Collapse to view only § 1645. Business credit cards; limits on liability of employees
- § 1631. Disclosure requirements
- § 1632. Form of disclosure; additional information
- § 1633. Exemption for State-regulated transactions
- § 1634. Effect of subsequent occurrence
- § 1635. Right of rescission as to certain transactions
- § 1636. Repealed.
- § 1637. Open end consumer credit plans
- § 1637a. Disclosure requirements for open end consumer credit plans secured by consumer’s principal dwelling
- § 1638. Transactions other than under an open end credit plan
- § 1638a. Reset of hybrid adjustable rate mortgages
- § 1639. Requirements for certain mortgages
- § 1639a. Duty of servicers of residential mortgages
- § 1639b. Residential mortgage loan origination
- § 1639c. Minimum standards for residential mortgage loans
- § 1639d. Escrow or impound accounts relating to certain consumer credit transactions
- § 1639e. Appraisal independence requirements
- § 1639f. Requirements for prompt crediting of home loan payments
- § 1639g. Requests for payoff amounts of home loan
- § 1639h. Property appraisal requirements
- § 1640. Civil liability
- § 1641. Liability of assignees
- § 1642. Issuance of credit cards
- § 1643. Liability of holder of credit card
- § 1644. Fraudulent use of credit cards; penalties
- § 1645. Business credit cards; limits on liability of employees
- § 1646. Dissemination of annual percentage rates; implementation, etc.
- § 1647. Home equity plans
- § 1648. Reverse mortgages
- § 1649. Certain limitations on liability
- § 1650. Preventing unfair and deceptive private educational lending practices and eliminating conflicts of interest
- § 1651. Procedure for timely settlement of estates of decedent obligors
§ 1631. Disclosure requirements
(a) Duty of creditor or lessor respecting one or more than one obligor
(b) Creditor or lessor required to make disclosure
(c) Estimates as satisfying statutory requirements; basis of disclosure for per diem interest
(d) Tolerances for numerical disclosures
(Pub. L. 90–321, title I, § 121, May 29, 1968, 82 Stat. 152; Pub. L. 93–495, title III, § 307(c), (d), title IV, § 409, Oct. 28, 1974, 88 Stat. 1516, 1519; Pub. L. 94–205, § 11, Jan. 2, 1976, 89 Stat. 1159; Pub. L. 96–221, title VI, § 611, Mar. 31, 1980, 94 Stat. 174; Pub. L. 104–29, § 3(b), Sept. 30, 1995, 109 Stat. 273; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
§ 1632. Form of disclosure; additional information
(a) Information clearly and conspicuously disclosed; “annual percentage rate” and “finance charge”; order of disclosures and use of different terminology
(b) Optional information by creditor or lessor
(c) Tabular format required for certain disclosures under section 1637(c)
(1) In general
The information described in paragraphs (1)(A), (3)(B)(i)(I), (4)(A), and (4)(C)(i)(I) of section 1637(c) of this title shall be—
(A) disclosed in the form and manner which the Bureau shall prescribe by regulations; and
(B) placed in a conspicuous and prominent location on or with any written application, solicitation, or other document or paper with respect to which such disclosure is required.
(2) Tabular format
(A) Form of table to be prescribed
In the regulations prescribed under paragraph (1)(A) of this subsection, the Bureau shall require that the disclosure of such information shall, to the extent the Bureau determines to be practicable and appropriate, be in the form of a table which—
(i) contains clear and concise headings for each item of such information; and
(ii) provides a clear and concise form for stating each item of information required to be disclosed under each such span.
(B) Bureau discretion in prescribing order and wording of table
In prescribing the form of the table under subparagraph (A), the Bureau may—
(i) list the items required to be included in the table in a different order than the order in which such items are set forth in paragraph (1)(A) or (4)(A) of section 1637(c) of this title; and
(ii) subject to subparagraph (C), employ terminology which is different than the terminology which is employed in section 1637(c) of this title if such terminology conveys substantially the same meaning.
(C) Grace period
(d) Additional electronic disclosures
(1) Posting agreements
(2) Creditor to provide contracts to the Bureau
(3) Record repository
(4) Exception
(5) Regulations
(Pub. L. 90–321, title I, § 122, May 29, 1968, 82 Stat. 152; Pub. L. 93–495, title III, § 307(e), (f), Oct. 28, 1974, 88 Stat. 1516, 1517; Pub. L. 96–221, title VI, § 611, Mar. 31, 1980, 94 Stat. 175; Pub. L. 100–583, § 2(b), Nov. 3, 1988, 102 Stat. 2966; Pub. L. 100–709, § 2(d), Nov. 23, 1988, 102 Stat. 4731; Pub. L. 111–24, title II, § 204, May 22, 2009, 123 Stat. 1746; Pub. L. 111–203, title X, § 1100A(2), (3), July 21, 2010, 124 Stat. 2107.)
§ 1633. Exemption for State-regulated transactions
The Bureau shall by regulation exempt from the requirements of this part any class of credit transactions within any State if it determines that under the law of that State that class of transactions is subject to requirements substantially similar to those imposed under this part, and that there is adequate provision for enforcement.
(Pub. L. 90–321, title I, § 123, May 29, 1968, 82 Stat. 152; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
§ 1634. Effect of subsequent occurrence
If information disclosed in accordance with this part is subsequently rendered inaccurate as the result of any act, occurrence, or agreement subsequent to the delivery of the required disclosures, the inaccuracy resulting therefrom does not constitute a violation of this part.
(Pub. L. 90–321, title I, § 124, May 29, 1968, 82 Stat. 152.)
§ 1635. Right of rescission as to certain transactions
(a) Disclosure of obligor’s right to rescind
(b) Return of money or property following rescission
(c) Rebuttable presumption of delivery of required disclosures
(d) Modification and waiver of rights
(e) Exempted transactions; reapplication of provisions
This section does not apply to—
(1) a residential mortgage transaction as defined in section 1602(w) 1
1 See References in Text note below.
of this title;(2) a transaction which constitutes a refinancing or consolidation (with no new advances) of the principal balance then due and any accrued and unpaid finance charges of an existing extension of credit by the same creditor secured by an interest in the same property;
(3) a transaction in which an agency of a State is the creditor; or
(4) advances under a preexisting open end credit plan if a security interest has already been retained or acquired and such advances are in accordance with a previously established credit limit for such plan.
(f) Time limit for exercise of right
(g) Additional relief
(h) Limitation on rescission
(i) Rescission rights in foreclosure
(1) In general
Notwithstanding section 1649 of this title, and subject to the time period provided in subsection (f), in addition to any other right of rescission available under this section for a transaction, after the initiation of any judicial or nonjudicial foreclosure process on the primary dwelling of an obligor securing an extension of credit, the obligor shall have a right to rescind the transaction equivalent to other rescission rights provided by this section, if—
(A) a mortgage broker fee is not included in the finance charge in accordance with the laws and regulations in effect at the time the consumer credit transaction was consummated; or
(B) the form of notice of rescission for the transaction is not the appropriate form of written notice published and adopted by the Bureau or a comparable written notice, and otherwise complied with all the requirements of this section regarding notice.
(2) Tolerance for disclosures
(3) Right of recoupment under State law
(4) Applicability
(Pub. L. 90–321, title I, § 125, May 29, 1968, 82 Stat. 153; Pub. L. 93–495, title IV, §§ 404, 405, 412, Oct. 28, 1974, 88 Stat. 1517, 1519; Pub. L. 96–221, title VI, § 612(a)(1), (3)–(6), Mar. 31, 1980, 94 Stat. 175, 176; Pub. L. 98–479, title II, § 205, Oct. 17, 1984, 98 Stat. 2234; Pub. L. 104–29, §§ 5, 8, Sept. 30, 1995, 109 Stat. 274, 275; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
§ 1636. Repealed. Pub. L. 96–221, title VI, § 614(e)(1), Mar. 31, 1980, 94 Stat. 180
§ 1637. Open end consumer credit plans
(a) Required disclosures by creditorBefore opening any account under an open end consumer credit plan, the creditor shall disclose to the person to whom credit is to be extended each of the following items, to the extent applicable:
(1) The conditions under which a finance charge may be imposed, including the time period (if any) within which any credit extended may be repaid without incurring a finance charge, except that the creditor may, at his election and without disclosure, impose no such finance charge if payment is received after the termination of such time period. If no such time period is provided, the creditor shall disclose such fact.
(2) The method of determining the balance upon which a finance charge will be imposed.
(3) The method of determining the amount of the finance charge, including any minimum or fixed amount imposed as a finance charge.
(4) Where one or more periodic rates may be used to compute the finance charge, each such rate, the range of balances to which it is applicable, and the corresponding nominal annual percentage rate determined by multiplying the periodic rate by the number of periods in a year.
(5) Identification of other charges which may be imposed as part of the plan, and their method of computation, in accordance with regulations of the Bureau.
(6) In cases where the credit is or will be secured, a statement that a security interest has been or will be taken in (A) the property purchased as part of the credit transaction, or (B) property not purchased as part of the credit transaction identified by item or type.
(7) A statement, in a form prescribed by regulations of the Bureau of the protection provided by sections 1666 and 1666i of this title to an obligor and the creditor’s responsibilities under sections 1666a and 1666i of this title. With respect to one billing cycle per calendar year, at intervals of not less than six months or more than eighteen months, the creditor shall transmit such statement to each obligor to whom the creditor is required to transmit a statement pursuant to subsection (b) for such billing cycle.
(8) In the case of any account under an open end consumer credit plan which provides for any extension of credit which is secured by the consumer’s principal dwelling, any information which—
(A) is required to be disclosed under section 1637a(a) of this title; and
(B) the Bureau determines is not described in any other paragraph of this subsection.
(b) Statement required with each billing cycleThe creditor of any account under an open end consumer credit plan shall transmit to the obligor, for each billing cycle at the end of which there is an outstanding balance in that account or with respect to which a finance charge is imposed, a statement setting forth each of the following items to the extent applicable:
(1) The outstanding balance in the account at the beginning of the statement period.
(2) The amount and date of each extension of credit during the period, and a brief identification, on or accompanying the statement of each extension of credit in a form prescribed by the Bureau sufficient to enable the obligor either to identify the transaction or to relate it to copies of sales vouchers or similar instruments previously furnished, except that a creditor’s failure to disclose such information in accordance with this paragraph shall not be deemed a failure to comply with this part or this subchapter if (A) the creditor maintains procedures reasonably adapted to procure and provide such information, and (B) the creditor responds to and treats any inquiry for clarification or documentation as a billing error and an erroneously billed amount under section 1666 of this title. In lieu of complying with the requirements of the previous sentence, in the case of any transaction in which the creditor and seller are the same person, as defined by the Bureau, and such person’s open end credit plan has fewer than 15,000 accounts, the creditor may elect to provide only the amount and date of each extension of credit during the period and the seller’s name and location where the transaction took place if (A) a brief identification of the transaction has been previously furnished, and (B) the creditor responds to and treats any inquiry for clarification or documentation as a billing error and an erroneously billed amount under section 1666 of this title.
(3) The total amount credited to the account during the period.
(4) The amount of any finance charge added to the account during the period, itemized to show the amounts, if any, due to the application of percentage rates and the amount, if any, imposed as a minimum or fixed charge.
(5) Where one or more periodic rates may be used to compute the finance charge, each such rate, the range of balances to which it is applicable, and, unless the annual percentage rate (determined under section 1606(a)(2) of this title) is required to be disclosed pursuant to paragraph (6), the corresponding nominal annual percentage rate determined by multiplying the periodic rate by the number of periods in a year.
(6) Where the total finance charge exceeds 50 cents for a monthly or longer billing cycle, or the pro rata part of 50 cents for a billing cycle shorter than monthly, the total finance charge expressed as an annual percentage rate (determined under section 1606(a)(2) of this title), except that if the finance charge is the sum of two or more products of a rate times a portion of the balance, the creditor may, in lieu of disclosing a single rate for the total charge, disclose each such rate expressed as an annual percentage rate, and the part of the balance to which it is applicable.
(7) The balance on which the finance charge was computed and a statement of how the balance was determined. If the balance is determined without first deducting all credits during the period, that fact and the amount of such payments shall also be disclosed.
(8) The outstanding balance in the account at the end of the period.
(9) The date by which or the period (if any) within which, payment must be made to avoid additional finance charges, except that the creditor may, at his election and without disclosure, impose no such additional finance charge if payment is received after such date or the termination of such period.
(10) The address to be used by the creditor for the purpose of receiving billing inquiries from the obligor.
(11)
(A) A written statement in the following form: “Minimum Payment Warning: Making only the minimum payment will increase the amount of interest you pay and the time it takes to repay your balance.”, or such similar statement as is established by the Bureau pursuant to consumer testing.
(B) Repayment information that would apply to the outstanding balance of the consumer under the credit plan, including—
(i) the number of months (rounded to the nearest month) that it would take to pay the entire amount of that balance, if the consumer pays only the required minimum monthly payments and if no further advances are made;
(ii) the total cost to the consumer, including interest and principal payments, of paying that balance in full, if the consumer pays only the required minimum monthly payments and if no further advances are made;
(iii) the monthly payment amount that would be required for the consumer to eliminate the outstanding balance in 36 months, if no further advances are made, and the total cost to the consumer, including interest and principal payments, of paying that balance in full if the consumer pays the balance over 36 months; and
(iv) a toll-free telephone number at which the consumer may receive information about accessing credit counseling and debt management services.
(C)
(i) Subject to clause (ii), in making the disclosures under subparagraph (B), the creditor shall apply the interest rate or rates in effect on the date on which the disclosure is made until the date on which the balance would be paid in full.
(ii) If the interest rate in effect on the date on which the disclosure is made is a temporary rate that will change under a contractual provision applying an index or formula for subsequent interest rate adjustment, the creditor shall apply the interest rate in effect on the date on which the disclosure is made for as long as that interest rate will apply under that contractual provision, and then apply an interest rate based on the index or formula in effect on the applicable billing date.
(D) All of the information described in subparagraph (B) shall—
(i) be disclosed in the form and manner which the Bureau shall prescribe, by regulation, and in a manner that avoids duplication; and
(ii) be placed in a conspicuous and prominent location on the billing statement.
(E) In the regulations prescribed under subparagraph (D), the Bureau shall require that the disclosure of such information shall be in the form of a table that—
(i) contains clear and concise headings for each item of such information; and
(ii) provides a clear and concise form stating each item of information required to be disclosed under each such span.
(F) In prescribing the form of the table under subparagraph (E), the Bureau shall require that—
(i) all of the information in the table, and not just a reference to the table, be placed on the billing statement, as required by this paragraph; and
(ii) the items required to be included in the table shall be listed in the order in which such items are set forth in subparagraph (B).
(G) In prescribing the form of the table under subparagraph (D), the Bureau shall employ terminology which is different than the terminology which is employed in subparagraph (B), if such terminology is more easily understood and conveys substantially the same meaning.
(12)Requirements relating to late payment deadlines and penalties.—
(A)Late payment deadline required to be disclosed.—In the case of a credit card account under an open end consumer credit plan under which a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment, the periodic statement required under subsection (b) with respect to the account shall include, in a conspicuous location on the billing statement, the date on which the payment is due or, if different, the date on which a late payment fee will be charged, together with the amount of the fee or charge to be imposed if payment is made after that date.
(B)Disclosure of increase in interest rates for late payments.—If 1 or more late payments under an open end consumer credit plan may result in an increase in the annual percentage rate applicable to the account, the statement required under subsection (b) with respect to the account shall include conspicuous notice of such fact, together with the applicable penalty annual percentage rate, in close proximity to the disclosure required under subparagraph (A) of the date on which payment is due under the terms of the account.
(C)Payments at local branches.—If the creditor, in the case of a credit card account referred to in subparagraph (A), is a financial institution which maintains branches or offices at which payments on any such account are accepted from the obligor in person, the date on which the obligor makes a payment on the account at such branch or office shall be considered to be the date on which the payment is made for purposes of determining whether a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment.
(c) Disclosure in credit and charge card applications and solicitations
(1) Direct mail applications and solicitations
(A) Information in tabular formatAny application to open a credit card account for any person under an open end consumer credit plan, or a solicitation to open such an account without requiring an application, that is mailed to consumers shall disclose the following information, subject to subsection (e) and section 1632(c) of this title:
(i) Annual percentage rates(I) Each annual percentage rate applicable to extensions of credit under such credit plan.(II) Where an extension of credit is subject to a variable rate, the fact that the rate is variable, the annual percentage rate in effect at the time of the mailing, and how the rate is determined.(III) Where more than one rate applies, the range of balances to which each rate applies.
(ii) Annual and other fees(I) Any annual fee, other periodic fee, or membership fee imposed for the issuance or availability of a credit card, including any account maintenance fee or other charge imposed based on activity or inactivity for the account during the billing cycle.(II) Any minimum finance charge imposed for each period during which any extension of credit which is subject to a finance charge is outstanding.(III) Any transaction charge imposed in connection with use of the card to purchase goods or services.
(iii) Grace period(I) The date by which or the period within which any credit extended under such credit plan for purchases of goods or services must be repaid to avoid incurring a finance charge, and, if no such period is offered, such fact shall be clearly stated.(II) If the length of such “grace period” varies, the card issuer may disclose the range of days in the grace period, the minimum number of days in the grace period, or the average number of days in the grace period, if the disclosure is identified as such.
(iv) Balance calculation method(I) The name of the balance calculation method used in determining the balance on which the finance charge is computed if the method used has been defined by the Bureau, or a detailed explanation of the balance calculation method used if the method has not been so defined.(II) In prescribing regulations to carry out this clause, the Bureau shall define and name not more than the 5 balance calculation methods determined by the Bureau to be the most commonly used methods.
(B) Other informationIn addition to the information required to be disclosed under subparagraph (A), each application or solicitation to which such subparagraph applies shall disclose clearly and conspicuously the following information, subject to subsections (e) and (f):
(i) Cash advance fee
(ii) Late fee
(iii) Over-the-limit fee
(2) Telephone solicitations
(A) In general
(B) ExceptionSubparagraph (A) shall not apply to any telephone solicitation if—
(i) the credit card issuer—(I) does not impose any fee described in paragraph (1)(A)(ii)(I); or(II) does not impose any fee in connection with telephone solicitations unless the consumer signifies acceptance by using the card;
(ii) the card issuer discloses clearly and conspicuously in writing the information described in paragraph (1) within 30 days after the consumer requests the card, but in no event later than the date of delivery of the card; and
(iii) the card issuer discloses clearly and conspicuously that the consumer is not obligated to accept the card or account and the consumer will not be obligated to pay any of the fees or charges disclosed unless the consumer elects to accept the card or account by using the card.
(3) Applications and solicitations by other means
(A) In general
(B) Specific informationAn application or solicitation described in subparagraph (A) meets the requirement of this subparagraph if such application or solicitation contains—
(i) the information—(I) described in paragraph (1)(A) in the form required under section 1632(c) of this title, subject to subsection (e), and(II) described in paragraph (1)(B) in a clear and conspicuous form, subject to subsections (e) and (f);
(ii) a statement, in a conspicuous and prominent location on the application or solicitation, that—(I) the information is accurate as of the date the application or solicitation was printed;(II) the information contained in the application or solicitation is subject to change after such date; and(III) the applicant should contact the creditor for information on any change in the information contained in the application or solicitation since it was printed;
(iii) a clear and conspicuous disclosure of the date the application or solicitation was printed; and
(iv) a disclosure, in a conspicuous and prominent location on the application or solicitation, of a toll free telephone number or a mailing address at which the applicant may contact the creditor to obtain any change in the information provided in the application or solicitation since it was printed.
(C) General information without any specific termAn application or solicitation described in subparagraph (A) meets the requirement of this subparagraph if such application or solicitation—
(i) contains a statement, in a conspicuous and prominent location on the application or solicitation, that—(I) there are costs associated with the use of credit cards; and(II) the applicant may contact the creditor to request disclosure of specific information of such costs by calling a toll free telephone number or by writing to an address, specified in the application;
(ii) contains a disclosure, in a conspicuous and prominent location on the application or solicitation, of a toll free telephone number and a mailing address at which the applicant may contact the creditor to obtain such information; and
(iii) does not contain any of the items described in paragraph (1).
(D) Applications or solicitations containing subsection (a) disclosuresAn application or solicitation meets the requirement of this subparagraph if it contains, or is accompanied by—
(i) the disclosures required by paragraphs (1) through (6) of subsection (a);
(ii) the disclosures required by subparagraphs (A) and (B) of paragraph (1) of this subsection included clearly and conspiciously 1
1 So in original. Probably should be “conspicuously”.
(except that the provisions of section 1632(c) of this title shall not apply); and(iii) a toll free telephone number or a mailing address at which the applicant may contact the creditor to obtain any change in the information provided.
(E) Prompt response to information requests
(4) Charge card applications and solicitations
(A) In generalAny application or solicitation to open a charge card account shall disclose clearly and conspicuously the following information in the form required by section 1632(c) of this title, subject to subsection (e):
(i) Any annual fee, other periodic fee, or membership fee imposed for the issuance or availability of the charge card, including any account maintenance fee or other charge imposed based on activity or inactivity for the account during the billing cycle.
(ii) Any transaction charge imposed in connection with use of the card to purchase goods or services.
(iii) A statement that charges incurred by use of the charge card are due and payable upon receipt of a periodic statement rendered for such charge card account.
(B) Other informationIn addition to the information required to be disclosed under subparagraph (A), each written application or solicitation to which such subparagraph applies shall disclose clearly and conspicuously the following information, subject to subsections (e) and (f):
(i) Cash advance fee
(ii) Late fee
(iii) Over-the-limit fee
(C) Applications and solicitations by other meansAny application to open a charge card account, and any solicitation to open such an account without requiring an application, that is made available to the public or contained in catalogs, magazines, or other publications shall contain—
(i) the information—(I) described in subparagraph (A) in the form required under section 1632(c) of this title, subject to subsection (e), and(II) described in subparagraph (B) in a clear and conspicuous form, subject to subsections (e) and (f);
(ii) a statement, in a conspicuous and prominent location on the application or solicitation, that—(I) the information is accurate as of the date the application or solicitation was printed;(II) the information contained in the application or solicitation is subject to change after such date; and(III) the applicant should contact the creditor for information on any change in the information contained in the application or solicitation since it was printed;
(iii) a clear and conspicuous disclosure of the date the application or solicitation was printed; and
(iv) a disclosure, in a conspicuous and prominent location on the application or solicitation, of a toll free telephone number or a mailing address at which the applicant may contact the creditor to obtain any change in the information provided in the application or solicitation since it was printed.
(D) Issuers of charge cards which provide access to open end consumer credit plansIf a charge card permits the card holder to receive an extension of credit under an open end consumer credit plan, which is not maintained by the charge card issuer, the charge card issuer may provide the information described in subparagraphs (A) and (B) in the form required by such subparagraphs in lieu of the information required to be provided under paragraph (1), (2), or (3) with respect to any credit extended under such plan, if the charge card issuer discloses clearly and conspicuously to the consumer in the application or solicitation that—
(i) the charge card issuer will make an independent decision as to whether to issue the card;
(ii) the charge card may arrive before the decision is made with respect to an extension of credit under an open end consumer credit plan; and
(iii) approval by the charge card issuer does not constitute approval by the issuer of the extension of credit.
The information required to be disclosed under paragraph (1) shall be provided to the charge card holder by the creditor which maintains such open end consumer credit plan before the first extension of credit under such plan.
(E) Charge card defined
(5) Regulatory authority of the Bureau
(6) Additional notice concerning “introductory rates”
(A) In generalExcept as provided in subparagraph (B), an application or solicitation to open a credit card account and all promotional materials accompanying such application or solicitation for which a disclosure is required under paragraph (1), and that offers a temporary annual percentage rate of interest, shall—
(i) use the term “introductory” in immediate proximity to each listing of the temporary annual percentage rate applicable to such account, which term shall appear clearly and conspicuously;
(ii) if the annual percentage rate of interest that will apply after the end of the temporary rate period will be a fixed rate, state in a clear and conspicuous manner in a prominent location closely proximate to the first listing of the temporary annual percentage rate (other than a listing of the temporary annual percentage rate in the tabular format described in section 1632(c) of this title), the time period in which the introductory period will end and the annual percentage rate that will apply after the end of the introductory period; and
(iii) if the annual percentage rate that will apply after the end of the temporary rate period will vary in accordance with an index, state in a clear and conspicuous manner in a prominent location closely proximate to the first listing of the temporary annual percentage rate (other than a listing in the tabular format prescribed by section 1632(c) of this title), the time period in which the introductory period will end and the rate that will apply after that, based on an annual percentage rate that was in effect within 60 days before the date of mailing the application or solicitation.
(B) Exception
(C) Conditions for introductory ratesAn application or solicitation to open a credit card account for which a disclosure is required under paragraph (1), and that offers a temporary annual percentage rate of interest shall, if that rate of interest is revocable under any circumstance or upon any event, clearly and conspicuously disclose, in a prominent manner on or with such application or solicitation—
(i) a general description of the circumstances that may result in the revocation of the temporary annual percentage rate; and
(ii) if the annual percentage rate that will apply upon the revocation of the temporary annual percentage rate—(I) will be a fixed rate, the annual percentage rate that will apply upon the revocation of the temporary annual percentage rate; or(II) will vary in accordance with an index, the rate that will apply after the temporary rate, based on an annual percentage rate that was in effect within 60 days before the date of mailing the application or solicitation.
(D) DefinitionsIn this paragraph—
(i) the terms “temporary annual percentage rate of interest” and “temporary annual percentage rate” mean any rate of interest applicable to a credit card account for an introductory period of less than 1 year, if that rate is less than an annual percentage rate that was in effect within 60 days before the date of mailing the application or solicitation; and
(ii) the term “introductory period” means the maximum time period for which the temporary annual percentage rate may be applicable.
(E) Relation to other disclosure requirements
(7) Internet-based solicitations
(A) In generalIn any solicitation to open a credit card account for any person under an open end consumer credit plan using the Internet or other interactive computer service, the person making the solicitation shall clearly and conspicuously disclose—
(i) the information described in subparagraphs (A) and (B) of paragraph (1); and
(ii) the information described in paragraph (6).
(B) Form of disclosureThe disclosures required by subparagraph (A) shall be—
(i) readily accessible to consumers in close proximity to the solicitation to open a credit card account; and
(ii) updated regularly to reflect the current policies, terms, and fee amounts applicable to the credit card account.
(C) DefinitionsFor purposes of this paragraph—
(i) the term “Internet” means the international computer network of both Federal and non-Federal interoperable packet switched data networks; and
(ii) the term “interactive computer service” means any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.
(8) Applications from underage consumers
(A) Prohibition on issuance
(B) Application requirementsAn application to open a credit card account by a consumer who has not attained the age of 21 as of the date of submission of the application shall require—
(i) the signature of a cosigner, including the parent, legal guardian, spouse, or any other individual who has attained the age of 21 having a means to repay debts incurred by the consumer in connection with the account, indicating joint liability for debts incurred by the consumer in connection with the account before the consumer has attained the age of 21; or
(ii) submission by the consumer of financial information, including through an application, indicating an independent means of repaying any obligation arising from the proposed extension of credit in connection with the account.
(C) Safe harbor
(d) Disclosure prior to renewal
(1) In generalA card issuer that has changed or amended any term of the account since the last renewal that has not been previously disclosed or that imposes any fee described in subsection (c)(1)(A)(ii)(I) or (c)(4)(A)(i) shall transmit to a consumer at least 30 days prior to the scheduled renewal date of the consumer’s credit or charge card account a clear and conspicuous disclosure of—
(A) the date by which, the month by which, or the billing period at the close of which, the account will expire if not renewed;
(B) the information described in subsection (c)(1)(A) or (c)(4)(A) that would apply if the account were renewed, subject to subsection (e); and
(C) the method by which the consumer may terminate continued credit availability under the account.
(2) Short-term renewals
(e) Other rules for disclosures under subsections (c) and (d)
(1) Fees determined on the basis of a percentage
(2) Disclosure only of fees actually imposed
(f) Disclosure of range of certain fees which vary by State allowed
(g) Insurance in connection with certain open end credit card plans
(1) Change in insurance carrier
(2) Notice of new insurance coverage
(3) Right to discontinue guarantee or insurance
(4) No preemption of State law
(5) Bureau definition of substantial decrease in coverage or service
(h) Prohibition on certain actions for failure to incur finance charges
(i) Advance notice of rate increase and other changes required
(1) Advance notice of increase in interest rate required
(2) Advance notice of other significant changes required
(3) Notice of right to cancel
(4) Rule of construction
(j) Prohibition on penalties for on-time payments
(1) Prohibition on double-cycle billing and penalties for on-time paymentsExcept as provided in paragraph (2), a creditor may not impose any finance charge on a credit card account under an open end consumer credit plan as a result of the loss of any time period provided by the creditor within which the obligor may repay any portion of the credit extended without incurring a finance charge, with respect to—
(A) any balances for days in billing cycles that precede the most recent billing cycle; or
(B) any balances or portions thereof in the current billing cycle that were repaid within such time period.
(2) ExceptionsParagraph (1) does not apply to—
(A) any adjustment to a finance charge as a result of the resolution of a dispute; or
(B) any adjustment to a finance charge as a result of the return of a payment for insufficient funds.
(k) Opt-in required for over-the-limit transactions if fees are imposed
(1) In general
(2) Disclosure by creditor
(3) Form of election
(4) Time of election
(5) RegulationsThe Bureau shall prescribe regulations—
(A) governing disclosures under this subsection; and
(B) that prevent unfair or deceptive acts or practices in connection with the manipulation of credit limits designed to increase over-the-limit fees or other penalty fees.
(6) Rule of construction
(7) Restriction on fees charged for an over-the-limit transaction
(l) Limit on fees related to method of payment
(m) Use of term “fixed rate”
(n) Standards applicable to initial issuance of subprime or “fee harvester” cards
(1) In general
(2) Rule of construction
(o) Due dates for credit card accounts
(1) In general
(2) Weekend or holiday due dates
(p) Parental approval required to increase credit lines for accounts for which parent is jointly liable
(r)2
2 So in original. No subsec. (q) has been enacted.
College card agreements(1) DefinitionsFor purposes of this subsection, the following definitions shall apply:
(A) College affinity cardThe term “college affinity card” means a credit card issued by a credit card issuer under an open end consumer credit plan in conjunction with an agreement between the issuer and an institution of higher education, or an alumni organization or foundation affiliated with or related to such institution, under which such cards are issued to college students who have an affinity with such institution, organization and—
(i) the creditor has agreed to donate a portion of the proceeds of the credit card to the institution, organization, or foundation (including a lump sum or 1-time payment of money for access);
(ii) the creditor has agreed to offer discounted terms to the consumer; or
(iii) the credit card bears the name, emblem, mascot, or logo of such institution, organization, or foundation, or other words, pictures, or symbols readily identified with such institution, organization, or foundation.
(B) College student credit card account
(C) College student
(D) Institution of higher education
(2) Reports by creditors
(A) In general
(B) Details of reportThe information required to be reported under subparagraph (A) includes—
(i) any memorandum of understanding between or among a creditor, an institution of higher education, an alumni association, or foundation that directly or indirectly relates to any aspect of any agreement referred to in such subparagraph or controls or directs any obligations or distribution of benefits between or among any such entities;
(ii) the amount of any payments from the creditor to the institution, organization, or foundation during the period covered by the report, and the precise terms of any agreement under which such amounts are determined; and
(iii) the number of credit card accounts covered by any such agreement that were opened during the period covered by the report, and the total number of credit card accounts covered by the agreement that were outstanding at the end of such period.
(C) Aggregation by institution
(D) Initial report
(3) Reports by Bureau
(Pub. L. 90–321, title I, § 127, May 29, 1968, 82 Stat. 153; Pub. L. 93–495, title III, §§ 304, 305, title IV, §§ 411, 415, Oct. 28, 1974, 88 Stat. 1511, 1519, 1521; Pub. L. 96–221, title VI, § 613(a)–(e), Mar. 31, 1980, 94 Stat. 176, 177; Pub. L. 100–583, §§ 2(a), 6, Nov. 3, 1988, 102 Stat. 2960, 2968; Pub. L. 100–709, § 2(b), Nov. 23, 1988, 102 Stat. 4729; Pub. L. 109–8, title XIII, §§ 1301(a), 1303(a), 1304(a), 1305(a), 1306(a), Apr. 20, 2005, 119 Stat. 204, 209, 211, 212; Pub. L. 111–24, title I, §§ 101(a)(1), 102(a), 103, 105, 106(a), title II, §§ 201(a), 202, 203, title III, §§ 301, 303, 305(a), May 22, 2009, 123 Stat. 1735, 1738, 1741–1743, 1745–1749; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
§ 1637a. Disclosure requirements for open end consumer credit plans secured by consumer’s principal dwelling
(a) Application disclosuresIn the case of any open end consumer credit plan which provides for any extension of credit which is secured by the consumer’s principal dwelling, the creditor shall make the following disclosures in accordance with subsection (b):
(1) Fixed annual percentage rate
(2) Variable percentage rateIn the case of a plan which provides for variable rates of interest on credit extended under the plan—
(A) a description of the manner in which such rate will be computed and a statement that such rate does not include costs other than interest;
(B) a description of the manner in which any changes in the annual percentage rate will be made, including—
(i) any negative amortization and interest rate carryover;
(ii) the timing of any such changes;
(iii) any index or margin to which such changes in the rate are related; and
(iv) a source of information about any such index;
(C) if an initial annual percentage rate is offered which is not based on an index—
(i) a statement of such rate and the period of time such initial rate will be in effect; and
(ii) a statement that such rate does not include costs other than interest;
(D) a statement that the consumer should ask about the current index value and interest rate;
(E) a statement of the maximum amount by which the annual percentage rate may change in any 1-year period or a statement that no such limit exists;
(F) a statement of the maximum annual percentage rate that may be imposed at any time under the plan;
(G) subject to subsection (b)(3), a table, based on a $10,000 extension of credit, showing how the annual percentage rate and the minimum periodic payment amount under each repayment option of the plan would have been affected during the preceding 15-year period by changes in any index used to compute such rate;
(H) a statement of—
(i) the maximum annual percentage rate which may be imposed under each repayment option of the plan;
(ii) the minimum amount of any periodic payment which may be required, based on a $10,000 outstanding balance, under each such option when such maximum annual percentage rate is in effect; and
(iii) the earliest date by which such maximum annual interest rate may be imposed; and
(I) a statement that interest rate information will be provided on or with each periodic statement.
(3) Other fees imposed by the creditor
(4) Estimates of fees which may be imposed by third parties
(A) Aggregate amount
(B) Statement of availability
(5) Statement of risk of loss of dwellingA statement that—
(A) any extension of credit under the plan is secured by the consumer’s dwelling; and
(B) in the event of any default, the consumer risks the loss of the dwelling.
(6) Conditions to which disclosed terms are subject
(A) Period during which such terms are availableA clear and conspicuous statement—
(i) of the time by which an application must be submitted to obtain the terms disclosed; or
(ii) if applicable, that the terms are subject to change.
(B) Right of refusal if certain terms changeA statement that—
(i) the consumer may elect not to enter into an agreement to open an account under the plan if any term changes (other than a change contemplated by a variable feature of the plan) before any such agreement is final; and
(ii) if the consumer makes an election described in clause (i), the consumer is entitled to a refund of all fees paid in connection with the application.
(C) Retention of information
(7) Rights of creditor with respect to extensions of creditA statement that—
(A) under certain conditions, the creditor may terminate any account under the plan and require immediate repayment of any outstanding balance, prohibit any additional extension of credit to the account, or reduce the credit limit applicable to the account; and
(B) the consumer may receive, upon request, more specific information about the conditions under which the creditor may take any action described in subparagraph (A).
(8) Repayment options and minimum periodic paymentsThe repayment options under the plan, including—
(A) if applicable, any differences in repayment options with regard to—
(i) any period during which additional extensions of credit may be obtained; and
(ii) any period during which repayment is required to be made and no additional extensions of credit may be obtained;
(B) the length of any repayment period, including any differences in the length of any repayment period with regard to the periods described in clauses (i) and (ii) of subparagraph (A); and
(C) an explanation of how the amount of any minimum monthly or periodic payment will be determined under each such option, including any differences in the determination of any such amount with regard to the periods described in clauses (i) and (ii) of subparagraph (A).
(9) Example of minimum payments and maximum repayment period
(10) Statement concerning balloon paymentsIf, under any repayment option of the plan, the payment of not more than the minimum periodic payments required under such option over the length of the repayment period—
(A) would not repay any of the principal balance; or
(B) would repay less than the outstanding balance by the end of such period,
as the case may be, a statement of such fact, including an explicit statement that at the end of such repayment period a balloon payment (as defined in section 1665b(f) of this title) would result which would be required to be paid in full at that time.
(11) Negative amortizationIf applicable, a statement that—
(A) any limitation in the plan on the amount of any increase in the minimum payments may result in negative amortization;
(B) negative amortization increases the outstanding principal balance of the account; and
(C) negative amortization reduces the consumer’s equity in the consumer’s dwelling.
(12) Limitations and minimum amount requirements on extensions of credit
(A) Number and dollar amount limitations
(B) Minimum balance and other transaction amount requirementsAny requirement which establishes a minimum amount for—
(i) the initial extension of credit to an account under the plan;
(ii) any subsequent extension of credit to an account under the plan; or
(iii) any outstanding balance of an account under the plan.
(13) Statement regarding tax deductibilityA statement that—
(A) the consumer should consult a tax advisor regarding the deductibility of interest and charges under the plan; and
(B) in any case in which the extension of credit exceeds the fair market value (as defined under title 26) of the dwelling, the interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax deductible for Federal income tax purposes.
(14) Disclosure requirements established by Bureau
(b) Time and form of disclosures
(1) Time of disclosure
(A) In general
(B) Telephone, publications, and third party applications
(2) Form
(A) In general
(B) Segregation of required disclosures from other information
(C) Precedence of certain information
(D) Special provision relating to variable interest rate information
(3) Requirement for historical table
(c) Third party applicationsIn the case of an application to open an account under any open end consumer credit plan described in subsection (a) which is provided to a consumer by any person other than the creditor—
(1) such person shall provide such consumer with—
(A) the disclosures required under subsection (a) with respect to such plan, in accordance with subsection (b); and
(B) the pamphlet required under subsection (e); or
(2) if such person cannot provide specific terms about the plan because specific information about the plan terms is not available, no nonrefundable fee may be imposed in connection with such application before the end of the 3-day period beginning on the date the consumer receives the disclosures required under subsection (a) with respect to the application.
(d) “Principal dwelling” defined
(e) PamphletIn addition to the disclosures required under subsection (a) with respect to an application to open an account under any open end consumer credit plan described in such subsection, the creditor or other person providing such disclosures to the consumer shall provide—
(1) a pamphlet published by the Bureau pursuant to section 4 of the Home Equity 1
1 So in original. Probably should be followed by “Loan”.
Consumer Protection Act of 1988; or(2) any pamphlet which provides substantially similar information to the information described in such section, as determined by the Bureau.
(Pub. L. 90–321, title I, § 127A, as added Pub. L. 100–709, § 2(a), Nov. 23, 1988, 102 Stat. 4725; amended Pub. L. 109–8, title XIII, § 1302(a)(1), Apr. 20, 2005, 119 Stat. 208; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
§ 1638. Transactions other than under an open end credit plan
(a) Required disclosures by creditorFor each consumer credit transaction other than under an open end credit plan, the creditor shall disclose each of the following items, to the extent applicable:
(1) The identity of the creditor required to make disclosure.
(2)
(A) The “amount financed”, using that term, which shall be the amount of credit of which the consumer has actual use. This amount shall be computed as follows, but the computations need not be disclosed and shall not be disclosed with the disclosures conspicuously segregated in accordance with subsection (b)(1):
(i) take the principal amount of the loan or the cash price less downpayment and trade-in;
(ii) add any charges which are not part of the finance charge or of the principal amount of the loan and which are financed by the consumer, including the cost of any items excluded from the finance charge pursuant to section 1605 of this title; and
(iii) subtract any charges which are part of the finance charge but which will be paid by the consumer before or at the time of the consummation of the transaction, or have been withheld from the proceeds of the credit.
(B) In conjunction with the disclosure of the amount financed, a creditor shall provide a statement of the consumer’s right to obtain, upon a written request, a written itemization of the amount financed. The statement shall include spaces for a “yes” and “no” indication to be initialed by the consumer to indicate whether the consumer wants a written itemization of the amount financed. Upon receiving an affirmative indication, the creditor shall provide, at the time other disclosures are required to be furnished, a written itemization of the amount financed. For the purposes of this subparagraph, “itemization of the amount financed” means a disclosure of the following items, to the extent applicable:
(i) the amount that is or will be paid directly to the consumer;
(ii) the amount that is or will be credited to the consumer’s account to discharge obligations owed to the creditor;
(iii) each amount that is or will be paid to third persons by the creditor on the consumer’s behalf, together with an identification of or reference to the third person; and
(iv) the total amount of any charges described in the preceding subparagraph (A)(iii).
(3) The “finance charge”, not itemized, using that term.
(4) The finance charge expressed as an “annual percentage rate”, using that term. This shall not be required if the amount financed does not exceed $75 and the finance charge does not exceed $5, or if the amount financed exceeds $75 and the finance charge does not exceed $7.50.
(5) The sum of the amount financed and the finance charge, which shall be termed the “total of payments”.
(6) The number, amount, and due dates or period of payments scheduled to repay the total of payments.
(7) In a sale of property or services in which the seller is the creditor required to disclose pursuant to section 1631(b) of this title, the “total sale price”, using that term, which shall be the total of the cash price of the property or services, additional charges, and the finance charge.
(8) Descriptive explanations of the terms “amount financed”, “finance charge”, “annual percentage rate”, “total of payments”, and “total sale price” as specified by the Bureau. The descriptive explanation of “total sale price” shall include reference to the amount of the downpayment.
(9) Where the credit is secured, a statement that a security interest has been taken in (A) the property which is purchased as part of the credit transaction, or (B) property not purchased as part of the credit transaction identified by item or type.
(10) Any dollar charge or percentage amount which may be imposed by a creditor solely on account of a late payment, other than a deferral or extension charge.
(11) A statement indicating whether or not the consumer is entitled to a rebate of any finance charge upon refinancing or prepayment in full pursuant to acceleration or otherwise, if the obligation involves a precomputed finance charge. A statement indicating whether or not a penalty will be imposed in those same circumstances if the obligation involves a finance charge computed from time to time by application of a rate to the unpaid principal balance.
(12) A statement that the consumer should refer to the appropriate contract document for any information such document provides about nonpayment, default, the right to accelerate the maturity of the debt, and prepayment rebates and penalties.
(13) In any residential mortgage transaction, a statement indicating whether a subsequent purchaser or assignee of the consumer may assume the debt obligation on its original terms and conditions.
(14) In the case of any variable interest rate residential mortgage transaction, in disclosures provided at application as prescribed by the Bureau for a variable rate transaction secured by the consumer’s principal dwelling, at the option of the creditor, a statement that the periodic payments may increase or decrease substantially, and the maximum interest rate and payment for a $10,000 loan originated at a recent interest rate, as determined by the Bureau, assuming the maximum periodic increases in rates and payments under the program, or a historical example illustrating the effects of interest rate changes implemented according to the loan program.
(15) In the case of a consumer credit transaction that is secured by the principal dwelling of the consumer, in which the extension of credit may exceed the fair market value of the dwelling, a clear and conspicuous statement that—
(A) the interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax deductible for Federal income tax purposes; and
(B) the consumer should consult a tax adviser for further information regarding the deductibility of interest and charges.
(16) In the case of a variable rate residential mortgage loan for which an escrow or impound account will be established for the payment of all applicable taxes, insurance, and assessments—
(A) the amount of initial monthly payment due under the loan for the payment of principal and interest, and the amount of such initial monthly payment including the monthly payment deposited in the account for the payment of all applicable taxes, insurance, and assessments; and
(B) the amount of the fully indexed monthly payment due under the loan for the payment of principal and interest, and the amount of such fully indexed monthly payment including the monthly payment deposited in the account for the payment of all applicable taxes, insurance, and assessments.
(17) In the case of a residential mortgage loan, the aggregate amount of settlement charges for all settlement services provided in connection with the loan, the amount of charges that are included in the loan and the amount of such charges the borrower must pay at closing, the approximate amount of the wholesale rate of funds in connection with the loan, and the aggregate amount of other fees or required payments in connection with the loan.
(18) In the case of a residential mortgage loan, the aggregate amount of fees paid to the mortgage originator in connection with the loan, the amount of such fees paid directly by the consumer, and any additional amount received by the originator from the creditor.
(19) In the case of a residential mortgage loan, the total amount of interest that the consumer will pay over the life of the loan as a percentage of the principal of the loan. Such amount shall be computed assuming the consumer makes each monthly payment in full and on-time, and does not make any over-payments.
(b) Form and timing of disclosures; residential mortgage transaction requirements
(1) Except as otherwise provided in this part, the disclosures required under subsection (a) shall be made before the credit is extended. Except for the disclosures required by subsection (a)(1) of this section, all disclosures required under subsection (a) and any disclosure provided for in subsection (b), (c), or (d) of section 1605 of this title shall be conspicuously segregated from all other terms, data, or information provided in connection with a transaction, including any computations or itemization.
(2)
(A) Except as provided in subparagraph (G), in the case of any extension of credit that is secured by the dwelling of a consumer, which is also subject to the Real Estate Settlement Procedures Act [12 U.S.C. 2601 et seq.], good faith estimates of the disclosures required under subsection (a) shall be made in accordance with regulations of the Bureau under section 1631(c) of this title and shall be delivered or placed in the mail not later than three business days after the creditor receives the consumer’s written application, which shall be at least 7 business days before consummation of the transaction.
(B) In the case of an extension of credit that is secured by the dwelling of a consumer, the disclosures provided under subparagraph (A),1
1 So in original. The comma probably should not appear.
shall be in addition to the other disclosures required by subsection (a), and shall—(i) state in conspicuous type size and format, the following: “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”; and
(ii) be provided in the form of final disclosures at the time of consummation of the transaction, in the form and manner prescribed by this section.
(C) In the case of an extension of credit that is secured by the dwelling of a consumer, under which the annual rate of interest is variable, or with respect to which the regular payments may otherwise be variable, in addition to the other disclosures required by subsection (a), the disclosures provided under this subsection shall do the following:
(i) Label the payment schedule as follows: “Payment Schedule: Payments Will Vary Based on Interest Rate Changes”.
(ii) State in conspicuous type size and format examples of adjustments to the regular required payment on the extension of credit based on the change in the interest rates specified by the contract for such extension of credit. Among the examples required to be provided under this clause is an example that reflects the maximum payment amount of the regular required payments on the extension of credit, based on the maximum interest rate allowed under the contract, in accordance with the rules of the Bureau. Prior to issuing any rules pursuant to this clause, the Bureau shall conduct consumer testing to determine the appropriate format for providing the disclosures required under this subparagraph to consumers so that such disclosures can be easily understood, including the fact that the initial regular payments are for a specific time period that will end on a certain date, that payments will adjust afterwards potentially to a higher amount, and that there is no guarantee that the borrower will be able to refinance to a lower amount.
(D) In any case in which the disclosure statement under subparagraph (A) contains an annual percentage rate of interest that is no longer accurate, as determined under section 1606(c) of this title, the creditor shall furnish an additional, corrected statement to the borrower, not later than 3 business days before the date of consummation of the transaction.
(E) The consumer shall receive the disclosures required under this paragraph before paying any fee to the creditor or other person in connection with the consumer’s application for an extension of credit that is secured by the dwelling of a consumer. If the disclosures are mailed to the consumer, the consumer is considered to have received them 3 business days after they are mailed. A creditor or other person may impose a fee for obtaining the consumer’s credit report before the consumer has received the disclosures under this paragraph, provided the fee is bona fide and reasonable in amount.
(F)Waiver of timeliness of disclosures.—To expedite consummation of a transaction, if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency, the consumer may waive or modify the timing requirements for disclosures under subparagraph (A), provided that—
(i) the term “bona fide personal emergency” may be further defined in regulations issued by the Bureau;
(ii) the consumer provides to the creditor a dated, written statement describing the emergency and specifically waiving or modifying those timing requirements, which statement shall bear the signature of all consumers entitled to receive the disclosures required by this paragraph; and
(iii) the creditor provides to the consumers at or before the time of such waiver or modification, the final disclosures required by paragraph (1).
(G)
(i) In the case of an extension of credit relating to a plan described in section 101(53D) of title 11—(I) the requirements of subparagraphs (A) through (E) shall not apply; and(II) a good faith estimate of the disclosures required under subsection (a) shall be made in accordance with regulations of the Bureau under section 1631(c) of this title before such credit is extended, or shall be delivered or placed in the mail not later than 3 business days after the date on which the creditor receives the written application of the consumer for such credit, whichever is earlier.
(ii) If a disclosure statement furnished within 3 business days of the written application (as provided under clause (i)(II)) contains an annual percentage rate which is subsequently rendered inaccurate, within the meaning of section 1606(c) of this title, the creditor shall furnish another disclosure statement at the time of settlement or consummation of the transaction.
(3) In the case of a credit transaction described in paragraph (15) of subsection (a), disclosures required by that paragraph shall be made to the consumer at the time of application for such extension of credit.
(4)
(A)In general.—In the case of any consumer credit transaction secured by a first mortgage or lien on the principal dwelling of the consumer, other than a consumer credit transaction under an open end credit plan or a reverse mortgage, for which an impound, trust, or other type of account has been or will be established in connection with the transaction for the payment of property taxes, hazard and flood (if any) insurance premiums, or other periodic payments or premiums with respect to the property, the information required to be provided under subsection (a) with respect to the number, amount, and due dates or period of payments scheduled to repay the total of payments shall take into account the amount of any monthly payment to such account for each such repayment in accordance with section 10(a)(2) of the Real Estate Settlement Procedures Act of 1974 [12 U.S.C. 2609(a)(2)].
(B)Assessment value.—The amount taken into account under subparagraph (A) for the payment of property taxes, hazard and flood (if any) insurance premiums, or other periodic payments or premiums with respect to the property shall reflect the taxable assessed value of the real property securing the transaction after the consummation of the transaction, including the value of any improvements on the property or to be constructed on the property (whether or not such construction will be financed from the proceeds of the transaction), if known, and the replacement costs of the property for hazard insurance, in the initial year after the transaction.
(c) Timing of disclosures on unsolicited mailed or telephone purchase orders or loan requests
(1) If a creditor receives a purchase order by mail or telephone without personal solicitation, and the cash price and the total sale price and the terms of financing, including the annual percentage rate, are set forth in the creditor’s catalog or other printed material distributed to the public, then the disclosures required under subsection (a) may be made at any time not later than the date the first payment is due.
(2) If a creditor receives a request for a loan by mail or telephone without personal solicitation and the terms of financing, including the annual percentage rate for representative amounts of credit, are set forth in the creditor’s printed material distributed to the public, or in the contract of loan or other printed material delivered to the obligor, then the disclosures required under subsection (a) may be made at any time not later than the date the first payment is due.
(d) Timing of disclosure in cases of an addition of a deferred payment price to an existing outstanding balance
(e) Terms and disclosure with respect to private education loans
(1) Disclosures required in private education loan applications and solicitationsIn any application for a private education loan, or a solicitation for a private education loan without requiring an application, the private educational lender shall disclose to the borrower, clearly and conspicuously—
(A) the potential range of rates of interest applicable to the private education loan;
(B) whether the rate of interest applicable to the private education loan is fixed or variable;
(C) limitations on interest rate adjustments, both in terms of frequency and amount, or the lack thereof, if applicable;
(D) requirements for a co-borrower, including any changes in the applicable interest rates without a co-borrower;
(E) potential finance charges, late fees, penalties, and adjustments to principal, based on defaults or late payments of the borrower;
(F) fees or range of fees applicable to the private education loan;
(G) the term of the private education loan;
(H) whether interest will accrue while the student to whom the private education loan relates is enrolled at a covered educational institution;
(I) payment deferral options;
(J) general eligibility criteria for the private education loan;
(K) an example of the total cost of the private education loan over the life of the loan—
(i) which shall be calculated using the principal amount and the maximum rate of interest actually offered by the private educational lender; and
(ii) calculated both with and without capitalization of interest, if an option exists for postponing interest payments;
(L) that a covered educational institution may have school-specific education loan benefits and terms not detailed on the disclosure form;
(M) that the borrower may qualify for Federal student financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), in lieu of, or in addition to, a loan from a non-Federal source;
(N) the interest rates available with respect to such Federal student financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.);
(O) that, as provided in paragraph (6)—
(i) the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within 30 calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education loan is approved and the borrower receives the disclosure documents required under this subsection for the loan; and
(ii) except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender during the period described in clause (i);
(P) that, before a private education loan may be consummated, the borrower must obtain from the relevant institution of higher education the form required under paragraph (3), and complete, sign, and return such form to the private educational lender;
(Q) that the consumer may obtain additional information concerning such Federal student financial assistance from their institution of higher education, or at the website of the Department of Education; and
(R) such other information as the Bureau shall prescribe, by rule, as necessary or appropriate for consumers to make informed borrowing decisions.
(2) Disclosures at the time of private education loan approvalContemporaneously with the approval of a private education loan application, and before the loan transaction is consummated, the private educational lender shall disclose to the borrower, clearly and conspicuously—
(A) the applicable rate of interest in effect on the date of approval;
(B) whether the rate of interest applicable to the private education loan is fixed or variable;
(C) limitations on interest rate adjustments, both in terms of frequency and amount, or the lack thereof, if applicable;
(D) the initial approved principal amount;
(E) applicable finance charges, late fees, penalties, and adjustments to principal, based on borrower defaults or late payments, including limitations on the discharge of a private education loan in bankruptcy;
(F) fees or range of fees applicable to the private education loan;
(G) the maximum term under the private education loan program;
(H) an estimate of the total amount for repayment, at both the interest rate in effect on the date of approval and at the maximum possible rate of interest offered by the private educational lender and applicable to the borrower, to the extent that such maximum rate may be determined, or if not, a good faith estimate thereof;
(I) any principal and interest payments required while the student for whom the private education loan is intended is enrolled at a covered educational institution and unpaid interest that will accrue during such enrollment;
(J) payment deferral options applicable to the borrower;
(K) whether monthly payments are graduated;
(L) that, as provided in paragraph (6)—
(i) the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within 30 calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education loan is approved and the borrower receives the disclosure documents required under this subsection for the loan; and
(ii) except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender during the period described in clause (i);
(M) that the borrower—
(i) may qualify for Federal financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), in lieu of, or in addition to, a loan from a non-Federal source; and
(ii) may obtain additional information concerning such assistance from their institution of higher education or the website of the Department of Education;
(N) the interest rates available with respect to such Federal financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.);
(O) the maximum monthly payment, calculated using the maximum rate of interest actually offered by the private educational lender and applicable to the borrower, to the extent that such maximum rate may be determined, or if not, a good faith estimate thereof; and
(P) such other information as the Bureau shall prescribe, by rule, as necessary or appropriate for consumers to make informed borrowing decisions.
(3) Self-certification of information
(A) In general
(B) Rule of construction
(4) Disclosures at the time of private education loan consummationContemporaneously with the consummation of a private education loan, a private educational lender shall make to the borrower each of the disclosures described in—
(A) paragraph (2)(A) (adjusted, as necessary, for the rate of interest in effect on the date of consummation, based on the index used for the loan);
(B) subparagraphs (B) through (K) and (M) through (P) of paragraph (2); and
(C) paragraph (7).
(5) Format of disclosures
(A) Model form
(B) FormatModel forms developed under this paragraph shall—
(i) be comprehensible to borrowers, with a clear format and design;
(ii) provide for clear and conspicuous disclosures;
(iii) enable borrowers easily to identify material terms of the loan and to compare such terms among private education loans; and
(iv) be succinct, and use an easily readable type font.
(C) Safe harbor
(6) Effective period of approved rate of interest and loan terms
(A) In general
(B) Prohibition on changesExcept for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender prior to the earlier of—
(i) the date of acceptance of the terms of the loan and consummation of the transaction by the borrower, as described in subparagraph (A); or
(ii) the expiration of the period described in subparagraph (A).
(7) Right to cancel
(8) Prohibition on disbursement
(9) Bureau regulations
(10) Definitions
(11) Duties of lenders participating in preferred lender arrangements
(f) Periodic statements for residential mortgage loans
(1) In generalThe creditor, assignee, or servicer with respect to any residential mortgage loan shall transmit to the obligor, for each billing cycle, a statement setting forth each of the following items, to the extent applicable, in a conspicuous and prominent manner:
(A) The amount of the principal obligation under the mortgage.
(B) The current interest rate in effect for the loan.
(C) The date on which the interest rate may next reset or adjust.
(D) The amount of any prepayment fee to be charged, if any.
(E) A description of any late payment fees.
(F) A telephone number and electronic mail address that may be used by the obligor to obtain information regarding the mortgage.
(G) The names, addresses, telephone numbers, and Internet addresses of counseling agencies or programs reasonably available to the consumer that have been certified or approved and made publicly available by the Secretary of Housing and Urban Development or a State housing finance authority (as defined in section 1441a–1 of title 12).
(H) Such other information as the Board 2
2 So in original. Probably should be “Bureau”.
may prescribe in regulations.(2) Development and use of standard form
(3) Exception
(Pub. L. 90–321, title I, § 128, May 29, 1968, 82 Stat. 155; Pub. L. 96–221, title VI, § 614(a)–(c), Mar. 31, 1980, 94 Stat. 178, 179; Pub. L. 104–208, div. A, title II, § 2105, Sept. 30, 1996, 110 Stat. 3009–402; Pub. L. 109–8, title XIII, § 1302(b)(1), Apr. 20, 2005, 119 Stat. 208; Pub. L. 110–289, div. B, title V, § 2502(a), July 30, 2008, 122 Stat. 2855; Pub. L. 110–315, title X, § 1021(a), Aug. 14, 2008, 122 Stat. 3483; Pub. L. 110–343, div. A, title I, § 130(a), Oct. 3, 2008, 122 Stat. 3797; Pub. L. 111–203, title X, § 1100A(2), title XIV, §§ 1419, 1420, 1465, July 21, 2010, 124 Stat. 2107, 2154, 2155, 2185.)
§ 1638a. Reset of hybrid adjustable rate mortgages
(a) Hybrid adjustable rate mortgages defined
(b) Notice of reset and alternativesDuring the 1-month period that ends 6 months before the date on which the interest rate in effect during the introductory period of a hybrid adjustable rate mortgage adjusts or resets to a variable interest rate or, in the case of such an adjustment or resetting that occurs within the first 6 months after consummation of such loan, at consummation, the creditor or servicer of such loan shall provide a written notice, separate and distinct from all other correspondence to the consumer, that includes the following:
(1) Any index or formula used in making adjustments to or resetting the interest rate and a source of information about the index or formula.
(2) An explanation of how the new interest rate and payment would be determined, including an explanation of how the index was adjusted, such as by the addition of a margin.
(3) A good faith estimate, based on accepted industry standards, of the creditor or servicer of the amount of the monthly payment that will apply after the date of the adjustment or reset, and the assumptions on which this estimate is based.
(4) A list of alternatives consumers may pursue before the date of adjustment or reset, and descriptions of the actions consumers must take to pursue these alternatives, including—
(A) refinancing;
(B) renegotiation of loan terms;
(C) payment forbearances; and
(D) pre-foreclosure sales.
(5) The names, addresses, telephone numbers, and Internet addresses of counseling agencies or programs reasonably available to the consumer that have been certified or approved and made publicly available by the Secretary of Housing and Urban Development or a State housing finance authority (as defined in section 1441a–1 of title 12).
(6) The address, telephone number, and Internet address for the State housing finance authority (as so defined) for the State in which the consumer resides.
(c) Savings clause
(Pub. L. 90–321, title I, § 128A, as added Pub. L. 111–203, title XIV, § 1418(a), July 21, 2010, 124 Stat. 2153.)
§ 1639. Requirements for certain mortgages
(a) Disclosures
(1) Specific disclosuresIn addition to other disclosures required under this subchapter, for each mortgage referred to in section 1602(aa) 1
1 See References in Text note below.
of this title, the creditor shall provide the following disclosures in conspicuous type size:(A) “You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application.”.
(B) “If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan.”.
(2) Annual percentage rateIn addition to the disclosures required under paragraph (1), the creditor shall disclose—
(A) in the case of a credit transaction with a fixed rate of interest, the annual percentage rate and the amount of the regular monthly payment; or
(B) in the case of any other credit transaction, the annual percentage rate of the loan, the amount of the regular monthly payment, a statement that the interest rate and monthly payment may increase, and the amount of the maximum monthly payment, based on the maximum interest rate allowed pursuant to section 3806 of title 12.
(b) Time of disclosures
(1) In general
(2) New disclosures required
(A) In general
(B) Telephone disclosureA creditor may provide new disclosures pursuant to subparagraph (A) by telephone, if—
(i) the change is initiated by the consumer; and
(ii) at the consummation of the transaction under which the credit is extended—(I) the creditor provides to the consumer the new disclosures, in writing; and(II) the creditor and consumer certify in writing that the new disclosures were provided by telephone, by not later than 3 days prior to the date of consummation of the transaction.
(3) No wait for lower rate
(4) Modifications
(c) No prepayment penalty
(1) In general 2
2 So in original. There is no par. (2).
(A) Limitation on terms
(B) Construction
(d) Limitations after default
(e) No balloon payments
(f) No negative amortization
(g) No prepaid payments
(h) Prohibition on extending credit without regard to payment ability of consumer
(i) Requirements for payments under home improvement contractsA creditor shall not make a payment to a contractor under a home improvement contract from amounts extended as credit under a mortgage referred to in section 1602(aa) 1 of this title, other than—
(1) in the form of an instrument that is payable to the consumer or jointly to the consumer and the contractor; or
(2) at the election of the consumer, by a third party escrow agent in accordance with terms established in a written agreement signed by the consumer, the creditor, and the contractor before the date of payment.
(j) Recommended default
(k) Late fees
(1) In generalNo creditor may impose a late payment charge or fee in connection with a high-cost mortgage—
(A) in an amount in excess of 4 percent of the amount of the payment past due;
(B) unless the loan documents specifically authorize the charge or fee;
(C) before the end of the 15-day period beginning on the date the payment is due, or in the case of a loan on which interest on each installment is paid in advance, before the end of the 30-day period beginning on the date the payment is due; or
(D) more than once with respect to a single late payment.
(2) Coordination with subsequent late fees
(3) Failure to make installment payment
(l) Acceleration of debt
(m) Restriction on financing points and feesNo creditor may directly or indirectly finance, in connection with any high-cost mortgage, any of the following:
(1) Any prepayment fee or penalty payable by the consumer in a refinancing transaction if the creditor or an affiliate of the creditor is the noteholder of the note being refinanced.
(2) Any points or fees.
(n) Consequence of failure to comply
(o) “Affiliate” defined
(p) Discretionary regulatory authority of Bureau
(1) ExemptionsThe Bureau may, by regulation or order, exempt specific mortgage products or categories of mortgages from any or all of the prohibitions specified in subsections (c) through (i), if the Bureau finds that the exemption—
(A) is in the interest of the borrowing public; and
(B) will apply only to products that maintain and strengthen home ownership and equity protection.
(2) ProhibitionsThe Bureau, by regulation or order, shall prohibit acts or practices in connection with—
(A) mortgage loans that the Bureau finds to be unfair, deceptive, or designed to evade the provisions of this section; and
(B) refinancing of mortgage loans that the Bureau finds to be associated with abusive lending practices, or that are otherwise not in the interest of the borrower.
(q) Civil penalties in Federal Trade Commission enforcement actions
(r) Prohibitions on evasions, structuring of transactions, and reciprocal arrangementsA creditor may not take any action in connection with a high-cost mortgage—
(1) to structure a loan transaction as an open-end credit plan or another form of loan for the purpose and with the intent of evading the provisions of this subchapter; or
(2) to divide any loan transaction into separate parts for the purpose and with the intent of evading provisions of this subchapter.
(s) Modification and deferral fees prohibited
(t) Payoff statement
(1) Fees
(A) In general
(B) Transaction fee
(C) Fee disclosure
(D) Multiple requests
(2) Prompt delivery
(u) Pre-loan counseling
(1) In general
(2) Disclosures required prior to counseling
(3) Regulations
(v) Corrections and unintentional violationsA creditor or assignee in a high-cost mortgage who, when acting in good faith, fails to comply with any requirement under this section will not be deemed to have violated such requirement if the creditor or assignee establishes that either—
(1) within 30 days of the loan closing and prior to the institution of any action, the consumer is notified of or discovers the violation, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the consumer—
(A) make the loan satisfy the requirements of this part; or
(B) in the case of a high-cost mortgage, change the terms of the loan in a manner beneficial to the consumer so that the loan will no longer be a high-cost mortgage; or
(2) within 60 days of the creditor’s discovery or receipt of notification of an unintentional violation or bona fide error and prior to the institution of any action, the consumer is notified of the compliance failure, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the consumer—
(A) make the loan satisfy the requirements of this part; or
(B) in the case of a high-cost mortgage, change the terms of the loan in a manner beneficial so that the loan will no longer be a high-cost mortgage.
(Pub. L. 90–321, title I, § 129, as added Pub. L. 103–325, title I, § 152(d), Sept. 23, 1994, 108 Stat. 2191; amended Pub. L. 111–8, div. D, title VI, § 626(c), Mar. 11, 2009, 123 Stat. 679; Pub. L. 111–203, title X, § 1100A(2), (9), title XIV, §§ 1432, 1433, July 21, 2010, 124 Stat. 2107, 2109, 2160; Pub. L. 115–174, title I, § 109(a), May 24, 2018, 132 Stat. 1305.)
§ 1639a. Duty of servicers of residential mortgages
(a) In generalNotwithstanding any other provision of law, whenever a servicer of residential mortgages agrees to enter into a qualified loss mitigation plan with respect to 1 or more residential mortgages originated before May 20, 2009, including mortgages held in a securitization or other investment vehicle—
(1) to the extent that the servicer owes a duty to investors or other parties to maximize the net present value of such mortgages, the duty shall be construed to apply to all such investors and parties, and not to any individual party or group of parties; and
(2) the servicer shall be deemed to have satisfied the duty set forth in paragraph (1) if, before December 31, 2012, the servicer implements a qualified loss mitigation plan that meets the following criteria:
(A) Default on the payment of such mortgage has occurred, is imminent, or is reasonably foreseeable, as such terms are defined by guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008 [12 U.S.C. 5201 et seq.].
(B) The mortgagor occupies the property securing the mortgage as his or her principal residence.
(C) The servicer reasonably determined, consistent with the guidelines issued by the Secretary of the Treasury or his designee, that the application of such qualified loss mitigation plan to a mortgage or class of mortgages will likely provide an anticipated recovery on the outstanding principal mortgage debt that will exceed the anticipated recovery through foreclosures.
(b) No liability
(c) Standard industry practice
(d) Scope of safe harbor
(e) Reporting
(f) DefinitionsAs used in this section—
(1) the term “qualified loss mitigation plan” means—
(A) a residential loan modification, workout, or other loss mitigation plan, including to the extent that the Secretary of the Treasury determines appropriate, a loan sale, real property disposition, trial modification, pre-foreclosure sale, and deed in lieu of foreclosure, that is described or authorized in guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008 [12 U.S.C. 5201 et seq.]; and
(B) a refinancing of a mortgage under the Hope for Homeowners program;
(2) the term “servicer” means the person responsible for the servicing for others of residential mortgage loans (including of a pool of residential mortgage loans); and
(3) the term “securitization vehicle” means a trust, special purpose entity, or other legal structure that is used to facilitate the issuing of securities, participation certificates, or similar instruments backed by or referring to a pool of assets that includes residential mortgages (or instruments that are related to residential mortgages such as credit-linked notes).
(g) Rule of construction
(Pub. L. 90–321, title I, § 129A, as added Pub. L. 110–289, div. A, title IV, § 1403, July 30, 2008, 122 Stat. 2809; renumbered § 129 and amended Pub. L. 111–22, div. A, title II, § 201(b), May 20, 2009, 123 Stat. 1638; renumbered § 129A, Pub. L. 111–203, title XIV, § 1402(a)(1), July 21, 2010, 124 Stat. 2138.)
§ 1639b. Residential mortgage loan origination
(a) Finding and purpose
(1) Finding
(2) Purpose
(b) Duty of care
(1) StandardSubject to regulations prescribed under this subsection, each mortgage originator shall, in addition to the duties imposed by otherwise applicable provisions of State or Federal law—
(A) be qualified and, when required, registered and licensed as a mortgage originator in accordance with applicable State or Federal law, including the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 [12 U.S.C. 5101 et seq.]; and
(B) include on all loan documents any unique identifier of the mortgage originator provided by the Nationwide Mortgage Licensing System and Registry.
(2) Compliance procedures required
(c) Prohibition on steering incentives
(1) In general
(2) Restructuring of financing origination fee
(A) In general
(B) ExceptionNotwithstanding subparagraph (A), a mortgage originator may receive from a person other than the consumer an origination fee or charge, and a person other than the consumer may pay a mortgage originator an origination fee or charge, if—
(i) the mortgage originator does not receive any compensation directly from the consumer; and
(ii) the consumer does not make an upfront payment of discount points, origination points, or fees, however denominated (other than bona fide third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or originator), except that the Bureau may, by rule, waive or provide exemptions to this clause if the Bureau determines that such waiver or exemption is in the interest of consumers and in the public interest.
(3) RegulationsThe Bureau shall prescribe regulations to prohibit—
(A) mortgage originators from steering any consumer to a residential mortgage loan that—
(i) the consumer lacks a reasonable ability to repay (in accordance with regulations prescribed under section 1639c(a) of this title); or
(ii) has predatory characteristics or effects (such as equity stripping, excessive fees, or abusive terms);
(B) mortgage originators from steering any consumer from a residential mortgage loan for which the consumer is qualified that is a qualified mortgage (as defined in section 1639c(b)(2) of this title) to a residential mortgage loan that is not a qualified mortgage;
(C) abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but of different race, ethnicity, gender, or age; and
(D) mortgage originators from—
(i) mischaracterizing the credit history of a consumer or the residential mortgage loans available to a consumer;
(ii) mischaracterizing or suborning the mischaracterization of the appraised value of the property securing the extension of credit; or
(iii) if unable to suggest, offer, or recommend to a consumer a loan that is not more expensive than a loan for which the consumer qualifies, discouraging a consumer from seeking a residential mortgage loan secured by a consumer’s principal dwelling from another mortgage originator.
(4) Rules of constructionNo provision of this subsection shall be construed as—
(A) permitting any yield spread premium or other similar compensation that would, for any residential mortgage loan, permit the total amount of direct and indirect compensation from all sources permitted to a mortgage originator to vary based on the terms of the loan (other than the amount of the principal);
(B) limiting or affecting the amount of compensation received by a creditor upon the sale of a consummated loan to a subsequent purchaser;
(C) restricting a consumer’s ability to finance, at the option of the consumer, including through principal or rate, any origination fees or costs permitted under this subsection, or the mortgage originator’s right to receive such fees or costs (including compensation) from any person, subject to paragraph (2)(B), so long as such fees or costs do not vary based on the terms of the loan (other than the amount of the principal) or the consumer’s decision about whether to finance such fees or costs; or
(D) prohibiting incentive payments to a mortgage originator based on the number of residential mortgage loans originated within a specified period of time.
(d) Liability for violations
(1) In general
(2) Maximum
(e) Discretionary regulatory authority
(1) In general
(2) Application
(f) Timeshare plans
(Pub. L. 90–321, title I, § 129B, as added and amended
§ 1639c. Minimum standards for residential mortgage loans
(a) Ability to repay
(1) In general
(2) Multiple loans
(3) Basis for determination
(4) Income verificationA creditor making a residential mortgage loan shall verify amounts of income or assets that such creditor relies on to determine repayment ability, including expected income or assets, by reviewing the consumer’s Internal Revenue Service Form W–2, tax returns, payroll receipts, financial institution records, or other third-party documents that provide reasonably reliable evidence of the consumer’s income or assets. In order to safeguard against fraudulent reporting, any consideration of a consumer’s income history in making a determination under this subsection shall include the verification of such income by the use of—
(A) Internal Revenue Service transcripts of tax returns; or
(B) a method that quickly and effectively verifies income documentation by a third party subject to rules prescribed by the Bureau.
(5) ExemptionWith respect to loans made, guaranteed, or insured by Federal departments or agencies identified in subsection (b)(3)(B)(ii), such departments or agencies may exempt refinancings under a streamlined refinancing from this income verification requirement as long as the following conditions are met:
(A) The consumer is not 30 days or more past due on the prior existing residential mortgage loan.
(B) The refinancing does not increase the principal balance outstanding on the prior existing residential mortgage loan, except to the extent of fees and charges allowed by the department or agency making, guaranteeing, or insuring the refinancing.
(C) Total points and fees (as defined in section 1602(aa)(4) 1
1 See References in Text note below.
of this title, other than bona fide third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator) payable in connection with the refinancing do not exceed 3 percent of the total new loan amount.(D) The interest rate on the refinanced loan is lower than the interest rate of the original loan, unless the borrower is refinancing from an adjustable rate to a fixed-rate loan, under guidelines that the department or agency shall establish for loans they make, guarantee, or issue.
(E) The refinancing is subject to a payment schedule that will fully amortize the refinancing in accordance with the regulations prescribed by the department or agency making, guaranteeing, or insuring the refinancing.
(F) The terms of the refinancing do not result in a balloon payment, as defined in subsection (b)(2)(A)(ii).
(G) Both the residential mortgage loan being refinanced and the refinancing satisfy all requirements of the department or agency making, guaranteeing, or insuring the refinancing.
(6) Nonstandard loans
(A) Variable rate loans that defer repayment of any principal or interest
(B) Interest-only loans
(C) Calculation for negative amortization
(D) Calculation processFor purposes of making any determination under this subsection, a creditor shall calculate the monthly payment amount for principal and interest on any residential mortgage loan by assuming—
(i) the loan proceeds are fully disbursed on the date of the consummation of the loan;
(ii) the loan is to be repaid in substantially equal monthly amortizing payments for principal and interest over the entire term of the loan with no balloon payment, unless the loan contract requires more rapid repayment (including balloon payment), in which case the calculation shall be made (I) in accordance with regulations prescribed by the Bureau, with respect to any loan which has an annual percentage rate that does not exceed the average prime offer rate for a comparable transaction, as of the date the interest rate is set, by 1.5 or more percentage points for a first lien residential mortgage loan; and by 3.5 or more percentage points for a subordinate lien residential mortgage loan; or (II) using the contract’s repayment schedule, with respect to a loan which has an annual percentage rate, as of the date the interest rate is set, that is at least 1.5 percentage points above the average prime offer rate for a first lien residential mortgage loan; and 3.5 percentage points above the average prime offer rate for a subordinate lien residential mortgage loan; and
(iii) the interest rate over the entire term of the loan is a fixed rate equal to the fully indexed rate at the time of the loan closing, without considering the introductory rate.
(E) Refinance of hybrid loans with current lenderIn considering any application for refinancing an existing hybrid loan by the creditor into a standard loan to be made by the same creditor in any case in which there would be a reduction in monthly payment and the mortgagor has not been delinquent on any payment on the existing hybrid loan, the creditor may—
(i) consider the mortgagor’s good standing on the existing mortgage;
(ii) consider if the extension of new credit would prevent a likely default should the original mortgage reset and give such concerns a higher priority as an acceptable underwriting practice; and
(iii) offer rate discounts and other favorable terms to such mortgagor that would be available to new customers with high credit ratings based on such underwriting practice.
(7) Fully-indexed rate defined
(8) Reverse mortgages and bridge loans
(9) Seasonal income
(b) Presumption of ability to repay
(1) In general
(2) DefinitionsFor purposes of this subsection, the following definitions shall apply:
(A) Qualified mortgageThe term “qualified mortgage” means any residential mortgage loan—
(i) for which the regular periodic payments for the loan may not—(I) result in an increase of the principal balance; or(II) except as provided in subparagraph (E), allow the consumer to defer repayment of principal;
(ii) except as provided in subparagraph (E), the terms of which do not result in a balloon payment, where a “balloon payment” is a scheduled payment that is more than twice as large as the average of earlier scheduled payments;
(iii) for which the income and financial resources relied upon to qualify the obligors on the loan are verified and documented;
(iv) in the case of a fixed rate loan, for which the underwriting process is based on a payment schedule that fully amortizes the loan over the loan term and takes into account all applicable taxes, insurance, and assessments;
(v) in the case of an adjustable rate loan, for which the underwriting is based on the maximum rate permitted under the loan during the first 5 years, and a payment schedule that fully amortizes the loan over the loan term and takes into account all applicable taxes, insurance, and assessments;
(vi) that complies with any guidelines or regulations established by the Bureau relating to ratios of total monthly debt to monthly income or alternative measures of ability to pay regular expenses after payment of total monthly debt, taking into account the income levels of the borrower and such other factors as the Bureau may determine relevant and consistent with the purposes described in paragraph (3)(B)(i);
(vii) for which the total points and fees (as defined in subparagraph (C)) payable in connection with the loan do not exceed 3 percent of the total loan amount;
(viii) for which the term of the loan does not exceed 30 years, except as such term may be extended under paragraph (3), such as in high-cost areas; and
(ix) in the case of a reverse mortgage (except for the purposes of subsection (a) of this section, to the extent that such mortgages are exempt altogether from those requirements), a reverse mortgage which meets the standards for a qualified mortgage, as set by the Bureau in rules that are consistent with the purposes of this subsection.
(B) Average prime offer rate
(C) Points and fees
(i) In general
(ii) ComputationFor purposes of computing the total points and fees under this subparagraph, the total points and fees shall exclude either of the amounts described in the following subclauses, but not both:(I) Up to and including 2 bona fide discount points payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage’s interest rate will be discounted does not exceed by more than 1 percentage point the average prime offer rate.(II) Unless 2 bona fide discount points have been excluded under subclause (I), up to and including 1 bona fide discount point payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage’s interest rate will be discounted does not exceed by more than 2 percentage points the average prime offer rate.
(iii) Bona fide discount points defined
(iv) Interest rate reduction
(D) Smaller loans
(E) Balloon loansThe Bureau may, by regulation, provide that the term “qualified mortgage” includes a balloon loan—
(i) that meets all of the criteria for a qualified mortgage under subparagraph (A) (except clauses (i)(II), (ii), (iv), and (v) of such subparagraph);
(ii) for which the creditor makes a determination that the consumer is able to make all scheduled payments, except the balloon payment, out of income or assets other than the collateral;
(iii) for which the underwriting is based on a payment schedule that fully amortizes the loan over a period of not more than 30 years and takes into account all applicable taxes, insurance, and assessments; and
(iv) that is extended by a creditor that—(I) operates in rural or underserved areas;(II) together with all affiliates, has total annual residential mortgage loan originations that do not exceed a limit set by the Bureau;(III) retains the balloon loans in portfolio; and(IV) meets any asset size threshold and any other criteria as the Bureau may establish, consistent with the purposes of this part.
(F) Safe harbor
(i) DefinitionsIn this subparagraph—(I) the term “covered institution” means an insured depository institution or an insured credit union that, together with its affiliates, has less than $10,000,000,000 in total consolidated assets;(II) the term “insured credit union” has the meaning given the term in section 1752 of title 12;(III) the term “insured depository institution” has the meaning given the term in section 1813 of title 12;(IV) the term “interest-only” means that, under the terms of the legal obligation, one or more of the periodic payments may be applied solely to accrued interest and not to loan principal; and(V) the term “negative amortization” means payment of periodic payments that will result in an increase in the principal balance under the terms of the legal obligation.
(ii) Safe harborIn this section—(I) the term “qualified mortgage” includes any residential mortgage loan—(aa) that is originated and retained in portfolio by a covered institution;(bb) that is in compliance with the limitations with respect to prepayment penalties described in subsections (c)(1) and (c)(3);(cc) that is in compliance with the requirements of clause (vii) of subparagraph (A);(dd) that does not have negative amortization or interest-only features; and(ee) for which the covered institution considers and documents the debt, income, and financial resources of the consumer in accordance with clause (iv); and(II) a residential mortgage loan described in subclause (I) shall be deemed to meet the requirements of subsection (a).
(iii) Exception for certain transfersA residential mortgage loan described in clause (ii)(I) shall not qualify for the safe harbor under clause (ii) if the legal title to the residential mortgage loan is sold, assigned, or otherwise transferred to another person unless the residential mortgage loan is sold, assigned, or otherwise transferred—(I) to another person by reason of the bankruptcy or failure of a covered institution;(II) to a covered institution so long as the loan is retained in portfolio by the covered institution to which the loan is sold, assigned, or otherwise transferred;(III) pursuant to a merger of a covered institution with another person or the acquisition of a covered institution by another person or of another person by a covered institution, so long as the loan is retained in portfolio by the person to whom the loan is sold, assigned, or otherwise transferred; or(IV) to a wholly owned subsidiary of a covered institution, provided that, after the sale, assignment, or transfer, the residential mortgage loan is considered to be an asset of the covered institution for regulatory accounting purposes.
(iv) Consideration and documentation requirementsThe consideration and documentation requirements described in clause (ii)(I)(ee) shall—(I) not be construed to require compliance with, or documentation in accordance with, appendix Q to part 1026 of title 12, Code of Federal Regulations, or any successor regulation; and(II) be construed to permit multiple methods of documentation.
(3) Regulations
(A) In general
(B) Revision of safe harbor criteria
(i) In general
(ii) Loan definitionThe following agencies shall, in consultation with the Bureau, prescribe rules defining the types of loans they insure, guarantee, or administer, as the case may be, that are qualified mortgages for purposes of paragraph (2)(A), and such rules may revise, add to, or subtract from the criteria used to define a qualified mortgage under paragraph (2)(A), upon a finding that such rules are consistent with the purposes of this section and section 1639b of this title, to prevent circumvention or evasion thereof, or to facilitate compliance with such sections:(I) The Department of Housing and Urban Development, with regard to mortgages insured under the National Housing Act [12 U.S.C. 1701 et seq.].(II) The Department of Veterans Affairs, with regard to a loan made or guaranteed by the Secretary of Veterans Affairs.(III) The Department of Agriculture, with regard 3
3 So in original. Probably should be followed by “to”.
loans guaranteed by the Secretary of Agriculture pursuant to section 1472(h) of title 42.(IV) The Rural Housing Service, with regard to loans insured by the Rural Housing Service.(C) Consideration of underwriting requirements for Property Assessed Clean Energy financing
(i) Definition
(ii) Regulations
(iii) Collection of information and consultationIn prescribing the regulations under this subparagraph, the Bureau—(I) may collect such information and data that the Bureau determines is necessary; and(II) shall consult with State and local governments and bond-issuing authorities.
(c) Prohibition on certain prepayment penalties
(1) Prohibited on certain loans
(A) In general
(B) ExclusionsFor purposes of this subsection, a “qualified mortgage” may not include a residential mortgage loan that—
(i) has an adjustable rate; or
(ii) has an annual percentage rate that exceeds the average prime offer rate for a comparable transaction, as of the date the interest rate is set—(I) by 1.5 or more percentage points, in the case of a first lien residential mortgage loan having a original principal obligation amount that is equal to or less than the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the 6th sentence of section 1454(a)(2) of title 12;(II) by 2.5 or more percentage points, in the case of a first lien residential mortgage loan having a original principal obligation amount that is more than the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the 6th sentence of section 1454(a)(2) of title 12; and(III) by 3.5 or more percentage points, in the case of a subordinate lien residential mortgage loan.
(2) Publication of average prime offer rate and APR thresholdsThe Bureau—
(A) shall publish, and update at least weekly, average prime offer rates;
(B) may publish multiple rates based on varying types of mortgage transactions; and
(C) shall adjust the thresholds established under subclause (I), (II), and (III) of paragraph (1)(B)(ii) as necessary to reflect significant changes in market conditions and to effectuate the purposes of the Mortgage Reform and Anti-Predatory Lending Act.
(3) Phased-out penalties on qualified mortgagesA qualified mortgage (as defined in subsection (b)(2)) may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal after the loan is consummated in excess of the following limitations:
(A) During the 1-year period beginning on the date the loan is consummated, the prepayment penalty shall not exceed an amount equal to 3 percent of the outstanding balance on the loan.
(B) During the 1-year period beginning after the period described in subparagraph (A), the prepayment penalty shall not exceed an amount equal to 2 percent of the outstanding balance on the loan.
(C) During the 1-year period beginning after the 1-year period described in subparagraph (B), the prepayment penalty shall not exceed an amount equal to 1 percent of the outstanding balance on the loan.
(D) After the end of the 3-year period beginning on the date the loan is consummated, no prepayment penalty may be imposed on a qualified mortgage.
(4) Option for no prepayment penalty required
(d) Single premium credit insurance prohibitedNo creditor may finance, directly or indirectly, in connection with any residential mortgage loan or with any extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident, loss-of-income, life, or health insurance, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that—
(1) insurance premiums or debt cancellation or suspension fees calculated and paid in full on a monthly basis shall not be considered financed by the creditor; and
(2) this subsection shall not apply to credit unemployment insurance for which the unemployment insurance premiums are reasonable, the creditor receives no direct or indirect compensation in connection with the unemployment insurance premiums, and the unemployment insurance premiums are paid pursuant to another insurance contract and not paid to an affiliate of the creditor.
(e) Arbitration
(1) In general
(2) Post-controversy agreements
(3) No waiver of statutory cause of action
(f) Mortgages with negative amortizationNo creditor may extend credit to a borrower in connection with a consumer credit transaction under an open or closed end consumer credit plan secured by a dwelling or residential real property that includes a dwelling, other than a reverse mortgage, that provides or permits a payment plan that may, at any time over the term of the extension of credit, result in negative amortization unless, before such transaction is consummated—
(1) the creditor provides the consumer with a statement that—
(A) the pending transaction will or may, as the case may be, result in negative amortization;
(B) describes negative amortization in such manner as the Bureau shall prescribe;
(C) negative amortization increases the outstanding principal balance of the account; and
(D) negative amortization reduces the consumer’s equity in the dwelling or real property; and
(2) in the case of a first-time borrower with respect to a residential mortgage loan that is not a qualified mortgage, the first-time borrower provides the creditor with sufficient documentation to demonstrate that the consumer received homeownership counseling from organizations or counselors certified by the Secretary of Housing and Urban Development as competent to provide such counseling.
(g) Protection against loss of anti-deficiency protection
(1) Definition
(2) Notice at time of consummation
(3) Notice before refinancing that would cause loss of protection
(h) Policy regarding acceptance of partial paymentIn the case of any residential mortgage loan, a creditor shall disclose prior to settlement or, in the case of a person becoming a creditor with respect to an existing residential mortgage loan, at the time such person becomes a creditor—
(1) the creditor’s policy regarding the acceptance of partial payments; and
(2) if partial payments are accepted, how such payments will be applied to such mortgage and if such payments will be placed in escrow.
(i) Timeshare plans
(Pub. L. 90–321, title I, § 129C, as added and amended Pub. L. 111–203, title X, § 1100A(2), title XIV, §§ 1411(a)(2), 1412, 1414(a), (c), (d), July 21, 2010, 124 Stat. 2107, 2142, 2145, 2149, 2152; Pub. L. 114–94, div. G, title LXXXIX, § 89003(1), Dec. 4, 2015, 129 Stat. 1800; Pub. L. 115–174, title I, § 101, title III, § 307, May 24, 2018, 132 Stat. 1297, 1347.)
§ 1639d. Escrow or impound accounts relating to certain consumer credit transactions
(a) In general
(b) When requiredNo impound, trust, or other type of account for the payment of property taxes, insurance premiums, or other purposes relating to the property may be required as a condition of a real property sale contract or a loan secured by a first deed of trust or mortgage on the principal dwelling of the consumer, other than a consumer credit transaction under an open end credit plan or a reverse mortgage, except when—
(1) any such impound, trust, or other type of escrow or impound account for such purposes is required by Federal or State law;
(2) a loan is made, guaranteed, or insured by a State or Federal governmental lending or insuring agency;
(3) the transaction is secured by a first mortgage or lien on the consumer’s principal dwelling having an original principal obligation amount that—
(A) does not exceed the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date such interest rate set, pursuant to the sixth sentence of section 1454(a)(2) of title 12, and the annual percentage rate will exceed the average prime offer rate as defined in section 1639c of this title by 1.5 or more percentage points; or
(B) exceeds the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date such interest rate set, pursuant to the sixth sentence of section 1454(a)(2) of title 12, and the annual percentage rate will exceed the average prime offer rate as defined in section 1639c of this title by 2.5 or more percentage points; or
(4) so required pursuant to regulation.
(c) Exemptions
(1) In generalThe Bureau may, by regulation, exempt from the requirements of subsection (a) a creditor that—
(A) operates in rural or underserved areas;
(B) together with all affiliates, has total annual mortgage loan originations that do not exceed a limit set by the Bureau;
(C) retains its mortgage loan originations in portfolio; and
(D) meets any asset size threshold and any other criteria the Bureau may establish, consistent with the purposes of this part.
(2) Treatment of loans held by smaller institutionsThe Bureau shall, by regulation, exempt from the requirements of subsection (a) any loan made by an insured depository institution or an insured credit union secured by a first lien on the principal dwelling of a consumer if—
(A) the insured depository institution or insured credit union has assets of $10,000,000,000 or less;
(B) during the preceding calendar year, the insured depository institution or insured credit union and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling; and
(C) the transaction satisfies the criteria in sections 1026.35(b)(2)(iii)(A), 1026.35(b)(2)(iii)(D), and 1026.35(b)(2)(v) of title 12, Code of Federal Regulations, or any successor regulation.
(d) Duration of mandatory escrow or impound accountAn escrow or impound account established pursuant to subsection (b) shall remain in existence for a minimum period of 5 years, beginning with the date of the consummation of the loan, unless and until—
(1) such borrower has sufficient equity in the dwelling securing the consumer credit transaction so as to no longer be required to maintain private mortgage insurance;
(2) such borrower is delinquent;
(3) such borrower otherwise has not complied with the legal obligation, as established by rule; or
(4) the underlying mortgage establishing the account is terminated.
(e) Limited exemptions for loans secured by shares in a cooperative or in which an association must maintain a master insurance policy
(f) Clarification on escrow accounts for loans not meeting statutory testFor mortgages not covered by the requirements of subsection (b), no provision of this section shall be construed as precluding the establishment of an impound, trust, or other type of account for the payment of property taxes, insurance premiums, or other purposes relating to the property—
(1) on terms mutually agreeable to the parties to the loan;
(2) at the discretion of the lender or servicer, as provided by the contract between the lender or servicer and the borrower; or
(3) pursuant to the requirements for the escrowing of flood insurance payments for regulated lending institutions in section 102(d) of the Flood Disaster Protection Act of 1973 [42 U.S.C. 4012a(d)].
(g) Administration of mandatory escrow or impound accounts
(1) In general
(2) AdministrationExcept as provided in this section or regulations prescribed under this section, an escrow or impound account subject to this section shall be administered in accordance with—
(A) the Real Estate Settlement Procedures Act of 1974 [12 U.S.C. 2601 et seq.] and regulations prescribed under such Act;
(B) the Flood Disaster Protection Act of 1973 and regulations prescribed under such Act; and
(C) the law of the State, if applicable, where the real property securing the consumer credit transaction is located.
(3) Applicability of payment of interest
(4) Penalty coordination with RESPA
(h) Disclosures relating to mandatory escrow or impound accountIn the case of any impound, trust, or escrow account that is required under subsection (b), the creditor shall disclose by written notice to the consumer at least 3 business days before the consummation of the consumer credit transaction giving rise to such account or in accordance with timeframes established in prescribed regulations the following information:
(1) The fact that an escrow or impound account will be established at consummation of the transaction.
(2) The amount required at closing to initially fund the escrow or impound account.
(3) The amount, in the initial year after the consummation of the transaction, of the estimated taxes and hazard insurance, including flood insurance, if applicable, and any other required periodic payments or premiums that reflects, as appropriate, either the taxable assessed value of the real property securing the transaction, including the value of any improvements on the property or to be constructed on the property (whether or not such construction will be financed from the proceeds of the transaction) or the replacement costs of the property.
(4) The estimated monthly amount payable to be escrowed for taxes, hazard insurance (including flood insurance, if applicable) and any other required periodic payments or premiums.
(5) The fact that, if the consumer chooses to terminate the account in the future, the consumer will become responsible for the payment of all taxes, hazard insurance, and flood insurance, if applicable, as well as any other required periodic payments or premiums on the property unless a new escrow or impound account is established.
(6) Such other information as the Bureau determines necessary for the protection of the consumer.
(i) DefinitionsFor purposes of this section, the following definitions shall apply:
(1) Flood insurance
(2) Hazard insurance
(3) Insured credit union
(4) Insured depository institution
(j) Disclosure notice required for consumers who waive escrow services
(1) In generalIf—
(A) an impound, trust, or other type of account for the payment of property taxes, insurance premiums, or other purposes relating to real property securing a consumer credit transaction is not established in connection with the transaction; or
(B) a consumer chooses, and provides written notice to the creditor or servicer of such choice, at any time after such an account is established in connection with any such transaction and in accordance with any statute, regulation, or contractual agreement, to close such account,
the creditor or servicer shall provide a timely and clearly written disclosure to the consumer that advises the consumer of the responsibilities of the consumer and implications for the consumer in the absence of any such account.
(2)Any disclosure provided to a consumer under paragraph (1) shall include the following:
(A) Information concerning any applicable fees or costs associated with either the non-establishment of any such account at the time of the transaction, or any subsequent closure of any such account.
(B) A clear and prominent statement that the consumer is responsible for personally and directly paying the non-escrowed items, in addition to paying the mortgage loan payment, in the absence of any such account, and the fact that the costs for taxes, insurance, and related fees can be substantial.
(C) A clear explanation of the consequences of any failure to pay non-escrowed items, including the possible requirement for the forced placement of insurance by the creditor or servicer and the potentially higher cost (including any potential commission payments to the servicer) or reduced coverage for the consumer in the event of any such creditor-placed insurance.
(D) Such other information as the Bureau determines necessary for the protection of the consumer.
(Pub. L. 90–321, title I, § 129D, as added and amended Pub. L. 111–203, title X, § 1100A(2), title XIV, §§ 1461(a), 1462, July 21, 2010, 124 Stat. 2107, 2178, 2181; Pub. L. 114–94, div. G, title LXXXIX, § 89003(2), Dec. 4, 2015, 129 Stat. 1801; Pub. L. 115–174, title I, § 108, May 24, 2018, 132 Stat. 1304.)
§ 1639e. Appraisal independence requirements
(a) In general
(b) Appraisal independence
For purposes of subsection (a), acts or practices that violate appraisal independence shall include—
(1) any appraisal of a property offered as security for repayment of the consumer credit transaction that is conducted in connection with such transaction in which a person with an interest in the underlying transaction compensates, coerces, extorts, colludes, instructs, induces, bribes, or intimidates a person, appraisal management company, firm, or other entity conducting or involved in an appraisal, or attempts, to compensate, coerce, extort, collude, instruct, induce, bribe, or intimidate such a person, for the purpose of causing the appraised value assigned, under the appraisal, to the property to be based on any factor other than the independent judgment of the appraiser;
(2) mischaracterizing, or suborning any mischaracterization of, the appraised value of the property securing the extension of the credit;
(3) seeking to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing of the transaction; and
(4) withholding or threatening to withhold timely payment for an appraisal report or for appraisal services rendered when the appraisal report or services are provided for in accordance with the contract between the parties.
(c) Exceptions
The requirements of subsection (b) shall not be construed as prohibiting a mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, consumer, or any other person with an interest in a real estate transaction from asking an appraiser to undertake 1 or more of the following:
(1) Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal.
(2) Provide further detail, substantiation, or explanation for the appraiser’s value conclusion.
(3) Correct errors in the appraisal report.
(d) Prohibitions on conflicts of interest
(e) Mandatory reporting
(f) No extension of credit
(g) Rules and interpretive guidelines
(1) In general
(2) Interim final regulations
(h) Appraisal report portability
(i) Customary and reasonable fee
(1) In general
(2) Fee appraiser definition
(A) In general
For purposes of this section, the term “fee appraiser” means a person who is not an employee of the mortgage loan originator or appraisal management company engaging the appraiser and is—
(i) a State licensed or certified appraiser who receives a fee for performing an appraisal and certifies that the appraisal has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice; or
(ii) a company not subject to the requirements of section 3353 of title 12 that utilizes the services of State licensed or certified appraisers and receives a fee for performing appraisals in accordance with the Uniform Standards of Professional Appraisal Practice.
(B) Rule of construction related to appraisal donations
(3) Exception for complex assignments
(j) Sunset
(k) Penalties
(1) First violation
(2) Subsequent violations
(3) Assessment
(Pub. L. 90–321, title I, § 129E, as added Pub. L. 111–203, title XIV, § 1472(a), July 21, 2010, 124 Stat. 2187; amended Pub. L. 115–174, title I, § 102, May 24, 2018, 132 Stat. 1299.)
§ 1639f. Requirements for prompt crediting of home loan payments
(a) In general
(b) Exception
(Pub. L. 90–321, title I, § 129F, as added Pub. L. 111–203, title XIV, § 1464(a), July 21, 2010, 124 Stat. 2184.)
§ 1639g. Requests for payoff amounts of home loan
A creditor or servicer of a home loan shall send an accurate payoff balance within a reasonable time, but in no case more than 7 business days, after the receipt of a written request for such balance from or on behalf of the borrower.
(Pub. L. 90–321, title I, § 129G, as added Pub. L. 111–203, title XIV, § 1464(b), July 21, 2010, 124 Stat. 2184.)
§ 1639h. Property appraisal requirements
(a) In general
(b) Appraisal requirements
(1) Physical property visit
(2) Second appraisal under certain circumstances
(A) In general
(B) No cost to applicant
(3) Certified or licensed appraiser definedFor purposes of this section, the term “certified or licensed appraiser” means a person who—
(A) is, at a minimum, certified or licensed by the State in which the property to be appraised is located; and
(B) performs each appraisal in conformity with the Uniform Standards of Professional Appraisal Practice and title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 [12 U.S.C. 3331 et seq.], and the regulations prescribed under such title, as in effect on the date of the appraisal.
(4) Regulations
(A) In general
(B) Exemption
(c) Free copy of appraisal
(d) Consumer notification
(e) Violations
(f) Higher-risk mortgage definedFor purposes of this section, the term “higher-risk mortgage” means a residential mortgage loan, other than a reverse mortgage loan that is a qualified mortgage, as defined in section 1639c of this title, secured by a principal dwelling—
(1) that is not a qualified mortgage, as defined in section 1639c of this title; and
(2) with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction, as defined in section 1639c of this title, as of the date the interest rate is set—
(A) by 1.5 or more percentage points, in the case of a first lien residential mortgage loan having an original principal obligation amount that does not exceed the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the sixth sentence of section 1454(a)(2) of title 12;
(B) by 2.5 or more percentage points, in the case of a first lien residential mortgage loan having an original principal obligation amount that exceeds the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the sixth sentence of section 1454(a)(2) of title 12; and
(C) by 3.5 or more percentage points for a subordinate lien residential mortgage loan.
(Pub. L. 90–321, title I, § 129H, as added Pub. L. 111–203, title XIV, § 1471, July 21, 2010, 124 Stat. 2185.)
§ 1640. Civil liability
(a) Individual or class action for damages; amount of award; factors determining amount of awardExcept as otherwise provided in this section, any creditor who fails to comply with any requirement imposed under this part, including any requirement under section 1635 of this title, subsection (f) or (g) of section 1641 of this title, or part D or E of this subchapter with respect to any person is liable to such person in an amount equal to the sum of—
(1) any actual damage sustained by such person as a result of the failure;
(2)
(A)
(i) in the case of an individual action twice the amount of any finance charge in connection with the transaction, (ii) in the case of an individual action relating to a consumer lease under part E of this subchapter, 25 per centum of the total amount of monthly payments under the lease, except that the liability under this subparagraph shall not be less than $200 nor greater than $2,000, (iii) in the case of an individual action relating to an open end consumer credit plan that is not secured by real property or a dwelling, twice the amount of any finance charge in connection with the transaction, with a minimum of $500 and a maximum of $5,000, or such higher amount as may be appropriate in the case of an established pattern or practice of such failures; 1
1 So in original. The semicolon probably should be a comma.
or (iv) in the case of an individual action relating to a credit transaction not under an open end credit plan that is secured by real property or a dwelling, not less than $400 or greater than $4,000; or(B) in the case of a class action, such amount as the court may allow, except that as to each member of the class no minimum recovery shall be applicable, and the total recovery under this subparagraph in any class action or series of class actions arising out of the same failure to comply by the same creditor shall not be more than the lesser of $1,000,000 or 1 per centum of the net worth of the creditor;
(3) in the case of any successful action to enforce the foregoing liability or in any action in which a person is determined to have a right of rescission under section 1635 or 1638(e)(7) of this title, the costs of the action, together with a reasonable attorney’s fee as determined by the court; and
(4) in the case of a failure to comply with any requirement under section 1639 of this title, paragraph (1) or (2) of section 1639b(c) of this title, or section 1639c(a) of this title, an amount equal to the sum of all finance charges and fees paid by the consumer, unless the creditor demonstrates that the failure to comply is not material.
In determining the amount of award in any class action, the court shall consider, among other relevant factors, the amount of any actual damages awarded, the frequency and persistence of failures of compliance by the creditor, the resources of the creditor, the number of persons adversely affected, and the extent to which the creditor’s failure of compliance was intentional. In connection with the disclosures referred to in subsections (a) and (b) of section 1637 of this title, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 1635 of this title, 1637(a) 2
2 So in original. Probably should be preceded by “section”.
of this title, or any of paragraphs (4) through (13) of section 1637(b) of this title, or for failing to comply with disclosure requirements under State law for any term or item that the Bureau has determined to be substantially the same in meaning under section 1610(a)(2) of this title as any of the terms or items referred to in section 1637(a) of this title, or any of paragraphs (4) through (13) of section 1637(b) of this title. In connection with the disclosures referred to in subsection (c) or (d) of section 1637 of this title, a card issuer shall have a liability under this section only to a cardholder who pays a fee described in section 1637(c)(1)(A)(ii)(I) or section 1637(c)(4)(A)(i) of this title or who uses the credit card or charge card. In connection with the disclosures referred to in section 1638 of this title, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 1635 of this title, of paragraph (2) (insofar as it requires a disclosure of the “amount financed”), (3), (4), (5), (6), or (9) of section 1638(a) of this title, or section 1638(b)(2)(C)(ii) of this title, of subparagraphs (A), (B), (D), (F), or (J) of section 1638(e)(2) of this title (for purposes of paragraph (2) or (4) of section 1638(e) of this title), or paragraph (4)(C), (6), (7), or (8) of section 1638(e) of this title, or for failing to comply with disclosure requirements under State law for any term which the Bureau has determined to be substantially the same in meaning under section 1610(a)(2) of this title as any of the terms referred to in any of those paragraphs of section 1638(a) of this title or section 1638(b)(2)(C)(ii) of this title. With respect to any failure to make disclosures required under this part or part D or E of this subchapter, liability shall be imposed only upon the creditor required to make disclosure, except as provided in section 1641 of this title.(b) Correction of errors
(c) Unintentional violations; bona fide errors
(d) Liability in transaction or lease involving multiple obligors
(e) Jurisdiction of courts; limitations on actions; State attorney general enforcementExcept as provided in the subsequent sentence, any action under this section may be brought in any United States district court, or in any other court of competent jurisdiction, within one year from the date of the occurrence of the violation or, in the case of a violation involving a private education loan (as that term is defined in section 1650(a) of this title), 1 year from the date on which the first regular payment of principal is due under the loan. Any action under this section with respect to any violation of section 1639, 1639b, or 1639c of this title may be brought in any United States district court, or in any other court of competent jurisdiction, before the end of the 3-year period beginning on the date of the occurrence of the violation. This subsection does not bar a person from asserting a violation of this subchapter in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action, except as otherwise provided by State law. An action to enforce a violation of section 1639, 1639b, 1639c, 1639d, 1639e, 1639f, 1639g, or 1639h of this title may also be brought by the appropriate State attorney general in any appropriate United States district court, or any other court of competent jurisdiction, not later than 3 years after the date on which the violation occurs. The State attorney general shall provide prior written notice of any such civil action to the Federal agency responsible for enforcement under section 1607 of this title and shall provide the agency with a copy of the complaint. If prior notice is not feasible, the State attorney general shall provide notice to such agency immediately upon instituting the action. The Federal agency may—
(1) intervene in the action;
(2) upon intervening—
(A) remove the action to the appropriate United States district court, if it was not originally brought there; and
(B) be heard on all matters arising in the action; and
(3) file a petition for appeal.
(f) Good faith compliance with rule, regulation, or interpretation of Bureau or with interpretation or approval of duly authorized official or employee of Federal Reserve System
(g) Recovery for multiple failures to disclose
(h) Offset from amount owed to creditor or assignee; rights of defaulting consumer
(i) Class action moratorium
(1) In generalDuring the period beginning on May 18, 1995, and ending on October 1, 1995, no court may enter any order certifying any class in any action under this subchapter—
(A) which is brought in connection with any credit transaction not under an open end credit plan which is secured by a first lien on real property or a dwelling and constitutes a refinancing or consolidation of an existing extension of credit; and
(B) which is based on the alleged failure of a creditor—
(i) to include a charge actually incurred (in connection with the transaction) in the finance charge disclosed pursuant to section 1638 of this title;
(ii) to properly make any other disclosure required under section 1638 of this title as a result of the failure described in clause (i); or
(iii) to provide proper notice of rescission rights under section 1635(a) of this title due to the selection by the creditor of the incorrect form from among the model forms prescribed by the Bureau or from among forms based on such model forms.
(2) Exceptions for certain alleged violationsParagraph (1) shall not apply with respect to any action—
(A) described in clause (i) or (ii) of paragraph (1)(B), if the amount disclosed as the finance charge results in an annual percentage rate that exceeds the tolerance provided in section 1606(c) of this title; or
(B) described in paragraph (1)(B)(iii), if—
(i) no notice relating to rescission rights under section 1635(a) of this title was provided in any form; or
(ii) proper notice was not provided for any reason other than the reason described in such paragraph.
(j) Private educational lender
(k) Defense to foreclosure
(1) In general
(2) Amount of recoupment or setoff
(A) In general
(B) Special rule
(l) Exemption from liability and rescission in case of borrower fraud or deception
(Pub. L. 90–321, title I, § 130, May 29, 1968, 82 Stat. 157; Pub. L. 93–495, title IV, §§ 406, 407, 408(a)–(d), Oct. 28, 1974, 88 Stat. 1518; Pub. L. 94–222, § 3(b), Feb. 27, 1976, 90 Stat. 197; Pub. L. 94–240, § 4, Mar. 23, 1976, 90 Stat. 260; Pub. L. 96–221, title VI, § 615, Mar. 31, 1980, 94 Stat. 180; Pub. L. 100–583, § 3, Nov. 3, 1988, 102 Stat. 2966; Pub. L. 103–325, title I, § 153(a), (b), Sept. 23, 1994, 108 Stat. 2195; Pub. L. 104–12, § 2, May 18, 1995, 109 Stat. 161; Pub. L. 104–29, § 6, Sept. 30, 1995, 109 Stat. 274; Pub. L. 110–289, div. B, title V, § 2502(b), July 30, 2008, 122 Stat. 2857; Pub. L. 110–315, title X, § 1012(a), Aug. 14, 2008, 122 Stat. 3482; Pub. L. 111–22, div. A, title IV, § 404(b), May 20, 2009, 123 Stat. 1658; Pub. L. 111–24, title I, § 107, title II, § 201(b), May 22, 2009, 123 Stat. 1743, 1745; Pub. L. 111–203, title X, § 1100A(2), title XIV, §§ 1413, 1416, 1417, 1422, July 21, 2010, 124 Stat. 2107, 2148, 2153, 2157.)
§ 1641. Liability of assignees
(a) Prerequisites
(b) Proof of compliance with statutory provisions
(c) Right of rescission by consumer unaffected
(d) Rights upon assignment of certain mortgages
(1) In general
(2) Limitation on damagesNotwithstanding any other provision of law, relief provided as a result of any action made permissible by paragraph (1) may not exceed—
(A) with respect to actions based upon a violation of this subchapter, the amount specified in section 1640 of this title; and
(B) with respect to all other causes of action, the sum of—
(i) the amount of all remaining indebtedness; and
(ii) the total amount paid by the consumer in connection with the transaction.
(3) Offset
(4) Notice
(e) Liability of assignee for consumer credit transactions secured by real property
(1) In generalExcept as otherwise specifically provided in this subchapter, any civil action against a creditor for a violation of this subchapter, and any proceeding under section 1607 of this title against a creditor, with respect to a consumer credit transaction secured by real property may be maintained against any assignee of such creditor only if—
(A) the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement provided in connection with such transaction pursuant to this subchapter; and
(B) the assignment to the assignee was voluntary.
(2) Violation apparent on the face of the disclosure describedFor the purpose of this section, a violation is apparent on the face of the disclosure statement if—
(A) the disclosure can be determined to be incomplete or inaccurate by a comparison among the disclosure statement, any itemization of the amount financed, the note, or any other disclosure of disbursement; or
(B) the disclosure statement does not use the terms or format required to be used by this subchapter.
(f) Treatment of servicer
(1) In general
(2) Servicer not treated as owner on basis of assignment for administrative convenience
(3) “Servicer” defined
(4) Applicability
(g) Notice of new creditor
(1) In generalIn addition to other disclosures required by this subchapter, not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer, including—
(A) the identity, address, telephone number of the new creditor;
(B) the date of transfer;
(C) how to reach an agent or party having authority to act on behalf of the new creditor;
(D) the location of the place where transfer of ownership of the debt is recorded; and
(E) any other relevant information regarding the new creditor.
(2) Definition
(Pub. L. 90–321, title I, § 131, May 29, 1968, 82 Stat. 157; Pub. L. 96–221, title VI, § 616(a), Mar. 31, 1980, 94 Stat. 182; Pub. L. 103–325, title I, § 153(c), Sept. 23, 1994, 108 Stat. 2195; Pub. L. 104–29, § 7, Sept. 30, 1995, 109 Stat. 274; Pub. L. 111–22, div. A, title IV, § 404(a), May 20, 2009, 123 Stat. 1658; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
§ 1642. Issuance of credit cards
No credit card shall be issued except in response to a request or application therefor. This prohibition does not apply to the issuance of a credit card in renewal of, or in substitution for, an accepted credit card.
(Pub. L. 90–321, title I, § 132, as added Pub. L. 91–508, title V, § 502(a), Oct. 26, 1970, 84 Stat. 1126.)
§ 1643. Liability of holder of credit card
(a) Limits on liability
(1) A cardholder shall be liable for the unauthorized use of a credit card only if—
(A) the card is an accepted credit card;
(B) the liability is not in excess of $50;
(C) the card issuer gives adequate notice to the cardholder of the potential liability;
(D) the card issuer has provided the cardholder with a description of a means by which the card issuer may be notified of loss or theft of the card, which description may be provided on the face or reverse side of the statement required by section 1637(b) of this title or on a separate notice accompanying such statement;
(E) the unauthorized use occurs before the card issuer has been notified that an unauthorized use of the credit card has occurred or may occur as the result of loss, theft, or otherwise; and
(F) the card issuer has provided a method whereby the user of such card can be identified as the person authorized to use it.
(2) For purposes of this section, a card issuer has been notified when such steps as may be reasonably required in the ordinary course of business to provide the card issuer with the pertinent information have been taken, whether or not any particular officer, employee, or agent of the card issuer does in fact receive such information.
(b) Burden of proof
(c) Liability imposed by other laws or by agreement with issuer
(d) Exclusiveness of liability
(Pub. L. 90–321, title I, § 133, as added Pub. L. 91–508, title V, § 502(a), Oct. 26, 1970, 84 Stat. 1126; amended Pub. L. 96–221, title VI, § 617, Mar. 31, 1980, 94 Stat. 182.)
§ 1644. Fraudulent use of credit cards; penalties
(a) Use, attempt or conspiracy to use card in transaction affecting interstate or foreign commerce
(b) Transporting, attempting or conspiring to transport card in interstate commerce
(c) Use of interstate commerce to sell or transport card
(d) Receipt, concealment, etc., of goods obtained by use of card
(e) Receipt, concealment, etc., of tickets for interstate or foreign transportation obtained by use of card
(f) Furnishing of money, etc., through use of card
(Pub. L. 90–321, title I, § 134, as added Pub. L. 91–508, title V, § 502(a), Oct. 26, 1970, 84 Stat. 1127; amended Pub. L. 93–495, title IV, § 414, Oct. 28, 1974, 88 Stat. 1520.)
§ 1645. Business credit cards; limits on liability of employees
The exemption provided by section 1603(1) of this title does not apply to the provisions of sections 1642, 1643, and 1644 of this title, except that a card issuer and a business or other organization which provides credit cards issued by the same card issuer to ten or more of its employees may by contract agree as to liability of the business or other organization with respect to unauthorized use of such credit cards without regard to the provisions of section 1643 of this title, but in no case may such business or other organization or card issuer impose liability upon any employee with respect to unauthorized use of such a credit card except in accordance with and subject to the limitations of section 1643 of this title.
(Pub. L. 90–321, title I, § 135, as added Pub. L. 93–495, title IV, § 410(a), Oct. 28, 1974, 88 Stat. 1519.)
§ 1646. Dissemination of annual percentage rates; implementation, etc.
(a) Annual percentage rates
(b) Credit card price and availability information
(1) Collection required
(2) Sample requirementsThe broad sample of financial institutions required under paragraph (1) shall include—
(A) the 25 largest issuers of credit cards; and
(B) not less than 125 additional financial institutions selected by the Bureau in a manner that ensures—
(i) an equitable geographical distribution within the sample; and
(ii) the representation of a wide spectrum of institutions within the sample.
(3) Report of information from sample
(4) Public availability of collected information; report to CongressThe Bureau shall—
(A) make the information collected pursuant to this subsection available to the public upon request; and
(B) report such information semiannually to Congress.
(c) Implementation
(Pub. L. 90–321, title I, § 136, as added Pub. L. 96–221, title VI, § 618(a), Mar. 31, 1980, 94 Stat. 183; amended Pub. L. 100–583, § 5, Nov. 3, 1988, 102 Stat. 2967; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
§ 1647. Home equity plans
(a) Index requirement
(b) Grounds for acceleration of outstanding balanceA creditor may not unilaterally terminate any account under an open end consumer credit plan under which extensions of credit are secured by a consumer’s principal dwelling and require the immediate repayment of any outstanding balance at such time, except in the case of—
(1) fraud or material misrepresentation on the part of the consumer in connection with the account;
(2) failure by the consumer to meet the repayment terms of the agreement for any outstanding balance; or
(3) any other action or failure to act by the consumer which adversely affects the creditor’s security for the account or any right of the creditor in such security.
This subsection does not apply to reverse mortgage transactions.
(c) Change in terms
(1) In general
(2) Certain changes not precludedNotwithstanding the provisions of subsection 1
1 So in original. Probably should be “paragraph”.
(1), a creditor may make any of the following changes:(A) Change the index and margin applicable to extensions of credit under such plan if the index used by the creditor is no longer available and the substitute index and margin would result in a substantially similar interest rate.
(B) Prohibit additional extensions of credit or reduce the credit limit applicable to an account under the plan during any period in which the value of the consumer’s principal dwelling which secures any outstanding balance is significantly less than the original appraisal value of the dwelling.
(C) Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which the creditor has reason to believe that the consumer will be unable to comply with the repayment requirements of the account due to a material change in the consumer’s financial circumstances.
(D) Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which the consumer is in default with respect to any material obligation of the consumer under the agreement.
(E) Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which—
(i) the creditor is precluded by government action from imposing the annual percentage rate provided for in the account agreement; or
(ii) any government action is in effect which adversely affects the priority of the creditor’s security interest in the account to the extent that the value of the creditor’s secured interest in the property is less than 120 percent of the amount of the credit limit applicable to the account.
(F) Any change that will benefit the consumer.
(3) Material obligations
(4) Consumer benefit
(A) In general
(B) Bureau categorization
(d) Terms changed after application
(e) Additional requirements relating to refunds and imposition of nonrefundable fees
(1) In general
(2) Constructive receipt
(Pub. L. 90–321, title I, § 137, as added Pub. L. 100–709, § 3, Nov. 23, 1988, 102 Stat. 4731; amended Pub. L. 103–325, title I, § 154(c), Sept. 23, 1994, 108 Stat. 2197; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
§ 1648. Reverse mortgages
(a) In generalIn addition to the disclosures required under this subchapter, for each reverse mortgage, the creditor shall, not less than 3 days prior to consummation of the transaction, disclose to the consumer in conspicuous type a good faith estimate of the projected total cost of the mortgage to the consumer expressed as a table of annual interest rates. Each annual interest rate shall be based on a projected total future credit extension balance under a projected appreciation rate for the dwelling and a term for the mortgage. The disclosure shall include—
(1) statements of the annual interest rates for not less than 3 projected appreciation rates and not less than 3 credit transaction periods, as determined by the Bureau, including—
(A) a short-term reverse mortgage;
(B) a term equaling the actuarial life expectancy of the consumer; and
(C) such longer term as the Bureau deems appropriate; and
(2) a statement that the consumer is not obligated to complete the reverse mortgage transaction merely because the consumer has received the disclosure required under this section or has signed an application for the reverse mortgage.
(b) Projected total costIn determining the projected total cost of the mortgage to be disclosed to the consumer under subsection (a), the creditor shall take into account—
(1) any shared appreciation or equity that the lender will, by contract, be entitled to receive;
(2) all costs and charges to the consumer, including the costs of any associated annuity that the consumer elects or is required to purchase as part of the reverse mortgage transaction;
(3) all payments to and for the benefit of the consumer, including, in the case in which an associated annuity is purchased (whether or not required by the lender as a condition of making the reverse mortgage), the annuity payments received by the consumer and financed from the proceeds of the loan, instead of the proceeds used to finance the annuity; and
(4) any limitation on the liability of the consumer under reverse mortgage transactions (such as nonrecourse limits and equity conservation agreements).
(Pub. L. 90–321, title I, § 138, as added Pub. L. 103–325, title I, § 154(b), Sept. 23, 1994, 108 Stat. 2196; amended Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
§ 1649. Certain limitations on liability
(a) Limitations on liabilityFor any closed end consumer credit transaction that is secured by real property or a dwelling, that is subject to this subchapter, and that is consummated before September 30, 1995, a creditor or any assignee of a creditor shall have no civil, administrative, or criminal liability under this subchapter for, and a consumer shall have no extended rescission rights under section 1635(f) of this title with respect to—
(1) the creditor’s treatment, for disclosure purposes, of—
(A) taxes described in section 1605(d)(3) of this title;
(B) fees described in section 1605(e)(2) and (5) of this title;
(C) fees and amounts referred to in the 3rd sentence of section 1605(a) of this title; or
(D) borrower-paid mortgage broker fees referred to in section 1605(a)(6) of this title;
(2) the form of written notice used by the creditor to inform the obligor of the rights of the obligor under section 1635 of this title if the creditor provided the obligor with a properly dated form of written notice published and adopted by the Bureau or a comparable written notice, and otherwise complied with all the requirements of this section regarding notice; or
(3) any disclosure relating to the finance charge imposed with respect to the transaction if the amount or percentage actually disclosed—
(A) may be treated as accurate for purposes of this subchapter if the amount disclosed as the finance charge does not vary from the actual finance charge by more than $200;
(B) may, under section 1605(f)(2) of this title, be treated as accurate for purposes of section 1635 of this title; or
(C) is greater than the amount or percentage required to be disclosed under this subchapter.
(b) ExceptionsSubsection (a) shall not apply to—
(1) any individual action or counterclaim brought under this subchapter which was filed before June 1, 1995;
(2) any class action brought under this subchapter for which a final order certifying a class was entered before January 1, 1995;
(3) the named individual plaintiffs in any class action brought under this subchapter which was filed before June 1, 1995; or
(4) any consumer credit transaction with respect to which a timely notice of rescission was sent to the creditor before June 1, 1995.
(Pub. L. 90–321, title I, § 139, as added Pub. L. 104–29, § 4(a), Sept. 30, 1995, 109 Stat. 273; amended Pub. L. 104–208, div. A, title II, § 2107(a), Sept. 30, 1996, 110 Stat. 3009–402; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
§ 1650. Preventing unfair and deceptive private educational lending practices and eliminating conflicts of interest
(a) DefinitionsAs used in this section—
(1) the term “cosigner”—
(A) means any individual who is liable for the obligation of another without compensation, regardless of how designated in the contract or instrument with respect to that obligation, other than an obligation under a private education loan extended to consolidate a consumer’s pre-existing private education loans;
(B) includes any person the signature of which is requested as condition to grant credit or to forbear on collection; and
(C) does not include a spouse of an individual described in subparagraph (A), the signature of whom is needed to perfect the security interest in a loan.
(2) the term “covered educational institution”—
(A) means any educational institution that offers a postsecondary educational degree, certificate, or program of study (including any institution of higher education); and
(B) includes an agent, officer, or employee of the educational institution;
(3) the term “gift”—
(A)
(i) means any gratuity, favor, discount, entertainment, hospitality, loan, or other item having more than a de minimis monetary value, including services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred; and
(ii) includes an item described in clause (i) provided to a family member of an officer, employee, or agent of a covered educational institution, or to any other individual based on that individual’s relationship with the officer, employee, or agent, if—(I) the item is provided with the knowledge and acquiescence of the officer, employee, or agent; and(II) the officer, employee, or agent has reason to believe the item was provided because of the official position of the officer, employee, or agent; and
(B) does not include—
(i) standard informational material related to a loan, default aversion, default prevention, or financial literacy;
(ii) food, refreshments, training, or informational material furnished to an officer, employee, or agent of a covered educational institution, as an integral part of a training session or through participation in an advisory council that is designed to improve the service of the private educational lender to the covered educational institution, if such training or participation contributes to the professional development of the officer, employee, or agent of the covered educational institution;
(iii) favorable terms, conditions, and borrower benefits on a private education loan provided to a student employed by the covered educational institution, if such terms, conditions, or benefits are not provided because of the student’s employment with the covered educational institution;
(iv) the provision of financial literacy counseling or services, including counseling or services provided in coordination with a covered educational institution, to the extent that such counseling or services are not undertaken to secure—(I) applications for private education loans or private education loan volume;(II) applications or loan volume for any loan made, insured, or guaranteed under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); or(III) the purchase of a product or service of a specific private educational lender;
(v) philanthropic contributions to a covered educational institution from a private educational lender that are unrelated to private education loans and are not made in exchange for any advantage related to private education loans; or
(vi) State education grants, scholarships, or financial aid funds administered by or on behalf of a State;
(4) the term “institution of higher education” has the same meaning as in section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002);
(5) the term “postsecondary educational expenses” means any of the expenses that are included as part of the cost of attendance of a student, as defined under section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll);
(6) the term “preferred lender arrangement” has the same meaning as in section 151 of the Higher Education Act of 1965 [20 U.S.C. 1019];
(7) the term “private educational lender” means—
(A) a financial institution, as defined in section 1813 of title 12 that solicits, makes, or extends private education loans;
(B) a Federal credit union, as defined in section 1752 of title 12 that solicits, makes, or extends private education loans; and
(C) any other person engaged in the business of soliciting, making, or extending private education loans;
(8) the term “private education loan”—
(A) means a loan provided by a private educational lender that—
(i) is not made, insured, or guaranteed under of 1
1 So in original. The word “of” probably should not appear.
title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); and(ii) is issued expressly for postsecondary educational expenses to a borrower, regardless of whether the loan is provided through the educational institution that the subject student attends or directly to the borrower from the private educational lender; and
(B) does not include an extension of credit under an open end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling; and
(9) the term “revenue sharing” means an arrangement between a covered educational institution and a private educational lender under which—
(A) a private educational lender provides or issues private education loans with respect to students attending the covered educational institution;
(B) the covered educational institution recommends to students or others the private educational lender or the private education loans of the private educational lender; and
(C) the private educational lender pays a fee or provides other material benefits, including profit sharing, to the covered educational institution in connection with the private education loans provided to students attending the covered educational institution or a borrower acting on behalf of a student.
(b) Prohibition on certain gifts and arrangementsA private educational lender may not, directly or indirectly—
(1) offer or provide any gift to a covered educational institution in exchange for any advantage or consideration provided to such private educational lender related to its private education loan activities; or
(2) engage in revenue sharing with a covered educational institution.
(c) Prohibition on co-branding
(d) Advisory Board compensation
(e) Prohibition on prepayment or repayment fees or penalty
(f) Credit card protections for college students
(1) Disclosure required
(2) Inducements prohibitedNo card issuer or creditor may offer to a student at an institution of higher education any tangible item to induce such student to apply for or participate in an open end consumer credit plan offered by such card issuer or creditor, if such offer is made—
(A) on the campus of an institution of higher education;
(B) near the campus of an institution of higher education, as determined by rule of the Bureau; or
(C) at an event sponsored by or related to an institution of higher education.
(3) Sense of the CongressIt is the sense of the Congress that each institution of higher education should consider adopting the following policies relating to credit cards:
(A) That any card issuer that markets a credit card on the campus of such institution notify the institution of the location at which such marketing will take place.
(B) That the number of locations on the campus of such institution at which the marketing of credit cards takes place be limited.
(C) That credit card and debt education and counseling sessions be offered as a regular part of any orientation program for new students of such institution.
(g) Additional protections relating to borrower or cosigner of a private education loan
(1) Prohibition on automatic default in case of death or bankruptcy of non-student obligor
(2) Cosigner release in case of death of borrower
(A) Release of cosigner
(B) Notification of release
(C) Designation of individual to act on behalf of the borrower
(Pub. L. 90–321, title I, § 140, as added Pub. L. 110–315, title X, § 1011(a), Aug. 14, 2008, 122 Stat. 3479; amended Pub. L. 111–24, title III, § 304, May 22, 2009, 123 Stat. 1749; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107; Pub. L. 115–174, title VI, § 601(a), May 24, 2018, 132 Stat. 1365.)
§ 1651. Procedure for timely settlement of estates of decedent obligors
The Bureau, in consultation with the Bureau 1
1 So in original.
and each other agency referred to in section 1607(a) of this title, shall prescribe regulations to require any creditor, with respect to any credit card account under an open end consumer credit plan, to establish procedures to ensure that any administrator of an estate of any deceased obligor with respect to such account can resolve outstanding credit balances in a timely manner.(Pub. L. 90–321, title I, § 140A, as added Pub. L. 111–24, title V, § 504(a), May 22, 2009, 123 Stat. 1756; amended Pub. L. 111–203, title X, § 1100A(2), (3), July 21, 2010, 124 Stat. 2107.)