Truth in Lending Act Amendments of 1995

Summary: Truth in Lending Act Amendments of 1995 - Amends the Truth in Lending Act pertaining to consumer credit cost disclosure to exclude from the determination of finance charges:  (1) charges imposed by third parties not affiliated with the creditor (including settlement agents, attorneys, and escrow and title companies) if the creditor does not expressly require the imposition of such charges and does not retain them; (2) taxes levied on security instruments or evidences of indebtedness if payment is a precondition for recording such an instrument; (3) fees, for preparation of loan-related documents and attending or conducting settlement in extensions of credit secured by interest in real property; and (4) fees related to pest infestation on premises, structural inspections, and flood hazards. 
(Sec. 3) Excludes from a consumer's statutory right of rescission certain refinancings or consolidations of debt secured by a first lien. 
(Sec. 4) Increases the allowable tolerances for accuracy pertaining to the annual percentage rate disclosure requirements on consumer credit transactions. 
Provides that the disclosure for per diem interest shall be deemed to be accurate if it 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. 5) Sets forth liability limitations for:  (1) a creditor's treatment, for disclosure purposes, of specified taxes, fees, and charges other than finance charges; and (2) a creditor's finance charge disclosures within specified tolerance limits. 
(Sec. 7) Provides that the statute of limitations on a consumer's right of rescission is absolute and acts as a bar to any subsequent assertion of such rescission in State or Federal court. 
(Sec. 8) Narrows the civil liability guidelines for consumer credit disclosures to:  (1) declare a creditor liable for actual damages sustained by a person to the extent such person demonstrates reliance on the inaccurate disclosure which prevented the person from accepting better credit terms actually available from another creditor; (2) revise the general rules for liability of a creditor's voluntary assignee for a violation apparent on the face of the disclosure statement; and (3) declare that a servicer of a consumer obligation shall not be treated as an assignee unless the servicer is the owner of the obligation.

SECTION 1. SHORT TITLE.

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

SEC. 2. TREATMENT OF 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 second sentence the 
following new sentence: ``The finance charge shall not include fees and 
amounts imposed by third parties not affiliated with the creditor 
(including settlement agents, attorneys, and escrow and title 
companies) if the creditor does not expressly require the imposition of 
the charges and does not retain the charges.''.
    (b) 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.''.
    (c) 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 and 
        attending or conducting settlement.''.
    (d) 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 pest infestations, 
premises and structural inspections, and flood hazards'' before the 
period.

SEC. 3. EXEMPTIONS FROM RESCISSION.

    (a) Certain Refinancings.--Section 125(e) of the Truth in Lending 
Act (15 U.S.C. 1635(e)) is amended--
            (1) by striking ``or'' at the end of paragraph (3);
            (2) by striking the period at the end of paragraph (4) and 
        inserting ``; or''; and
            (3) by adding at the end the following new paragraph:
            ``(5) a transaction, other than a mortgage referred to in 
        section 103(aa), which--
                    ``(A) is secured by a first lien, in any amount; 
                and
                    ``(B) constitutes a refinancing or consolidation of 
                an existing extension of credit.''.
    (b) Technical and Conforming Amendment.--Section 125(e)(2) of the 
Truth in Lending Act (15 U.S.C. 1635(e)(2)) is amended by inserting ``, 
other than a transaction described in subsection (e)(5),'' after ``a 
refinancing or consolidation (with no new advances)''.

SEC. 4. 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) Tolerance 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 shall be treated as being 
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 an amount equal to \1/2\ of the numerical tolerance corresponding 
to, and generated by, the tolerance provided by section 107(c) with 
respect to the annual percentage rate.''.
    (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. 5. 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 Disclosures Relating to Certain 
Fees and Charges Other Than Finance Charges.--
            ``(1) In general.--For transactions 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, the creditor's treatment, 
        for disclosure purposes, of--
                    ``(A) taxes described in section 106(d)(3);
                    ``(B) fees and amounts described in section 106(e) 
                (2) and (5) and third party fees and amounts described 
                in section 106(a); and
                    ``(C) delivery charges imposed by a creditor.
            ``(2) Exceptions.--Subsection (a) shall not apply to--
                    ``(A) any individual action or counterclaim brought 
                under this title--
                            ``(i) which was filed before October 1, 
                        1994; and
                            ``(ii) the pleadings in which (as filed 
                        before such date) allege improper disclosure of 
                        charges described in paragraph (1), (2), or (3) 
                        of subsection (a);
                    ``(B) any class action brought under this title--
                            ``(i) for which a class was certified 
                        before October 1, 1994; and
                            ``(ii) the pleadings in which (as filed 
                        before such date) allege improper disclosure of 
                        charges described in paragraph (1), (2), or (3) 
                        of subsection (a);
                    ``(C) the named individual plaintiffs in any class 
                action brought under this title--
                            ``(i) which was filed before October 1, 
                        1994; and
                            ``(ii) the pleadings in which (as filed 
                        before such date) allege improper disclosure of 
                        charges described in paragraph (1), (2), or (3) 
                        of subsection (a); or
                    ``(D) any consumer credit transaction with respect 
                to which a timely notice of rescission was sent to the 
                creditor before October 1, 1994.
    ``(b) Exemption From Liability for Finance Charge Disclosures 
Within Tolerance Limits.--
            ``(1) In general.--In the case of any consumer credit 
        transaction subject to this title, including a transaction 
consummated before the date of the enactment of the Truth in Lending 
Act Amendments of 1995, no creditor or assignee with respect to such 
transaction shall have any civil, administrative, or criminal liability 
under this title for, and no consumer shall have extended rescission 
rights under section 125 by reason of, any disclosure relating to the 
finance charge imposed with respect to such transaction if the amount 
or percentage actually disclosed--
                    ``(A) may be treated as accurate pursuant to 
                section 106(f), or
                    ``(B) is greater than the amount or percentage 
                required to be disclosed under this title.
            ``(2) Exceptions.--Paragraph (1) shall not apply to--
                    ``(A) any individual action or counterclaim brought 
                under this title which was filed before October 1, 
                1994;
                    ``(B) any class action brought under this title for 
                which a class was certified before October 1, 1994;
                    ``(C) the named individual plaintiffs in any class 
                action brought under this title which was filed before 
                October 1, 1994; or
                    ``(D) any consumer credit transaction with respect 
                to which a timely notice of rescission was sent to the 
                creditor before October 1, 1994.''.
    (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:

``Sec. 139. Certain limitations on liability.''.

SEC. 6. APPLICABILITY.

    Except as otherwise provided in section 5, the amendments made by 
this Act shall apply to all consumer credit transactions consummated on 
or after the date of enactment of this Act, except that the amendments 
made by subsections (a) and (b) of section 3 shall apply to all 
extensions of credit with respect to which rescission rights have not 
been asserted as of January 1, 1995.

SEC. 7. LIMITATION ON RESCISSION PERIOD.

    Section 125(f) of the Truth in Lending Act (15 U.S.C. 1635(f)) is 
amended by adding at the end the following sentences: ``The expiration 
of the right of rescission pursuant to this subsection shall be 
absolute and no consumer may assert rescission, affirmatively or as a 
defense, in any action in any State or Federal court after the earlier 
of the end of the 3-year period beginning on the date of the 
consummation of the transaction or the sale of the property securing 
the loan or other extension of credit, except as otherwise provided in 
the preceding sentence. This subsection shall supersede any State law 
which is inconsistent with any provision of this subsection.''.

SEC. 8. CALCULATION OF ACTUAL DAMAGES.

    Paragraph (1) of section 130(a) of the Truth in Lending Act (15 
U.S.C. 1640(a)) is amended to read as follows:
            ``(1) Any actual damages sustained by such person as a 
        result of the failure (to the extent the person demonstrates 
        reliance on the inaccurate disclosure which prevented the 
        person from accepting better credit terms actually available to 
        the person from another creditor) and the amount of such 
        damages shall be the difference between the finance charges 
        actually paid and the finance charges that would have been paid 
        over the same period under credit terms applicable with respect 
        to credit actually available to the person from another 
        creditor.''.

SEC. 9. ASSIGNEE LIABILITY.

    (a) Violations Apparent on the Face of Transaction Documents.--
Section 131(a) of the Truth in Lending Act (15 U.S.C. 1641(a)) is 
amended to read as follows:
    ``(a) Liability of Assignee for Apparent Violations.--
            ``(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 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 from the face of the 
                disclosure statement; or
                    ``(B) the disclosure 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 amended by adding at the end the 
following new subsection:
    ``(d) 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 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.
            ``(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.''.