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October 3, 1997


To: The Chief Executive Officer
All Farm Credit System Institutions

From: Roland E. Smith, Director /s/ Thomas M.Glenn for
Office of Examination

Subject: Regulation Z (Truth in Lending) Official Staff Commentary Revisions


The Farm Credit Administration is distributing a copy of changes made to the official staff commentary to Regulation Z (12 CFR § 226 et seq.), which implements the Truth in Lending Act (15 U.S.C. § 1601 et seq.). The staff commentary interprets the regulation and provides guidance to creditors in applying the regulation to specific transactions. The commentary is updated periodically to address significant questions that have arisen.

These changes address issues arising from September 1996 revisions to Regulation Z (61 Federal Register 49237, September 19, 1996) that were distributed to Farm Credit System institutions with an informational memorandum dated January 14, 1997, entitled "Regulation Z Amendments." The staff commentary provides guidance on the treatment of certain fees paid in connection with mortgage loans. It addresses new tolerances for accuracy in disclosing the amount of the finance charge and other affected cost disclosures. It also discusses debt cancellation agreements and a creditor's duties if providing periodic statements via electronic means. Compliance with the guidance is mandatory on October 1, 1997.

The attached information should be distributed to affected personnel and retained for future reference. If you have questions regarding this or similar communications issued previously, please call Tom Holland in the Office of Examination at (703) 883-4483.

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