PUBLIC LAW 104–29—SEPT. 30, 1995 109 STAT. 271

Public Law 104–29

104th Congress

An Act

To amend the Truth in Lending Act to clarify the intent of such Act and to

reduce burdensome regulatory requirements on creditors.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

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.’’.

15 USC 1605

note.

15 USC 1605

note.

15 USC 1601

note.

Truth in Lending

Act Amendments

of 1995.

Sept. 30, 1995

[H.R. 2399]
109 STAT. 272 PUBLIC LAW 104–29—SEPT. 30, 1995

(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

Federal Register,

publication.

15 USC 1605

note.
PUBLIC LAW 104–29—SEPT. 30, 1995 109 STAT. 273

‘‘(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

15 USC 1649.
109 STAT. 274 PUBLIC LAW 104–29—SEPT. 30, 1995

‘‘(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.—
PUBLIC LAW 104–29—SEPT. 30, 1995 109 STAT. 275

‘‘(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
109 STAT. 276 PUBLIC LAW 104–29—SEPT. 30, 1995

LEGISLATIVE HISTORY—H.R. 2399:

CONGRESSIONAL RECORD, Vol. 141 (1995):

Sept. 27, considered and passed House.

Sept. 28, considered and passed Senate.

Æ

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.’’.

Approved September 30, 1995.