(e), require that the consumer must provide the creditor a
written, signed and dated waiver statement that describes the
emergency. The wavier statement may not be executed on a preprinted
form.
Based on the Board's experience in monitoring compliance with
Regulation Z, the Board has determined that the three-day waiting
period that provides a consumer the opportunity to rescind a loan, and
the restriction on the use of a preprinted form to execute a waiver of
the right of rescission, may disadvantage borrowers in the major
disaster areas who are in immediate need of the loan proceeds.
Therefore, the Board believes that granting relief in these situations
can reasonably be expected to produce benefits to the public that
outweigh possible adverse effects.\1\
---------------------------------------------------------------------------
\1\Similar action has been taken by the Board in connection with
areas declared major disaster areas as a result of floods in the
Midwest (58 FR 40582 (1993)), hurricanes in Florida, Louisiana and
Hawaii and civil unrest in California (57 FR 53545 (1992)).
---------------------------------------------------------------------------
Accordingly, pursuant to its authority under section 2 of DIDRA,
provided that the dwelling securing the extension of credit is located
in an area of California that was declared a major disaster by the
President under section 401 of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act, 42 U.S.C. 5170, as a result of the
January 17, 1994 earthquake in California,\2\ the Board hereby:
---------------------------------------------------------------------------
\2\Such areas now include Los Angeles, Orange, and Ventura
counties.
---------------------------------------------------------------------------
(1) Determines that a consumer's need to obtain funds immediately
shall be regarded as a bona fide personal financial emergency for
purposes of Secs. 226.15(e) and 226. 23(e) of Regulation Z; and
(2) Grants relief from Secs. 226.15(e) and 226.23(e) of Regulation
Z to permit the use of preprinted forms for consumers to waive the
right of rescission. The Board notes that consumers must still provide
creditors with signed, dated waiver statements in these transactions.
The relief from Regulation Z provided in this Order shall expire on
October 31, 1994
By order of the Board of Governors of the Federal Reserve
System, dated February 7, 1994.
William W. Wiles,
Secretary of the Board.
[FR Doc. 94-3249 Filed 2-10-94; 8:45 am]
BILLING CODE 6210-01-F