Court Opinion

ID: 5597686
Source: CourtListenerOpinion
Date Created: 2022-01-11 02:45:24.580223+00
Date Added: 2024-06-11T08:36:38.910903
License: Public Domain

Addendum On Motion for Rehearing.
The appellees in this case have filed a motion for rehearing, arguing that although it may be true that § 226.8 (b) (4) of Regulation Z requires the disclosure of acceleration rebate practices only when acceleration rebates are less than voluntary prepayment rebates, § 226.8 (b)(7) of Regulation Z requires a disclosure of acceleration rebate practices whenever acceleration rebates differ from voluntary prepayment rebates.
In our opinion, the Federal Reserve Board has sent out conflicting signals as to whether § 226.8 (b)(7) requires a disclosure of acceleration rebate practices as well as voluntary prepayment rebate methods. “[W]here acceleration rebates are less than voluntary prepayment rebates, acceleration policy must be separately explained under § 226.8 (b)(4) and, perhaps as well, under § 226.8 (b)(7).” Ford Motor Credit Co. v. Milhollin, supra, 444 U. S. at pp. 563, 564, n. 8. (Emphasis supplied.)
In determining whether there must be a separate disclosure of the fact that; acceleration rebates are actually greater than voluntary prepayment rebates, it is instructive to look to the “broad purpose” of the TILA, which is “promoting ‘the informed use of credit’ by assuring ‘meaningful disclosure of credit terms’ to consumers.” Ford Motor Credit Co. v. Milhollin, supra, 444 U. S. at p. 559. A disclosure of the method of rebating unearned interest on voluntary prepayment promotes the informed use of credit, because a person might reasonably use such information in determining whether it is economically advantageous to prepay a loan. A disclosure of the fact that acceleration rebates are less than voluntary prepayment rebates also promotes the informed use of credit, because it informs of a penalty for default. However, it cannot be said that a disclosure of the fact that acceleration rebates are actually greater than voluntary prepayment rebates promotes the informed use of credit, because it is entirely unrealistic to presume that a person would use such *110information as a basis for determining whether to allow a loan agreement to go into default.
Therefore, we hold that by making a disclosure of the existence of the acceleration clause, the appellant has complied with the TILA and Regulation Z as interpreted in the Milhollin decision. We decline to find a violation of Regulation Z arising from the fact that there was no separate disclosure that acceleration rebates are actually greater than voluntary prepayment rebates in Georgia.