Truth in Lending Act Amendments of 1995

Summary: Truth in Lending Act Amendments of 1995 - Amends the Truth in Lending Act (TILA) to exclude from the determination of finance charge for any consumer credit transaction fees imposed by third party closing agents, including settlement agents, attorneys, escrow and title companies, that are neither required nor retained by the creditor (thereby exempting such fees from TILA disclosure requirements). 
Modifies the determination of finance charge to include borrower-paid mortgage broker fees. 
Exempts from the required computation of finance charge:  (1) certain taxes on security instruments or evidences of indebtedness if they are a prerequisite for recordation; (2) fees for loan document preparation; and (3) appraisal fees related to pest infestations and flood hazard inspections. 
Instructs the Board of Governors of the Federal Reserve System to report to the Congress on statutory or regulatory changes necessary to:  (1) ensure that finance charges more accurately reflect the cost of credit; and (2) address abusive refinancing practices intended to avoid rescission. 
(Sec.3) Permits finance charge disclosures to vary within specified accuracy tolerance limits for certain consumer credit transactions secured by real property or a dwelling. 
Sets disclosure accuracy guidelines for per diem interest rate disclosures on consumer credit transactions. 
(Sec. 4) Shields a creditor or assignee, except in certain kinds of actions, from liability in connection with disclosures of:  (1) certain fees, taxes, and charges; and (2) finance charges that fall within certain statutory tolerance limits. 
(Sec. 5) Restricts rescission liability arising from the form of written notice used by the creditor. 
(Sec. 6) Provides for damages ranging from $200 to $2,000 for an individual consumer credit transaction not under an open end credit plan that is secured by real property or a dwelling. 
(Sec. 7) Modifies assignee liability guidelines to:  (1) apply them to consumer credit transactions secured by real property; and (2) provide that a violation is apparent on the face of the disclosure statement if the disclosure does not use the format required by law. 
States that the servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as an assignee of an obligation unless the servicer owns it. 
(Sec. 8) Identifies circumstances under which a consumer has a right to rescind a consumer credit transaction after the initiation of any judicial or nonjudicial foreclosure process on the consumer's primary dwelling securing the debt.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Truth in Lending Act Amendments of 
1995''.

SEC. 2. CERTAIN CHARGES.

    (a) Third Party Fees.--Section 106(a) of the Truth in Lending Act 
(15 U.S.C. 1605(a)) is amended by adding after the 2d sentence the 
following new sentence: ``The finance charge shall not include fees and 
amounts imposed by third party closing agents (including settlement 
agents, attorneys, and escrow and title companies) if the creditor does 
not require the imposition of the charges or the services provided and 
does not retain the charges.''.
    (b) Borrower-Paid Mortgage Broker Fees.--
        (1) Inclusion in finance charge.--Section 106(a) of the Truth 
    in Lending Act (15 U.S.C. 1605(a)) is amended by adding at the end 
    the following new paragraph:
        ``(6) Borrower-paid mortgage broker fees, including fees paid 
    directly to the broker or the lender (for delivery to the broker) 
    whether such fees are paid in cash or financed.''.
        (2) Effective date.--The amendment made by paragraph (1) shall 
    take effect on the earlier of--
            (A) 60 days after the date on which the Board of Governors 
        of the Federal Reserve System issues final regulations under 
        paragraph (3); or
            (B) the date that is 12 months after the date of the 
        enactment of this Act.
        (3) Regulations implementing borrower-paid mortgage broker 
    fees.--The Board of Governors of the Federal Reserve System shall 
    promulgate regulations implementing the amendment made by paragraph 
    (1) by no later than 6 months after the date of the enactment of 
    this Act.
    (c) Taxes on Security Instruments or Evidences of Indebtedness.--
Section 106(d) of the Truth in Lending Act (15 U.S.C. 1605(d)) is 
amended by adding at the end the following new paragraph:
        ``(3) Any tax levied on security instruments or on documents 
    evidencing indebtedness if the payment of such taxes is a 
    precondition for recording the instrument securing the evidence of 
    indebtedness.''.
    (d) Preparation of Loan Documents.--Section 106(e)(2) of the Truth 
in Lending Act (15 U.S.C. 1605(e)(2)) is amended to read as follows:
        ``(2) Fees for preparation of loan-related documents.''.
    (e) Fees Relating to Pest Infestations, Inspections, and Hazards.--
Section 106(e)(5) of the Truth in Lending Act (15 U.S.C. 1605(e)(5)) is 
amended by inserting ``, including fees related to any pest infestation 
or flood hazard inspections conducted prior to closing'' before the 
period.
    (f) Ensuring Finance Charges Reflect Cost of Credit.--
        (1) Report.--
            (A) In general.--Not later than 6 months after the date of 
        the enactment of this Act, the Board of Governors of the 
        Federal Reserve System shall submit to the Congress a report 
        containing recommendations on any regulatory or statutory 
        changes necessary--
                (i) to ensure that finance charges imposed in 
            connection with consumer credit transactions more 
            accurately reflect the cost of providing credit; and
                (ii) to address abusive refinancing practices engaged 
            in for the purpose of avoiding rescission.
            (B) Report requirements.--In preparing the report under 
        this paragraph, the Board shall--
                (i) consider the extent to which it is feasible to 
            include in finance charges all charges payable directly or 
            indirectly by the consumer to whom credit is extended, and 
            imposed directly or indirectly by the creditor as an 
            incident to the extension of credit (especially those 
            charges excluded from finance charges under section 106 of 
            the Truth in Lending Act as of the date of the enactment of 
            this Act), excepting only those charges which are payable 
            in a comparable cash transaction; and
                (ii) consult with and consider the views of affected 
            industries and consumer groups.
        (2) Regulations.--The Board of Governors of the Federal Reserve 
    System shall prescribe any appropriate regulation in order to 
    effect any change included in the report under paragraph (1), and 
    shall publish the regulation in the Federal Register before the end 
    of the 1-year period beginning on the date of enactment of this 
    Act.

SEC. 3. TOLERANCES; BASIS OF DISCLOSURES.

    (a) Tolerances for Accuracy.--Section 106 of the Truth in Lending 
Act (15 U.S.C. 1605) is amended by adding at the end the following new 
subsection:
    ``(f) Tolerances for Accuracy.--In connection with credit 
transactions not under an open end credit plan that are secured by real 
property or a dwelling, the disclosure of the finance charge and other 
disclosures affected by any finance charge--
        ``(1) shall be treated as being accurate for purposes of this 
    title if the amount disclosed as the finance charge--
            ``(A) does not vary from the actual finance charge by more 
        than $100; or
            ``(B) is greater than the amount required to be disclosed 
        under this title; and
        ``(2) shall be treated as being accurate for purposes of 
    section 125 if--
            ``(A) except as provided in subparagraph (B), the amount 
        disclosed as the finance charge does not vary from the actual 
        finance charge by more than an amount equal to one-half of one 
        percent of the total amount of credit extended; or
            ``(B) in the case of a transaction, other than a mortgage 
        referred to in section 103(aa), which--
                ``(i) is a refinancing of the principal balance then 
            due and any accrued and unpaid finance charges of a 
            residential mortgage transaction as defined in section 
            103(w), or is any subsequent refinancing of such a 
            transaction; and
                ``(ii) does not provide any new consolidation or new 
            advance;
        if the amount disclosed as the finance charge does not vary 
        from the actual finance charge by more than an amount equal to 
        one percent of the total amount of credit extended.''.
    (b) Basis of Disclosure for Per Diem Interest.--Section 121(c) of 
the Truth in Lending Act (15 U.S.C. 1631(c)) is amended by adding at 
the end the following new sentence: ``In the case of any consumer 
credit transaction a portion of the interest on which is determined on 
a per diem basis and is to be collected upon the consummation of such 
transaction, any disclosure with respect to such portion of interest 
shall be deemed to be accurate for purposes of this title if the 
disclosure is based on information actually known to the creditor at 
the time that the disclosure documents are being prepared for the 
consummation of the transaction.''.

SEC. 4. LIMITATION ON LIABILITY.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by adding at the end the following new 
section:

``SEC. 139. CERTAIN LIMITATIONS ON LIABILITY.

    ``(a) Limitations on Liability.--For any consumer credit 
transaction subject to this title that is consummated before the date 
of the enactment of the Truth in Lending Act Amendments of 1995, a 
creditor or any assignee of a creditor shall have no civil, 
administrative, or criminal liability under this title for, and a 
consumer shall have no extended rescission rights under section 125(f) 
with respect to--
        ``(1) the creditor's treatment, for disclosure purposes, of--
            ``(A) taxes described in section 106(d)(3);
            ``(B) fees described in section 106(e)(2) and (5);
            ``(C) fees and amounts referred to in the 3rd sentence of 
        section 106(a); or
            ``(D) borrower-paid mortgage broker fees referred to in 
        section 106(a)(6);
        ``(2) the form of written notice used by the creditor to inform 
    the obligor of the rights of the obligor under section 125 if the 
    creditor provided the obligor with a properly dated form of written 
    notice published and adopted by the Board 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 title 
        if the amount disclosed as the finance charge does not vary 
        from the actual finance charge by more than $200;
            ``(B) may, under section 106(f)(2), be treated as accurate 
        for purposes of section 125; or
            ``(C) is greater than the amount or percentage required to 
        be disclosed under this title.
    ``(b) Exceptions.--Subsection (a) shall not apply to--
        ``(1) any individual action or counterclaim brought under this 
    title which was filed before June 1, 1995;
        ``(2) any class action brought under this title 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 title 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.''.
    (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 138 the following new item:
``139. Certain limitations on liability.''.

SEC. 5. LIMITATION ON RESCISSION LIABILITY.

    Section 125 of the Truth in Lending Act (15 U.S.C. 1635) is further 
amended by adding at the end the following new subsection:
    ``(h) Limitation on Rescission.--An obligor shall have no 
rescission rights arising solely from the form of written notice used 
by the creditor to inform the obligor of the rights of the obligor 
under this section, if the creditor provided the obligor the 
appropriate form of written notice published and adopted by the Board, 
or a comparable written notice of the rights of the obligor, that was 
properly completed by the creditor, and otherwise complied with all 
other requirements of this section regarding notice.''.

SEC. 6. CALCULATION OF DAMAGES.

    Section 130(a)(2)(A) of the Truth in Lending Act (15 U.S.C. 
1640(a)(2)(A)) is amended--
        (1) by striking ``or (ii)'' and inserting ``(ii)''; and
        (2) by inserting before the semicolon at the end the following: 
    ``, or (iii) 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 $200 or 
    greater than $2,000''.

SEC. 7. ASSIGNEE LIABILITY.

    (a) Violations Apparent on the Face of Transaction Documents.--
Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is amended by 
adding at the end the following new subsection:
    ``(e) Liability of Assignee for Consumer Credit Transactions 
Secured by Real Property.--
        ``(1) In general.--Except as otherwise specifically provided in 
    this title, any civil action against a creditor for a violation of 
    this title, and any proceeding under section 108 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 
        title; and
            ``(B) the assignment to the assignee was voluntary.
        ``(2) Violation apparent on the face of the disclosure 
    described.--For 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 title.''.
    (b) Servicer Not Treated as Assignee.--Section 131 of the Truth in 
Lending Act (15 U.S.C. 1641) is further amended by adding after 
subsection (e) (as added by subsection (a) of this section) the 
following new subsection:
    ``(f) Treatment of Servicer.--
        ``(1) In general.--A servicer of a consumer obligation arising 
    from a consumer credit transaction shall not be treated as an 
    assignee of such obligation for purposes of this section unless the 
    servicer is or was the owner of the obligation.
        ``(2) Servicer not treated as owner on basis of assignment for 
    administrative convenience.--A servicer of a consumer obligation 
    arising from a consumer credit transaction shall not be treated as 
    the owner of the obligation for purposes of this section on the 
    basis of an assignment of the obligation from the creditor or 
    another assignee to the servicer solely for the administrative 
    convenience of the servicer in servicing the obligation. Upon 
    written request by the obligor, the servicer shall provide the 
    obligor, to the best knowledge of the servicer, with the name, 
    address, and telephone number of the owner of the obligation or the 
    master servicer of the obligation.
        ``(3) Servicer defined.--For purposes of this subsection, the 
    term `servicer' has the same meaning as in section 6(i)(2) of the 
    Real Estate Settlement Procedures Act of 1974.
        ``(4) Applicability.--This subsection shall apply to all 
    consumer credit transactions in existence or consummated on or 
    after the date of the enactment of the Truth in Lending Act 
    Amendments of 1995.''.

SEC. 8. RESCISSION RIGHTS IN FORECLOSURE.

    Section 125 of the Truth in Lending Act (15 U.S.C. 1635) is amended 
by inserting after subsection (h) (as added by section 5 of this Act) 
the following new subsection:
    ``(i) Rescission Rights in Foreclosure.--
        ``(1) In general.--Notwithstanding section 139, 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 Board or a comparable written notice, and 
        otherwise complied with all the requirements of this section 
        regarding notice.
        ``(2) Tolerance for disclosures.--Notwithstanding section 
    106(f), and subject to the time period provided in subsection (f), 
    for the purposes of exercising any rescission rights after the 
    initiation of any judicial or nonjudicial foreclosure process on 
    the principal dwelling of the obligor securing an extension of 
    credit, the disclosure of the finance charge and other disclosures 
    affected by any finance charge shall be treated as being accurate 
    for purposes of this section if the amount disclosed as the finance 
    charge does not vary from the actual finance charge by more than 
    $35 or is greater than the amount required to be disclosed under 
    this title.
        ``(3) Right of recoupment under state law.--Nothing in this 
    subsection affects a consumer's right of rescission in recoupment 
    under State law.
        ``(4) Applicability.--This subsection shall apply to all 
    consumer credit transactions in existence or consummated on or 
    after the date of the enactment of the Truth in Lending Act 
    Amendments of 1995.''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.