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[104th Congress Public Law 29]
[From the U.S. Government Printing Office]

<DOC>
[DOCID: f:publ29.104]

[[Page 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. <<NOTE: Sept. 
                       30, 1995 -  [H.R. 2399]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Truth in Lending 
Act Amendments of 1995.>> 

SECTION 1. SHORT TITLE. <<NOTE: 15 USC 1601 note.>> 

    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) <<NOTE: 15 USC 1605 note.>>  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) <<NOTE: 15 USC 1605 note.>>  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.''.

[[Page 109 STAT. 272]]

    (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) <<NOTE: 15 USC 1605 note.>>  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) <<NOTE: Federal Register, publication.>>  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

[[Page 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. <<NOTE: 15 USC 1649.>> 

    ``(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

[[Page 109 STAT. 274]]

            ``(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.--

[[Page 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

[[Page 109 STAT. 276]]

        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.

LEGISLATIVE HISTORY--H.R. 2399:
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CONGRESSIONAL RECORD, Vol. 141 (1995):
            Sept. 27, considered and passed House.
            Sept. 28, considered and passed Senate.

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