Consumers interested in open-ended lines of credit secured by homes are adequately protected, more than 50 banks told the Federal Reserve Board recently.

Banks answering the Fed's Jan. 30 request for comments on the question did want some revisions to Regulation Z - such as reducing and simplifying its disclosure requirements.

Consumers putting their homes on the line already are inundated with information, according to the industry's letters.

"We believe that the current volume of information required to be disclosed may overwhelm the consumer to the point of confusion," the American Bankers Association wrote.

Under the 1988 Home Equity Consumer Protection Act, banks must give consumers a Fed pamphlet that explains the risk of using a home as collateral for an open-ended line of credit. They also must reveal the loan's terms and conditions at application and closing.

If a loan has a variable interest rate, lenders must disclose the loan's minimum and maximum payments, and give a 15-year history of the index used to determine the rate. In addition, banks must provide a hypothetical cost estimate based on a standard $10,000 example.

Bankers suggested combining the Fed brochure and the Reg Z disclosure into a two-page document. Bankers also derided the 15-year payment and rate example as a particularly onerous and useless piece of paperwork.

"It is very time-consuming for banks to update the early disclosure, especially the historical example," commented Janie B. Johnson, vice president and corporate compliance officer at Branch Banking & Trust Co.,Wilson, N.C.

The American Association of Retired Persons and a coalition of consumer groups insisted that current disclosures do not adequately help consumers assess the cost of an open-ended loan.

Both groups advocated changing the $10,000 loan example to one rounded to the $5,000 increment closest to the actual amount of the loan, said Margot Saunders, managing attorney at the Consumer Law Center.

The Fed is supposed to report back to Congress by September on any changes needed to the Truth-in-Lending Act.

Mr. Smith writes for the Medill News Service.

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