(a)(1) Applicability. This part applies to consumer credit extended by a creditor to a covered borrower,
as those terms are defined in this part. Nothing in this part applies to a credit transaction or account relating to a consumer
who is not a covered borrower at the time he or she becomes obligated on a credit
transaction or establishes an account for credit. Nothing in this part applies to a credit transaction or account relating to a consumer
(which otherwise would be consumer credit) when the consumer no longer is a covered
(i) Covered borrower. Consumer A is a member of the armed forces but not serving on active duty, and holds
an account for closed-end credit with a financial institution. After establishing the closed-end credit account, Consumer A is ordered to serve
on active duty, thereby becoming a covered borrower, and soon thereafter separately
establishes an open-end line of credit for personal purposes (which is not subject
to any exception or temporary exemption) with the financial institution. This part applies to the open-end line of credit, but not to the closed-end credit
(ii) Not a covered borrower. Same facts as described in paragraph (a)(2)(i) of this section. One year after establishing the open-end line of credit, Consumer A ceases to serve
on active duty. This part never did apply to the closed-end credit account, and because Consumer
A no longer is a covered borrower, this part no longer applies to the open-end line
(b) Examples. The examples in this part are not exclusive. To the extent that an example in this part implicates a term or provision of Regulation
Z (12 CFR part 1026), issued by the Consumer Financial Protection Bureau to implement the Truth in Lending
Act, Regulation Z shall control the meaning of that term or provision.
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