Format of Regulation Z
The disclosure rules creditors must follow differ depending on whether the creditor is
offering open-end credit, such as credit cards or home-equity lines, or closed-end credit,
such as car loans or mortgages.
Subpart A (sections 226.1 through 226.4) of the regulation provides general information
that applies to open-end and closed-end credit transactions. It sets forth definitions and
stipulates which transactions are covered and which are exempt from the regulation. It also
contains the rules for determining which fees are finance charges.
Subpart B (sections 226.5 through 226.16) of the regulation contains rules for disclosures
for home-equity loans, credit and charge card accounts, and other open-end credit.
Subpart B also covers rules for resolving billing errors, calculating annual percentage rates,
credit balances, and advertising open-end credit. Special rules apply to credit card
transactions only, such as certain prohibitions on the issuance of credit cards and
restrictions on the right to offset a cardholder’s indebtedness. Additional special rules apply
to home-equity lines of credit, such as certain prohibitions against closing accounts or
changing account terms.
Subpart C (sections 226.17 through 226.24) includes provisions for closed-end credit.
Residential mortgage transactions, demand loans, and installment credit contracts, including
direct loans by banks and purchased dealer paper, are included in the closed-end credit
category. Subpart C also contains disclosure rules for regular and variable rate loans,
refinancings and assumptions, credit balances, calculating annual percentage rates, and
advertising closed-end credit.
Subpart D (sections 226.25 through 226.30), which applies to both open-end and closed-end
credit, sets forth the duty of creditors to retain evidence of compliance with the regulation.
It also clarifies the relationship between the regulation and state law, and requires creditors
to set a cap for variable rate transactions secured by a consumer’s dwelling.
Subpart E (sections 226.31 through 226.34) applies to certain home mortgage transactions
including high-cost, closed-end mortgages and reverse mortgages. It requires additional
disclosures and provides limitations for certain home mortgage transactions having rates or
2 72 FR 63462, November 9, 2007. These amendments took effect December 10, 2007, with a mandatory compliance
date of October 1, 2008. Further technical amendments were issued December 14, 2007, with a January 14, 2008
effective date and an October 1, 2008 mandatory compliance date: 72 FR 71058.
fees above a certain percentage or amount, and prohibits specific acts and practices in
connection with those loans. Subpart E also includes disclosure requirements for reverse
mortgage transactions (open-end and closed-end credit).
The appendices to the regulation set forth model forms and clauses that creditors may use
when providing open-end and closed-end disclosures. The appendices contain detailed rules
for calculating the APR for open-end credit (appendix F) and closed-end credit (appendixes
D and J). The last two appendixes (appendixes K and L) provide total annual loan cost rate
computations and assumed loan periods for reverse mortgage transactions.
Official staff interpretations of the regulation are published in a commentary that is
normally updated annually in March. Good faith compliance with the commentary protects
creditors from civil liability under the act. In addition, the commentary includes mandates,
which are not necessarily explicit in Regulation Z, on disclosures or other actions required
of creditors. It is virtually impossible to comply with Regulation Z without reference to and
reliance on the commentary.