Regulation Z - Truth in Lending

Regulation Z establishes uniform methods of computing the cost of credit, disclosure of credit terms, and procedures for resolving errors on certain credit accounts. It also gives consumers the right to cancel certain transactions involving their principal residence.

The credit provisions of the regulation apply to all persons who extend consumer credit more than 25 times a year or, in the case of consumer credit secured by real estate, more than 5 times a year. Consumer credit is generally defined as credit offered or extended to individuals for personal, family, or household purposes, where the credit is repayable in more than four installments or for which a finance charge is imposed.

The major provisions of the regulation require lenders to:

• provide borrowers with meaningful, written information on essential credit terms, including the cost of credit expressed as an annual percentage rate (APR)
  
• respond to consumer complaints of billing errors on certain credit accounts within a specific period
  
• identify credit transactions on periodic statements of open-end credit accounts
  
• provide certain rights regarding credit cards
  
• provide good faith estimations of disclosure information before consummation of certain residential mortgage transactions
  
• provide "early" disclosure of credit terms to consumers interested in adjustable rate mortgages (ARMS) and home equity lines of credit
  
• comply with special requirements when advertising credit.