In the December 29, 2010 issue of the Federal Register (75 FR 81836), the Board of Governors of the Federal Reserve System (FRB) published an interim rule (Dec.-Rule) making technical revisions to its September 24, 2010 interim rule (Sept.-Rule), which implemented certain requirements of the 2008 Mortgage Disclosure Improvement Act, that required disclosure of payment examples if the loan’s interest rate or payments can change. (See our memorandum dated October 28, 2010, posted on our Web site at: The purpose of this memorandum is to (1) advise you of the FRB’s Dec.-Rule revisions to the Sept.-Rule, and (2) to amend our October 28, 2010 memorandum. In order to have a complete understanding of the Sept.-Rule and its Dec.-Rule revisions, you will need to read both memoranda. The FRB issued the Dec.-Rule to revise and clarify the Sept.-Rule, as follows: 1. clarify the requirements for “5/1 ARM” adjustable-rate loans; 2. correct the requirements for interest-only loans to clarify that the disclosures should reflect the date of the interest rate change rather than the date the first payments of principal and interest are due under the new rate; 3. revise the definition of “negative amortization loan” to clarify which loans are covered by the special disclosure requirements for such loans; 4. clarify how the Sept.-Rule applies to multiple- advance construction loans; and 5. make other technical revisions and clarifications.

Complete Memorandum