Estimating Practices
Labeling of estimates
Estimates must be designated as such in the segregated disclosures. Even though
other disclosures are based on the same assumption on which a specific estimated
disclosure was based, the creditor has some flexibility in labelling the estimates.
Generally, only the particular disclosure for which the exact information
is unknown is labelled as an estimate. However, when several disclosures are
affected because of the unknown information, the creditor has the option of labelling
either every effective disclosure or only the disclosure primarily affected. For
example, when the finance charge is unknown because the date of consummation is
unknown, the creditor must label the finance charge as an estimate and may also
label as estimates the total of payments and the payment schedule. When many
disclosures are estimates, the creditor may use a general statement, such as "all
numerical disclosures except the late payment disclosure are estimates," as
a method to label those disclosures as estimates.
Use of estimates in variable-rate transactions
The variable-rate feature does not, by itself, make the disclosures estimates.
Per diem interest
If the amount of per-diem interest used in preparing the disclosures for consummation
is based on the information known to the creditor at the time the disclosure document
is prepared, the disclosures are considered accurate under this rule, and
affected disclosures are also considered accurate, even if the disclosures are not
labeled as estimates.
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