Case: 1:22-cv-01690 Document #: 6-1 Filed: 03/31/22 Page 1 of 127 PageID #:38 

IN THE UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

FEDERAL TRADE COMMISSION and PEOPLE 

OF THE STATE OF ILLINOIS, 

Plaintiffs, 

v. 

NORTH AMERICAN AUTOMOTIVE 

SERVICES, INC., also d/b/a Ed Napleton 

Automotive Group, a corporation, 

ED NAPLETON ELMHURST IMPORTS, INC., a 

corporation, also d/b/a Napleton’s Kia of 

Elmhurst/Ed Napleton Acura, 

NAPLETON’S ARLINGTON HEIGHTS 

MOTORS, INC., a corporation, also d/b/a 

Napleton’s Arlington Heights Chrysler Dodge Jeep 

Ram, 

NAPLETON’S NORTH PALM AUTO PARK, 

INC., a corporation, also d/b/a Napleton’s Northlake 

Chrysler Dodge Jeep Ram, 

NAPLETON ENTERPRISES, LLC, a limited 

liability company, also d/b/a Napleton’s South 

Orlando/Kissimmee Chrysler Dodge Jeep Ram, 

CLERMONT MOTORS, LLC, a limited liability 

company, also d/b/a Napleton’s Clermont Chrysler 

Dodge Jeep Ram, 

Case No. ____________ 

STIPULATED ORDER FOR 

PERMANENT INJUNCTION, 

MONETARY JUDGMENT, 

AND OTHER RELIEF 

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NORTH PALM MOTORS, LLC, a limited liability 

company, also d/b/a Napleton’s Northlake Kia, 

NAPLETON’S ELLWOOD MOTORS, INC., a 

corporation, also d/b/a Napleton’s Ellwood Chrysler 

Dodge Jeep Ram, 

NAPLETON MID RIVERS IMPORTS, INC., a 

corporation, also d/b/a Napleton’s Mid Rivers Kia, 

and 

HITKO KADRIC, 

Defendants. 

Plaintiffs, the Federal Trade Commission (“Commission” or “FTC”) and the People of the 

State of Illinois, by KWAME RAOUL, Illinois Attorney General (together, “Plaintiffs”), filed 

their Complaint for Permanent Injunction, Monetary Relief, and Other Relief (“Complaint”), 

pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 

§ 53(b) and 57b, the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601-1666j, and its 

implementing Regulation Z, 12 C.F.R. Part 226, the Equal Credit Opportunity Act (“ECOA”), 15 

U.S.C. §§ 1691-1691f, and its implementing Regulation B, 12 C.F.R. § 202, the Illinois 

Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. (“Illinois 

Consumer Fraud Act”), and the Illinois Motor Vehicle Advertising Regulations, 14 Ill. Adm. 

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Code 475.110 et seq. Plaintiff FTC and Defendants stipulate to the entry of this Stipulated Order

for Permanent Injunction, Monetary Judgment, and Other Relief (“Order”) to resolve all matters

in dispute plead in FTC Counts I, II, III, IV, and V through the effective date of this Order

without requiring the Commission to file an administrative complaint pursuant to 16 C.F.R. Part 3

and then seek monetary relief in federal court pursuant to Section 19(a)(2) of the FTC Act.

Plaintiff State of Illinois, through the Illinois Attorney General, and Defendants stipulate to the

entry of this Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief to

resolve all matters in dispute plead in Illinois Counts VI, VII, VIII, IX, and X through the

effective date of this Order in this action between them before requiring the People of the State of

Illinois to litigate.

THEREFORE, IT IS ORDERED as follows:

FINDINGS

1. This Court has jurisdiction over this matter.

2. The Complaint charges that Defendants participated in deceptive and unfair acts or

practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, and, as to Napleton Auto

Group, Napleton’s Elmhurst Kia/Acura and Napleton’s Arlington Heights CDJR, Section 2 of the

Illinois Consumer Fraud Act, 815 ILCS 505/2, in the promoting, advertising, marketing, sale,

leasing, or financing of new and used motor vehicles.

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3. The Complaint charges that Defendants Napleton Auto Group, Napleton’s Elmhurst 

Kia/Acura, and Napleton’s Arlington Heights CDJR were at all times relevant to the Complaint 

engaged in trade and commerce in the State of Illinois by advertising, offering for sale, and 

selling new and used vehicles in and from the State of Illinois. 

4. The Complaint charges that the Defendants located in Illinois participated in deceptive 

and unfair acts or practices in violation of the Illinois Consumer Fraud Act in the advertising, 

sale, and leasing of new and used motor vehicles. 

5. The Complaint charges that Defendant Napleton’s Arlington Heights Motors, Inc., d/b/a 

Napleton’s Arlington Heights Chrysler Dodge Jeep Ram and Defendant Hitko Kadric, violated 

the Illinois Consumer Fraud Act and Illinois Motor Vehicle Advertising Regulations in the 

advertising, sale, and leasing of new and used motor vehicles. The Complaint further charges 

that Defendant Napleton’s Arlington Heights Motors, Inc., d/b/a Napleton’s Arlington Heights 

Chrysler Dodge Jeep Ram and Defendant Hitko Kadric failed to include required disclosures in 

its advertisements for closed-end credit, in violation of TILA, 15 U.S.C. 1601-1666j, and its 

implementing Regulation Z, 12 C.F.R. Part 226. 

6. The Complaint charges that Defendants Napleton Auto Group, Napleton’s Elmhurst 

Kia/Acura, Napleton’s Arlington Heights CDJR, Napleton’s Northlake CDJR, Napleton’s 

Kissimmee CJDR, Napleton’s Clermont CDJR, Napleton’s Northlake Kia, Napleton’s Ellwood 

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CJDR, and Napleton’s Mid Rivers Kia, violated the Equal Credit Opportunity Act (“ECOA”), 15 

U.S.C. §§ 1691-1691f, and its implementing Regulation B, 12 C.F.R. § 202, in the promoting, 

advertising, marketing, sale, leasing, or financing of new and used motor vehicles of new and 

used motor vehicles. 

7. Defendants neither admit nor deny any of the allegations in the Complaint, except as 

specifically stated in this Order. Only for purposes of this action, Defendants admit the facts 

necessary to establish jurisdiction. 

8. Defendants waive any claim that they may have under the Equal Access to Justice Act, 28 

U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agree 

to bear their own costs and attorney fees. 

9. Defendants and Plaintiffs waive all rights to appeal or otherwise challenge or contest the 

validity of this Order. 

DEFINITIONS 

For the purpose of this Order, the following definitions apply: 

A. “Add-on product or service” means any product or service relating to the sale, lease, or 

financing of a motor vehicle that is marketed, offered, provided, sold or arranged by a motor 

vehicle dealer that is not provided or installed by the motor vehicle manufacturer, including but 

not limited to extended warranties; maintenance plans; Guaranteed Asset Protection insurance 

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(“GAP insurance”); Vehicle Identification Number (VIN) etching; service contracts; payment 

programs; rustproofing; undercoating; paint or fabric protection; physical items such as mud flaps 

or sill plates; appearance products; lease protection; tire and wheel protection; theft protection or 

security devices; global positioning systems; starter interrupt devices; remote starters; road 

service or club memberships; shuttle services; credit life, accident, disability, loss-of-income or 

other insurance; and debt cancellation or suspension coverage. 

B. “Buy Rate” means the lowest interest rate at which any assignee will purchase the 

contract. 

C. “Clear(ly) and conspicuous(ly)” means that a required disclosure is difficult to miss (i.e., 

easily noticeable) and easily understandable by consumers, including in all of the following ways: 

1. In any communication that is solely visual or solely audible, the disclosure must be 

made through the same means through which the communication is presented. In any 

communication made through both visual and audible means, such as a television advertisement, 

the disclosure must be presented simultaneously in both the visual and audible portions of the 

communication even if the representation requiring the disclosure is made in only one means. 

2. A visual disclosure, by its size, contrast, location, the length of time it appears, and 

other characteristics, must stand out from any accompanying text or other visual elements so that 

it is easily noticed, read, and understood. 

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3. An audible disclosure, including by telephone or streaming video, must be 

delivered in a volume, speed, and cadence sufficient for consumers to easily hear and understand 

it. 

4. In any communication using an interactive electronic medium, such as the Internet 

or software, the disclosure must be unavoidable. 

5. The disclosure must use diction and syntax understandable to consumers and must 

appear in each language in which the representation that requires the disclosure appears. 

6. The disclosure must comply with these requirements in each medium through 

which it is received, including all electronic devices and face-to-face communications. 

7. The disclosure must not be contradicted or mitigated by, or inconsistent with, 

anything else in the communication. 

D. “Defendants” means the Individual Defendant and the Corporate Defendants, 

individually, collectively, or in any combination. 

1. “Corporate Defendants” means North American Automotive Services, Inc., Ed 

Napleton Elmhurst Imports, Inc., d/b/a Napleton’s Kia of Elmhurst/Ed Napleton Acura; 

Napleton’s Arlington Heights Motors, Inc., d/b/a Napleton’s Arlington Heights Chrysler Dodge 

Jeep Ram; Napleton’s North Palm Auto Park, Inc., d/b/a Napleton’s Northlake Chrysler Dodge 

Jeep Ram; Napleton Enterprises, LLC, d/b/a Napleton’s South Orlando (Kissimmee) Chrysler 

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Dodge Jeep Ram; Clermont Motors LLC, d/b/a Napleton’s Clermont Chrysler Dodge Jeep Ram; 

North Palm Motors, LLC, d/b/a Napleton’s Northlake Kia/Collision Center; Napleton’s Ellwood 

Motors Inc., d/b/a Napleton’s Ellwood Chrysler Dodge Jeep Ram; Napleton Mid Rivers Imports, 

Inc., d/b/a Napleton’s Mid Rivers Kia; and their successors and assigns. 

2. “Individual Defendant” means Hitko Kadric. 

E. “Express, Informed Consent” means an affirmative act communicating unambiguous 

assent to be charged, made after receiving, and in close proximity to, Clear and conspicuous 

disclosure, orally and in writing, of the following: 

1. the product or service associated with the charge; 

2. all fees and costs to be charged to the consumer for the product or service; and 

3. whether the product or service is optional or required. 

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ORDER 

I. PROHIBITION AGAINST MISREPRESENTATIONS 

IT IS ORDERED that Defendants, Defendants’ officers, agents, employees, and all other 

persons in active concert or participation with any of them, who receive actual notice of this 

Order, whether acting directly or indirectly, in connection with promoting, advertising, marketing, 

offering for sale or lease, sale, lease, or financing of motor vehicles, are permanently restrained 

and enjoined from misrepresenting, expressly or by implication: 

A. whether charges, products, or services are optional or required; 

B. the existence or amount of any fees, interest, charges, or costs; 

C. whether charges, products, or services are authorized by consumers; 

D. any material aspect of any Add-on product or service; and 

E. any other material fact, such as: any restrictions, limitations, or conditions; or any 

aspect of the benefits, performance, efficacy, nature, or central characteristics of any product or 

service. 

II. OBTAINING EXPRESS INFORMED CONSENT FOR ALL CHARGES 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, employees, 

and all other persons in active concert or participation with any of them, who receive actual notice 

of this Order, whether acting directly or indirectly, in connection with promoting, advertising, 

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marketing, offering for sale or lease, sale, lease, or financing of motor vehicles, are permanently 

restrained and enjoined from charging a consumer without having obtained the consumer’s 

Express, Informed Consent. 

III. PROHIBITION AGAINST VIOLATIONS OF THE ILLINOIS CONSUMER FRAUD 

ACT 

IT IS ORDERED that Defendants North American Automotive Services, Inc., d/b/a Ed 

Napleton Automotive Group, Ed Napleton Elmhurst Imports, Inc., d/b/a Napleton’s Kia of 

Elmhurst/Ed Napleton Acura, Napleton’s Arlington Heights Motors, Inc., d/b/a Napleton’s 

Arlington Heights Chrysler Dodge Jeep Ram, Defendants’ officers, agents, employees, and all 

other persons in active concert or participation with any of them, who receive actual notice of this 

Order, whether acting directly or indirectly, in connection with promoting, advertising, marketing, 

offering for sale or lease, sale or lease, or servicing of motor vehicles, are permanently restrained 

and enjoined from violating Section 2 of the Consumer Fraud Act (815 ILCS 505/2) and Section 

2 of the Uniform Deceptive Trade Practices Act by misrepresenting, expressly or by implication 

or creating a likelihood of confusion regarding: 

A. whether charges, products, or services are optional or required; 

B. the existence or amount of any fees, interest, charges, or costs; 

C. whether charges, products, or services are authorized by consumers; 

D. any material aspect of any Add-on product or service; and 

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E. any other material fact, such as: any restrictions, limitations, or conditions; or any 

aspect of the benefits, performance, efficacy, nature, or central characteristics of any 

product or service. 

IV. PROHIBITION AGAINST VIOLATIONS OF SECTION 2J.1 OF THE ILLINOIS 

CONSUMER FRAUD ACT AND VIOLATIONS OF ILLINOIS MOTOR VEHICLE 

ADVERTISING REGULATIONS 

IT IS FURTHER ORDERED that Defendant Napleton’s Arlington Heights Motors, Inc., 

d/b/a Napleton’s Arlington Heights Chrysler Dodge Jeep Ram (“Napleton’s Arlington Heights 

CDJR”) is permanently enjoined as follows: 

A. Defendant Napleton’s Arlington Heights CDJR is permanently enjoined from 

violating Section 2J.1 of the Consumer Fraud Act, 815 ILCS 505/2J.1, by offering a coupon in 

connection with the retail sale of a motor vehicle; 

B. Defendant Napleton’s Arlington Heights CDJR is permanently enjoined from 

violating Section 475.590 of the Illinois Motor Vehicle Advertising Regulations, 14 Ill. Adm. 

Code 475.590, by advertising or offering a free gift in connection with the purchase or lease of a 

vehicle; 

C. Defendant Napleton’s Arlington Heights CDJR is permanently enjoined from 

violating Section 475.610 of the Illinois Motor Vehicle Advertising Regulations, 14 Ill. Adm. 

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Code 475.610, by advertising or offering “closed-end credit” terms without clearly and 

conspicuously1 disclosing the required credit sales advertising disclosures; and 

D. Defendant Napleton’s Arlington Heights CDJR is permanently enjoined from 

violating Section 475.390 of the Illinois Motor Vehicle Advertising Regulations, 14 Ill. Adm. 

Code 475.390, by advertising vehicles offered for sale at a range of percentage discounts, without 

clearly and conspicuously disclosing the lowest discount or highest price in the range in the 

advertisement. 

V. INJUNCTION CONCERNING FINANCING DISCLOSURES 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, employees 

and all other persons in active concert or participation with any of them, who receive actual notice 

of this Order, whether acting directly or indirectly, in connection with any advertisement for any 

extension of consumer credit, are permanently restrained and enjoined from: 

A. Stating, expressly or by implication: 

1. The amount or percentage of any downpayment, the number of payments 

or period of repayment, the amount of any payment, or the amount of any finance 

charge, without disclosing Clearly and Conspicuously all of the following terms: 

a. The amount or percentage of the downpayment; 

b. The terms of repayment; and 

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1 For purposes of sections IV.C and IV.D, and for any subsequent compliance or enforcement 

action by the Illinois Attorney General, “Clear(ly) and Conspicuous(ly)” shall be defined 

consistently with Section 475.110 of the Illinois Motor Vehicle Advertising Regulations, 14 Ill. 

Adm. Code 475.110, attached hereto as Exhibit A. 
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c. The annual percentage rate, using the term “annual percentage rate” 

or the abbreviation “APR.” If the annual percentage rate may be increased 

after consummation of the credit transaction, that fact must also be 

disclosed; or 

2. A rate of finance charge without stating the rate as an “annual percentage 

rate” or the abbreviation “APR,” using that term; or 

B. Failing to comply with Regulation Z, 12 C.F.R. Part 226, as amended, and the 

Truth in Lending Act, as amended, 15 U.S.C. §§ 1601-1667, a copy of which is attached (TILA). 

VI. PROHIBITION AGAINST UNLAWFUL CREDIT DISCRIMINATION 

IT IS FURTHER ORDERED that Corporate Defendants, Corporate Defendants’ officers, 

agents, employees, and attorneys, and all other persons in active concert or participation with any 

of them, who receive actual notice of this Order, whether acting directly or indirectly, are 

permanently restrained and enjoined from: 

A. Discriminating against any credit applicant: 

1. On the basis of race, color, religion, national origin, sex or marital status, or 

age (provided the applicant has the capacity to contract); 

2. Because all of part of the applicant’s income derives from any public 

assistance program; or 

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3. Because the applicant has in good faith exercised any right under the 

Consumer Credit Protection Act, §§ 1601-1693r, a copy of which is attached; or 

B. Failing to comply with the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-

1691f, and Regulation B, 12 C.F.R. § 202, a copy of which is attached (ECOA). 

VII. FAIR LENDING PROGRAM 

IT IS FURTHER ORDERED that Corporate Defendants, Corporate Defendants’ officers, 

agents, employees and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, whether acting directly or indirectly, shall not participate in the 

extension, renewal, or continuation of credit unless they establish and implement, and thereafter 

maintain, a fair lending program (“Fair Lending Program”) that safeguards against discrimination 

against credit applicants on a basis prohibited by this Order or by law. To satisfy this 

requirement, Corporate Defendants must, at a minimum: 

A. Designate a single senior manager qualified in fair lending compliance as the fair 

lending compliance officer responsible for the Fair Lending Program; 

B. Ensure all employees, before engaging in the extension, renewal, or continuation 

of credit, and at least once every twelve (12) months, receive training from an independent 

qualified person or organization on the Fair Lending Program, the requirements of the 

ECOA, and Corporate Defendants’ obligations under the ECOA, and sign an 

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acknowledgement that states that the employee: (1) completed the training, (2) had the 

opportunity to have questions about his or her legal responsibilities answered, and (3) 

understands his or her legal responsibilities not to discriminate under the federal fair 

lending laws; 

C. Implement and maintain written guidelines specifying the reasons for assessing or 

not assessing any fee or other charge, each of which must be objective and none of which 

can be discriminatory; 

D. For all retail installment sales contracts: 

1. Charge an interest rate not greater than the Buy Rate; 

2. Charge the same number of basis points above the Buy Rate; or 

3. Charge a pre-set standard number of basis points above the Buy Rate 

(“Standard”), not to exceed one hundred eighty-five (185) basis points, except that: (i) if a 

lower Annual Percentage Rate (APR) is imposed by the assignee for the particular 

transaction, Corporate Defendants may deviate below the Standard to match the lower 

APR; (ii) upon a consumer presenting a more favorable offer from another dealer or 

financing entity, Corporate Defendants may deviate below the Standard to match the more 

favorable offer, provided that Corporate Defendants create and maintain a 

contemporaneous written record, signed by the employee to whom the consumer made the 

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request and certified by the Fair Lending officer, acknowledging the name of the 

consumer, the name of the dealer or financing entity, the APR offered, and that the 

consumer presented the offer to Corporate Defendants; (iii) upon a consumer’s request of 

a lower monthly payment or APR, Corporate Defendants may deviate below the Standard 

to the extent necessary to match the requested monthly payment or APR, provided that 

Corporate Defendants create and maintain a contemporaneous written acknowledgment, 

signed by the employee to whom the consumer made the request and certified by the 

Fair Lending officer, that deviating downward from the Standard was necessary for the 

Corporate Defendants to offer the lower monthly payment or APR requested by the 

consumer; (iv) if the consumer qualifies for a manufacturer interest rate subvention 

program or a manufacturer employee incentive program, Corporate Defendants may 

deviate downward from the Standard to match the rate in that program; and (v) upon 

documented inventory reduction considerations related to specific vehicles; and 

a. For any charge below the Standard, create and maintain a 

contemporaneous written record that explains the reason for the downward 

deviation and is sufficient to show that the charge complies with the rest of this 

Order, with dated approval from the fair lending compliance officer; and 

b. For any charge above the Buy Rate, Clearly and Conspicuously disclose 

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before the earlier of consummation of the credit contract or obtaining the 

consumer’s signature on the credit contract that the consumer may negotiate 

the APR and other consumers have received a lower rate; 

E. Promptly take disciplinary action, up to and including termination of employees 

engaged in discriminatory conduct or conduct that violates the Fair Lending Program or any 

term of Sections I through VII of this Order; and 

F. For 10 years after entry of this Order, within 14 days of receiving, whether directly 

or indirectly, such as through a third party, a complaint of discrimination against Corporate 

Defendants or any of Corporate Defendants’ officers, agents, or employees, related to the 

promotion, advertising, marketing, sale, leasing, or financing of new and used motor 

vehicles, submit a copy, along with any response, to the Commission pursuant to the Section 

titled “Compliance Reporting.” 

Provided, however, that nothing in this Order shall be construed as permitting any conduct 

that overtly, in treatment, or in effect discriminates against consumers on the basis of race, color, 

national origin, or any other protected characteristic or violates the ECOA or any other law. 

VIII. MONETARY JUDGMENT 

IT IS FURTHER ORDERED that Defendants shall pay Ten Million Dollars 

($10,000,000.00) as follows: 

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A. Judgment in the amount of Nine Million Nine Hundred Fifty Thousand Dollars 

($9,950,000.00) is entered in favor of the Plaintiffs against Individual Defendant and Corporate 

Defendants, jointly and severally, as monetary relief. With respect to the judgment entered 

against Defendants in Sections VI.A: 

1. Defendants are ordered to pay to the Plaintiffs, by making payment to the 

Commission: Nine Million Nine Hundred Fifty Thousand Dollars ($9,950,000.00), 

which, as Defendants stipulate, their undersigned counsel holds in escrow for no 

purpose other than payment to the Commission. Such payment must be made 

within 7 days of entry of this Order by electronic fund transfer in accordance with 

instructions previously provided by a representative of the Commission. 

2. Defendants relinquish dominion and all legal and equitable right, title, and 

interest in all assets transferred and may not seek the return of any assets; 

3. The facts alleged in the Complaint will be taken as true, without further 

proof, in any subsequent civil litigation by or on behalf of the Plaintiffs in a 

proceeding to enforce their rights to any payment or monetary judgment, such as a 

nondischargeability complaint in any bankruptcy case; 

4. The facts alleged in the Complaint establish all elements necessary to 

sustain an action by the Commission pursuant to Section 523(a)(2)(A) of the 

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Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral 

estoppel effect for such purposes; 

5. Defendants acknowledge that their Taxpayer Identification Numbers 

(Social Security Numbers or Employer Identification Numbers), which Defendants 

must submit to the Commission, may be used for collecting and reporting on any 

delinquent amount arising out of this Order, in accordance with 31 U.S.C. §7701; 

and 

6. All money received by the Commission may be deposited into a fund 

administered by the Commission or its designee to be used for consumer relief, 

such as redress and any attendant expenses for the administration of any redress 

fund. If a representative of the Commission decides that direct redress to 

consumers is wholly or partially impracticable or money remains after redress is 

completed, with the court’s prior approval, the Commission may apply any 

remaining money for such related relief (including consumer information 

remedies) as it determines to be reasonably related to Defendants’ practices alleged 

in the Complaint. Any money not used for relief is to be deposited to the U.S. 

Treasury. Defendants have no right to challenge any actions the Commission or 

its representatives may take pursuant to this Subsection. 

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B. Within 7 days of entry of this Order, North American Automotive Services, Inc., 

d/b/a Ed Napleton Automotive Group, Ed Napleton Elmhurst Imports, Inc., d/b/a Napleton’s Kia 

of Elmhurst/Ed Napleton Acura and Napleton’s Arlington Heights Motors, Inc., d/b/a Napleton’s 

Arlington Heights Chrysler Dodge Jeep Ram shall pay $50,000.00 to the People of the State of 

Illinois as a voluntary contribution to the Attorney General Court Ordered and Voluntary 

Compliance Payment Projects Fund. The payment shall be made out to the “Attorney General 

Court Ordered and Voluntary Compliance Fund,” in accordance with payment instructions 

separately provided by Plaintiffs. Such funds may be used by the Illinois Attorney General for 

any purpose authorized by Section 7(e) of the Consumer Fraud Act, 815 ILCS 505/7(e). 

Defendants shall not be entitled to further accounting regarding the money deposited into this 

account. 

IX. CUSTOMER INFORMATION 

IT IS FURTHER ORDERED that Defendants are permanently restrained and enjoined 

from directly or indirectly failing to provide sufficient customer information to enable the 

Plaintiffs to efficiently administer consumer redress. Defendants represent that they have 

provided this redress information to Plaintiffs. If a representative of the either of the Plaintiffs 

requests in writing any information related to redress, Defendants must provide it, in the form 

prescribed by Plaintiffs, within 14 days. 

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X. ORDER ACKNOWLEDGMENTS 

IT IS FURTHER ORDERED that Defendants obtain acknowledgments of receipt of this 

Order: 

A. Each Defendant, within 7 days of entry of this Order, must submit to Plaintiffs an 

acknowledgment of receipt of this Order sworn under penalty of perjury. 

B. For 5 years after entry of this Order, Individual Defendant for any business that 

such Defendant, individually or collectively with any other Defendants, is the majority owner or 

controls directly or indirectly, and each Corporate Defendant, must deliver a copy of this Order 

to: (1) all principals, officers, directors, and LLC managers and members; (2) all employees 

having managerial responsibilities for the conduct related to the subject matter of the Order and 

all agents and representatives who participate in conduct related to the subject matter of the 

Order; and (3) any business entity resulting from any change in structure as set forth in the 

Section titled Compliance Reporting. Delivery must occur within 7 days of entry of this Order 

for current personnel. For all others, delivery must occur before they assume their 

responsibilities. 

C. From each individual or entity to which a Defendant delivered a copy of this 

Order, that Defendant must obtain, within 30 days, a signed and dated acknowledgment of receipt 

of this Order. 

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XI. COMPLIANCE REPORTING 

IT IS FURTHER ORDERED that Defendants make timely submissions to Plaintiffs: 

A. One year after entry of this Order, each Defendant must submit a compliance 

report, sworn under penalty of perjury: 

1. Each Defendant must: (a) identify the primary physical, postal, and email 

address and telephone number, as designated points of contact, which 

representatives of Plaintiffs may use to communicate with Defendant; (b) identify 

all of that Defendant’s businesses by all of their names, telephone numbers, and 

physical, postal, email, and Internet addresses; (c) describe the activities of each 

business, including the goods and services offered, the means of advertising, 

marketing, and sales, and the involvement of any other Defendant (which 

Individual Defendant must describe if he knows or should know due to his own 

involvement); (d) describe in detail whether and how that Defendant is in 

compliance with each Section of this Order; and (e) provide a copy of each Order 

Acknowledgment obtained pursuant to this Order, unless previously submitted to 

Plaintiffs. 

2. Additionally, Individual Defendant must: (a) identify all telephone 

numbers and all physical, postal, email and Internet addresses, including all 

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residences; (b) identify all business activities, including any business for which 

such Defendant performs services whether as an employee or otherwise and any 

entity in which such Defendant has any ownership interest; and (c) describe in 

detail such Defendant’s involvement in each such business, including title, role, 

responsibilities, participation, authority, control, and any ownership. 

B. For 10 years after entry of this Order, each Defendant must submit a compliance 

notice, sworn under penalty of perjury, within 14 days of any change in the following: 

1. Each Defendant must report any change in: (a) any designated point of 

contact; or (b) the structure of any Corporate Defendant or any entity that 

Defendant has any ownership interest in or controls directly or indirectly that may 

affect compliance obligations arising under this Order, including: creation, 

merger, sale, or dissolution of the entity or any subsidiary, parent, or affiliate that 

engages in any acts or practices subject to this Order. 

2. Additionally, Individual Defendant must report any change in: (a) name, 

including aliases or fictitious name, or residence address; or (b) title or role in any 

business activity, including any business for which such Defendant performs 

services whether as an employee or otherwise and any entity in which such 

Defendant has any ownership interest, and identify the name, physical address, and 

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any Internet address of the business or entity. 

C. Each Defendant must submit to Plaintiffs notice of the filing of any 

bankruptcy petition, insolvency proceeding, or similar proceeding by or against 

such Defendant within 14 days of its filing. 

D. Any submission to Plaintiffs required by this Order to be sworn under penalty of 

perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by concluding: “I 

declare under penalty of perjury under the laws of the United States of America that the foregoing 

is true and correct. Executed on: _____” and supplying the date, signatory’s full name, title (if 

applicable), and signature. 

E. Unless otherwise directed by the applicable representative of Plaintiffs in writing, 

all submissions to Plaintiffs pursuant to this Order must be emailed to DEbrief@ftc.gov and 

Cassandra.halm@ilag.gov or sent by overnight courier (not the U.S. Postal Service) to: 

Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 

600 Pennsylvania Avenue NW, Washington, DC 20580 and Consumer Fraud Bureau Chief, 

Consumer Fraud Bureau, Illinois Attorney General, 100 W. Randolph 12th Floor, Chicago, IL, 

60601 with a copy to Cassandra Halm, Illinois Attorney General’s Office, Consumer Fraud 

Bureau, 500 South Second Street, Springfield IL 62701. The subject line must begin: FTC and 

People of the State of Illinois v. Ed Napleton Automotive Group. 

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XII. RECORDKEEPING 

IT IS FURTHER ORDERED that Defendants must create certain records for 10 years 

after entry of the Order, and retain each such record for 5 years. Specifically, Corporate 

Defendants, in connection with the advertising, marketing, offering for sale or lease, or sale or 

lease of motor vehicles or Add-on products or services, and Individual Defendant for any business 

that such Defendant, individually or collectively with any other Defendants, is a majority owner 

or controls directly or indirectly, must create and retain the following records: 

A. accounting records showing the revenues from all goods or services sold; 

B. personnel records showing, for each person providing services, whether as an 

employee or otherwise, that person’s: name; addresses; telephone numbers; job title or position; 

dates of service; and (if applicable) the reason for termination; 

C. records of all consumer complaints and refund requests, whether received directly 

or indirectly, such as through a third party, and any response. For purposes of this provision, 

consumer complaint(s) shall mean any written, oral, or electronic allegation, charge, claim, 

demand, dispute, or lawsuit concerning the subject matter of the Order; 

D. all records necessary to demonstrate full compliance with each provision of this 

Order, including all submissions to Plaintiffs; and 

E. a copy of each unique advertisement or other marketing material. 

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XIII. COMPLIANCE MONITORING 

IT IS FURTHER ORDERED that, for the purpose of monitoring Defendants’ compliance 

with this Order and any failure to transfer any assets as required by this Order: 

A. Within 14 days of receipt of a written request from a representative of Plaintiffs, 

each Defendant must: submit additional compliance reports or other requested information, 

which must be sworn under penalty of perjury; appear for depositions; and produce documents for 

inspection and copying. Plaintiffs are also authorized to obtain discovery, without further leave 

of court, using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30 

(including telephonic depositions), 31, 33, 34, 36, 45, and 69. 

B. For matters concerning this Order, Plaintiffs are authorized to communicate 

directly with each Defendant. Defendant must permit representatives of the Plaintiffs to 

interview any employee or other person affiliated with any Defendant who has agreed to such an 

interview. The person interviewed may have counsel present. 

C. Plaintiffs may use all other lawful means, including posing, through their 

representatives as consumers, suppliers, or other individuals or entities, to Defendants or any 

individual or entity affiliated with Defendants, without the necessity of identification or prior 

notice. Nothing in this Order limits the Plaintiffs’ lawful use of compulsory process, pursuant to 

Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1. 

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EXHIBIT A 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Section 475.110 of the Illinois Motor Vehicle Advertising Regulations, in relevant part, provides 

as follows: 

Section 475.110 Definitions 

. . . 

"Clear and conspicuous " (including the terms "clearly" and "conspicuously") 

means that the statement, representation or term being conveyed is in close 

proximity to the statement, representation or term it clarifies, modifies, or 

explains, or to which it otherwise relates; readily noticeable; reasonably 

understandable by the person(s) to whom it is directed; and not contradictory to 

any terms it purports to clarify, modify or explain. 

A statement, representation or term is not clear and conspicuous unless it 

shall: 

For printed, written, typed or graphic advertisements: 

employ abbreviations only if they are commonly understood by the 

public (e.g., abbreviations commonly understood – AC, AM/FM, 

AUTO, AIR, 2DR, CYL, MSRP, and e.g., abbreviations not 

commonly understood – WAC, PEG) or approved by federal or 

State law (e.g., terms allowed by the Federal Truth in Lending Act, 

15 USC 1601, et seq., or the Consumer Leasing Act of 1976, 15 

USC 1601, et seq., such as "APR"); 

be of sufficient prominence in terms of print, size and color 

contrast, as compared with the remainder of the advertisement, so 

as to be readily noticeable to the person(s) to whom it is 

directed. Any type size which is 10-point type or larger is deemed 

readily noticeable. 

For radio advertisements and the audio portion of television 

advertisements or advertisements in any other audio-visual medium: 

be at a decibel level equal to the highest decibel level used in the 

advertisement; and 

be at a speed equal to or slower than any other statement, 

representation or term contained in the advertisement. 

For required superimposed written copy ("super") in a television 

advertisement or advertisements in any other audio-visual medium: 

the minimum height of supers should be: 
 

 

 

 

 

 

 

 

 

 

 

 

 

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capital and lower case letters: 24 video scanlines; 

capital letters only: 18 video scanlines; 

appear on the screen for a duration sufficient to allow a viewer to 

have a reasonable opportunity to read and understand the 

statement, representation or term. 

It shall be a rebuttable presumption that the super is sufficient if 

the super meets the following on-screen minimum display time: 

three seconds for the first line of text; and 

one second for each additional line. 

. . . 

14 Ill. Adm. Code tit. 14, § 475.110 (2022) 
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EXHIBIT B 
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§ 1601 TITLE 15—COMMERCE AND TRADE Page 1386 

Sec. 

1681l. Restrictions on investigative consumer reports. 

1681m. Requirements on users of consumer reports. 

1681n. Civil liability for willful noncompliance. 

1681o. Civil liability for negligent noncompliance. 

1681p. Jurisdiction of courts; limitation of actions. 

1681q. Obtaining information under false pretenses. 

1681r. Unauthorized disclosures by officers or employees. 

1681s. Administrative enforcement. 

1681s–1. Information on overdue child support obligations. 

1681s–2. Responsibilities of furnishers of information 

to consumer reporting agencies. 

1681s–3. Affiliate sharing. 

1681t. Relation to State laws. 

1681u. Disclosures to FBI for counterintelligence 

purposes. 

1681v. Disclosures to governmental agencies for 

counterterrorism purposes. 

1681w. Disposal of records. 

1681x. Corporate and technological circumvention 

prohibited. 

SUBCHAPTER IV—EQUAL CREDIT OPPORTUNITY 

1691. Scope of prohibition. 

1691a. Definitions; rules of construction. 

1691b. Promulgation of regulations by the Bureau. 

1691c. Administrative enforcement. 

1691c–1. Incentives for self-testing and self-correction. 

1691c–2. Small business loan data collection. 

1691d. Applicability of other laws. 

1691e. Civil liability. 

1691f. Annual reports to Congress; contents. 

SUBCHAPTER V—DEBT COLLECTION PRACTICES 

1692. Congressional findings and declaration of purpose. 

1692a. Definitions. 

1692b. Acquisition of location information. 

1692c. Communication in connection with debt collection. 

1692d. Harassment or abuse. 

1692e. False or misleading representations. 

1692f. Unfair practices. 

1692g. Validation of debts. 

1692h. Multiple debts. 

1692i. Legal actions by debt collectors. 

1692j. Furnishing certain deceptive forms. 

1692k. Civil liability. 

1692l. Administrative enforcement. 

1692m. Reports to Congress by the Bureau; views of 

other Federal agencies. 

1692n. Relation to State laws. 

1692o. Exemption for State regulation. 

1692p Exception for certain bad check enforcement 

programs operated by private entities. 

SUBCHAPTER VI—ELECTRONIC FUND TRANSFERS 

1693. Congressional findings and declaration of purpose. 

1693a. Definitions. 

1693b. Regulations. 

1693c. Terms and conditions of transfers. 

1693d. Documentation of transfers. 

1693e. Preauthorized transfers. 

1693f. Error resolution. 

1693g. Consumer liability. 

1693h. Liability of financial institutions. 

1693i. Issuance of cards or other means of access. 

1693j. Suspension of obligations. 

1693k. Compulsory use of electronic fund transfers. 

1693l. Waiver of rights. 

1693l–1. General-use prepaid cards, gift certificates, 

and store gift cards. 

1693m. Civil liability. 

1693n. Criminal liability. 

1693o. Administrative enforcement. 

1693o–1. Remittance transfers. 

Sec. 

1693o–2. Reasonable fees and rules for payment card 

transactions. 

1693p. Reports to Congress. 

1693q. Relation to State laws. 

1693r. Exemption for State regulation. 

SUBCHAPTER I—CONSUMER CREDIT COST 

DISCLOSURE 

PART A—GENERAL PROVISIONS 

§ 1601. Congressional findings and declaration of 

purpose 

(a) Informed use of credit 

The Congress finds that economic stabilization would be enhanced and the competition 

among the various financial institutions and 

other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit. The informed use of credit 

results from an awareness of the cost thereof by 

consumers. It is the purpose of this subchapter 

to assure a meaningful disclosure of credit 

terms so that the consumer will be able to compare more readily the various credit terms 

available to him and avoid the uninformed use 

of credit, and to protect the consumer against 

inaccurate and unfair credit billing and credit 

card practices. 

(b) Terms of personal property leases 

The Congress also finds that there has been a 

recent trend toward leasing automobiles and 

other durable goods for consumer use as an alternative to installment credit sales and that 

these leases have been offered without adequate 

cost disclosures. It is the purpose of this subchapter to assure a meaningful disclosure of the 

terms of leases of personal property for personal, family, or household purposes so as to enable the lessee to compare more readily the various lease terms available to him, limit balloon 

payments in consumer leasing, enable comparison of lease terms with credit terms where appropriate, and to assure meaningful and accurate disclosures of lease terms in advertisements. 

(Pub. L. 90–321, title I, § 102, May 29, 1968, 82 Stat. 

146; Pub. L. 93–495, title III, § 302, Oct. 28, 1974, 88 

Stat. 1511; Pub. L. 94–240, § 2, Mar. 23, 1976, 90 

Stat. 257.) 

AMENDMENTS 

1976—Pub. L. 94–240 designated existing provisions as 

subsec. (a) and added subsec. (b). 

1974—Pub. L. 93–495 inserted provisions expanding 

purposes of subchapter to include protection of consumer against inaccurate and unfair credit billing and 

credit card practices. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Pub. L. 111–203, title XIV, §1400(c), July 21, 2010, 124 

Stat. 2136, provided that: 

‘‘(1) REGULATIONS.—The regulations required to be 

prescribed under this title [see Tables for classification] or the amendments made by this title shall— 

‘‘(A) be prescribed in final form before the end of 

the 18-month period beginning on the designated 

transfer date; and 

‘‘(B) take effect not later than 12 months after the 

date of issuance of the regulations in final form. 

‘‘(2) EFFECTIVE DATE ESTABLISHED BY RULE.—Except 

as provided in paragraph (3), a section, or provision 

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Page 1387 TITLE 15—COMMERCE AND TRADE § 1601 

thereof, of this title shall take effect on the date on 

which the final regulations implementing such section, 

or provision, take effect. 

‘‘(3) EFFECTIVE DATE.—A section of this title for 

which regulations have not been issued on the date 

that is 18 months after the designated transfer date 

shall take effect on such date.’’ 

EFFECTIVE DATE OF 1976 AMENDMENT 

Amendment by Pub. L. 94–240 effective on expiration 

of one year after Mar. 23, 1976, see section 6 of Pub. L. 

94–240, set out as an Effective Date note under section 

1667 of this title. 

EFFECTIVE DATE OF 1974 AMENDMENT 

For effective date of amendment by Pub. L. 93–495, 

see section 308 of Pub. L. 93–495, set out as an Effective 

Date note under section 1666 of this title. 

EFFECTIVE DATE 

Section 504(a) of Pub. L. 90–321 provided that this part 

is effective May 29, 1968. 

SHORT TITLE OF 2018 AMENDMENT 

Pub. L. 115–174, §1(a), May 24, 2018, 132 Stat. 1296, provided that: ‘‘This Act [see Tables for classification] 

may be cited as the ‘Economic Growth, Regulatory Relief, and Consumer Protection Act’.’’ 

SHORT TITLE OF 2015 AMENDMENT 

Pub. L. 114–94, div. G, title LXXXIX, § 89001, Dec. 4, 

2015, 129 Stat. 1799, provided that: ‘‘This title [amending 

sections 1639c and 1639d of this title and enacting provisions set out as a note under section 5512 of Title 12, 

Banks and Banking] may be cited as the ‘Helping Expand Lending Practices in Rural Communities Act of 

2015’ or the ‘HELP Rural Communities Act of 2015’.’’ 

SHORT TITLE OF 2010 AMENDMENT 

Pub. L. 111–319, § 1, Dec. 18, 2010, 124 Stat. 3457, provided that: ‘‘This Act [amending section 1681m of this 

title and enacting provisions set out as a note under 

section 1681m of this title] may be cited as the ‘Red 

Flag Program Clarification Act of 2010’.’’ 

Pub. L. 111–203, title XIV, § 1400(a), July 21, 2010, 124 

Stat. 2136, provided that: ‘‘This title [see Tables for 

classification] may be cited as the ‘Mortgage Reform 

and Anti-Predatory Lending Act’.’’ 

SHORT TITLE OF 2009 AMENDMENT 

Pub. L. 111–93, § 1, Nov. 6, 2009, 123 Stat. 2998, provided 

that: ‘‘This Act [amending section 1666b of this title] 

may be cited as the ‘Credit CARD Technical Corrections Act of 2009’.’’ 

Pub. L. 111–24, §1(a), May 22, 2009, 123 Stat. 1734, provided that: ‘‘This Act [enacting sections 1616, 1651, 1665c 

to 1665e, 1666i–1, 1666i–2, and 1693l–1 of this title and section 1a–7b of Title 16, Conservation, amending sections 

1602, 1632, 1637, 1640, 1650, 1666b, 1666c, 1666j, 1681b, 1681j, 

and 1693m to 1693r of this title, enacting provisions set 

out as notes under sections 1602, 1637, 1638, 1666b, 1681j, 

and 1693l–1 of this title and section 5311 of Title 31, 

Money and Finance, and amending provisions set out as 

notes under sections 1638 and 1693 of this title] may be 

cited as the ‘Credit Card Accountability Responsibility 

and Disclosure Act of 2009’ or the ‘Credit CARD Act of 

2009’.’’ 

SHORT TITLE OF 2008 AMENDMENT 

Pub. L. 110–315, title X, §1001, Aug. 14, 2008, 122 Stat. 

3478, provided that: ‘‘This title [enacting section 1650 of 

this title and sections 1019d and 9709 of Title 20, Education, amending sections 1602, 1603, 1638, and 1640 of 

this title, section 2903 of Title 12, Banks and Banking, 

and section 1092 of Title 20, and enacting provisions set 

out as notes under sections 1638 and 1640 of this title, 

section 2903 of Title 12, and section 9709 of Title 20] may 

be cited as the ‘Private Student Loan Transparency 

and Improvement Act of 2008’.’’ 

Pub. L. 110–289, div. B, title V, §2501, July 30, 2008, 122 

Stat. 2855, provided that: ‘‘This title [amending sections 1638 and 1640 of this title and sections 24 and 338a 

of Title 12, Banks and Banking, and enacting provisions 

set out as a note under section 1638 of this title] may 

be cited as the ‘Mortgage Disclosure Improvement Act 

of 2008’.’’ 

Pub. L. 110–241, § 1, June 3, 2008, 122 Stat. 1565, provided that: ‘‘This Act [amending section 1681n of this 

title and enacting provisions set out as notes under section 1681n of this title] may be cited as the ‘Credit and 

Debit Card Receipt Clarification Act of 2007’.’’ 

SHORT TITLE OF 2003 AMENDMENT 

Pub. L. 108–159, § 1(a), Dec. 4, 2003, 117 Stat. 1952, provided that: ‘‘This Act [enacting sections 1681c–1, 

1681c–2, 1681s–3, 1681w, and 1681x of this title and sections 9701 to 9708 of Title 20, Education, amending sections 1681a, 1681b, 1681c, 1681g, 1681i, 1681j, 1681m, 1681o, 

1681p, 1681s, 1681s–2, 1681t, 1681u, and 1681v of this title 

and section 5318 of Title 31, Money and Finance, enacting provisions set out as notes under this section, sections 1681, 1681a, 1681b, 1681c, 1681c–1, 1681i, 1681j, 1681m, 

1681n, 1681s–2, 1681s–3 of this title, and section 9701 of 

Title 20, and amending provisions set out as a note 

under this section] may be cited as the ‘Fair and Accurate Credit Transactions Act of 2003’.’’ 

SHORT TITLE OF 1999 AMENDMENT 

Pub. L. 106–102, title VII, §701, Nov. 12, 1999, 113 Stat. 

1463, provided that: ‘‘This subtitle [subtitle A 

(§§ 701–705) of title VII of Pub. L. 106–102, amending sections 1693b, 1693c, and 1693h of this title] may be cited 

as the ‘ATM Fee Reform Act of 1999’.’’ 

SHORT TITLE OF 1998 AMENDMENT 

Pub. L. 105–347, § 1, Nov. 2, 1998, 112 Stat. 3208, provided that: ‘‘This Act [amending sections 1681a to 1681c, 

1681g, 1681i, 1681k, and 1681s of this title and enacting 

provisions set out as a note under section 1681a of this 

title] may be cited as the ‘Consumer Reporting Employment Clarification Act of 1998’.’’ 

SHORT TITLE OF 1996 AMENDMENT 

Pub. L. 104–208, div. A, title II, § 2401, Sept. 30, 1996, 110 

Stat. 3009–426, provided that: ‘‘This chapter [chapter 1 

(§§ 2401–2422) of subtitle D of title II of div. A of Pub. L. 

104–208, enacting section 1681s–2 of this title, amending 

sections 1681a to 1681e, 1681g to 1681j, 1681m to 1681o, 

1681q to 1681s, and 1681t of this title, and enacting provisions set out as notes under sections 1681a, 1681b, and 

1681g of this title] may be cited as the ‘Consumer Credit 

Reporting Reform Act of 1996’.’’ 

SHORT TITLE OF 1995 AMENDMENTS 

Pub. L. 104–29, § 1, Sept. 30, 1995, 109 Stat. 271, provided 

that: ‘‘This Act [enacting section 1649 of this title, 

amending sections 1605, 1631, 1635, 1640, and 1641 of this 

title, and enacting provisions set out as notes under 

section 1605 of this title] may be cited as the ‘Truth in 

Lending Act Amendments of 1995’.’’ 

Pub. L. 104–12, §1, May 18, 1995, 109 Stat. 161, provided 

that: ‘‘This Act [amending section 1640 of this title] 

may be cited as the ‘Truth in Lending Class Action Relief Act of 1995’.’’ 

SHORT TITLE OF 1994 AMENDMENT 

Pub. L. 103–325, title I, §151, Sept. 23, 1994, 108 Stat. 

2190, provided that: ‘‘This subtitle [subtitle B 

(§§ 151–158) of title I of Pub. L. 103–325, enacting sections 

1639 and 1648 of this title, amending sections 1602, 1604, 

1610, 1640, 1641, and 1647 of this title, and enacting provisions set out as notes under this section and section 

1602 of this title] may be cited as the ‘Home Ownership 

and Equity Protection Act of 1994’.’’ 

SHORT TITLE OF 1992 AMENDMENT 

Pub. L. 102–537, § 1, Oct. 27, 1992, 106 Stat. 3531, provided that: ‘‘This Act [enacting section 1681s–1 of this 

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§ 1601 TITLE 15—COMMERCE AND TRADE Page 1388 

title, amending section 1681a of this title, and enacting 

provisions set out as a note under section 1681a of this 

title] may be cited as the ‘Ted Weiss Child Support Enforcement Act of 1992’.’’ 

SHORT TITLE OF 1988 AMENDMENTS 

Pub. L. 100–709, § 1, Nov. 23, 1988, 102 Stat. 4725, provided that: ‘‘This Act [enacting sections 1637a, 1647, and 

1665b of this title, amending sections 1632 and 1637 of 

this title, and enacting provisions set out as notes 

under section 1637a of this title] may be cited as the 

‘Home Equity Loan Consumer Protection Act of 1988’.’’ 

Pub. L. 100–583, § 1, Nov. 3, 1988, 102 Stat. 2960, provided that: ‘‘This Act [amending sections 1610, 1632, 

1637, 1640, and 1646 of this title and enacting provisions 

set out as a note under section 1637 of this title] may 

be cited as the ‘Fair Credit and Charge Card Disclosure 

Act of 1988’.’’ 

SHORT TITLE OF 1981 AMENDMENT 

Pub. L. 97–25, §1, July 27, 1981, 95 Stat. 144, provided: 

‘‘That this Act [amending sections 1602 and 1666f of this 

title, section 29 of Title 12, Banks and Banking, and 

sections 205 and 212 of Title 42, The Public Health and 

Welfare; enacting provisions set out as notes under this 

section and sections 1602 and 1666f of this title; and 

amending provisions set out as notes under sections 

1602 and 1666f of this title] may be cited as the ‘Cash 

Discount Act’.’’ 

SHORT TITLE OF 1980 AMENDMENT 

Pub. L. 96–221, title VI, § 601, Mar. 31, 1980, 94 Stat. 168, 

provided that: ‘‘This title [enacting section 1646 of this 

title, amending sections 57a, 1602 to 1607, 1610, 1612, 1613, 

1631, 1632, 1635, 1637, 1638, 1640, 1641, 1643, 1663, 1664, 1665a, 

1666, 1666d, 1667d, and 1691f of this title, repealing sections 1614, 1636, and 1639 of this title, and enacting provisions set out as notes under sections 1602 and 1607 of 

this title] may be cited as the ‘Truth in Lending Simplification and Reform Act’.’’ 

SHORT TITLE OF 1976 AMENDMENTS 

Pub. L. 94–240, §1, Mar. 23, 1976, 90 Stat. 257, provided 

that: ‘‘This Act [enacting sections 1667 to 1667e of this 

title, amending this section and section 1640 of this 

title, and enacting provisions set out as a note under 

section 1667 of this title] may be cited as the ‘Consumer 

Leasing Act of 1976’.’’ 

Pub. L. 94–239, § 1(a), Mar. 23, 1976, 90 Stat. 251, provided that: ‘‘This Act [enacting section 1691f of this 

title, amending this section and sections 1691b, 1691c, 

1691d, 1691e of this title, repealing section 1609 of this 

title, enacting provisions set out as notes under this 

section, and repealing provision set out as a note under 

this section] may be cited as the ‘Equal Credit Opportunity Act Amendments of 1976’.’’ 

Section 1(c) of Pub. L. 94–239 repealed section 501 of 

Pub. L. 93–495, title V, Oct. 28, 1974, 88 Stat. 1521, which 

provided that subchapter IV of this chapter and notes 

set out under section 1691 were to be cited as the 

‘‘Equal Credit Opportunity Act’’. 

SHORT TITLE OF 1974 AMENDMENT 

Pub. L. 93–495, title III, §301, Oct. 28, 1974, 88 Stat. 

1511, provided that: ‘‘This title [enacting sections 1666 

to 1666j of this title, amending this section and sections 

1602, 1610, 1631, 1632, and 1637 of this title, and enacting 

provision set out as a note under section 1666 of this 

title] may be cited as the ‘Fair Credit Billing Act’.’’ 

SHORT TITLE 

Pub. L. 90–321, §1, May 29, 1968, 82 Stat. 146, provided 

that: ‘‘This Act [enacting this chapter, sections 891 to 

896 of Title 18, Crimes and Criminal Procedure, and provisions set out as notes under this section, sections 1631 

and 1671 of this title, and section 891 of Title 18] may 

be cited as the ‘Consumer Credit Protection Act’.’’ 

Pub. L. 90–321, title I, § 101, May 29, 1968, 82 Stat. 146, 

provided that: ‘‘This title [enacting this subchapter] 

may be cited as the ‘Truth in Lending Act’.’’ 

Section 401 of title IV of Pub. L. 90–321, as added by 

Pub. L. 104–208, div. A, title II, § 2451, Sept. 30, 1996, 110 

Stat. 3009–454, provided that: ‘‘This title [enacting subchapter II–A of this chapter] may be cited as the ‘Credit Repair Organizations Act’.’’ 

Section 601 of title VI of Pub. L. 90–321, as added by 

Pub. L. 91–508, title VI, §601, Oct. 26, 1970, 84 Stat. 1128, 

as amended by Pub. L. 108–159, title VIII, §811(a), Dec. 

4, 2003, 117 Stat. 2011, provided that: ‘‘This title [enacting subchapter III of this chapter] may be cited as the 

‘Fair Credit Reporting Act’.’’ 

Section 709 of title VII of Pub. L. 90–321, as added by 

section 1(b) of Pub. L. 94–239, Mar. 23, 1976, 90 Stat. 251, 

provided that: ‘‘This title [enacting subchapter IV of 

this chapter and notes set out under section 1691 of this 

title] may be cited as the ‘Equal Credit Opportunity 

Act’.’’ 

Section 801 of title VIII of Pub. L. 90–321, as added by 

Pub. L. 95–109, Sept. 20, 1977, 91 Stat. 874, provided that: 

‘‘This title [enacting subchapter V of this chapter] may 

be cited as the ‘Fair Debt Collection Practices Act’.’’ 

Section 901 of title IX of Pub. L. 90–321, as added Pub. 

L. 95–630, title XX, §2001, Nov. 10, 1978, 92 Stat. 3728, provided that: ‘‘This title [enacting subchapter VI of this 

chapter] may be cited as the ‘Electronic Fund Transfer 

Act’.’’ 

SEVERABILITY 

Pub. L. 90–321, title V, §501, May 29, 1968, 82 Stat. 167, 

provided that: ‘‘If a provision enacted by this Act [see 

Short Title note above], is held invalid, all valid provisions that are severable from the invalid provision remain in effect. If a provision enacted by this Act is held 

invalid in one or more of its applications, the provision 

remains in effect in all valid applications that are severable from the invalid application or applications.’’ 

EXEMPTION OR MODIFICATION OF MORTGAGE 

DISCLOSURE REQUIREMENTS 

Pub. L. 111–203, title XIV, § 1405(b), July 21, 2010, 124 

Stat. 2142, provided that: ‘‘Notwithstanding any other 

provision of this title [see Tables for classification], in 

order to improve consumer awareness and understanding of transactions involving residential mortgage loans through the use of disclosures, the Board 

may, by rule, exempt from or modify disclosure requirements, in whole or in part, for any class of residential mortgage loans if the Board determines that 

such exemption or modification is in the interest of 

consumers and in the public interest.’’ 

ANALYSIS OF FURTHER RESTRICTIONS ON OFFERS OF 

CREDIT OR INSURANCE 

Pub. L. 108–159, title II, §213(e), Dec. 4, 2003, 117 Stat. 

1979, provided that: 

‘‘(1) IN GENERAL.—The Board shall conduct a study 

of— 

‘‘(A) the ability of consumers to avoid receiving 

written offers of credit or insurance in connection 

with transactions not initiated by the consumer; and 

‘‘(B) the potential impact that any further restrictions on providing consumers with such written offers of credit or insurance would have on consumers. 

‘‘(2) REPORT.—The Board shall submit a report summarizing the results of the study required under paragraph (1) to the Congress not later than 12 months after 

the date of enactment of this Act [Dec. 4, 2003], together with such recommendations for legislative or 

administrative action as the Board may determine to 

be appropriate. 

‘‘(3) CONTENT OF REPORT.—The report described in 

paragraph (2) shall address the following issues: 

‘‘(A) The current statutory or voluntary mechanisms that are available to a consumer to notify 

lenders and insurance providers that the consumer 

does not wish to receive written offers of credit or insurance. 

‘‘(B) The extent to which consumers are currently 

utilizing existing statutory and voluntary mechanisms to avoid receiving offers of credit or insurance. 

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Page 1389 TITLE 15—COMMERCE AND TRADE § 1602 

‘‘(C) The benefits provided to consumers as a result 

of receiving written offers of credit or insurance. 

‘‘(D) Whether consumers incur significant costs or 

are otherwise adversely affected by the receipt of 

written offers of credit or insurance. 

‘‘(E) Whether further restricting the ability of lenders and insurers to provide written offers of credit or 

insurance to consumers would affect— 

‘‘(i) the cost consumers pay to obtain credit or insurance; 

‘‘(ii) the availability of credit or insurance; 

‘‘(iii) consumers’ knowledge about new or alternative products and services; 

‘‘(iv) the ability of lenders or insurers to compete 

with one another; and 

‘‘(v) the ability to offer credit or insurance products to consumers who have been traditionally underserved.’’ 

[For definitions of terms used in section 213(e) of Pub. 

L. 108–159, set out above, see section 2 of Pub. L. 108–159, 

set out as a Definitions note under section 1681 of this 

title.] 

FEDERAL RESERVE STUDY OF HOME EQUITY LENDING 

AND APPROPRIATE INTEREST RATE INDEX 

Pub. L. 103–325, title I, §157, Sept. 23, 1994, 108 Stat. 

2197, provided that during the period beginning 180 days 

after Sept. 23, 1994, and ending 2 years after that date, 

the Board of Governors of the Federal Reserve System 

was to conduct a study and submit to the Congress a 

report, including recommendations for any appropriate 

legislation, regarding whether consumers engaging in 

open end credit transactions as defined in section 1602 

of this title secured by principal dwellings have adequate Federal protection and whether a more appropriate interest rate index existed for purposes of section 1602(bb)(1)(A) of this title than the yield on Treasury securities. 

HEARINGS ON HOME EQUITY LENDING 

Pub. L. 103–325, title I, §158, Sept. 23, 1994, 108 Stat. 

2197, as amended by Pub. L. 111–203, title X, §1096, July 

21, 2010, 124 Stat. 2102, provided that: 

‘‘(a) HEARINGS.—Not less than once during the 3-year 

period beginning on the date of enactment of this Act 

[Sept. 23, 1994], and regularly thereafter, the Bureau, in 

consultation with the Advisory Board to the Bureau, 

shall conduct a public hearing to examine the home equity loan market and the adequacy of existing regulatory and legislative provisions and the provisions of 

this subtitle [see Short Title of 1994 Amendment note 

above] in protecting the interests of consumers, and 

low-income consumers in particular. 

‘‘(b) PARTICIPATION.—In conducting hearings required 

by subsection (a), the Bureau shall solicit participation 

from consumers, representatives of consumers, lenders, 

and other interested parties.’’ 

STUDY BY FEDERAL RESERVE BOARD OF GOVERNORS 

COVERING EFFECT OF CHARGE CARD TRANSACTIONS 

UPON CARD ISSUERS, MERCHANTS, AND CONSUMERS 

Pub. L. 97–25, title II, § 202, July 27, 1981, 95 Stat. 145, 

directed Board of Governors of Federal Reserve System, not later than 2 years after July 27, 1981, to prepare a study and submit its findings to Congress on the 

effect of charge card transactions upon card issuers, 

merchants, and consumers. 

INFERENCE OF LEGISLATIVE INTENT IN SECTION 

CAPTIONS AND CATCHLINES 

Pub. L. 90–321, title V, §502, May 29, 1968, 82 Stat. 167, 

provided that: ‘‘Captions and catchlines are intended 

solely as aids to convenient reference, and no inference 

as to the legislative intent with respect to any provision enacted by this Act [enacting this chapter, section 

891 to 896 of Title 18, Crimes and Criminal Procedure, 

and provisions set out as notes under this section, sections 1631 and 1671 of this title, and section 891 of Title 

18] may be drawn from them.’’ 

GRAMMATICAL USAGES 

Pub. L. 90–321, title V, §503, May 30, 1968, 82 Stat. 167, 

provided that: ‘‘In this Act [enacting this chapter, sections 891 to 896 of Title 18, Crimes and Criminal Procedure, and provisions set out as notes under this section, 

sections 1631 and 1671 of this title, and section 891 of 

Title 18]: 

‘‘(1) The word ‘may’ is used to indicate that an action either is authorized or is permitted. 

‘‘(2) The word ‘shall’ is used to indicate that an action is both authorized and required. 

‘‘(3) The phrase ‘may not’ is used to indicate that 

an action is both unauthorized and forbidden. 

‘‘(4) Rules of law are stated in the indicative 

mood.’’ 

DEFINITION 

Pub. L. 111–203, title XIV, § 1495, July 21, 2010, 124 

Stat. 2207, provided that: ‘‘For purposes of this title 

[see Tables for classification], the term ‘designated 

transfer date’ means the date established under section 

1062 of this Act [12 U.S.C. 5582].’’ 

§ 1602. Definitions and rules of construction 

(a) The definitions and rules of construction 

set forth in this section are applicable for the 

purposes of this subchapter. 

(b) BUREAU.—The term ‘‘Bureau’’ means the 

Bureau of Consumer Financial Protection. 

(c) The term ‘‘Board’’ refers to the Board of 

Governors of the Federal Reserve System. 

(d) The term ‘‘organization’’ means a corporation, government or governmental subdivision 

or agency, trust, estate, partnership, cooperative, or association. 

(e) The term ‘‘person’’ means a natural person 

or an organization. 

(f) The term ‘‘credit’’ means the right granted 

by a creditor to a debtor to defer payment of 

debt or to incur debt and defer its payment. 

(g) The term ‘‘creditor’’ refers only to a person 

who both (1) regularly extends, whether in connection with loans, sales of property or services, 

or otherwise, consumer credit which is payable 

by agreement in more than four installments or 

for which the payment of a finance charge is or 

may be required, and (2) is the person to whom 

the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement. Notwithstanding the preceding sentence, in the case of 

an open-end credit plan involving a credit card, 

the card issuer and any person who honors the 

credit card and offers a discount which is a finance charge are creditors. For the purpose of 

the requirements imposed under part D of this 

subchapter and sections 1637(a)(5), 1637(a)(6), 

1637(a)(7), 1637(b)(1), 1637(b)(2), 1637(b)(3), 

1637(b)(8), and 1637(b)(10) of this title, the term 

‘‘creditor’’ shall also include card issuers whether or not the amount due is payable by agreement in more than four installments or the payment of a finance charge is or may be required, 

and the Bureau shall, by regulation, apply these 

requirements to such card issuers, to the extent 

appropriate, even though the requirements are 

by their terms applicable only to creditors offering open-end credit plans. Any person who originates 2 or more mortgages referred to in subsection (aa) in any 12-month period or any person who originates 1 or more such mortgages 

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§ 1602 TITLE 15—COMMERCE AND TRADE Page 1390 

through a mortgage broker shall be considered 

to be a creditor for purposes of this subchapter. 

The term ‘‘creditor’’ includes a private educational lender (as that term is defined in section 1650 of this title) for purposes of this subchapter. 

(h) The term ‘‘credit sale’’ refers to any sale in 

which the seller is a creditor. The term includes 

any contract in the form of a bailment or lease 

if the bailee or lessee contracts to pay as compensation for use a sum substantially equivalent 

to or in excess of the aggregate value of the 

property and services involved and it is agreed 

that the bailee or lessee will become, or for no 

other or a nominal consideration has the option 

to become, the owner of the property upon full 

compliance with his obligations under the contract. 

(i) The adjective ‘‘consumer’’, used with reference to a credit transaction, characterizes the 

transaction as one in which the party to whom 

credit is offered or extended is a natural person, 

and the money, property, or services which are 

the subject of the transaction are primarily for 

personal, family, or household purposes. 

(j) The terms ‘‘open end credit plan’’ and 

‘‘open end consumer credit plan’’ mean a plan 

under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and 

which provides for a finance charge which may 

be computed from time to time on the outstanding unpaid balance. A credit plan or open 

end consumer credit plan which is an open end 

credit plan or open end consumer credit plan 

within the meaning of the preceding sentence is 

an open end credit plan or open end consumer 

credit plan even if credit information is verified 

from time to time. 

(k) The term ‘‘adequate notice,’’ as used in 

section 1643 of this title, means a printed notice 

to a cardholder which sets forth the pertinent 

facts clearly and conspicuously so that a person 

against whom it is to operate could reasonably 

be expected to have noticed it and understood 

its meaning. Such notice may be given to a 

cardholder by printing the notice on any credit 

card, or on each periodic statement of account, 

issued to the cardholder, or by any other means 

reasonably assuring the receipt thereof by the 

cardholder. 

(l) The term ‘‘credit card’’ means any card, 

plate, coupon book or other credit device existing for the purpose of obtaining money, property, labor, or services on credit. 

(m) The term ‘‘accepted credit card’’ means 

any credit card which the cardholder has requested and received or has signed or has used, 

or authorized another to use, for the purpose of 

obtaining money, property, labor, or services on 

credit. 

(n) The term ‘‘cardholder’’ means any person 

to whom a credit card is issued or any person 

who has agreed with the card issuer to pay obligations arising from the issuance of a credit 

card to another person. 

(o) The term ‘‘card issuer’’ means any person 

who issues a credit card, or the agent of such 

person with respect to such card. 

(p) The term ‘‘unauthorized use,’’ as used in 

section 1643 of this title, means a use of a credit 

card by a person other than the cardholder who 

does not have actual, implied, or apparent authority for such use and from which the cardholder receives no benefit. 

(q) The term ‘‘discount’’ as used in section 

1666f of this title means a reduction made from 

the regular price. The term ‘‘discount’’ as used 

in section 1666f of this title shall not mean a surcharge. 

(r) The term ‘‘surcharge’’ as used in this section and section 1666f of this title means any 

means of increasing the regular price to a cardholder which is not imposed upon customers 

paying by cash, check, or similar means.’’ 

(s) The term ‘‘State’’ refers to any State, the 

Commonwealth of Puerto Rico, the District of 

Columbia, and any territory or possession of the 

United States. 

(t) The term ‘‘agricultural purposes’’ includes 

the production, harvest, exhibition, marketing, 

transportation, processing, or manufacture of 

agricultural products by a natural person who 

cultivates, plants, propagates, or nurtures those 

agricultural products, including but not limited 

to the acquisition of farmland, real property 

with a farm residence, and personal property 

and services used primarily in farming. 

(u) The term ‘‘agricultural products’’ includes 

agricultural, horticultural, viticultural, and 

dairy products, livestock, wildlife, poultry, bees, 

forest products, fish and shellfish, and any products thereof, including processed and manufactured products, and any and all products raised 

or produced on farms and any processed or manufactured products thereof. 

(v) The term ‘‘material disclosures’’ means the 

disclosure, as required by this subchapter, of the 

annual percentage rate, the method of determining the finance charge and the balance upon 

which a finance charge will be imposed, the 

amount of the finance charge, the amount to be 

financed, the total of payments, the number and 

amount of payments, the due dates or periods of 

payments scheduled to repay the indebtedness, 

and the disclosures required by section 1639(a) of 

this title. 

(w) The term ‘‘dwelling’’ means a residential 

structure or mobile home which contains one to 

four family housing units, or individual units of 

condominiums or cooperatives. 

(x) The term ‘‘residential mortgage transaction’’ means a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest 

is created or retained against the consumer’s 

dwelling to finance the acquisition or initial 

construction of such dwelling. 

(y) As used in this section and section 1666f of 

this title, the term ‘‘regular price’’ means the 

tag or posted price charged for the property or 

service if a single price is tagged or posted, or 

the price charged for the property or service 

when payment is made by use of an open-end 

credit plan or a credit card if either (1) no price 

is tagged or posted, or (2) two prices are tagged 

or posted, one of which is charged when payment 

is made by use of an open-end credit plan or a 

credit card and the other when payment is made 

by use of cash, check, or similar means. For purposes of this definition, payment by check, 

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Page 1391 TITLE 15—COMMERCE AND TRADE § 1602 

draft, or other negotiable instrument which may 

result in the debiting of an open-end credit plan 

or a credit cardholder’s open-end account shall 

not be considered payment made by use of the 

plan or the account. 

(z) Any reference to any requirement imposed 

under this subchapter or any provision thereof 

includes reference to the regulations of the Bureau under this subchapter or the provision 

thereof in question. 

(aa) The disclosure of an amount or percentage which is greater than the amount or percentage required to be disclosed under this subchapter does not in itself constitute a violation 

of this subchapter. 

(bb) HIGH-COST MORTGAGE.— 

(1) DEFINITION.— 

(A) IN GENERAL.—The term ‘‘high-cost 

mortgage’’, and a mortgage referred to in 

this subsection, means a consumer credit 

transaction that is secured by the consumer’s principal dwelling, other than a reverse mortgage transaction, if— 

(i) in the case of a credit transaction secured— 

(I) by a first mortgage on the consumer’s principal dwelling, the annual 

percentage rate at consummation of the 

transaction will exceed by more than 6.5 

percentage points (8.5 percentage points, 

if the dwelling is personal property and 

the transaction is for less than $50,000) 

the average prime offer rate, as defined 

in section 1639c(b)(2)(B) of this title, for 

a comparable transaction; or 

(II) by a subordinate or junior mortgage on the consumer’s principal dwelling, the annual percentage rate at consummation of the transaction will exceed by more than 8.5 percentage points 

the average prime offer rate, as defined 

in section 1639c(b)(2)(B) of this title, for 

a comparable transaction; 

(ii) the total points and fees payable in 

connection with the transaction, other 

than bona fide third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator, exceed— 

(I) in the case of a transaction for 

$20,000 or more, 5 percent of the total 

transaction amount; or 

(II) in the case of a transaction for less 

than $20,000, the lesser of 8 percent of the 

total transaction amount or $1,000 (or 

such other dollar amount as the Board 

shall prescribe by regulation); or 

(iii) the credit transaction documents 

permit the creditor to charge or collect 

prepayment fees or penalties more than 36 

months after the transaction closing or 

such fees or penalties exceed, in the aggregate, more than 2 percent of the amount 

prepaid. 

(B) INTRODUCTORY RATES TAKEN INTO ACCOUNT.—For purposes of subparagraph (A)(i), 

the annual percentage rate of interest shall 

be determined based on the following interest rate: 

(i) In the case of a fixed-rate transaction 

in which the annual percentage rate will 

not vary during the term of the loan, the 

interest rate in effect on the date of consummation of the transaction. 

(ii) In the case of a transaction in which 

the rate of interest varies solely in accordance with an index, the interest rate determined by adding the index rate in effect on 

the date of consummation of the transaction to the maximum margin permitted 

at any time during the loan agreement. 

(iii) In the case of any other transaction 

in which the rate may vary at any time 

during the term of the loan for any reason, 

the interest charged on the transaction at 

the maximum rate that may be charged 

during the term of the loan. 

(C) MORTGAGE INSURANCE.—For the purposes of computing the total points and fees 

under paragraph (4), the total points and fees 

shall exclude— 

(i) any premium provided by an agency 

of the Federal Government or an agency of 

a State; 

(ii) any amount that is not in excess of 

the amount payable under policies in effect at the time of origination under section 203(c)(2)(A) of the National Housing 

Act (12 U.S.C. 1709(c)(2)(A)), provided that 

the premium, charge, or fee is required to 

be refundable on a pro-rated basis and the 

refund is automatically issued upon notification of the satisfaction of the underlying 

mortgage loan; and 

(iii) any premium paid by the consumer 

after closing. 

(2)(A) After the 2-year period beginning on the 

effective date of the regulations promulgated 

under section 155 of the Riegle Community Development and Regulatory Improvement Act of 

1994, and no more frequently than biennially 

after the first increase or decrease under this 

subparagraph, the Bureau may by regulation increase or decrease the number of percentage 

points specified in paragraph (1)(A), if the Bureau determines that the increase or decrease 

is— 

(i) consistent with the consumer protections 

against abusive lending provided by the 

amendments made by subtitle B of title I of 

the Riegle Community Development and Regulatory Improvement Act of 1994; and 

(ii) warranted by the need for credit. 

(B) An increase or decrease under subparagraph (A)— 

(i) may not result in the number of percentage points referred to in paragraph (1)(A)(i)(I) 

being less than 6 percentage points or greater 

than 10 percentage points; and 

(ii) may not result in the number of percentage points referred to in paragraph (1)(A)(i)(II) 

being less than 8 percentage points or greater 

than 12 percentage points. 

(C) In determining whether to increase or decrease the number of percentage points referred 

to in subparagraph (A), the Bureau shall consult 

with representatives of consumers, including 

low-income consumers, and lenders. 

(3) The amount specified in paragraph (1)(B)(ii) 

shall be adjusted annually on January 1 by the 

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§ 1602 TITLE 15—COMMERCE AND TRADE Page 1392 

annual percentage change in the Consumer 

Price Index, as reported on June 1 of the year 

preceding such adjustment. 

(4) For purposes of paragraph (1)(B), points and 

fees shall include— 

(A) all items included in the finance charge, 

except interest or the time-price differential; 

(B) all compensation paid directly or indirectly by a consumer or creditor to a mortgage originator from any source, including a 

mortgage originator that is also the creditor 

in a table-funded transaction; 

(C) each of the charges listed in section 

1605(e) of this title (except an escrow for future payment of taxes), unless— 

(i) the charge is reasonable; 

(ii) the creditor receives no direct or indirect compensation; and 

(iii) the charge is paid to a third party unaffiliated with the creditor; and 

(D) premiums or other charges payable at or 

before closing for any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident, loss-ofincome, life or health insurance, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, 

except that 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; 

(E) the maximum prepayment fees and penalties which may be charged or collected 

under the terms of the credit transaction; 

(F) all prepayment fees or penalties that are 

incurred by the consumer if the loan refinances a previous loan made or currently held 

by the same creditor or an affiliate of the 

creditor; and 

(G) such other charges as the Bureau determines to be appropriate. 

(5) CALCULATION OF POINTS AND FEES FOR OPENEND CONSUMER CREDIT PLANS.—In the case of 

open-end consumer credit plans, points and fees 

shall be calculated, for purposes of this section 

and section 1639 of this title, by adding the total 

points and fees known at or before closing, including the maximum prepayment penalties 

which may be charged or collected under the 

terms of the credit transaction, plus the minimum additional fees the consumer would be required to pay to draw down an amount equal to 

the total credit line. 

(6) This subsection shall not be construed to 

limit the rate of interest or the finance charge 

that a person may charge a consumer for any extension of credit. 

(cc) The term ‘‘reverse mortgage transaction’’ 

means a nonrecourse transaction in which a 

mortgage, deed of trust, or equivalent consensual security interest is created against the consumer’s principal dwelling— 

(1) securing one or more advances; and 

(2) with respect to which the payment of any 

principal, interest, and shared appreciation or 

equity is due and payable (other than in the 

case of default) only after— 

(A) the transfer of the dwelling; 

(B) the consumer ceases to occupy the 

dwelling as a principal dwelling; or 

(C) the death of the consumer. 

(dd) DEFINITIONS RELATING TO MORTGAGE 

ORIGINATION AND RESIDENTIAL MORTGAGE 

LOANS.— 

(1) COMMISSION.—Unless otherwise specified, 

the term ‘‘Commission’’ means the Federal 

Trade Commission. 

(2) MORTGAGE ORIGINATOR.—The term ‘‘mortgage originator’’— 

(A) means any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or 

gain— 

(i) takes a residential mortgage loan application; 

(ii) assists a consumer in obtaining or 

applying to obtain a residential mortgage 

loan; or 

(iii) offers or negotiates terms of a residential mortgage loan; 

(B) includes any person who represents to 

the public, through advertising or other 

means of communicating or providing information (including the use of business cards, 

stationery, brochures, signs, rate lists, or 

other promotional items), that such person 

can or will provide any of the services or 

perform any of the activities described in 

subparagraph (A); 

(C) does not include any person who is— 

(i) not otherwise described in subparagraph (A) or (B) and who performs purely 

administrative or clerical tasks on behalf 

of a person who is described in any such 

subparagraph; or 

(ii) a retailer of manufactured or modular homes or an employee of the retailer 

if the retailer or employee, as applicable— 

(I) does not receive compensation or 

gain for engaging in activities described 

in subparagraph (A) that is in excess of 

any compensation or gain received in a 

comparable cash transaction; 

(II) discloses to the consumer— 

(aa) in writing any corporate affiliation with any creditor; and 

(bb) if the retailer has a corporate affiliation with any creditor, at least 1 

unaffiliated creditor; and 

(III) does not directly negotiate with 

the consumer or lender on loan terms 

(including rates, fees, and other costs). 

(D) does not include a person or entity 

that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless 

such person or entity is compensated by a 

lender, a mortgage broker, or other mortgage originator or by any agent of such lender, mortgage broker, or other mortgage 

originator; 

(E) does not include, with respect to a residential mortgage loan, a person, estate, or 

trust that provides mortgage financing for 

the sale of 3 properties in any 12-month period to purchasers of such properties, each of 

which is owned by such person, estate, or 

trust and serves as security for the loan, 

provided that such loan— 

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Page 1393 TITLE 15—COMMERCE AND TRADE § 1602 

(i) is not made by a person, estate, or 

trust that has constructed, or acted as a 

contractor for the construction of, a residence on the property in the ordinary 

course of business of such person, estate, 

or trust; 

(ii) is fully amortizing; 

(iii) is with respect to a sale for which 

the seller determines in good faith and 

documents that the buyer has a reasonable 

ability to repay the loan; 

(iv) has a fixed rate or an adjustable rate 

that is adjustable after 5 or more years, 

subject to reasonable annual and lifetime 

limitations on interest rate increases; and 

(v) meets any other criteria the Board 

may prescribe; 

(F) does not include the creditor (except 

the creditor in a table-funded transaction) 

under paragraph (1), (2), or (4) of section 

1639b(c) of this title; and 

(G) does not include a servicer or servicer 

employees, agents and contractors, including but not limited to those who offer or negotiate terms of a residential mortgage loan 

for purposes of renegotiating, modifying, replacing and subordinating principal of existing mortgages where borrowers are behind in 

their payments, in default or have a reasonable likelihood of being in default or falling 

behind. 

(3) NATIONWIDE MORTGAGE LICENSING SYSTEM 

AND REGISTRY.—The term ‘‘Nationwide Mortgage Licensing System and Registry’’ has the 

same meaning as in the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 

[12 U.S.C. 5101 et seq.]. 

(4) OTHER DEFINITIONS RELATING TO MORTGAGE ORIGINATOR.—For purposes of this subsection, a person ‘‘assists a consumer in obtaining or applying to obtain a residential 

mortgage loan’’ by, among other things, advising on residential mortgage loan terms (including rates, fees, and other costs), preparing 

residential mortgage loan packages, or collecting information on behalf of the consumer 

with regard to a residential mortgage loan. 

(5) RESIDENTIAL MORTGAGE LOAN.—The term 

‘‘residential mortgage loan’’ means any consumer credit transaction that is secured by a 

mortgage, deed of trust, or other equivalent 

consensual security interest on a dwelling or 

on residential real property that includes a 

dwelling, other than a consumer credit transaction under an open end credit plan or, for 

purposes of sections 1639b and 1639c of this 

title and section 1638(a) (16), (17), (18), and (19) 

of this title, and sections 1638(f) and 1640(k) of 

this title, and any regulations promulgated 

thereunder, an extension of credit relating to 

a plan described in section 101(53D) of title 11. 

(6) SECRETARY.—The term ‘‘Secretary’’, 

when used in connection with any transaction 

or person involved with a residential mortgage 

loan, means the Secretary of Housing and 

Urban Development. 

(7) SERVICER.—The term ‘‘servicer’’ has the 

same meaning as in section 2605(i)(2) of title 

12. 

(ee) BONA FIDE DISCOUNT POINTS AND PREPAYMENT PENALTIES.—For the purposes of determining the amount of points and fees for purposes of subsection (aa), either the amounts described in paragraph (1) or (2) of the following 

paragraphs, but not both, shall be excluded: 

(1) 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— 

(A) the average prime offer rate, as defined 

in section 1639c of this title; or 

(B) if secured by a personal property loan, 

the average rate on a loan in connection 

with which insurance is provided under title 

I of the National Housing Act (12 U.S.C. 1702 

et seq.). 

(2) Unless 2 bona fide discount points have 

been excluded under paragraph (1), 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— 

(A) the average prime offer rate, as defined 

in section 1639c of this title; or 

(B) if secured by a personal property loan, 

the average rate on a loan in connection 

with which insurance is provided under title 

I of the National Housing Act (12 U.S.C. 1702 

et seq.). 

(3) For purposes of paragraph (1), the term 

‘‘bona fide discount points’’ means loan discount points which are knowingly paid by the 

consumer for the purpose of reducing, and 

which in fact result in a bona fide reduction 

of, the interest rate or time-price differential 

applicable to the mortgage. 

(4) Paragraphs (1) and (2) shall not apply to 

discount points used to purchase an interest 

rate reduction unless the amount of the interest rate reduction purchased is reasonably 

consistent with established industry norms 

and practices for secondary mortgage market 

transactions. 

(Pub. L. 90–321, title I, § 103, May 29, 1968, 82 Stat. 

147; Pub. L. 91–508, title V, § 501, Oct. 26, 1970, 84 

Stat. 1126; Pub. L. 93–495, title III, § 303, Oct. 28, 

1974, 88 Stat. 1511; Pub. L. 94–222, § 3(a), Feb. 27, 

1976, 90 Stat. 197; Pub. L. 96–221, title VI, §§ 602, 

603(a), (b), 604, 612(a)(2), (b), Mar. 31, 1980, 94 Stat. 

168, 169, 175, 176; Pub. L. 97–25, title I, § 102, July 

27, 1981, 95 Stat. 144; Pub. L. 97–320, title VII, 

§ 702(a), Oct. 15, 1982, 96 Stat. 1538; Pub. L. 

103–325, title I, §§ 152(a)–(c), 154(a), Sept. 23, 1994, 

108 Stat. 2190, 2191, 2196; Pub. L. 110–315, title X, 

§ 1011(b), Aug. 14, 2008, 122 Stat. 3481; Pub. L. 

111–24, title I, § 108, May 22, 2009, 123 Stat. 1743; 

Pub. L. 111–203, title X, § 1100A(1), (2), title XIV, 

§§ 1401, 1431, July 21, 2010, 124 Stat. 2107, 2137, 

2157; Pub. L. 115–174, title I, § 107, May 24, 2018, 

132 Stat. 1304.) 

REFERENCES IN TEXT 

The Riegle Community Development and Regulatory 

Improvement Act of 1994, referred to in subsec. 

(bb)(2)(A)(i), is Pub. L. 103–325, Sept. 23, 1994, 108 Stat. 

2160. Section 155 of the Act is set out below. For classification of subtitle B of title I of the Act, known as the 

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§ 1602 TITLE 15—COMMERCE AND TRADE Page 1394 

‘‘Home Ownership and Equity Protection Act of 1994’’, 

see Short Title of 1994 Amendment note set out under 

section 1601 of this title. For complete classification of 

this Act to the Code, see Short Title note set out under 

section 4701 of Title 12, Banks and Banking, and Tables. 

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, referred to in subsec. (dd)(3), is title 

V of div. A of Pub. L. 110–289, July 30, 2008, 122 Stat. 

2810, also known as the S.A.F.E. Mortgage Licensing 

Act of 2008, which is classified generally to chapter 51 

(§ 5101 et seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see Short 

Title note set out under section 5101 of Title 12 and Tables. 

The National Housing Act, referred to in subsec. 

(ee)(1)(B), (2)(B), is act June 27, 1934, ch. 847, 48 Stat. 

1246. Title I of the Act is classified generally to subchapter II (§ 1702 et seq.) of chapter 13 of Title 12, Banks 

and Banking. For complete classification of this Act to 

the Code, see section 1701 of Title 12 and Tables. 

AMENDMENTS 

2018—Subsecs. (cc), (dd). Pub. L. 115–174, §107(1), redesignated subsec. (cc), relating to definitions relating 

to mortgage origination and residential mortgage 

loans, as (dd). Former subsec. (dd) redesignated (ee). 

Subsec. (dd)(2)(C). Pub. L. 115–174, §107(2), added subpar. (C) and struck out former subpar. (C) which read as 

follows: ‘‘does not include any person who is (i) not otherwise described in subparagraph (A) or (B) and who 

performs purely administrative or clerical tasks on behalf of a person who is described in any such subparagraph, or (ii) an employee of a retailer of manufactured 

homes who is not described in clause (i) or (iii) of subparagraph (A) and who does not advise a consumer on 

loan terms (including rates, fees, and other costs);’’. 

Subsec. (ee). Pub. L. 115–174, § 107(1), redesignated subsec. (dd) as (ee). 

2010—Pub. L. 111–203, §1100A(2), which directed substitution of ‘‘Bureau’’ for ‘‘Board’’ wherever appearing, 

was executed by making the substitution wherever appearing in subsecs. (g), (z), and (bb)(2)(A), (C), (4)(D), 

but not in subsec. (c), to reflect the probable intent of 

Congress. 

Subsecs. (b) to (z). Pub. L. 111–203, § 1100(A)(1), added 

subsec. (b) and redesignated former subsecs. (b) to (z) as 

(c) to (aa), respectively. 

Subsec. (bb). Pub. L. 111–203, § 1431(a), which directed 

amendment of subsec. (aa) by inserting subsec. heading, 

adding par. (1), and striking out former par. (1), was executed by making the amendment to subsec. (bb) to reflect the probable intent of Congress and the redesignation of subsec. (aa) as (bb) by Pub. L. 111–203, 

§ 1100(A)(1). See below. Text of former par. (1) read as 

follows: ‘‘A mortgage referred to in this subsection 

means a consumer credit transaction that is secured by 

the consumer’s principal dwelling, other than a residential mortgage transaction, a reverse mortgage 

transaction, or a transaction under an open end credit 

plan, if— 

‘‘(A) the annual percentage rate at consummation 

of the transaction will exceed by more than 10 percentage points the yield on Treasury securities having comparable periods of maturity on the fifteenth 

day of the month immediately preceding the month 

in which the application for the extension of credit is 

received by the creditor; or 

‘‘(B) the total points and fees payable by the consumer at or before closing will exceed the greater of— 

‘‘(i) 8 percent of the total loan amount; or 

‘‘(ii) $400.’’ 

Pub. L. 111–203, §1100(A)(1), redesignated subsec. (aa) 

as (bb). Former subsec. (bb) redesignated (cc). 

Subsec. (bb)(2)(B). Pub. L. 111–203, § 1431(b), which directed amendment of subsec. (aa)(2) by adding subpar. 

(B) and striking out former subpar. (B), was executed 

by making the amendment to subsec. (bb)(2) to reflect 

the probable intent of Congress and the redesignation 

of subsec. (aa) as (bb) by Pub. L. 111–203, §1100(A)(1). See 

above. Text of former subpar. (B) read as follows: ‘‘An 

increase or decrease under subparagraph (A) may not 

result in the number of percentage points referred to in 

subparagraph (A) being— 

‘‘(i) less that 8 percentage points; or 

‘‘(ii) greater than 12 percentage points.’’ 

Subsec. (bb)(4)(B). Pub. L. 111–203, § 1431(c)(1)(A), 

which directed amendment of subsec. (aa)(4) by adding 

subpar. (B) and struck out former subpar. (B), was executed by making the amendment to subsec. (bb)(4) to 

reflect the probable intent of Congress and the redesignation of subsec. (aa) as (bb) by Pub. L. 111–203, 

§ 1100(A)(1). See above. Text of former subpar. (B) read 

as follows: ‘‘all compensation paid to mortgage brokers;’’. 

Subsec. (bb)(4)(D) to (G). Pub. L. 111–203, 

§ 1431(c)(1)(B), (C), which directed amendment of subsec. 

(aa)(4) by adding subpars. (D) to (F) and redesignating 

former subpar. (D) as (G), was executed by making the 

amendment to subsec. (bb)(4) to reflect the probable intent of Congress and the redesignation of subsec. (aa) 

as (bb) by Pub. L. 111–203, §1100(A)(1). See above. 

Subsec. (bb)(5), (6). Pub. L. 111–203, § 1431(c)(2), which 

directed amendment of subsec. (aa) by adding par. (5) 

and redesignating former par. (5) as (6), was executed 

by making the amendment to subsec. (bb) to reflect the 

probable intent of Congress and the redesignation of 

subsec. (aa) as (bb) by Pub. L. 111–203, § 1100(A)(1). See 

above. 

Subsec. (cc). Pub. L. 111–203, § 1401, added subsec. (cc) 

relating to definitions relating to mortgage origination 

and residential mortgage loans. 

Pub. L. 111–203, §1100(A)(1), redesignated subsec. (bb) 

as (cc) defining the term ‘‘reverse mortgage transaction’’. 

Subsec. (dd). Pub. L. 111–203, §1431(d), added subsec. 

(dd). 

2009—Subsec. (i). Pub. L. 111–24 substituted ‘‘terms 

‘open end credit plan’ and ‘open end consumer credit 

plan’ mean’’ for ‘‘term ‘open end credit plan’ means’’ in 

first sentence and inserted ‘‘or open end consumer credit plan’’ after ‘‘credit plan’’ wherever appearing in second sentence. 

2008—Subsec. (f). Pub. L. 110–315 inserted at end ‘‘The 

term ‘creditor’ includes a private educational lender 

(as that term is defined in section 1650 of this title) for 

purposes of this subchapter.’’ 

1994—Subsec. (f). Pub. L. 103–325, § 152(c), inserted at 

end ‘‘Any person who originates 2 or more mortgages 

referred to in subsection (aa) in any 12-month period or 

any person who originates 1 or more such mortgages 

through a mortgage broker shall be considered to be a 

creditor for purposes of this subchapter.’’ 

Subsec. (u). Pub. L. 103–325, §152(b), substituted ‘‘the 

due dates’’ for ‘‘and the due dates’’ and inserted before 

period at end ‘‘, and the disclosures required by section 

1639(a) of this title’’. 

Subsec. (aa). Pub. L. 103–325, §152(a), added subsec. 

(aa). 

Subsec. (bb). Pub. L. 103–325, §154(a), added subsec. 

(bb). 

1982—Subsec. (f). Pub. L. 97–320 struck out provision 

that a person who regularly arranged for the extension 

of consumer credit payable in more than four installments or for which the payment of a finance charge 

was or might have been required from persons not 

creditors was a creditor, and provision that this subchapter applied to any creditor, irrespective of his or 

its status as a natural person or any type of organization, who was a card issuer. 

1981—Subsecs. (x) to (z). Pub. L. 97–25 added subsec. 

(z) and, effective Apr. 10, 1982, redesignated subsecs. (x), 

(y), and (z) as (y), (z), and (x), respectively. 

1980—Subsec. (f). Pub. L. 96–221, §602(a), substituted 

provisions defining term ‘‘creditor’’ as referring only to 

a person who both regularly extends consumer credit, 

subject to specified conditions, and is the person to 

whom the debt arising is initially payable on the face 

of the indebtedness or by agreement, and notwithstanding such provisions, also refers to a person regularly arranging for the extension of consumer credit, 

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Page 1395 TITLE 15—COMMERCE AND TRADE § 1603 

and a card issuer and any person honoring the credit 

card, subject to specified conditions, for provisions defining term ‘‘creditor’’ as referring only to creditors 

who regularly extend, or arrange for the extension of 

credit payable in more than four installments or where 

a finance charge is or may be required, and substituted 

‘‘(a)(5)’’ for ‘‘(a)(6)’’, ‘‘(a)(6)’’ for ‘‘(a)(7)’’, ‘‘(a)(7)’’ for 

‘‘(a)(8)’’, ‘‘(b)(8)’’ for ‘‘(b)(9)’’, and ‘‘(b)(10)’’ for ‘‘(b)(11)’’. 

Subsec. (g). Pub. L. 96–221, § 602(b), substituted ‘‘in 

which the seller is a creditor’’ for ‘‘with respect to 

which credit is extended or arranged by the seller’’. 

Subsec. (h). Pub. L. 96–221, §603(a), struck out applicability to agricultural purposes. 

Subsec. (i). Pub. L. 96–221, § 604, inserted provisions 

respecting the reasonable contemplations of the creditor, and verification of credit information from time 

to time. 

Subsecs. (s), (t). Pub. L. 96–221, § 603(b), added subsecs. 

(s) and (t). Former subsecs. (s) and (t) redesignated (x) 

and (y), respectively. 

Subsec. (u). Pub. L. 96–221, § 612(a)(2), added subsec. 

(u). 

Subsecs. (v), (w). Pub. L. 96–221, §612(b), added subsecs. (v) and (w). 

Subsecs. (x), (y). Pub. L. 96–221, §603(b), redesignated 

former subsecs. (s) and (t) as (x) and (y), respectively. 

1976—Subsecs. (p) to (t). Pub. L. 94–222 added subsecs. 

(p) and (q) and redesignated former subsecs. (p) to (r) as 

(r) to (t), respectively. 

1974—Subsec. (f). Pub. L. 93–495 inserted provision requiring the credit to be payable by agreement in more 

than four installments and defining term ‘‘creditor’’ for 

the purposes of the requirements imposed under the 

enumerated sections of this chapter. 

1970—Subsecs. (j) to (r). Pub. L. 91–508 added subsecs. 

(j) to (o) and redesignated former subsecs. (j) to (l) as 

(p) to (r), respectively. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by section 1100A(1), (2) of Pub. L. 111–203 

effective on the designated transfer date, see section 

1100H of Pub. L. 111–203, set out as a note under section 

552a of Title 5, Government Organization and Employees. 

Amendment by sections 1401 and 1431 of Pub. L. 

111–203 effective on the date on which final regulations 

implementing that amendment take effect, or on the 

date that is 18 months after the designated transfer 

date if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as a 

note under section 1601 of this title. 

EFFECTIVE DATE OF 2009 AMENDMENT 

Pub. L. 111–24, § 3, May 22, 2009, 123 Stat. 1735, provided 

that: ‘‘This Act [enacting sections 1616, 1651, 1665c to 

1665e, 1666i–1, 1666i–2, and 1693l–1 of this title and section 1a–7b of Title 16, Conservation, amending this section and sections 1632, 1637, 1640, 1650, 1666b, 1666c, 1666j, 

1681b, 1681j, and 1693m to 1693r of this title, enacting 

provisions set out as notes under this section and sections 1637, 1638, 1666b, 1681j, and 1693l–1 of this title and 

section 5311 of Title 31, Money and Finance, and amending provisions set out as notes under sections 1638 and 

1693 of this title] and the amendments made by this Act 

shall become effective 9 months after the date of enactment of this Act [May 22, 2009], except as otherwise specifically provided in this Act.’’ 

EFFECTIVE DATE OF 1982 AMENDMENT 

Pub. L. 97–320, title VII, §702(b), Oct. 15, 1982, 96 Stat. 

1538, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall take effect on 

the effective date of title VI of the Depository Institutions Deregulation and Monetary Control Act of 1980 

[two years and six months after Mar. 31, 1980, see Effective Date of 1980 Amendment note below].’’ 

EFFECTIVE DATE OF 1981 AMENDMENT 

Section 102(b) of Pub. L. 97–25 provided that the 

amendment made by that section is effective Apr. 10, 

1982. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Pub. L. 96–221, title VI, § 625, Mar. 31, 1980, 94 Stat. 185, 

as amended by Pub. L. 97–25, title III, § 301, July 27, 1981, 

95 Stat. 145; Pub. L. 97–110, title III, § 301, Dec. 26, 1981, 

95 Stat. 1515, provided that: 

‘‘(a) Except as provided in section 608(b) [set out as an 

Effective Date of 1980 Amendment note under section 

1607 of this title], the amendments made by this title 

[enacting section 1646 of this title, amending sections 

57a, 1602 to 1606, 1610, 1612, 1613, 1631, 1632, 1635, 1637, 

1638, 1640, 1641, 1643, 1663, 1664, 1665a, 1666, 1666d, 1667d, 

and 1691f of this title, repealing sections 1614, 1636, and 

1639 of this title, and enacting provisions set out as a 

note under section 1601 of this title] shall take effect 

upon the expiration of two years and six months after 

the date of enactment of this title [Mar. 31, 1980]. 

‘‘(b) All regulations, forms, and clauses required to be 

prescribed under the amendments made by this title 

shall be promulgated at least one year prior to such effective date. 

‘‘(c) Notwithstanding subsections (a) and (b), any 

creditor may comply with the amendments made by 

this title, in accordance with the regulations, forms, 

and clauses prescribed by the Board, prior to such effective date. Any creditor who elects to comply with such 

amendments and any assignee of such a creditor shall 

be subject to the provisions of sections 130 and 131 of 

the Truth in Lending Act, as amended by sections 615 

and 616, respectively, of this title [sections 1640 and 1641 

of this title].’’ 

EFFECTIVE DATE OF 1974 AMENDMENT 

For effective date of amendment by Pub. L. 93–495, 

see section 308 of Pub. L. 93–495, set out as an Effective 

Date note under section 1666 of this title. 

REGULATIONS 

Pub. L. 111–24, § 2, May 22, 2009, 123 Stat. 1735, provided 

that: ‘‘The Board of Governors of the Federal Reserve 

System (in this Act [see Short Title of 2009 Amendment 

note set out under section 1601 of this title] referred to 

as the ‘Board’) may issue such rules and publish such 

model forms as it considers necessary to carry out this 

Act and the amendments made by this Act.’’ 

Pub. L. 103–325, title I, §155, Sept. 23, 1994, 108 Stat. 

2197, provided that: ‘‘Not later than 180 days after the 

date of enactment of this Act [Sept. 23, 1994], the Board 

of Governors of the Federal Reserve System shall issue 

such regulations as may be necessary to carry out this 

subtitle [subtitle B (§§151–158) of title I of Pub. L. 

103–325, see Short Title of 1994 Amendment note set out 

under section 1601 of this title], and such regulations 

shall become effective on the date on which disclosure 

regulations are required to become effective under section 105(d) of the Truth in Lending Act [15 U.S.C. 

§ 1604(d)].’’ 

APPLICABILITY OF 1994 AMENDMENTS AND REGULATIONS 

TO SUBSECTION (aa) MORTGAGES 

Pub. L. 103–325, title I, §156, Sept. 23, 1994, 108 Stat. 

2197, provided that: ‘‘This subtitle [subtitle B 

(§§ 151–158) of title I of Pub. L. 103–325, see Short Title 

of 1994 Amendment note set out under section 1601 of 

this title], and the amendments made by this subtitle, 

shall apply to every mortgage referred to in section 

103(aa) of the Truth in Lending Act [now 15 U.S.C. 

1602(bb)] (as added by section 152(a) of this Act) consummated on or after the date on which regulations 

issued under section 155 [set out above] become effective.’’ 

§ 1603. Exempted transactions 

This subchapter does not apply to the following: 

(1) Credit transactions involving extensions 

of credit primarily for business, commercial, 

or agricultural purposes, or to government or 

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§ 1604 TITLE 15—COMMERCE AND TRADE Page 1396 

governmental agencies or instrumentalities, 

or to organizations. 

(2) Transactions in securities or commodities accounts by a broker-dealer registered 

with the Securities and Exchange Commission. 

(3) Credit transactions, other than those in 

which a security interest is or will be acquired 

in real property, or in personal property used 

or expected to be used as the principal dwelling of the consumer and other than private 

education loans (as that term is defined in section 1650(a) of this title), in which the total 

amount financed exceeds $50,000.1 

(4) Transactions under public utility tariffs, 

if the Bureau determines that a State regulatory body regulates the charges for the public utility services involved, the charges for 

delayed payment, and any discount allowed 

for early payment. 

(5) Transactions for which the Bureau, by 

rule, determines that coverage under this subchapter is not necessary to carry out the purposes of this subchapter. 

(6) Repealed. Pub. L. 96–221, title VI, 

§ 603(c)(3), Mar. 31, 1980, 94 Stat. 169. 

(7) Loans made, insured, or guaranteed pursuant to a program authorized by title IV of 

the Higher Education Act of 1965 [20 U.S.C. 

1070 et seq.]. 

(Pub. L. 90–321, title I, § 104, May 29, 1968, 82 Stat. 

147; Pub. L. 93–495, title IV, § 402, Oct. 28, 1974, 88 

Stat. 1517; Pub. L. 96–221, title VI, § 603(c), Mar. 

31, 1980, 94 Stat. 169; Pub. L. 97–320, title VII, 

§ 701(a), Oct. 15, 1982, 96 Stat. 1538; Pub. L. 

104–208, div. A, title II, § 2102(a), Sept. 30, 1996, 110 

Stat. 3009–398; Pub. L. 110–315, title X, § 1022, 

Aug. 14, 2008, 122 Stat. 3488; Pub. L. 111–203, title 

X, §§ 1100A(2), 1100E(a)(1), July 21, 2010, 124 Stat. 

2107, 2111.) 

REFERENCES IN TEXT 

The Higher Education Act of 1965, referred to in par. 

(7), is Pub. L. 89–329, Nov. 8, 1965, 79 Stat. 1219. Title IV 

of the Act is classified generally to subchapter IV 

(§ 1070 et seq.) of chapter 28 of Title 20, Education. For 

complete classification of this Act to the Code, see 

Short Title note set out under section 1001 of Title 20 

and Tables. 

AMENDMENTS 

2010—Par. (3). Pub. L. 111–203, §1100E(a)(1), substituted ‘‘$50,000’’ for ‘‘$25,000’’. 

Pars. (4), (5). Pub. L. 111–203, § 1100A(2), substituted 

‘‘Bureau’’ for ‘‘Board’’. 

2008—Par. (3). Pub. L. 110–315 inserted ‘‘and other 

than private education loans (as that term is defined in 

section 1650(a) of this title)’’ after ‘‘consumer’’. 

1996—Pars. (5) to (7). Pub. L. 104–208 added par. (5) and 

redesignated former pars. (5) and (6) as (6) and (7), respectively. 

1982—Par. (6). Pub. L. 97–320 added par. (6). 

1980—Par. (1). Pub. L. 96–221, § 603(c)(1), inserted provision relating to applicability to agricultural purposes. 

Par. (3). Pub. L. 96–221, §603(c)(2), substituted provision excepting security interest in real property, or in 

personal property used as the consumer’s principal 

dwelling, for provisions excepting real property transactions. 

Par. (5). Pub. L. 96–221, §603(c)(3), struck out par. (5) 

which related to credit transactions primarily for agri1See Adjustments for Inflation note below. 

cultural purposes where the amount financed exceeds 

$25,000. 

1974—Par. (5). Pub. L. 93–495 added par. (5). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1982 AMENDMENT 

Section 701(c) of Pub. L. 97–320, as amended by Pub. 

L. 97–457, § 31, Jan. 12, 1983, 96 Stat. 2511, provided that: 

‘‘The amendment made by subsection (a) [amending 

this section] and subsection (b) [enacting section 1099 of 

Title 20, Education] shall be effective with respect to 

loans made prior to, on, and after the date of the enactment of this Act [Oct. 15, 1982].’’ 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

EFFECTIVE DATE OF 1974 AMENDMENT 

Amendment by Pub. L. 93–495 effective Oct. 28, 1974, 

see section 416 of Pub. L. 93–495, set out as an Effective 

Date note under section 1665a of this title. 

EXCEPTIONS IN AREAS WHERE MAJOR DISASTER EXISTS 

Board of Governors of Federal Reserve System authorized to make exceptions to requirements of this 

subchapter for transactions within an area in which the 

President has determined that a major disaster exists, 

if Board determines that exception can reasonably be 

expected to alleviate hardships to the public that outweigh possible adverse effects, see section 50002 of Pub. 

L. 105–18, set out as a note under section 4008 of Title 

12, Banks and Banking, and similar provisions listed 

thereunder. 

ADJUSTMENTS FOR INFLATION 

Pub. L. 111–203, title X, § 1100E(b), July 21, 2010, 124 

Stat. 2111, provided that: ‘‘On and after December 31, 

2011, the Bureau [of Consumer Financial Protection] 

shall adjust annually the dollar amounts described in 

sections 104(3) and 181(1) of the Truth in Lending Act [15 

U.S.C. 1603(3), 1667(1)] (as amended by this section), by 

the annual percentage increase in the Consumer Price 

Index for Urban Wage Earners and Clerical Workers, as 

published by the Bureau of Labor Statistics, rounded to 

the nearest multiple of $100, or $1,000, as applicable.’’ 

Threshold amounts in effect during particular periods 

of time can be found in Code of Federal Regulations, 

Title 12, Supplement I to Part 1013, under Section 

1013.2—Definitions, under 2(e)—Consumer Lease, paragraph 11. 

§ 1604. Disclosure guidelines 

(a) Promulgation, contents, etc., of regulations 

The Bureau shall prescribe regulations to 

carry out the purposes of this subchapter. Except with respect to the provisions of section 

1639 of this title that apply to a mortgage referred to in section 1602(aa) 1 of this title, such 

regulations may contain such additional requirements, classifications, differentiations, or 

other provisions, and may provide for such ad1See References in Text note below. 

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Page 1397 TITLE 15—COMMERCE AND TRADE § 1604 

justments and exceptions for all or any class of 

transactions, as in the judgment of the Bureau 

are necessary or proper to effectuate the purposes of this subchapter, to prevent circumvention or evasion thereof, or to facilitate compliance therewith. 

(b) Model disclosure forms and clauses; publication, criteria, compliance, etc. 

The Bureau shall publish a single, integrated 

disclosure for mortgage loan transactions (including real estate settlement cost statements) 

which includes the disclosure requirements of 

this subchapter in conjunction with the disclosure requirements of the Real Estate Settlement 

Procedures Act of 1974 [12 U.S.C. 2601 et seq.] 

that, taken together, may apply to a transaction that is subject to both or either provisions of law. The purpose of such model disclosure shall be to facilitate compliance with the 

disclosure requirements of this subchapter and 

the Real Estate Settlement Procedures Act of 

1974, and to aid the borrower or lessee in understanding the transaction by utilizing readily understandable language to simplify the technical 

nature of the disclosures. In devising such 

forms, the Bureau shall consider the use by 

creditors or lessors of data processing or similar 

automated equipment. Nothing in this subchapter may be construed to require a creditor 

or lessor to use any such model form or clause 

prescribed by the Bureau under this section. A 

creditor or lessor shall be deemed to be in compliance with the disclosure provisions of this 

subchapter with respect to other than numerical 

disclosures if the creditor or lessor (1) uses any 

appropriate model form or clause as published 

by the Bureau, or (2) uses any such model form 

or clause and changes it by (A) deleting any information which is not required by this subchapter, or (B) rearranging the format, if in 

making such deletion or rearranging the format, 

the creditor or lessor does not affect the substance, clarity, or meaningful sequence of the 

disclosure. 

(c) Procedures applicable for adoption of model 

forms and clauses 

Model disclosure forms and clauses shall be 

adopted by the Bureau after notice duly given in 

the Federal Register and an opportunity for public comment in accordance with section 553 of 

title 5. 

(d) Effective dates of regulations containing new 

disclosure requirements 

Any regulation of the Bureau, or any amendment or interpretation thereof, requiring any 

disclosure which differs from the disclosures 

previously required by this part, part D, or part 

E or by any regulation of the Bureau promulgated thereunder shall have an effective date of 

that October 1 which follows by at least six 

months the date of promulgation, except that 

the Bureau may at its discretion take interim 

action by regulation, amendment, or interpretation to lengthen the period of time permitted for 

creditors or lessors to adjust their forms to accommodate new requirements or shorten the 

length of time for creditors or lessors to make 

such adjustments when it makes a specific finding that such action is necessary to comply with 

the findings of a court or to prevent unfair or 

deceptive disclosure practices. Notwithstanding 

the previous sentence, any creditor or lessor 

may comply with any such newly promulgated 

disclosure requirements prior to the effective 

date of the requirements. 

(e) Disclosure for charitable mortgage loan 

transactions 

With respect to a mortgage loan transaction 

involving a residential mortgage loan offered at 

0 percent interest with only bonafide and reasonable fees and that is primarily for charitable 

purposes by an organization described in section 

501(c)(3) of title 26 and exempt from taxation 

under section 501(a) of such title, forms HUD–1 

and GFE (as defined under section 1024.2(b) of 

title 12, Code of Federal Regulations) together 

with a disclosure substantially in the form of 

the Loan Model Form H–2 (as depicted in Appendix H to part 1026 of title 12, Code of Federal 

Regulations) shall, collectively, be an appropriate model form for purposes of subsection (b) 

of this section. 

(f) Exemption authority 

(1) In general 

The Bureau may exempt, by regulation, 

from all or part of this subchapter all or any 

class of transactions, other than transactions 

involving any mortgage described in section 

1602(aa) 1 of this title, for which, in the determination of the Bureau, coverage under all or 

part of this subchapter does not provide a 

meaningful benefit to consumers in the form 

of useful information or protection. 

(2) Factors for consideration 

In determining which classes of transactions 

to exempt in whole or in part under paragraph 

(1), the Bureau shall consider the following 

factors and publish its rationale at the time a 

proposed exemption is published for comment: 

(A) The amount of the loan and whether 

the disclosures, right of rescission, and other 

provisions provide a benefit to the consumers who are parties to such transactions, 

as determined by the Bureau. 

(B) The extent to which the requirements 

of this subchapter complicate, hinder, or 

make more expensive the credit process for 

the class of transactions. 

(C) The status of the borrower, including— 

(i) any related financial arrangements of 

the borrower, as determined by the Bureau; 

(ii) the financial sophistication of the 

borrower relative to the type of transaction; and 

(iii) the importance to the borrower of 

the credit, related supporting property, 

and coverage under this subchapter, as determined by the Bureau; 

(D) whether the loan is secured by the 

principal residence of the consumer; and 

(E) whether the goal of consumer protection would be undermined by such an exemption. 

(g) Waiver for certain borrowers 

(1) In general 

The Bureau, by regulation, may exempt 

from the requirements of this subchapter certain credit transactions if— 

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§ 1605 TITLE 15—COMMERCE AND TRADE Page 1398 

(A) the transaction involves a consumer— 

(i) with an annual earned income of more 

than $200,000; or 

(ii) having net assets in excess of 

$1,000,000 at the time of the transaction; 

and 

(B) a waiver that is handwritten, signed, 

and dated by the consumer is first obtained 

from the consumer. 

(2) Adjustments by the Bureau 

The Bureau, at its discretion, may adjust 

the annual earned income and net asset requirements of paragraph (1) for inflation. 

(h) Deference 

Notwithstanding any power granted to any 

Federal agency under this subchapter, the deference that a court affords to the Bureau with 

respect to a determination made by the Bureau 

relating to the meaning or interpretation of any 

provision of this subchapter, other than section 

1639e or 1639h of this title, shall be applied as if 

the Bureau were the only agency authorized to 

apply, enforce, interpret, or administer the provisions of this subchapter. 

(i) Authority of the Board to prescribe rules 

Notwithstanding subsection (a), the Board 

shall have authority to prescribe rules under 

this subchapter with respect to a person described in section 5519(a) of title 12. Regulations 

prescribed under this subsection may contain 

such classifications, differentiations, or other 

provisions, as in the judgment of the Board are 

necessary or proper to effectuate the purposes of 

this subchapter, to prevent circumvention or 

evasion thereof, or to facilitate compliance 

therewith. 

(Pub. L. 90–321, title I, § 105, May 29, 1968, 82 Stat. 

148; Pub. L. 96–221, title VI, § 605, Mar. 31, 1980, 94 

Stat. 170; Pub. L. 103–325, title I, § 152(e)(2)(A), 

Sept. 23, 1994, 108 Stat. 2194; Pub. L. 104–208, div. 

A, title II, §§ 2102(b), 2104, Sept. 30, 1996, 110 Stat. 

3009–399, 3009–401; Pub. L. 111–203, title X, 

§ 1100A(2), (4)–(7), title XIV, § 1472(c), July 21, 

2010, 124 Stat. 2107, 2108, 2190; Pub. L. 116–342, 

§ 2(a), Jan. 13, 2021, 134 Stat. 5134.) 

REFERENCES IN TEXT 

Section 1602(aa) of this title, referred to in subsecs. 

(a) and (f)(1), was redesignated section 1602(bb) of this 

title by Pub. L. 111–203, title X, §1100A(1)(A), July 21, 

2010, 124 Stat. 2107. 

The Real Estate Settlement Procedures Act of 1974, 

referred to in subsec. (b), is Pub. L. 93–533, Dec. 22, 1974, 

88 Stat. 1724, which is classified principally to chapter 

27 (§ 2601 et seq.) of Title 12, Banks and Banking. For 

complete classification of this Act to the Code, see 

Short Title note set out under section 2601 of Title 12 

and Tables. 

AMENDMENTS 

2021—Subsec. (e). Pub. L. 116–342 added subsec. (e). 

2010—Subsec. (a). Pub. L. 111–203, § 1100A(2), (4), substituted ‘‘Bureau’’ for ‘‘Board’’ in two places, substituted ‘‘Except with respect to the provisions of section 1639 of this title that apply to a mortgage referred 

to in section 1602(aa) of this title, such regulations may 

contain such additional requirements,’’for ‘‘Except in 

the case of a mortgage referred to in section 1602(aa) of 

this title, these regulations may contain such’’, and inserted ‘‘all or’’ after ‘‘exceptions for’’. 

Subsec. (b). Pub. L. 111–203, § 1100A(2), (5), substituted 

‘‘Bureau’’ for ‘‘Board’’ wherever appearing in last three 

sentences and substituted first two sentences for 

former first sentence which read as follows: ‘‘The Board 

shall publish model disclosure forms and clauses for 

common transactions to facilitate compliance with the 

disclosure requirements of this subchapter and to aid 

the borrower or lessee in understanding the transaction 

by utilizing readily understandable language to simplify the technical nature of the disclosures.’’ 

Subsecs. (c), (d). Pub. L. 111–203, § 1100A(2), substituted ‘‘Bureau’’ for ‘‘Board’’ wherever appearing. 

Subsec. (f). Pub. L. 111–203, § 1100A(2), (6), substituted 

‘‘Bureau’’ for ‘‘Board’’ wherever appearing and inserted 

‘‘all or’’ after ‘‘from all or part of this subchapter’’ in 

par. (1). 

Subsec. (g). Pub. L. 111–203, § 1100A(2), substituted 

‘‘Bureau’’ for ‘‘Board’’ in pars. (1) and (2). 

Subsec. (h). Pub. L. 111–203, § 1472(c), which directed 

addition of subsec. (h) at end of section, was executed 

by adding subsec. (h) before subsec. (i), to reflect the 

probable intent of Congress and prior amendment by 

Pub. L. 111–203, § 1100A(7). See below. 

Subsec. (i). Pub. L. 111–203, § 1100A(7), added subsec. 

(i). 

1996—Subsec. (f). Pub. L. 104–208, §2102(b), added subsec. (f). 

Subsec. (g). Pub. L. 104–208, § 2104, added subsec. (g). 

1994—Subsec. (a). Pub. L. 103–325 substituted ‘‘Except 

in the case of a mortgage referred to in section 1602(aa) 

of this title, these’’ for ‘‘These’’ in second sentence. 

1980—Pub. L. 96–221 designated existing provisions as 

subsec. (a) and added subsecs. (b) to (d). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by section 1100A(2), (4)–(7) of Pub. L. 

111–203 effective on the designated transfer date, see 

section 1100H of Pub. L. 111–203, set out as a note under 

section 552a of Title 5, Government Organization and 

Employees. 

Amendment by section 1472(c) of Pub. L. 111–203 effective on the date on which final regulations implementing that amendment take effect, or on the date 

that is 18 months after the designated transfer date if 

such regulations have not been issued by that date, see 

section 1400(c) of Pub. L. 111–203, set out as a note under 

section 1601 of this title. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

§ 1605. Determination of finance charge 

(a) ‘‘Finance charge’’ defined 

Except as otherwise provided in this section, 

the amount of the finance charge in connection 

with any consumer credit transaction shall be 

determined as the sum of all charges, payable 

directly or indirectly by the person to whom the 

credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit. The finance charge does not 

include charges of a type payable in a comparable cash transaction. 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 

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Page 1399 TITLE 15—COMMERCE AND TRADE § 1605 

does not retain the charges. Examples of charges 

which are included in the finance charge include 

any of the following types of charges which are 

applicable: 

(1) Interest, time price differential, and any 

amount payable under a point, discount, or 

other system or additional charges. 

(2) Service or carrying charge. 

(3) Loan fee, finder’s fee, or similar charge. 

(4) Fee for an investigation or credit report. 

(5) Premium or other charge for any guarantee or insurance protecting the creditor 

against the obligor’s default or other credit 

loss. 

(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. 

(b) Life, accident, or health insurance premiums 

included in finance charge 

Charges or premiums for credit life, accident, 

or health insurance written in connection with 

any consumer credit transaction shall be included in the finance charges unless 

(1) the coverage of the debtor by the insurance is not a factor in the approval by the 

creditor of the extension of credit, and this 

fact is clearly disclosed in writing to the person applying for or obtaining the extension of 

credit; and 

(2) in order to obtain the insurance in connection with the extension of credit, the person to whom the credit is extended must give 

specific affirmative written indication of his 

desire to do so after written disclosure to him 

of the cost thereof. 

(c) Property damage and liability insurance premiums included in finance charge 

Charges or premiums for insurance, written in 

connection with any consumer credit transaction, against loss of or damage to property or 

against liability arising out of the ownership or 

use of property, shall be included in the finance 

charge unless a clear and specific statement in 

writing is furnished by the creditor to the person to whom the credit is extended, setting forth 

the cost of the insurance if obtained from or 

through the creditor, and stating that the person to whom the credit is extended may choose 

the person through which the insurance is to be 

obtained. 

(d) Items exempted from computation of finance 

charge in all credit transactions 

If any of the following items is itemized and 

disclosed in accordance with the regulations of 

the Bureau in connection with any transaction, 

then the creditor need not include that item in 

the computation of the finance charge with respect to that transaction: 

(1) Fees and charges prescribed by law which 

actually are or will be paid to public officials 

for determining the existence of or for perfecting or releasing or satisfying any security 

related to the credit transaction. 

(2) The premium payable for any insurance 

in lieu of perfecting any security interest otherwise required by the creditor in connection 

with the transaction, if the premium does not 

exceed the fees and charges described in paragraph (1) which would otherwise be payable. 

(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. 

(e) Items exempted from computation of finance 

charge in extensions of credit secured by an 

interest in real property 

The following items, when charged in connection with any extension of credit secured by an 

interest in real property, shall not be included 

in the computation of the finance charge with 

respect to that transaction: 

(1) Fees or premiums for title examination, 

title insurance, or similar purposes. 

(2) Fees for preparation of loan-related documents. 

(3) Escrows for future payments of taxes and 

insurance. 

(4) Fees for notarizing deeds and other documents. 

(5) Appraisal fees, including fees related to 

any pest infestation or flood hazard inspections conducted prior to closing. 

(6) Credit reports. 

(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 subchapter 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 subchapter; and 

(2) shall be treated as being accurate for purposes of section 1635 of this title 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 1602(aa) 1 of 

this title, 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 1602(w) 1 

of this title, 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. 

(Pub. L. 90–321, title I, § 106, May 29, 1968, 82 Stat. 

148; Pub. L. 96–221, title VI § 606, Mar. 31, 1980, 94 

Stat. 170; Pub. L. 104–29, §§ 2(a), (b)(1), (c)–(e), 

3(a), Sept. 30, 1995, 109 Stat. 271, 272; Pub. L. 

1See References in Text note below. 

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§ 1606 TITLE 15—COMMERCE AND TRADE Page 1400 

111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 

2107.) 

REFERENCES IN TEXT 

Subsecs. (aa) and (w) of section 1602 of this title, referred to in subsec. (f)(2)(B), were redesignated subsecs. 

(bb) and (x), respectively, of section 1602 of this title by 

Pub. L. 111–203, title X, § 1100A(1)(A), July 21, 2010, 124 

Stat. 2107. 

AMENDMENTS 

2010—Subsec. (d). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’ in introductory provisions. 

1995—Subsec. (a). Pub. L. 104–29, §2(a), in introductory 

provisions inserted after second 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.’’ 

Subsec. (a)(6). Pub. L. 104–29, § 2(b)(1), added par. (6). 

Subsec. (d)(3). Pub. L. 104–29, § 2(c), added par. (3). 

Subsec. (e)(2). Pub. L. 104–29, §2(d), amended par. (2) 

generally, substituting ‘‘loan-related’’ for ‘‘a deed, settlement statement, or other’’. 

Subsec. (e)(5). Pub. L. 104–29, §2(e), inserted before period ‘‘, including fees related to any pest infestation or 

flood hazard inspections conducted prior to closing’’. 

Subsec. (f). Pub. L. 104–29, § 3(a), added subsec. (f). 

1980—Subsec. (a). Pub. L. 96–221, § 606(a), inserted provisions excluding charges of a type payable in comparable cash transactions and indicated that pars. (1) 

to (5) are examples of charges. 

Subsec. (d). Pub. L. 96–221, § 606(b), struck out pars. (3) 

and (4) setting forth applicability to taxes and any 

other type of charge, respectively. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1995 AMENDMENT 

Pub. L. 104–29, § 2(b)(2), Sept. 30, 1995, 109 Stat. 271, 

provided that: ‘‘The amendment made by paragraph (1) 

[amending this section] 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) [set out below]; or 

‘‘(B) the date that is 12 months after the date of the 

enactment of this Act [Sept. 30, 1995].’’ 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

REGULATIONS 

Pub. L. 104–29, § 2(b)(3), Sept. 30, 1995, 109 Stat. 271, 

provided that: ‘‘The Board of Governors of the Federal 

Reserve System shall promulgate regulations implementing the amendment made by paragraph (1) 

[amending this section] by no later than 6 months after 

the date of the enactment of this Act [Sept. 30, 1995].’’ 

ENSURING THAT FINANCE CHARGES REFLECT COST OF 

CREDIT 

Pub. L. 104–29, § 2(f), Sept. 30, 1995, 109 Stat. 272, provided that: 

‘‘(1) REPORT.— 

‘‘(A) IN GENERAL.—Not later than 6 months after 

the date of the enactment of this Act [Sept. 30, 1995], 

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 [15 U.S.C. 1605] 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.’’ 

§ 1606. Determination of annual percentage rate 

(a) ‘‘Annual percentage rate’’ defined 

The annual percentage rate applicable to any 

extension of consumer credit shall be determined, in accordance with the regulations of the 

Bureau, 

(1) in the case of any extension of credit 

other than under an open end credit plan, as 

(A) that nominal annual percentage rate 

which will yield a sum equal to the amount 

of the finance charge when it is applied to 

the unpaid balances of the amount financed, 

calculated according to the actuarial method of allocating payments made on a debt 

between the amount financed and the 

amount of the finance charge, pursuant to 

which a payment is applied first to the accumulated finance charge and the balance is 

applied to the unpaid amount financed; or 

(B) the rate determined by any method 

prescribed by the Bureau as a method which 

materially simplifies computation while retaining reasonable accuracy as compared 

with the rate determined under subparagraph (A).1 

(2) in the case of any extension of credit 

under an open end credit plan, as the quotient 

(expressed as a percentage) of the total finance 

charge for the period to which it relates divided by the amount upon which the finance 

charge for that period is based, multiplied by 

the number of such periods in a year. 

(b) Computation of rate of finance charges for 

balances within a specified range 

Where a creditor imposes the same finance 

charge for balances within a specified range, the 

annual percentage rate shall be computed on the 

1So in original. 

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Page 1401 TITLE 15—COMMERCE AND TRADE § 1607 

median balance within the range, except that if 

the Bureau determines that a rate so computed 

would not be meaningful, or would be materially 

misleading, the annual percentage rate shall be 

computed on such other basis as the Bureau may 

be regulation require. 

(c) Allowable tolerances for purposes of compliance with disclosure requirements 

The disclosure of an annual percentage rate is 

accurate for the purpose of this subchapter if 

the rate disclosed is within a tolerance not 

greater than one-eighth of 1 per centum more or 

less than the actual rate or rounded to the nearest one-fourth of 1 per centum. The Bureau may 

allow a greater tolerance to simplify compliance 

where irregular payments are involved. 

(d) Use of rate tables or charts having allowable 

variance from determined rates 

The Bureau may authorize the use of rate tables or charts which may provide for the disclosure of annual percentage rates which vary from 

the rate determined in accordance with subsection (a)(1)(A) by not more than such tolerances as the Bureau may allow. The Bureau may 

not allow a tolerance greater than 8 per centum 

of that rate except to simplify compliance where 

irregular payments are involved. 

(e) Authorization of tolerances in determining 

annual percentage rates 

In the case of creditors determining the annual percentage rate in a manner other than as 

described in subsection (d), the Bureau may authorize other reasonable tolerances. 

(Pub. L. 90–321, title I, § 107, May 29, 1968, 82 Stat. 

149; Pub. L. 96–221, title VI, § 607, Mar. 31, 1980, 94 

Stat. 170; Pub. L. 111–203, title X, § 1100A(2), July 

21, 2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Pub. L. 111–203 substituted ‘‘Bureau’’ for 

‘‘Board’’ wherever appearing. 

1980—Subsec. (c). Pub. L. 96–221, §607(a), substituted 

provisions relating to allowable tolerances for purposes 

of compliance with disclosure requirements, for provisions relating to rounding off of annual percentage 

rates which are converted from single add-on or other 

rates. 

Subsec. (e). Pub. L. 96–221, §607(b), struck out reference to subsection (c) of this section. 

Subsec. (f). Pub. L. 96–221, § 607(c), struck out subsec. 

(f) setting forth requirements for form of expressing 

percentage rates prior to Jan. 1, 1971. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

§ 1607. Administrative enforcement 

(a) Enforcing agencies 

Subject to subtitle B of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5511 et 

seq.], compliance with the requirements imposed 

under this subchapter shall be enforced under— 

(1) section 8 of the Federal Deposit Insurance Act [12 U.S.C. 1818], by the appropriate 

Federal banking agency, as defined in section 

3(q) of the Federal Deposit Insurance Act (12 

U.S.C. 1813(q)), with respect to— 

(A) national banks, Federal savings associations, and Federal branches and Federal 

agencies of foreign banks; 

(B) member banks of the Federal Reserve 

System (other than national banks), 

branches and agencies of foreign banks 

(other than Federal branches, Federal agencies, and insured State branches of foreign 

banks), commercial lending companies 

owned or controlled by foreign banks, and 

organizations operating under section 25 or 

25A of the Federal Reserve Act [12 U.S.C. 601 

et seq., 611 et seq.]; and 

(C) banks and State savings associations 

insured by the Federal Deposit Insurance 

Corporation (other than members of the 

Federal Reserve System), and insured State 

branches of foreign banks; 

(2) the Federal Credit Union Act [12 U.S.C. 

1751 et seq.], by the Director of the National 

Credit Union Administration, with respect to 

any Federal credit union; 

(3) part A of subtitle VII of title 49, by the 

Secretary of Transportation, with respect to 

any air carrier or foreign air carrier subject to 

that part; 

(4) the Packers and Stockyards Act, 1921 [7 

U.S.C. 181 et seq.] (except as provided in section 406 of that Act [7 U.S.C. 226, 227]), by the 

Secretary of Agriculture, with respect to any 

activities subject to that Act; 

(5) the Farm Credit Act of 1971 [12 U.S.C. 2001 

et seq.], by the Farm Credit Administration 

with respect to any Federal land bank, Federal land bank association, Federal intermediate credit bank, or production credit association; and 

(6) subtitle E of the Consumer Financial 

Protection Act of 2010 [12 U.S.C. 5561 et seq.], 

by the Bureau, with respect to any person subject to this subchapter. 

(7) sections 21B and 21C of the Securities Exchange Act of 1934 [15 U.S.C. 78u–2, 78u–3], in 

the case of a broker or dealer, other than a depository institution, by the Securities and Exchange Commission. 

(b) Violations of this subchapter deemed violations of pre-existing statutory requirements; 

additional agency powers 

For the purpose of the exercise by any agency 

referred to in subsection (a) of its powers under 

any Act referred to in that subsection, a violation of any requirement imposed under this subchapter shall be deemed to be a violation of a requirement imposed under that Act. In addition 

to its powers under any provision of law specifically referred to in subsection (a), each of the 

agencies referred to in that subsection may exVerDate 0ct 09 2002 10:22 Oct 12, 2021 Jkt 000000 PO 00000 Frm 01401 Fmt 5800 Sfmt 5800 D:\OLRC\DATA\PRINT\2018SUPP220\OUTPUT\PCC\FOLIOS\USC15.20 PROD 
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§ 1607 TITLE 15—COMMERCE AND TRADE Page 1402 

ercise, for the purpose of enforcing compliance 

with any requirement imposed under this subchapter, any other authority conferred on it by 

law. 

(c) Overall enforcement authority of the Federal 

Trade Commission 

Except to the extent that enforcement of the 

requirements imposed under this subchapter is 

specifically committed to some other Government agency under any of paragraphs (1) 

through (5) of subsection (a), and subject to subtitle B of the Consumer Financial Protection 

Act of 2010 [12 U.S.C. 5511 et seq.], the Federal 

Trade Commission shall be authorized to enforce 

such requirements. For the purpose of the exercise by the Federal Trade Commission of its 

functions and powers under the Federal Trade 

Commission Act [15 U.S.C. 41 et seq.], a violation of any requirement imposed under this subchapter shall be deemed a violation of a requirement imposed under that Act. All of the functions and powers of the Federal Trade Commission under the Federal Trade Commission Act 

are available to the Federal Trade Commission 

to enforce compliance by any person with the 

requirements under this subchapter, irrespective 

of whether that person is engaged in commerce 

or meets any other jurisdictional tests under the 

Federal Trade Commission Act. 

(d) Rules and regulations 

The authority of the Bureau to issue regulations under this subchapter does not impair the 

authority of any other agency designated in this 

section to make rules respecting its own procedures in enforcing compliance with requirements imposed under this subchapter. 

(e) Adjustment of finance charges; procedures 

applicable, coverage, criteria, etc. 

(1) In carrying out its enforcement activities 

under this section, each agency referred to in 

subsection (a) or (c), in cases where an annual 

percentage rate or finance charge was inaccurately disclosed, shall notify the creditor of 

such disclosure error and is authorized in accordance with the provisions of this subsection 

to require the creditor to make an adjustment 

to the account of the person to whom credit was 

extended, to assure that such person will not be 

required to pay a finance charge in excess of the 

finance charge actually disclosed or the dollar 

equivalent of the annual percentage rate actually disclosed, whichever is lower. For the purposes of this subsection, except where such disclosure error resulted from a willful violation 

which was intended to mislead the person to 

whom credit was extended, in determining 

whether a disclosure error has occurred and in 

calculating any adjustment, (A) each agency 

shall apply (i) with respect to the annual percentage rate, a tolerance of one-quarter of 1 percent more or less than the actual rate, determined without regard to section 1606(c) of this 

title, and (ii) with respect to the finance charge, 

a corresponding numerical tolerance as generated by the tolerance provided under this subsection for the annual percentage rate; except 

that (B) with respect to transactions consummated after two years following March 31, 

1980, each agency shall apply (i) for transactions 

that have a scheduled amortization of ten years 

or less, with respect to the annual percentage 

rate, a tolerance not to exceed one-quarter of 1 

percent more or less than the actual rate, determined without regard to section 1606(c) of this 

title, but in no event a tolerance of less than the 

tolerances allowed under section 1606(c) of this 

title, (ii) for transactions that have a scheduled 

amortization of more than ten years, with respect to the annual percentage rate, only such 

tolerances as are allowed under section 1606(c) of 

this title, and (iii) for all transactions, with respect to the finance charge, a corresponding numerical tolerance as generated by the tolerances 

provided under this subsection for the annual 

percentage rate. 

(2) Each agency shall require such an adjustment when it determines that such disclosure 

error resulted from (A) a clear and consistent 

pattern or practice of violations, (B) gross negligence, or (C) a willful violation which was intended to mislead the person to whom the credit 

was extended. Notwithstanding the preceding 

sentence, except where such disclosure error resulted from a willful violation which was intended to mislead the person to whom credit 

was extended, an agency need not require such 

an adjustment if it determines that such disclosure error— 

(A) resulted from an error involving the disclosure of a fee or charge that would otherwise 

be excludable in computing the finance 

charge, including but not limited to violations 

involving the disclosures described in sections 

1605(b), (c) and (d) of this title, in which event 

the agency may require such remedial action 

as it determines to be equitable, except that 

for transactions consummated after two years 

after March 31, 1980, such an adjustment shall 

be ordered for violations of section 1605(b) of 

this title; 

(B) involved a disclosed amount which was 

10 per centum or less of the amount that 

should have been disclosed and (i) in cases 

where the error involved a disclosed finance 

charge, the annual percentage rate was disclosed correctly, and (ii) in cases where the 

error involved a disclosed annual percentage 

rate, the finance charge was disclosed correctly; in which event the agency may require 

such adjustment as it determines to be equitable; 

(C) involved a total failure to disclose either 

the annual percentage rate or the finance 

charge, in which event the agency may require 

such adjustment as it determines to be equitable; or 

(D) resulted from any other unique circumstance involving clearly technical and 

nonsubstantive disclosure violations that do 

not adversely affect information provided to 

the consumer and that have not misled or otherwise deceived the consumer. 

In the case of other such disclosure errors, each 

agency may require such an adjustment. 

(3) Notwithstanding paragraph (2), no adjustment shall be ordered— 

(A) if it would have a significantly adverse 

impact upon the safety or soundness of the 

creditor, but in any such case, the agency 

may— 

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Page 1403 TITLE 15—COMMERCE AND TRADE § 1607 

(i) require a partial adjustment in an 

amount which does not have such an impact; 

or 

(ii) require the full adjustment, but permit 

the creditor to make the required adjustment in partial payments over an extended 

period of time which the agency considers to 

be reasonable, if (in the case of an agency referred to in paragraph (1), (2), or (3) of subsection (a)), the agency determines that a 

partial adjustment or making partial payments over an extended period is necessary 

to avoid causing the creditor to become 

undercapitalized pursuant to section 38 of 

the Federal Deposit Insurance Act [12 U.S.C. 

1831o]; 

(B) the 1 amount of the adjustment would be 

less than $1, except that if more than one year 

has elapsed since the date of the violation, the 

agency may require that such amount be paid 

into the Treasury of the United States, or 

(C) except where such disclosure error resulted from a willful violation which was intended to mislead the person to whom credit 

was extended, in the case of an open-end credit 

plan, more than two years after the violation, 

or in the case of any other extension of credit, 

as follows: 

(i) with respect to creditors that are subject 

to examination by the agencies referred to in 

paragraphs (1) through (3) of subsection (a) of 

this section, except in connection with violations arising from practices identified in the 

current examination and only in connection 

with transactions that are consummated after 

the date of the immediately preceding examination, except that where practices giving 

rise to violations identified in earlier examinations have not been corrected, adjustments 

for those violations shall be required in connection with transactions consummated after 

the date of examination in which such practices were first identified; 

(ii) with respect to creditors that are not 

subject to examination by such agencies, except in connection with transactions that are 

consummated after May 10, 1978; and 

(iii) in no event after the later of (I) the expiration of the life of the credit extension, or 

(II) two years after the agreement to extend 

credit was consummated. 

(4)(A) Notwithstanding any other provision of 

this section, an adjustment under this subsection may be required by an agency referred 

to in subsection (a) or (c) only by an order issued 

in accordance with cease and desist procedures 

provided by the provision of law referred to in 

such subsections. 

(B) In case of an agency which is not authorized to conduct cease and desist proceedings, 

such an order may be issued after an agency 

hearing on the record conducted at least thirty 

but not more than sixty days after notice of the 

alleged violation is served on the creditor. Such 

a hearing shall be deemed to be a hearing which 

is subject to the provisions of section 8(h) of the 

Federal Deposit Insurance Act [12 U.S.C. 1818(h)] 

and shall be subject to judicial review as provided therein. 

1So in original. Probably should be preceded by ‘‘if’’. 

(5) Except as otherwise specifically provided in 

this subsection and notwithstanding any provision of law referred to in subsection (a) or (c), no 

agency referred to in subsection (a) or (c) may 

require a creditor to make dollar adjustments 

for errors in any requirements under this subchapter, except with regard to the requirements 

of section 1666d of this title. 

(6) A creditor shall not be subject to an order 

to make an adjustment, if within sixty days 

after discovering a disclosure error, whether 

pursuant to a final written examination report 

or through the creditor’s own procedures, the 

creditor notifies the person concerned of the 

error and adjusts the account so as to assure 

that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the 

annual percentage rate actually disclosed, 

whichever is lower. 

(7) Notwithstanding the second sentence of 

subsection (e)(1), subsection (e)(3)(C)(i), and subsection (e)(3)(C)(ii), each agency referred to in 

subsection (a) or (c) shall require an adjustment 

for an annual percentage rate disclosure error 

that exceeds a tolerance of one quarter of one 

percent less than the actual rate, determined 

without regard to section 1606(c) of this title, 

with respect to any transaction consummated 

between January 1, 1977, and March 31, 1980. 

(Pub. L. 90–321, title I, § 108, May 29, 1968, 82 Stat. 

150; Pub. L. 91–206, § 3, Mar. 10, 1970, 84 Stat. 49; 

Pub. L. 93–495, title IV, § 403, Oct. 28, 1974, 88 

Stat. 1517; Pub. L. 95–630, title V, § 501, Nov. 10, 

1978, 92 Stat. 3680; Pub. L. 96–221, title VI, 

§ 608(a), (c), Mar. 21, 1980, 94 Stat. 171, 173; Pub. L. 

98–443, § 9(n), Oct. 4, 1984, 98 Stat. 1708; Pub. L. 

101–73, title VII, § 744(k), Aug. 9, 1989, 103 Stat. 

439; Pub. L. 102–242, title II, § 212(b), Dec. 19, 1991, 

105 Stat. 2299; Pub. L. 102–550, title XVI, 

§ 1604(a)(5), Oct. 28, 1992, 106 Stat. 4082; Pub. L. 

104–208, div. A, title II, § 2106, Sept. 30, 1996, 110 

Stat. 3009–402; Pub. L. 111–203, title X, § 1100A(2), 

(8), title XIV, § 1414(b), July 21, 2010, 124 Stat. 

2107, 2108, 2152.) 

REFERENCES IN TEXT 

The Consumer Financial Protection Act of 2010, referred to in subsecs. (a) and (c), is title X of Pub. L. 

111–203, July 21, 2010, 124 Stat. 1955. Subtitles B 

(§§ 1021–1029A) and E (§§ 1051–1058) of the Act are classified generally to parts B (§5511 et seq.) and E (§5561 et 

seq.), respectively, of subchapter V of chapter 53 of 

Title 12, Banks and Banking. For complete classification of this Act to the Code, see Short Title note set 

out under section 5301 of Title 12 and Tables. 

Sections 25 and 25A of the Federal Reserve Act, referred to in subsec. (a)(1)(B), are classified to subchapters I (§ 601 et seq.) and II (§ 611 et seq.), respectively, of chapter 6 of Title 12, Banks and Banking. 

The Federal Credit Union Act, referred to in subsec. 

(a)(2), is act June 26, 1934, ch. 750, 48 Stat. 1216, which 

is classified generally to chapter 14 (§1751 et seq.) of 

Title 12. For complete classification of this Act to the 

Code, see section 1751 of Title 12 and Tables. 

The Packers and Stockyards Act, 1921, referred to in 

subsec. (a)(4), is act Aug. 15, 1921, ch. 64, 42 Stat. 159, 

which is classified generally to chapter 9 (§ 181 et seq.) 

of Title 7, Agriculture. For complete classification of 

this Act to the Code, see section 181 of Title 7 and Tables. 

The Farm Credit Act of 1971, referred to in subsec. 

(a)(5), is Pub. L. 92–181, Dec. 10, 1971, 85 Stat. 583, which 

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§ 1607 TITLE 15—COMMERCE AND TRADE Page 1404 

is classified generally to chapter 23 (§2001 et seq.) of 

Title 12, Banks and Banking. For complete classification of this Act to the Code, see Short Title note set 

out under section 2001 of Title 12 and Tables. 

The Federal Trade Commission Act, referred to in 

subsec. (c), is act Sept. 26, 1914, ch. 311, 38 Stat. 717, 

which is classified generally to subchapter I (§41 et 

seq.) of chapter 2 of this title. For complete classification of this Act to the Code, see section 58 of this title 

and Tables. 

CODIFICATION 

In subsec. (a)(3), ‘‘part A of subtitle VII of title 49’’ 

substituted for ‘‘the Federal Aviation Act of 1958’’ and 

‘‘that part’’ substituted for ‘‘that Act’’ on authority of 

Pub. L. 103–272, § 6(b), July 5, 1994, 108 Stat. 1378, the 

first section of which enacted subtitles II, III, and V to 

X of Title 49, Transportation. 

AMENDMENTS 

2010—Subsec. (a). Pub. L. 111–203, § 1100A(8)(A), added 

subsec. (a) and struck out former subsec. (a) which listed agencies under which compliance with subchapter 

requirements would be enforced. 

Subsec. (a)(7). Pub. L. 111–203, §1414(b), added par. (7). 

Subsec. (c). Pub. L. 111–203, § 1100A(8)(B), added subsec. (c) and struck out former subsec. (c). Prior to 

amendment, text read as follows: ‘‘Except to the extent 

that enforcement of the requirements imposed under 

this subchapter is specifically committed to some other 

Government agency under subsection (a) of this section, the Federal Trade Commission shall enforce such 

requirements. For the purpose of the exercise by the 

Federal Trade Commission of its functions and powers 

under the Federal Trade Commission Act, a violation 

of any requirement imposed under this subchapter shall 

be deemed a violation of a requirement imposed under 

that Act. All of the functions and powers of the Federal 

Trade Commission under the Federal Trade Commission Act are available to the Commission to enforce 

compliance by any person with the requirements imposed under this subchapter, irrespective of whether 

that person is engaged in commerce or meets any other 

jurisdictional tests in the Federal Trade Commission 

Act.’’ 

Subsec. (d). Pub. L. 111–203, § 1100A(2), substituted 

‘‘Bureau’’ for ‘‘Board’’. 

1996—Subsec. (e)(3). Pub. L. 104–208 struck out ‘‘ordered (A) if’’ and inserted ‘‘ordered— 

‘‘(A) if’’; 

struck out ‘‘may require a partial’’ and inserted 

‘‘may— 

‘‘(i) require a partial’’; 

struck out ‘‘, except that with respect to any transaction consumated after March 31, 1980, the agency 

shall require’’ and inserted ‘‘; or 

‘‘(ii) require’’; 

directed the substitution of ‘‘reasonable, if (in the case 

of an agency referred to in paragraph (1), (2), or (3) of 

subsection (a)), the agency determines that a partial 

adjustment or making partial payments over an extended period is necessary to avoid causing the creditor 

to become undercapitalized pursuant to section 38 of 

the Federal Deposit Insurance Act; 

‘‘(B) the’’; 

for ‘‘reasonable, (B) the’’, which was executed by making the substitution for ‘‘reasonable, (B) if the’’; and 

struck out ‘‘(C) except’’ and inserted 

‘‘(C) except’’. 

1992—Subsec. (a)(1)(C). Pub. L. 102–550 substituted 

semicolon for period at end. 

1991—Subsec. (a). Pub. L. 102–242, §212(b)(2), inserted 

at end ‘‘The terms used in paragraph (1) that are not 

defined in this subchapter or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 

1813(s)) shall have the meaning given to them in section 

1(b) of the International Banking Act of 1978 (12 U.S.C. 

3101).’’ 

Pub. L. 102–242, § 212(b)(1), added par. (1) and struck 

out former par. (1) which read as follows: ‘‘section 8 of 

the Federal Deposit Insurance Act, in the case of 

‘‘(A) national banks, by the Comptroller of the Currency. 

‘‘(B) member banks of the Federal Reserve System 

(other than national banks), by the Board. 

‘‘(C) banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal 

Reserve System), by the Board of Directors of the 

Federal Deposit Insurance Corporation.’’ 

1989—Subsec. (a)(2). Pub. L. 101–73 amended par. (2) 

generally. Prior to amendment, par. (2) read as follows: 

‘‘section 5(d) of the Home Owner’s Loan Act of 1933, section 407 of the National Housing Act, and sections 6(i) 

and 17 of the Federal Home Loan Bank Act, by the Federal Home Loan Bank Board (acting directly or 

through the Federal Savings and Loan Insurance Corporation), in the case of any institution subject to any 

of those provisions.’’ 

1984—Subsec. (a)(4). Pub. L. 98–443 substituted ‘‘Secretary of Transportation’’ for ‘‘Civil Aeronautics 

Board’’. 

1980—Subsec. (e). Pub. L. 96–221, §608(a), added subsec. 

(e). 

Pub. L. 96–221, § 608(c), struck out in pars. (1)(A)(i) and 

(7) ‘‘, except in the case of an irregular mortgage lending transaction’’ after ‘‘section 1606(c) of this title’’. 

See Effective Date of 1980 Amendment note below. 

1974—Subsec. (a)(4) to (6). Pub. L. 93–495 redesignated 

pars. (5) and (6) as (4) and (5), respectively. Former par. 

(4), which related to enforcement by the Interstate 

Commerce Commission, was struck out. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by section 1100A(2), (8) of Pub. L. 111–203 

effective on the designated transfer date, see section 

1100H of Pub. L. 111–203, set out as a note under section 

552a of Title 5, Government Organization and Employees. 

Amendment by section 1414(b) of Pub. L. 111–203 effective on the date on which final regulations implementing that amendment take effect, or on the date 

that is 18 months after the designated transfer date if 

such regulations have not been issued by that date, see 

section 1400(c) of Pub. L. 111–203, set out as a note under 

section 1601 of this title. 

EFFECTIVE DATE OF 1992 AMENDMENT 

Amendment by Pub. L. 102–550 effective as if included 

in the Federal Deposit Insurance Corporation Improvement Act of 1991, Pub. L. 102–242, as of Dec. 19, 1991, see 

section 1609(a) of Pub. L. 102–550, set out as a note 

under section 191 of Title 12, Banks and Banking. 

EFFECTIVE DATE OF 1984 AMENDMENT 

Amendment by Pub. L. 98–443 effective Jan. 1, 1985, 

see section 9(v) of Pub. L. 98–443, set out as a note under 

section 5314 of Title 5, Government Organization and 

Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Pub. L. 96–221, title VI, § 608(b), Mar. 31, 1980, 94 Stat. 

173, provided that: ‘‘This section [amending this section] shall take effect on the date of enactment of the 

Truth in Lending Simplification and Reform Act [Mar. 

31, 1980].’’ 

Pub. L. 96–221, title VI, § 608(c), Mar. 31, 1980, 94 Stat. 

173, provided that the amendment made by that section 

is effective one year after Mar. 31, 1980. 

EFFECTIVE DATE OF 1974 AMENDMENT 

Amendment by Pub. L. 93–495 effective Oct. 28, 1974, 

see section 416 of Pub. L. 93–495, set out as an Effective 

Date note under section 1665a of this title. 

TRANSFER OF FUNCTIONS 

‘‘National Credit Union Administration Board’’ substituted for ‘‘Director of the Bureau of Federal Credit 

Unions’’ in subsec. (a)(3) pursuant to section 3 of Pub. 

L. 91–206 and section 501 of Pub. L. 95–630 [12 U.S.C. 

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Page 1405 TITLE 15—COMMERCE AND TRADE § 1610 

1752a] which transferred functions of Bureau of Federal 

Credit Unions, and Director thereof, to National Credit 

Union Administration and vested authority for management of Administration in National Credit Union 

Administration Board. 

§ 1608. Views of other agencies 

In the exercise of its functions under this subchapter, the Bureau may obtain upon requests 

the views of any other Federal agency which, in 

the judgment of the Bureau, exercises regulatory or supervisory functions with respect to 

any class of creditors subject to this subchapter. 

(Pub. L. 90–321, title I, § 109, May 29, 1968, 82 Stat. 

150; Pub. L. 111–203, title X, § 1100A(2), July 21, 

2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Pub. L. 111–203 substituted ‘‘Bureau’’ for 

‘‘Board’’ in two places. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

§ 1609. Repealed. Pub. L. 94–239, § 3(b)(1), Mar. 23, 

1976, 90 Stat. 253 

Section, Pub. L. 90–321, title I, §110, May 29, 1968, 82 

Stat. 151, provided for establishment of an advisory 

committee authorized to seek to achieve a fair representation of interests of sellers of merchandise on 

credit, lenders, and the public. 

EFFECTIVE DATE OF REPEAL 

Repeal effective Mar. 23, 1976, see section 708 of Pub. 

L. 90–321, set out as an Effective Date note under section 1691 of this title. 

§ 1610. Effect on other laws 

(a) Inconsistent provisions; procedures applicable for determination 

(1) Except as provided in subsection (e), this 

part and parts B and C, do not annul, alter, or 

affect the laws of any State relating to the disclosure of information in connection with credit 

transactions, except to the extent that those 

laws are inconsistent with the provisions of this 

subchapter, and then only to the extent of the 

inconsistency. Upon its own motion or upon the 

request of any creditor, State, or other interested party which is submitted in accordance 

with procedures prescribed in regulations of the 

Bureau, the Bureau shall determine whether any 

such inconsistency exists. If the Bureau determines that a State-required disclosure is inconsistent, creditors located in that State may not 

make disclosures using the inconsistent term or 

form, and shall incur no liability under the law 

of that State for failure to use such term or 

form, notwithstanding that such determination 

is subsequently amended, rescinded, or determined by judicial or other authority to be invalid for any reason. 

(2) Upon its own motion or upon the request of 

any creditor, State, or other interested party 

which is submitted in accordance with procedures prescribed in regulations of the Bureau, 

the Bureau shall determine whether any disclosure required under the law of any State is substantially the same in meaning as a disclosure 

required under this subchapter. If the Bureau determines that a State-required disclosure is substantially the same in meaning as a disclosure 

required by this subchapter, then creditors located in that State may make such disclosure in 

compliance with such State law in lieu of the 

disclosure required by this subchapter, except 

that the annual percentage rate and finance 

charge shall be disclosed as required by section 

1632 of this title, and such State-required disclosure may not be made in lieu of the disclosures 

applicable to certain mortgages under section 

1639 of this title. 

(b) State credit charge statutes 

Except as provided in section 1639 of this title, 

this subchapter does not otherwise annul, alter 

or affect in any manner the meaning, scope or 

applicability of the laws of any State, including, 

but not limited to, laws relating to the types, 

amounts or rates of charges, or any element or 

elements of charges, permissible under such 

laws in connection with the extension or use of 

credit, nor does this subchapter extend the applicability of those laws to any class of persons 

or transactions to which they would not otherwise apply. The provisions of section 1639 of this 

title do not annul, alter, or affect the applicability of the laws of any State or exempt any 

person subject to the provisions of section 1639 

of this title from complying with the laws of 

any State, with respect to the requirements for 

mortgages referred to in section 1602(aa) 1 of this 

title, except to the extent that those State laws 

are inconsistent with any provisions of section 

1639 of this title, and then only to the extent of 

the inconsistency. 

(c) Disclosure as evidence 

In any action or proceeding in any court involving a consumer credit sale, the disclosure of 

the annual percentage rate as required under 

this subchapter in connection with that sale 

may not be received as evidence that the sale 

was a loan or any type of transaction other than 

a credit sale. 

(d) Contract or other obligations under State or 

Federal law 

Except as specified in sections 1635, 1640, and 

1666e of this title, this subchapter and the regulations issued thereunder do not affect the validity or enforceability of any contract or obligation under State or Federal law. 

(e) Certain credit and charge card application 

and solicitation disclosure provisions 

The provisions of subsection (c) of section 1632 

of this title and subsections (c), (d), (e), and (f) 

of section 1637 of this title shall supersede any 

provision of the law of any State relating to the 

disclosure of information in any credit or charge 

card application or solicitation which is subject 

to the requirements of section 1637(c) of this 

title or any renewal notice which is subject to 

the requirements of section 1637(d) of this title, 

except that any State may employ or establish 

State laws for the purpose of enforcing the requirements of such sections. 

1See References in Text note below. 

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§ 1611 TITLE 15—COMMERCE AND TRADE Page 1406 

(Pub. L. 90–321, title I, § 111, May 29, 1968, 82 Stat. 

151; Pub. L. 93–495, title III, § 307(b), Oct. 28, 1974, 

88 Stat. 1516; Pub. L. 96–221, title VI, § 609, Mar. 

31, 1980, 94 Stat. 173; Pub. L. 100–583, § 4, Nov. 3, 

1988, 102 Stat. 2967; Pub. L. 103–325, title I, 

§ 152(e)(2)(B), (C), Sept. 23, 1994, 108 Stat. 2194; 

Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 

124 Stat. 2107.) 

REFERENCES IN TEXT 

Section 1602(aa) of this title, referred to in subsec. 

(b), was redesignated section 1602(bb) of this title by 

Pub. L. 111–203, title X, § 1100A(1)(A), July 21, 2010, 124 

Stat. 2107. 

AMENDMENTS 

2010—Subsec. (a). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’ wherever appearing. 

1994—Subsec. (a)(2). Pub. L. 103–325, §152(e)(2)(B), 

which directed the amendment of par. (2) by inserting 

‘‘, and such State-required disclosure may not be made 

in lieu of the disclosures applicable to certain mortgages under section 1639 of this title’’ before period, 

was executed by making the insertion before period at 

end of par. (2), to reflect the probable intent of Congress. 

Subsec. (b). Pub. L. 103–325, § 152(e)(2)(C), substituted 

‘‘Except as provided in section 1639 of this title, this 

subchapter’’ for ‘‘This subchapter’’ and inserted at end 

‘‘The provisions of section 1639 of this title do not 

annul, alter, or affect the applicability of the laws of 

any State or exempt any person subject to the provisions of section 1639 of this title from complying with 

the laws of any State, with respect to the requirements 

for mortgages referred to in section 1602(aa) of this 

title, except to the extent that those State laws are inconsistent with any provisions of section 1639 of this 

title, and then only to the extent of the inconsistency.’’ 

1988—Subsec. (a)(1). Pub. L. 100–583, §4(1), substituted 

‘‘Except as provided in subsection (e), this part’’ for 

‘‘This part’’. 

Subsec. (e). Pub. L. 100–583, § 4(2), added subsec. (e). 

1980—Subsec. (a). Pub. L. 96–221 designated existing 

provisions as par. (1), substituted provisions respecting 

the effect of this part and parts B and C of this subchapter, and procedures applicable for determination, 

for provisions respecting the effect of this subchapter, 

and added par. (2). 

1974—Subsec. (d). Pub. L. 93–495 inserted reference to 

section 1666e of this title. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

EFFECTIVE DATE OF 1974 AMENDMENT 

For effective date of amendment by Pub. L. 93–495, 

see section 308 of Pub. L. 93–495, set out as an Effective 

Date note under section 1666 of this title. 

§ 1611. Criminal liability for willful and knowing 

violation 

Whoever willfully and knowingly 

(1) gives false or inaccurate information or 

fails to provide information which he is required to disclose under the provisions of this 

subchapter or any regulation issued thereunder, 

(2) uses any chart or table authorized by the 

Bureau under section 1606 of this title in such 

a manner as to consistently understate the annual percentage rate determined under section 

1606(a)(1)(A) of this title, or 

(3) otherwise fails to comply with any requirement imposed under this subchapter, 

shall be fined not more than $5,000 or imprisoned 

not more than one year, or both. 

(Pub. L. 90–321, title I, § 112, May 29, 1968, 82 Stat. 

151; Pub. L. 111–203, title X, § 1100A(2), July 21, 

2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Par. (2). Pub. L. 111–203 substituted ‘‘Bureau’’ 

for ‘‘Board’’. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

§ 1612. Effect on government agencies 

(a) Consultation requirements respecting compliance of credit instruments issued to participating creditor 

Any department or agency of the United 

States which administers a credit program in 

which it extends, insures, or guarantees consumer credit and in which it provides instruments to a creditor which contain any disclosures required by this subchapter shall, prior to 

the issuance or continued use of such instruments, consult with the Bureau to assure that 

such instruments comply with this subchapter. 

(b) Inapplicability of Federal civil or criminal 

penalties to Federal, State, and local agencies 

No civil or criminal penalty provided under 

this subchapter for any violation thereof may be 

imposed upon the United States or any department or agency thereof, or upon any State or 

political subdivision thereof, or any agency of 

any State or political subdivision. 

(c) Inapplicability of Federal civil or criminal 

penalties to participating creditor where violating instrument issued by United States 

A creditor participating in a credit program 

administered, insured, or guaranteed by any department or agency or the United States shall 

not be held liable for a civil or criminal penalty 

under this subchapter in any case in which the 

violation results from the use of an instrument 

required by any such department or agency. 

(d) Applicability of State penalties to violations 

by participating creditor 

A creditor participating in a credit program 

administered, insured, or guaranteed by any department or agency of the United States shall 

not be held liable for a civil or criminal penalty 

under the laws of any State (other than laws determined under section 1610 of this title to be inconsistent with this subchapter) for any technical or procedural failure, such as a failure to 

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Page 1407 TITLE 15—COMMERCE AND TRADE § 1615 

use a specific form, to make information available at a specific place on an instrument, or to 

use a specific typeface, as required by State law, 

which is caused by the use of an instrument required to be used by such department or agency. 

(Pub. L. 90–321, title I, § 113, May 29, 1968, 82 Stat. 

151; Pub. L. 96–221, title VI, § 622(a), Mar. 31, 1980, 

94 Stat. 184; Pub. L. 111–203, title X, § 1100A(2), 

July 21, 2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Subsec. (a). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’. 

1980—Pub. L. 96–221 amended section generally, designating existing provisions as subsec. (b) and adding 

subsecs. (a), (c), and (d). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

§ 1613. Annual reports to Congress by Bureau 

Each year the Bureau shall make a report to 

the Congress concerning the administration of 

its functions under this subchapter, including 

such recommendations as the Bureau deems necessary or appropriate. In addition, each report of 

the Bureau shall include its assessment of the 

extent to which compliance with the requirements imposed under this subchapter is being 

achieved. 

(Pub. L. 90–321, title I, § 114, May 29, 1968, 82 Stat. 

151; Pub. L. 96–221, title VI, § 610(a), Mar. 31, 1980, 

94 Stat. 174; Pub. L. 97–375, title II, § 209(b), Dec. 

21, 1982, 96 Stat. 1825; Pub. L. 111–203, title X, 

§ 1100A(2), July 21, 2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Pub. L. 111–203 substituted ‘‘Bureau’’ for 

‘‘Board’’ wherever appearing. 

1982—Pub. L. 97–375 struck out requirement that the 

Attorney General make a report on the same terms as 

the Board. 

1980—Pub. L. 96–221 substituted ‘‘Each year’’ for ‘‘Not 

later than January 3 of each year after 1969,’’. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

§ 1614. Repealed. Pub. L. 96–221, title VI, § 616(b), 

Mar. 31, 1980, 94 Stat. 182 

Section, Pub. L. 90–321, title I, §115, as added Pub. L. 

93–495, title IV, §413(a), Oct. 28, 1974, 88 Stat. 1520, related to liability of assignees. See section 1641 of this 

title. 

EFFECTIVE DATE OF REPEAL 

Repeal effective on expiration of two years and six 

months after Mar. 31, 1980, with all regulations, forms, 

and clauses required to be prescribed to be promulgated 

at least one year prior to such effective date, and allowing any creditor to comply with any amendments, 

in accordance with the regulations, forms, and clauses 

prescribed by the Board prior to such effective date, see 

section 625 of Pub. L. 96–221, set out as an Effective 

Date of 1980 Amendment note under section 1602 of this 

title. 

§ 1615. Prohibition on use of ‘‘Rule of 78’s’’ in connection with mortgage refinancings and 

other consumer loans 

(a) Prompt refund of unearned interest required 

(1) In general 

If a consumer prepays in full the financed 

amount under any consumer credit transaction, the creditor shall promptly refund any 

unearned portion of the interest charge to the 

consumer. 

(2) Exception for refund of de minimus 1 

amount 

No refund shall be required under paragraph 

(1) with respect to the prepayment of any consumer credit transaction if the total amount 

of the refund would be less than $1. 

(3) Applicability to refinanced transactions 

and acceleration by the creditor 

This subsection shall apply with respect to 

any prepayment of a consumer credit transaction described in paragraph (1) without regard to the manner or the reason for the prepayment, including— 

(A) any prepayment made in connection 

with the refinancing, consolidation, or restructuring of the transaction; and 

(B) any prepayment made as a result of the 

acceleration of the obligation to repay the 

amount due with respect to the transaction. 

(b) Use of ‘‘Rule of 78’s’’ prohibited 

For the purpose of calculating any refund of 

interest required under subsection (a) for any 

precomputed consumer credit transaction of a 

term exceeding 61 months which is consummated after September 30, 1993, the creditor 

shall compute the refund based on a method 

which is at least as favorable to the consumer as 

the actuarial method. 

(c) Statement of prepayment amount 

(1) In general 

Before the end of the 5-day period beginning 

on the date an oral or written request is received by a creditor from a consumer for the 

disclosure of the amount due on any 

precomputed consumer credit account, the 

creditor or assignee shall provide the consumer with a statement of— 

1So in original. Probably should be ‘‘de minimis’’. 

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§ 1616 TITLE 15—COMMERCE AND TRADE Page 1408 

(A) the amount necessary to prepay the account in full; and 

(B) if the amount disclosed pursuant to 

subparagraph (A) includes an amount which 

is required to be refunded under this section 

with respect to such prepayment, the 

amount of such refund. 

(2) Written statement required if request is in 

writing 

If the customer’s request is in writing, the 

statement under paragraph (1) shall be in writing. 

(3) 1 free annual statement 

A consumer shall be entitled to obtain 1 

statement under paragraph (1) each year without charge. 

(4) Additional statements subject to reasonable 

fees 

Any creditor may impose a reasonable fee to 

cover the cost of providing any statement 

under paragraph (1) to any consumer in addition to the 1 free annual statement required 

under paragraph (3) if the amount of the 

charge for such additional statement is disclosed to the consumer before furnishing such 

statement. 

(d) Definitions 

For the purpose of this section— 

(1) Actuarial method 

The term ‘‘actuarial method’’ means the 

method of allocating payments made on a debt 

between the amount financed and the finance 

charge pursuant to which a payment is applied 

first to the accumulated finance charge and 

any remainder is subtracted from, or any deficiency is added to, the unpaid balance of the 

amount financed. 

(2) Consumer, credit 

The terms ‘‘consumer’’ and ‘‘creditor’’ have 

the meanings given to such terms in section 

1602 of this title. 

(3) Creditor 

The term ‘‘creditor’’— 

(A) has the meaning given to such term in 

section 1602 of this title; and 

(B) includes any assignee of any creditor 

with respect to credit extended in connection with any consumer credit transaction 

and any subsequent assignee with respect to 

such credit. 

(Pub. L. 102–550, title IX, § 933, Oct. 28, 1992, 106 

Stat. 3891.) 

CODIFICATION 

Section was enacted as part of the Housing and Community Development Act of 1992, and not as part of the 

Consumer Credit Protection Act which comprises this 

chapter. 

§ 1616. Board review of consumer credit plans 

and regulations 

(a) Required review 

Not later than 2 years after the effective date 

of this Act and every 2 years thereafter, except 

as provided in subsection (c)(2), the Board shall 

conduct a review, within the limits of its existing resources available for reporting purposes, of 

the consumer credit card market, including— 

(1) the terms of credit card agreements and 

the practices of credit card issuers; 

(2) the effectiveness of disclosure of terms, 

fees, and other expenses of credit card plans; 

(3) the adequacy of protections against unfair or deceptive acts or practices relating to 

credit card plans; and 

(4) whether or not, and to what extent, the 

implementation of this Act and the amendments made by this Act has affected— 

(A) cost and availability of credit, particularly with respect to non-prime borrowers; 

(B) the safety and soundness of credit card 

issuers; 

(C) the use of risk-based pricing; or 

(D) credit card product innovation. 

(b) Solicitation of public comment 

In connection with conducting the review required by subsection (a), the Board shall solicit 

comment from consumers, credit card issuers, 

and other interested parties, such as through 

hearings or written comments. 

(c) Regulations 

(1) Notice 

Following the review required by subsection 

(a), the Board shall publish a notice in the 

Federal Register that— 

(A) summarizes the review, the comments 

received from the public solicitation, and 

other evidence gathered by the Board, such 

as through consumer testing or other research; and 

(B) either— 

(i) proposes new or revised regulations or 

interpretations to update or revise disclosures and protections for consumer credit 

cards, as appropriate; or 

(ii) states the reason for the determination of the Board that new or revised regulations are not necessary. 

(2) Revision of review period following material revision of regulations 

In the event that the Board materially revises regulations on consumer credit card 

plans, a review need not be conducted until 2 

years after the effective date of the revised 

regulations, which thereafter shall be treated 

as the new date for the biennial review required by subsection (a). 

(d) Board report to the Congress 

The Board shall report to Congress not less 

frequently than every 2 years, except as provided in subsection (c)(2), on the status of its 

most recent review, its efforts to address any 

issues identified from the review, and any recommendations for legislation. 

(e) Additional reporting 

The Federal banking agencies (as that term is 

defined in section 1813 of title 12) and the Federal Trade Commission shall provide annually to 

the Board, and the Board shall include in its annual report to Congress under section 247 of title 

12, information about the supervisory and enforcement activities of the agencies with respect 

to compliance by credit card issuers with appliVerDate 0ct 09 2002 10:22 Oct 12, 2021 Jkt 000000 PO 00000 Frm 01408 Fmt 5800 Sfmt 5800 D:\OLRC\DATA\PRINT\2018SUPP220\OUTPUT\PCC\FOLIOS\USC15.20 PROD 
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Page 1409 TITLE 15—COMMERCE AND TRADE § 1631 

cable Federal consumer protection statutes and 

regulations, including— 

(1) this Act, the amendments made by this 

Act, and regulations prescribed under this Act 

and such amendments; and 

(2) section 5 of the Federal Trade Commission Act [15 U.S.C. 45], and regulations prescribed under the Federal Trade Commission 

Act [15 U.S.C. 41 et seq.], including part 227 of 

title 12 of the Code of Federal Regulations, as 

prescribed by the Board (referred to as ‘‘Regulation AA’’). 

(Pub. L. 111–24, title V, § 502, May 22, 2009, 123 

Stat. 1755.) 

REFERENCES IN TEXT 

The effective date of this Act, referred to in subsec. 

(a), is 9 months after May 22, 2009, except as otherwise 

specifically provided in Pub. L. 111–24, see section 3 of 

Pub. L. 111–24, set out as an Effective Date of 2009 

Amendment note under section 1602 of this title. 

This Act, referred to in subsecs. (a)(4) and (e)(1), is 

Pub. L. 111–24, May 22, 2009, 123 Stat. 1734, known as the 

Credit Card Accountability Responsibility and Disclosure Act of 2009, and also as the Credit CARD Act of 

2009, which enacted this section and sections 1651, 1665c 

to 1665e, 1666i–1, 1666i–2, and 1693l–1 of this title and section 1a–7b of Title 16, Conservation, amended sections 

1602, 1632, 1637, 1640, 1650, 1666b, 1666c, 1666j, 1681b, 1681j, 

and 1693m to 1693r of this title, enacted provisions set 

out as notes under sections 1602, 1637, 1638, 1666b, 1681j, 

and 1693l–1 of this title and section 5311 of Title 31, 

Money and Finance, and amended provisions set out as 

notes under sections 1638 and 1693 of this title. For complete classification of this Act to the Code, see Short 

Title of 2009 Amendment note set out under section 1601 

of this title and Tables. 

The Federal Trade Commission Act, referred to in 

subsec. (e)(2), is act Sept. 26, 1914, ch. 311, 38 Stat. 717, 

which is classified generally to subchapter I (§41 et 

seq.) of chapter 2 of this title. For complete classification of this Act to the Code, see section 58 of this title 

and Tables. 

CODIFICATION 

Section was enacted as part of the Credit Card Accountability Responsibility and Disclosure Act of 2009, 

also known as the Credit CARD Act of 2009, and not as 

part of the Consumer Credit Protection Act which comprises this chapter. 

EFFECTIVE DATE 

Section effective 9 months after May 22, 2009, except 

as otherwise specifically provided, see section 3 of Pub. 

L. 111–24, set out as an Effective Date of 2009 Amendment note under section 1602 of this title. 

DEFINITION 

For definition of ‘‘Board’’, see section 2 of Pub. L. 

111–24, set out as a Regulations note under section 1602 

of this title. 

PART B—CREDIT TRANSACTIONS 

§ 1631. Disclosure requirements 

(a) Duty of creditor or lessor respecting one or 

more than one obligor 

Subject to subsection (b), a creditor or lessor 

shall disclose to the person who is obligated on 

a consumer lease or a consumer credit transaction the information required under this subchapter. In a transaction involving more than 

one obligor, a creditor or lessor, except in a 

transaction under section 1635 of this title, need 

not disclose to more than one of such obligors if 

the obligor given disclosure is a primary obligor. 

(b) Creditor or lessor required to make disclosure 

If a transaction involves one creditor as defined in section 1602(f) 1 of this title, or one lessor as defined in section 1667(3) of this title, such 

creditor or lessor shall make the disclosures. If 

a transaction involves more than one creditor or 

lessor, only one creditor or lessor shall by required to make the disclosures. The Bureau 

shall by regulation specify which creditor or lessor shall make the disclosures. 

(c) Estimates as satisfying statutory requirements; basis of disclosure for per diem interest 

The Bureau may provide by regulation that 

any portion of the information required to be 

disclosed by this subchapter may be given in the 

form of estimates where the provider of such information is not in a position to know exact information. 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 subchapter 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. 

(d) Tolerances for numerical disclosures 

The Bureau shall determine whether tolerances for numerical disclosures other than the 

annual percentage rate are necessary to facilitate compliance with this subchapter, and if it 

determines that such tolerances are necessary 

to facilitate compliance, it shall by regulation 

permit disclosures within such tolerances. The 

Bureau shall exercise its authority to permit 

tolerances for numerical disclosures other than 

the annual percentage rate so that such tolerances are narrow enough to prevent such tolerances from resulting in misleading disclosures 

or disclosures that circumvent the purposes of 

this subchapter. 

(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.) 

REFERENCES IN TEXT 

Section 1602(f) of this title, referred to in subsec. (b), 

was redesignated section 1602(g) of this title by Pub. L. 

111–203, title X, §1100A(1)(A), July 21, 2010, 124 Stat. 2107. 

AMENDMENTS 

2010—Subsecs. (b) to (d). Pub. L. 111–203 substituted 

‘‘Bureau’’ for ‘‘Board’’ wherever appearing. 

1995—Subsec. (c). Pub. L. 104–29 inserted at end ‘‘In 

the case of any consumer credit transaction a portion 

of the interest on which is determined on a per diem 

1See References in Text note below. 

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§ 1632 TITLE 15—COMMERCE AND TRADE Page 1410 

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 subchapter 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.’’ 

1980—Subsec. (a). Pub. L. 96–221 substituted provisions respecting to which obligor duty of creditor or 

lessor, where one or more than one obligor is involved, 

is owed, for provisions setting forth clear and conspicuous disclosure requirements for creditors to persons 

extended consumer credit. 

Subsec. (b). Pub. L. 96–221 substituted provisions relating to disclosure requirements of creditor or lessor, 

for provisions relating to statement of information 

where more than one obligor is involved. 

Subsecs. (c), (d). Pub. L. 96–221 added subsecs. (c) and 

(d). 

1976—Subsec. (c). Pub. L. 94–205 struck out subsec. (c) 

which related to disclosure including a full statement 

of closing costs incurred and permitted estimates of 

such information where the lender was not in a position to know exact information. 

1974—Subsec. (a). Pub. L. 93–495, §307(c), inserted reference to part D of this subchapter and struck out ‘‘and 

upon whom a finance charge is or may be imposed’’ 

after ‘‘extended’’. 

Subsec. (b). Pub. L. 93–495, § 307(d), inserted reference 

to part D of this subchapter. 

Subsec. (c). Pub. L. 93–495, §409, added subsec (c). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

EFFECTIVE DATE OF 1976 AMENDMENT 

Amendment by Pub. L. 94–205 effective Jan. 2, 1976, 

see section 12 of Pub. L. 94–205, set out as a note under 

section 2602 of Title 12, Banks and Banking. 

EFFECTIVE DATE OF 1974 AMENDMENT 

For effective date of amendment by section 307(c), (d) 

of Pub. L. 93–495, see section 308 of Pub. L. 93–495, set 

out as an Effective Date note under section 1666 of this 

title. 

For effective date of amendment by section 409 of 

Pub. L. 93–495, see section 416 of Pub. L. 93–495, set out 

as an Effective Date note under section 1665a of this 

title. 

EFFECTIVE DATE 

Pub. L. 90–321, title V, §504(b), May 29, 1968, 82 Stat. 

167, provided in part that chapter 2 of title I, which enacted sections 1631 to 1641 of this title, is effective July 

1, 1969. 

REAL ESTATE SETTLEMENT PROCEDURES 

Provisions of Real Estate Settlement Procedures Act 

of 1974, as superseding provisions of subsec. (c) of this 

section insofar as applying to federally related mortgage loans, see section 2605 of Title 12, Banks and 

Banking. 

§ 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 

Information required by this subchapter shall 

be disclosed clearly and conspicuously, in accordance with regulations of the Bureau. The 

terms ‘‘annual percentage rate’’ and ‘‘finance 

charge’’ shall be disclosed more conspicuously 

than other terms, data, or information provided 

in connection with a transaction, except information relating to the identify of the creditor. 

Except as provided in subsection (c), regulations 

of the Bureau need not require that disclosures 

pursuant to this subchapter be made in the 

order set forth in this subchapter and, except as 

otherwise provided, may permit the use of terminology different from that employed in this 

subchapter if it conveys substantially the same 

meaning. 

(b) Optional information by creditor or lessor 

Any creditor or lessor may supply additional 

information or explanation with any disclosures 

required under parts D and E and, except as provided in sections 1637a(b)(3) and 1638(b)(1) of this 

title, under this part. 

(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 heading. 

(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 

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Page 1411 TITLE 15—COMMERCE AND TRADE § 1633 

1637(c) of this title if such terminology 

conveys substantially the same meaning. 

(C) Grace period 

Either the heading or the statement under 

the heading which relates to the time period 

referred to in section 1637(c)(1)(A)(iii) of this 

title shall contain the term ‘‘grace period’’. 

(d) Additional electronic disclosures 

(1) Posting agreements 

Each creditor shall establish and maintain 

an Internet site on which the creditor shall 

post the written agreement between the creditor and the consumer for each credit card account under an open-end consumer credit plan. 

(2) Creditor to provide contracts to the Bureau 

Each creditor shall provide to the Bureau, in 

electronic format, the consumer credit card 

agreements that it publishes on its Internet 

site. 

(3) Record repository 

The Bureau shall establish and maintain on 

its publicly available Internet site a central 

repository of the consumer credit card agreements received from creditors pursuant to this 

subsection, and such agreements shall be easily accessible and retrievable by the public. 

(4) Exception 

This subsection shall not apply to individually negotiated changes to contractual 

terms, such as individually modified workouts 

or renegotiations of amounts owed by a consumer under an open end consumer credit 

plan. 

(5) Regulations 

The Bureau, in consultation with the other 

Federal banking agencies (as that term is defined in section 1681a of this title) and the Bureau,1 may promulgate regulations to implement this subsection, including specifying the 

format for posting the agreements on the 

Internet sites of creditors and establishing exceptions to paragraphs (1) and (2), in any case 

in which the administrative burden outweighs 

the benefit of increased transparency, such as 

where a credit card plan has a de minimis 

number of consumer account holders. 

(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.) 

AMENDMENTS 

2010—Subsecs. (a), (c). Pub. L. 111–203, § 1100A(2), substituted ‘‘Bureau’’ for ‘‘Board’’ wherever appearing. 

Subsec. (d)(2), (3). Pub. L. 111–203, §1100A(2), substituted ‘‘Bureau’’ for ‘‘Board’’ wherever appearing. 

Subsec. (d)(5). Pub. L. 111–203 substituted ‘‘The Bureau, in’’ for ‘‘The Board, in’’ and ‘‘and the Bureau, 

may’’ for ‘‘and the Federal Trade Commission, may’’. 

2009—Subsec. (d). Pub. L. 111–24 added subsec. (d). 

1So in original. 

1988—Subsec. (a). Pub. L. 100–583, §2(b)(1), substituted 

‘‘Except as provided in subsection (c), regulations’’ for 

‘‘Regulations’’. 

Subsec. (b). Pub. L. 100–709 substituted ‘‘sections 

1637a(b)(3) and 1638(b)(1)’’ for ‘‘section 1638(b)(1)’’. 

Subsec. (c). Pub. L. 100–583, §2(b)(2), added subsec. (c). 

1980—Subsec. (a). Pub. L. 96–221 substituted provisions setting forth form of disclosure to meet requirements of this subchapter, for provisions setting forth 

form of disclosure authorized under this part or part D 

of this subchapter. 

Subsec. (b). Pub. L. 96–221 substituted provisions setting forth disclosure requirements for additional information by creditors or lessors, for provisions setting 

forth disclosure requirements for additional information by creditors. 

1974—Subsecs. (a), (b). Pub. L. 93–495 inserted references to part D of this subchapter. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 2009 AMENDMENT 

Amendment by Pub. L. 111–24 effective 9 months after 

May 22, 2009, except as otherwise specifically provided, 

see section 3 of Pub. L. 111–24, set out as a note under 

section 1602 of this title. 

EFFECTIVE DATE OF 1988 AMENDMENT 

For effective date of amendments by Pub. L. 100–709, 

see Regulations; Effective Date note below. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

EFFECTIVE DATE OF 1974 AMENDMENT 

For effective date of amendment by Pub. L. 93–495, 

see section 308 of Pub. L. 93–495, set out as an Effective 

Date note under section 1666 of this title. 

REGULATIONS; EFFECTIVE DATE 

For provisions relating to promulgation of regulations to implement amendment by Pub. L. 100–709, and 

effective date of such amendment in connection with 

those regulations, see section 7 of Pub. L. 100–709, set 

out as a note under section 1637a of this title. 

For provisions relating to promulgation of regulations to implement amendment by Pub. L. 100–583, and 

effective date of such amendment in connection with 

those regulations, see section 7 of Pub. L. 100–583, set 

out as a note under section 1637 of this title. 

§ 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.) 

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§ 1634 TITLE 15—COMMERCE AND TRADE Page 1412 

AMENDMENTS 

2010—Pub. L. 111–203 substituted ‘‘Bureau’’ for 

‘‘Board’’. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

§ 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 

Except as otherwise provided in this section, 

in the case of any consumer credit transaction 

(including opening or increasing the credit limit 

for an open end credit plan) in which a security 

interest, including any such interest arising by 

operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is 

extended, the obligor shall have the right to rescind the transaction until midnight of the third 

business day following the consummation of the 

transaction or the delivery of the information 

and rescission forms required under this section 

together with a statement containing the material disclosures required under this subchapter, 

whichever is later, by notifying the creditor, in 

accordance with regulations of the Bureau, of 

his intention to do so. The creditor shall clearly 

and conspicuously disclose, in accordance with 

regulations of the Bureau, to any obligor in a 

transaction subject to this section the rights of 

the obligor under this section. The creditor shall 

also provide, in accordance with regulations of 

the Bureau, appropriate forms for the obligor to 

exercise his right to rescind any transaction 

subject to this section. 

(b) Return of money or property following rescission 

When an obligor exercises his right to rescind 

under subsection (a), he is not liable for any finance or other charge, and any security interest 

given by the obligor, including any such interest 

arising by operation of law, becomes void upon 

such a rescission. Within 20 days after receipt of 

a notice of rescission, the creditor shall return 

to the obligor any money or property given as 

earnest money, downpayment, or otherwise, and 

shall take any action necessary or appropriate 

to reflect the termination of any security interest created under the transaction. If the creditor 

has delivered any property to the obligor, the 

obligor may retain possession of it. Upon the 

performance of the creditor’s obligations under 

this section, the obligor shall tender the property to the creditor, except that if return of the 

property in kind would be impracticable or inequitable, the obligor shall tender its reasonable 

value. Tender shall be made at the location of 

the property or at the residence of the obligor, 

at the option of the obligor. If the creditor does 

not take possession of the property within 20 

days after tender by the obligor, ownership of 

the property vests in the obligor without obligation on his part to pay for it. The procedures 

prescribed by this subsection shall apply except 

when otherwise ordered by a court. 

(c) Rebuttable presumption of delivery of required disclosures 

Notwithstanding any rule of evidence, written 

acknowledgment of receipt of any disclosures required under this subchapter by a person to 

whom information, forms, and a statement is required to be given pursuant to this section does 

no more than create a rebuttable presumption of 

delivery thereof. 

(d) Modification and waiver of rights 

The Bureau may, if it finds that such action is 

necessary in order to permit homeowners to 

meet bona fide personal financial emergencies, 

prescribe regulations authorizing the modification or waiver of any rights created under this 

section to the extent and under the circumstances set forth in those regulations. 

(e) Exempted transactions; reapplication of provisions 

This section does not apply to— 

(1) a residential mortgage transaction as defined in section 1602(w) 1 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 

An obligor’s right of rescission shall expire 

three years after the date of consummation of 

the transaction or upon the sale of the property, 

whichever occurs first, notwithstanding the fact 

that the information and forms required under 

this section or any other disclosures required 

under this part have not been delivered to the 

obligor, except that if (1) any agency empowered 

to enforce the provisions of this subchapter institutes a proceeding to enforce the provisions 

of this section within three years after the date 

of consummation of the transaction, (2) such 

agency finds a violation of this section, and (3) 

the obligor’s right to rescind is based in whole 

or in part on any matter involved in such proceeding, then the obligor’s right of rescission 

shall expire three years after the date of consummation of the transaction or upon the earlier sale of the property, or upon the expiration 

1See References in Text note below. 

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Page 1413 TITLE 15—COMMERCE AND TRADE § 1635 

of one year following the conclusion of the proceeding, or any judicial review or period for judicial review thereof, whichever is later. 

(g) Additional relief 

In any action in which it is determined that a 

creditor has violated this section, in addition to 

rescission the court may award relief under section 1640 of this title for violations of this subchapter not relating to the right to rescind. 

(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 Bureau, 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. 

(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 

Notwithstanding section 1605(f) of this title, 

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 subchapter. 

(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 September 30, 1995. 

(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.) 

REFERENCES IN TEXT 

Section 1602(w) of this title, referred to in subsec. 

(e)(1), was redesignated section 1602(x) of this title by 

Pub. L. 111–203, title X, § 1100A(1)(A), July 21, 2010, 124 

Stat. 2107. 

AMENDMENTS 

2010—Subsecs. (a), (d), (h), (i)(1)(B). Pub. L. 111–203 

substituted ‘‘Bureau’’ for ‘‘Board’’ wherever appearing. 

1995—Subsec. (h). Pub. L. 104–29, §5, added subsec. (h). 

Subsec. (i). Pub. L. 104–29, § 8, added subsec. (i). 

1984—Subsec. (e). Pub. L. 98–479 redesignated par. (1) 

as subsec. (e), redesignated subpars. (A), (B), (C), and 

(D) of par. (1) as pars. (1), (2), (3), and (4), respectively, 

and struck out par. (2) which read as follows: ‘‘The provisions of paragraph (1)(D) shall cease to be effective 3 

years after the effective date of the Truth in Lending 

Simplification Reform Act.’’ 

1980—Subsec. (a). Pub. L. 96–221, §612(a)(1), substituted provisions relating to the right of rescission 

until midnight of the third business day following the 

consummation of the transaction or the delivery of the 

information and rescission forms required together 

with the statement containing the material disclosures 

required under this subchapter, whichever is later, for 

provisions relating to right of rescission until midnight 

of the third business day following the consummation 

of the transaction or the delivery of the required disclosures and all other material disclosures required 

under this part, whichever is later. 

Subsec. (b). Pub. L. 96–221, § 612(a)(3), (4), inserted provisions setting forth applicability of procedures prescribed by this subsection, and substituted ‘‘20’’ for 

‘‘ten’’ in two places. 

Subsec. (c). Pub. L. 96–221, § 612(a)(5), inserted ‘‘information, forms, and’’ after ‘‘whom’’. 

Subsec. (e). Pub. L. 96–221, §612(a)(6), substituted provisions relating to nonapplicability to residential 

mortgage transactions, refinancing or consolidation 

transactions, etc., for provisions relating to nonapplicability to creation or retention of first liens. 

Subsec. (f). Pub. L. 96–221, §612(a)(6), substituted provisions setting forth duration of right of rescission 

where the required information and forms or other disclosures required under this part have not been delivered to the obligor, and exceptions to such term, for 

provisions setting forth duration of right of rescission 

where the required disclosures or any other material 

disclosures required under this part have not been delivered to the obligor. 

Subsec. (g). Pub. L. 96–221, §612(a)(6), added subsec. 

(g). 

1974—Subsecs. (a), (b). Pub. L. 93–495, §404, inserted 

provisions relating to security interest arising by operation of law. 

Subsec. (e). Pub. L. 93–495, §412, inserted exemption 

for consumer credit transactions where a State agency 

is the creditor. 

Subsec. (f). Pub. L. 93–495, § 405, added subsec. (f). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

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§ 1636 TITLE 15—COMMERCE AND TRADE Page 1414 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

EFFECTIVE DATE OF 1974 AMENDMENT 

Amendment by Pub. L. 93–495 effective Oct. 28, 1974, 

see section 416 of Pub. L. 93–495, set out as an Effective 

Date note under section 1665a of this title. 

§ 1636. Repealed. Pub. L. 96–221, title VI, 

§ 614(e)(1), Mar. 31, 1980, 94 Stat. 180 

Section, Pub. L. 90–321, title I, §126, May 29, 1968, 82 

Stat. 153, related to contents of periodic statements. 

EFFECTIVE DATE OF REPEAL 

Repeal effective on expiration of two years and six 

months after Mar. 31, 1980, with all regulations, forms, 

and clauses required to be prescribed to be promulgated 

at least one year prior to such effective date, and allowing any creditor to comply with any amendments, 

in accordance with the regulations, forms, and clauses 

prescribed by the Board prior to such effective date, see 

section 625 of Pub. L. 96–221, set out as an Effective 

Date of 1980 Amendment note under section 1602 of this 

title. 

§ 1637. Open end consumer credit plans 

(a) Required disclosures by creditor 

Before 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 cycle 

The 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 

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Page 1415 TITLE 15—COMMERCE AND TRADE § 1637 

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 heading. 

(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 

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§ 1637 TITLE 15—COMMERCE AND TRADE Page 1416 

charged, together with the amount of the fee (iii) Grace period 

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 format 

Any 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. 

(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 information 

In 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 

Any fee imposed for an extension of credit in the form of cash. 

(ii) Late fee 

Any fee imposed for a late payment. 

(iii) Over-the-limit fee 

Any fee imposed in connection with an 

extension of credit in excess of the amount 

of credit authorized to be extended with 

respect to such account. 

(2) Telephone solicitations 

(A) In general 

In any telephone solicitation to open a 

credit card account for any person under an 

open end consumer credit plan, the person 

making the solicitation shall orally disclose 

the information described in paragraph 

(1)(A). 

(B) Exception 

Subparagraph (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 

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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 

Any application to open a credit card account for any person under an open end consumer credit plan, 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 meet the disclosure requirements of subparagraph (B), (C), 

or (D). 

(B) Specific information 

An 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 

term 

An 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) disclosures 

An 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 (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 

Upon receipt of a request for any of the information referred to in subparagraph (B), 

(C), or (D), the card issuer or the agent of 

such issuer shall promptly disclose all of the 

information described in paragraph (1). 

(4) Charge card applications and solicitations 

(A) In general 

Any 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 information 

In addition to the information required to 

be disclosed under subparagraph (A), each 

written application or solicitation to which 

such subparagraph applies shall disclose 

1So in original. Probably should be ‘‘conspicuously’’. 

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§ 1637 TITLE 15—COMMERCE AND TRADE Page 1418 

clearly and conspicuously the following information, subject to subsections (e) and (f): 

(i) Cash advance fee 

Any fee imposed for an extension of credit in the form of cash. 

(ii) Late fee 

Any fee imposed for a late payment. 

(iii) Over-the-limit fee 

Any fee imposed in connection with an 

extension of credit in excess of the amount 

of credit authorized to be extended with 

respect to such account. 

(C) Applications and solicitations by other 

means 

Any 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 plans 

If 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 

For the purposes of this subsection, the 

term ‘‘charge card’’ means a card, plate, or 

other single credit device that may be used 

from time to time to obtain credit which is 

not subject to a finance charge. 

(5) Regulatory authority of the Bureau 

The Bureau may, by regulation, require the 

disclosure of information in addition to that 

otherwise required by this subsection or subsection (d), and modify any disclosure of information required by this subsection or subsection (d), in any application to open a credit 

card account for any person under an open end 

consumer credit plan or any application to 

open a charge card account for any person, or 

a solicitation to open any such account without requiring an application, if the Bureau determines that such action is necessary to 

carry out the purposes of, or prevent evasions 

of, any paragraph of this subsection. 

(6) Additional notice concerning ‘‘introductory 

rates’’ 

(A) In general 

Except 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 

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Page 1419 TITLE 15—COMMERCE AND TRADE § 1637 

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 

Clauses (ii) and (iii) of subparagraph (A) do 

not apply with respect to any listing of a 

temporary annual percentage rate on an envelope or other enclosure in which an application or solicitation to open a credit card 

account is mailed. 

(C) Conditions for introductory rates 

An 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) Definitions 

In 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 

Nothing in this paragraph may be construed to supersede subsection (a) of section 

1632 of this title, or any disclosure required 

by paragraph (1) or any other provision of 

this subsection. 

(7) Internet-based solicitations 

(A) In general 

In 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 disclosure 

The 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) Definitions 

For 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 

No credit card may be issued to, or open 

end consumer credit plan established by or 

on behalf of, a consumer who has not attained the age of 21, unless the consumer has 

submitted a written application to the card 

issuer that meets the requirements of subparagraph (B). 

(B) Application requirements 

An 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 

The Bureau shall promulgate regulations 

providing standards that, if met, would satVerDate 0ct 09 2002 10:22 Oct 12, 2021 Jkt 000000 PO 00000 Frm 01419 Fmt 5800 Sfmt 5800 D:\OLRC\DATA\PRINT\2018SUPP220\OUTPUT\PCC\FOLIOS\USC15.20 PROD 
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§ 1637 TITLE 15—COMMERCE AND TRADE Page 1420 

isfy the requirements of subparagraph 

(B)(ii). 

(d) Disclosure prior to renewal 

(1) In general 

A 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 

The Bureau may by regulation provide for 

fewer disclosures than are required by paragraph (1) in the case of an account which is renewable for a period of less than 6 months. 

(e) Other rules for disclosures under subsections 

(c) and (d) 

(1) Fees determined on the basis of a percentage 

If the amount of any fee required to be disclosed under subsection (c) or (d) is determined on the basis of a percentage of another 

amount, the percentage used in making such 

determination and the identification of the 

amount against which such percentage is applied shall be disclosed in lieu of the amount 

of such fee. 

(2) Disclosure only of fees actually imposed 

If a credit or charge card issuer does not impose any fee required to be disclosed under any 

provision of subsection (c) or (d), such provision shall not apply with respect to such 

issuer. 

(f) Disclosure of range of certain fees which vary 

by State allowed 

If the amount of any fee required to be disclosed by a credit or charge card issuer under 

paragraph (1)(B), (3)(B)(i)(II), (4)(B), or 

(4)(C)(i)(II) of subsection (c) varies from State to 

State, the card issuer may disclose the range of 

such fees for purposes of subsection (c) in lieu of 

the amount for each applicable State, if such 

disclosure includes a statement that the amount 

of such fee varies from State to State. 

(g) Insurance in connection with certain open 

end credit card plans 

(1) Change in insurance carrier 

Whenever a card issuer that offers any guarantee or insurance for repayment of all or part 

of the outstanding balance of an open end 

credit card plan proposes to change the person 

providing that guarantee or insurance, the 

card issuer shall send each insured consumer 

written notice of the proposed change not less 

than 30 days prior to the change, including notice of any increase in the rate or substantial 

decrease in coverage or service which will result from such change. Such notice may be included on or with the monthly statement provided to the consumer prior to the month in 

which the proposed change would take effect. 

(2) Notice of new insurance coverage 

In any case in which a proposed change described in paragraph (1) occurs, the insured 

consumer shall be given the name and address 

of the new guarantor or insurer and a copy of 

the policy or group certificate containing the 

basic terms and conditions, including the premium rate to be charged. 

(3) Right to discontinue guarantee or insurance 

The notices required under paragraphs (1) 

and (2) shall each include a statement that the 

consumer has the option to discontinue the insurance or guarantee. 

(4) No preemption of State law 

No provision of this subsection shall be construed as superseding any provision of State 

law which is applicable to the regulation of insurance. 

(5) Bureau definition of substantial decrease in 

coverage or service 

The Bureau shall define, in regulations, 

what constitutes a ‘‘substantial decrease in 

coverage or service’’ for purposes of paragraph 

(1). 

(h) Prohibition on certain actions for failure to 

incur finance charges 

A creditor of an account under an open end 

consumer credit plan may not terminate an account prior to its expiration date solely because 

the consumer has not incurred finance charges 

on the account. Nothing in this subsection shall 

prohibit a creditor from terminating an account 

for inactivity in 3 or more consecutive months. 

(i) Advance notice of rate increase and other 

changes required 

(1) Advance notice of increase in interest rate 

required 

In the case of any credit card account under 

an open end consumer credit plan, a creditor 

shall provide a written notice of an increase in 

an annual percentage rate (except in the case 

of an increase described in paragraph (1), (2), 

or (3) of section 1666i–1(b) of this title) not 

later than 45 days prior to the effective date of 

the increase. 

(2) Advance notice of other significant changes 

required 

In the case of any credit card account under 

an open end consumer credit plan, a creditor 

shall provide a written notice of any significant change, as determined by rule of the Bureau, in the terms (including an increase in 

any fee or finance charge, other than as provided in paragraph (1)) of the cardholder agreement between the creditor and the obligor, not 

later than 45 days prior to the effective date of 

the change. 

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Page 1421 TITLE 15—COMMERCE AND TRADE § 1637 

(3) Notice of right to cancel 

Each notice required by paragraph (1) or (2) 

shall be made in a clear and conspicuous manner, and shall contain a brief statement of the 

right of the obligor to cancel the account pursuant to rules established by the Bureau before the effective date of the subject rate increase or other change. 

(4) Rule of construction 

Closure or cancellation of an account by the 

obligor shall not constitute a default under an 

existing cardholder agreement, and shall not 

trigger an obligation to immediately repay 

the obligation in full or through a method 

that is less beneficial to the obligor than one 

of the methods described in section 

1666i–1(c)(2) of this title, or the imposition of 

any other penalty or fee. 

(j) Prohibition on penalties for on-time payments 

(1) Prohibition on double-cycle billing and penalties for on-time payments 

Except 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) Exceptions 

Paragraph (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 

In the case of any credit card account under 

an open end consumer credit plan under which 

an over-the-limit fee may be imposed by the 

creditor for any extension of credit in excess 

of the amount of credit authorized to be extended under such account, no such fee shall 

be charged, unless the consumer has expressly 

elected to permit the creditor, with respect to 

such account, to complete transactions involving the extension of credit under such account 

in excess of the amount of credit authorized. 

(2) Disclosure by creditor 

No election by a consumer under paragraph 

(1) shall take effect unless the consumer, before making such election, received a notice 

from the creditor of any over-the-limit fee in 

the form and manner, and at the time, determined by the Bureau. If the consumer makes 

the election referred to in paragraph (1), the 

creditor shall provide notice to the consumer 

of the right to revoke the election, in the form 

prescribed by the Bureau, in any periodic 

statement that includes notice of the imposition of an over-the-limit fee during the period 

covered by the statement. 

(3) Form of election 

A consumer may make or revoke the election referred to in paragraph (1) orally, electronically, or in writing, pursuant to regulations prescribed by the Bureau. The Bureau 

shall prescribe regulations to ensure that the 

same options are available for both making 

and revoking such election. 

(4) Time of election 

A consumer may make the election referred 

to in paragraph (1) at any time, and such election shall be effective until the election is revoked in the manner prescribed under paragraph (3). 

(5) Regulations 

The 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 

Nothing in this subsection shall be construed to prohibit a creditor from completing 

an over-the-limit transaction, provided that a 

consumer who has not made a valid election 

under paragraph (1) is not charged an over-thelimit fee for such transaction. 

(7) Restriction on fees charged for an over-thelimit transaction 

With respect to a credit card account under 

an open end consumer credit plan, an over-thelimit fee may be imposed only once during a 

billing cycle if the credit limit on the account 

is exceeded, and an over-the-limit fee, with respect to such excess credit, may be imposed 

only once in each of the 2 subsequent billing 

cycles, unless the consumer has obtained an 

additional extension of credit in excess of such 

credit limit during any such subsequent cycle 

or the consumer reduces the outstanding balance below the credit limit as of the end of 

such billing cycle. 

(l) Limit on fees related to method of payment 

With respect to a credit card account under an 

open end consumer credit plan, the creditor may 

not impose a separate fee to allow the obligor to 

repay an extension of credit or finance charge, 

whether such repayment is made by mail, electronic transfer, telephone authorization, or 

other means, unless such payment involves an 

expedited service by a service representative of 

the creditor. 

(m) Use of term ‘‘fixed rate’’ 

With respect to the terms of any credit card 

account under an open end consumer credit 

plan, the term ‘‘fixed’’, when appearing in conjunction with a reference to the annual percentage rate or interest rate applicable with respect 

to such account, may only be used to refer to an 

annual percentage rate or interest rate that will 

not change or vary for any reason over the peVerDate 0ct 09 2002 10:22 Oct 12, 2021 Jkt 000000 PO 00000 Frm 01421 Fmt 5800 Sfmt 5800 D:\OLRC\DATA\PRINT\2018SUPP220\OUTPUT\PCC\FOLIOS\USC15.20 PROD 
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§ 1637 TITLE 15—COMMERCE AND TRADE Page 1422 

riod specified clearly and conspicuously in the 

terms of the account. 

(n) Standards applicable to initial issuance of 

subprime or ‘‘fee harvester’’ cards 

(1) In general 

If the terms of a credit card account under 

an open end consumer credit plan require the 

payment of any fees (other than any late fee, 

over-the-limit fee, or fee for a payment returned for insufficient funds) by the consumer 

in the first year during which the account is 

opened in an aggregate amount in excess of 25 

percent of the total amount of credit authorized under the account when the account is 

opened, no payment of any fees (other than 

any late fee, over-the-limit fee, or fee for a 

payment returned for insufficient funds) may 

be made from the credit made available under 

the terms of the account. 

(2) Rule of construction 

No provision of this subsection may be construed as authorizing any imposition or payment of advance fees otherwise prohibited by 

any provision of law. 

(o) Due dates for credit card accounts 

(1) In general 

The payment due date for a credit card account under an open end consumer credit plan 

shall be the same day each month. 

(2) Weekend or holiday due dates 

If the payment due date for a credit card account under an open end consumer credit plan 

is a day on which the creditor does not receive 

or accept payments by mail (including weekends and holidays), the creditor may not treat 

a payment received on the next business day 

as late for any purpose. 

(p) Parental approval required to increase credit 

lines for accounts for which parent is jointly 

liable 

No increase may be made in the amount of 

credit authorized to be extended under a credit 

card account for which a parent, legal guardian, 

or spouse of the consumer, or any other individual has assumed joint liability for debts incurred by the consumer in connection with the 

account before the consumer attains the age of 

21, unless that parent, guardian, or spouse approves in writing, and assumes joint liability 

for, such increase. 

(r) 2 College card agreements 

(1) Definitions 

For purposes of this subsection, the following definitions shall apply: 

(A) College affinity card 

The 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 

2So in original. No subsec. (q) has been enacted. 

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 

The term ‘‘college student credit card account’’ means a credit card account under an 

open end consumer credit plan established or 

maintained for or on behalf of any college 

student. 

(C) College student 

The term ‘‘college student’’ means an individual who is a full-time or a part-time student attending an institution of higher education. 

(D) Institution of higher education 

The term ‘‘institution of higher education’’ has the same meaning as in section 3 

1001 and 1002 of title 20. 

(2) Reports by creditors 

(A) In general 

Each creditor shall submit an annual report to the Bureau containing the terms and 

conditions of all business, marketing, and 

promotional agreements and college affinity 

card agreements with an institution of higher education, or an alumni organization or 

foundation affiliated with or related to such 

institution, with respect to any college student credit card issued to a college student 

at such institution. 

(B) Details of report 

The 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. 

3So in original. Probably should be ‘‘sections’’. 

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Page 1423 TITLE 15—COMMERCE AND TRADE § 1637 

(C) Aggregation by institution 

The information required to be reported 

under subparagraph (A) shall be aggregated 

with respect to each institution of higher 

education or alumni organization or foundation affiliated with or related to such institution. 

(D) Initial report 

The initial report required under subparagraph (A) shall be submitted to the Bureau 

before the end of the 9-month period beginning on May 22, 2009. 

(3) Reports by Bureau 

The Bureau shall submit to the Congress, 

and make available to the public, an annual 

report that lists the information concerning 

credit card agreements submitted to the Bureau under paragraph (2) by each institution of 

higher education, alumni organization, or 

foundation. 

(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.) 

AMENDMENTS 

2010—Pub. L. 111–203 substituted ‘‘Bureau’’ for 

‘‘Board’’ wherever appearing. 

2009—Subsec. (b)(11). Pub. L. 111–24, § 201(a), amended 

par. (11) generally, revising the minimum payment disclosures required from creditors. 

Subsec. (b)(12). Pub. L. 111–24, §202, amended par. (12) 

generally. Prior to amendment, par. (12) read as follows: ‘‘If a late payment fee is to be imposed due to the 

failure of the obligor to make payment on or before a 

required payment due date, the following shall be stated clearly and conspicuously on the billing statement: 

‘‘(A) The date on which that payment is due or, if 

different, the earliest date on which a late payment 

fee may be charged. 

‘‘(B) The amount of the late payment fee to be imposed if payment is made after such date.’’ 

Subsec. (c)(8). Pub. L. 111–24, § 301, added par. (8). 

Subsec. (d)(1). Pub. L. 111–24, §203(3), substituted ‘‘A 

card issuer that has changed or amended any term of 

the account since the last renewal that has not been 

previously disclosed or’’ for ‘‘Except as provided in 

paragraph (2), a card issuer’’ in introductory provisions. 

Subsec. (d)(2), (3). Pub. L. 111–24, § 203(1), (2), redesignated par. (3) as (2) and struck out former par. (2) which 

provided a special rule for certain disclosures. 

Subsec. (i). Pub. L. 111–24, §101(a)(1), added subsec. (i). 

Subsecs. (j) to (l). Pub. L. 111–24, § 102(a), added subsecs. (j) to (l). 

Subsec. (m). Pub. L. 111–24, § 103, added subsec. (m). 

Subsec. (n). Pub. L. 111–24, § 105, added subsec. (n). 

Subsec. (o). Pub. L. 111–24, §106(a), added subsec. (o). 

Subsec. (p). Pub. L. 111–24, §303, added subsec. (p). 

Subsec. (r). Pub. L. 111–24, § 305(a), added subsec. (r). 

2005—Subsec. (b)(11). Pub. L. 109–8, § 1301(a), added 

par. (11). 

Subsec. (b)(12). Pub. L. 109–8, §1305(a), added par. (12). 

Subsec. (c)(6). Pub. L. 109–8, § 1303(a), added par. (6). 

Subsec. (c)(7). Pub. L. 109–8, § 1304(a), added par. (7). 

Subsec. (h). Pub. L. 109–8, § 1306(a), added subsec. (h). 

1988—Subsec. (a)(8). Pub. L. 100–709 added par. (8). 

Subsecs. (c) to (f). Pub. L. 100–583, § 2(a), added subsecs. (c) to (f). 

Subsec. (g). Pub. L. 100–583, § 6, added subsec. (g). 

1980—Subsec. (a)(1). Pub. L. 96–221, § 613(a)(1), inserted 

provisions requiring the creditor to disclose that no 

time period is provided. 

Subsec. (a)(5). Pub. L. 96–221, §613(a)(2), (3), redesignated par. (6) as (5) and inserted provisions relating to 

identification of other charges, and regulations by the 

Board. Former par. (5), relating to elective rights of the 

creditor, was struck out. 

Subsec. (a)(6). Pub. L. 96–221, § 613(a)(2), (3), redesignated par. (7) as (6) and revised nomenclature and expanded statement requirements. Former par. (6) redesignated (5). 

Subsec. (a)(7), (8). Pub. L. 96–221, § 613(a)(2), (d), redesignated par. (8) as (7) and substituted provisions relating to one billing cycle per calendar year, for provisions relating to each of two billing cycles per year. 

Former par. (7) redesignated (6). 

Subsec. (b)(2). Pub. L. 96–221, §613(b), inserted provisions relating to failure of the creditor to disclose information in accordance with this paragraph, and made 

minor changes in phraseology. 

Subsec. (b)(7) to (11). Pub. L. 96–221, §613(c), struck 

out par. (7) which related to elective rights of the creditor, and redesignated pars. (8) to (11) as (7) to (10), respectively. 

Subsec. (c). Pub. L. 96–221, § 613(e), struck out subsec. 

(c) which related to the time for making disclosures 

with respect to open end consumer credit plans having 

an outstanding balance of more than $1 at or after the 

close of the first full billing cycle. 

1974—Subsec. (a)(1). Pub. L. 93–495, §415(1), inserted 

exception relating to nonimposition of a finance charge 

at the election of the creditor and without disclosure. 

Subsec. (a)(8). Pub. L. 93–495, § 304(a), added par. (8). 

Subsec. (b)(2). Pub. L. 93–495, §411, substituted provisions requiring a brief identification on or accompanying the statement of credit extension sufficient to 

enable the obligor to identify the transaction or relate 

it to copies of sales vouchers or similar instruments 

previously furnished, for provisions requiring for purchases a brief identification, unless previously furnished, of the goods or services purchased. 

Subsec. (b)(10). Pub. L. 93–495, §415(2), inserted exception relating to nonimposition of additional finance 

charge at the election of the creditor and without disclosure. 

Subsec. (b)(11). Pub. L. 93–495, §305, added par. (11). 

Subsec. (c). Pub. L. 93–495, §304(b), substituted provisions relating to disclosure requirements in a notice 

mailed or delivered to the obligor not later than the 

time of mailing the next statement required by subsec. 

(b) of this section, for provisions relating to disclosure 

requirements in a notice mailed or delivered to the obligor not later than thirty days after July 1, 1969. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 2009 AMENDMENT 

Amendment by Pub. L. 111–24 effective 9 months after 

May 22, 2009, except as otherwise specifically provided, 

see section 3 of Pub. L. 111–24, set out as a note under 

section 1602 of this title. 

Pub. L. 111–24, title I, §101(a)(2), May 22, 2009, 123 Stat. 

1736, provided that: ‘‘Notwithstanding section 3 [see Effective Date of 2009 Amendment note set out under section 1602 of this title], section 127(i) of the Truth in 

Lending Act [15 U.S.C. 1637(i)], as added by this subsection, shall become effective 90 days after the date of 

enactment of this Act [May 22, 2009].’’ 

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§ 1637 TITLE 15—COMMERCE AND TRADE Page 1424 

EFFECTIVE DATE OF 2005 AMENDMENT 

Pub. L. 109–8, title XIII, § 1301(b)(2), Apr. 20, 2005, 119 

Stat. 207, provided that: ‘‘Section 127(b)(11) of the Truth 

in Lending Act [subsec. (b)(11) of this section], as added 

by subsection (a) of this section, and the regulations 

issued under paragraph (1) of this subsection [set out as 

a note under this section] shall not take effect until 

the later of— 

‘‘(A) 18 months after the date of enactment of this 

Act [Apr. 20, 2005]; or 

‘‘(B) 12 months after the publication of such final 

regulations by the Board [of Governors of the Federal 

Reserve System] [Jan. 29, 2009, see 74 F.R. 5244].’’ 

Pub. L. 109–8, title XIII, § 1303(b)(2), Apr. 20, 2005, 119 

Stat. 211, provided that: ‘‘Section 127(c)(6) of the Truth 

in Lending Act [subsec. (c)(6) of this section], as added 

by this section, and regulations issued under paragraph 

(1) of this subsection [set out as a note under this section] shall not take effect until the later of— 

‘‘(A) 12 months after the date of enactment of this 

Act [Apr. 20, 2005]; or 

‘‘(B) 12 months after the date of publication of such 

final regulations by the Board [of Governors of the 

Federal Reserve System] [Jan. 29, 2009, see 74 F.R. 

5244].’’ 

Pub. L. 109–8, title XIII, § 1304(b)(2), Apr. 20, 2005, 119 

Stat. 212, provided that: ‘‘The amendment made by subsection (a) [amending this section] and the regulations 

issued under paragraph (1) of this subsection [set out as 

a note under this section] shall not take effect until 

the later of— 

‘‘(A) 12 months after the date of enactment of this 

Act [Apr. 20, 2005]; or 

‘‘(B) 12 months after the date of publication of such 

final regulations by the Board [of Governors of the 

Federal Reserve System] [Jan. 29, 2009, see 74 F.R. 

5244].’’ 

Pub. L. 109–8, title XIII, § 1305(b)(2), Apr. 20, 2005, 119 

Stat. 212, provided that: ‘‘The amendment made by subsection (a) [amending this section] and regulations 

issued under paragraph (1) of this subsection [set out as 

a note under this section] shall not take effect until 

the later of— 

‘‘(A) 12 months after the date of enactment of this 

Act [Apr. 20, 2005]; or 

‘‘(B) 12 months after the date of publication of such 

final regulations by the Board [of Governors of the 

Federal Reserve System] [Jan. 29, 2009, see 74 F.R. 

5244].’’ 

Pub. L. 109–8, title XIII, § 1306(b)(2), Apr. 20, 2005, 119 

Stat. 212, provided that: ‘‘The amendment made by subsection (a) [amending this section] and regulations 

issued under paragraph (1) of this subsection [set out as 

a note under this section] shall not take effect until 

the later of— 

‘‘(A) 12 months after the date of enactment of this 

Act [Apr. 20, 2005]; or 

‘‘(B) 12 months after the date of publication of such 

final regulations by the Board [of Governors of the 

Federal Reserve System] [Jan. 29, 2009, see 74 F.R. 

5244].’’ 

EFFECTIVE DATE OF 1988 AMENDMENT 

For effective date of amendments by Pub. L. 100–709, 

see Regulations; Effective Date note below. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

EFFECTIVE DATE OF 1974 AMENDMENT 

For effective date of amendment by sections 304 and 

305 of Pub. L. 93–495, see section 308 of Pub. L. 93–495, 

set out as an Effective Date note under section 1666 of 

this title. 

For effective date of amendment by section 411 of 

Pub. L. 93–495, see section 416 of Pub. L. 93–495, set out 

as an Effective Date note under section 1665a of this 

title. 

Amendment by section 415 of Pub. L. 93–495 effective 

Oct. 28, 1974, see section 416 of Pub. L. 93–495, set out as 

an Effective Date note under section 1665a of this title. 

REGULATIONS 

Pub. L. 111–24, title II, §201(c), May 22, 2009, 123 Stat. 

1745, provided that: 

‘‘(1) IN GENERAL.—Not later than 6 months after the 

date of enactment of this Act [May 22, 2009], the Board 

[of Governors of the Federal Reserve System] shall 

issue guidelines, by rule, in consultation with the Secretary of the Treasury, for the establishment and maintenance by creditors of a toll-free telephone number for 

purposes of providing information about accessing 

credit counseling and debt management services, as required under section 127(b)(11)(B)(iv) of the Truth in 

Lending Act [15 U.S.C. 1637(b)(11)(B)(iv)], as added by 

this section. 

‘‘(2) APPROVED AGENCIES.—Guidelines issued under 

this subsection shall ensure that referrals provided by 

the toll-free number referred to in paragraph (1) include only those nonprofit budget and credit counseling 

agencies approved by a United States bankruptcy 

trustee pursuant to section 111(a) of title 11, United 

States Code.’’ 

Pub. L. 109–8, title XIII, § 1301(b)(1), Apr. 20, 2005, 119 

Stat. 207, provided that: ‘‘The Board of Governors of the 

Federal Reserve System (hereafter in this title [amending this section and sections 1637a, 1638, 1664, and 1665b 

of this title and enacting provisions set out as notes 

under this section and section 1637a of this title] referred to as the ‘Board’) shall promulgate regulations 

implementing the requirements of section 127(b)(11) of 

the Truth in Lending Act [subsec. (b)(11) of this section], as added by subsection (a) of this section.’’ 

Pub. L. 109–8, title XIII, § 1303(b)(1), Apr. 20, 2005, 119 

Stat. 211, provided that: ‘‘The Board [of Governors of 

the Federal Reserve System] shall promulgate regulations implementing the requirements of section 

127(c)(6) of the Truth in Lending Act [subsec. (c)(6) of 

this section], as added by this section.’’ 

Pub. L. 109–8, title XIII, § 1304(b)(1), Apr. 20, 2005, 119 

Stat. 211, provided that: ‘‘The Board [of Governors of 

the Federal Reserve System] shall promulgate regulations implementing the requirements of section 

127(c)(7) of the Truth in Lending Act [subsec. (c)(7) of 

this section], as added by this section.’’ 

Pub. L. 109–8, title XIII, § 1305(b)(1), Apr. 20, 2005, 119 

Stat. 212, provided that: ‘‘The Board [of Governors of 

the Federal Reserve System] shall promulgate regulations implementing the requirements of section 

127(b)(12) of the Truth in Lending Act [subsec. (b)(12) of 

this section], as added by this section.’’ 

Pub. L. 109–8, title XIII, § 1306(b)(1), Apr. 20, 2005, 119 

Stat. 212, provided that: ‘‘The Board [of Governors of 

the Federal Reserve System] shall promulgate regulations implementing the requirements of section 127(h) 

of the Truth in Lending Act [subsec. (h) of this section], as added by this section.’’ 

Pub. L. 109–8, title XIII, §1309, Apr. 20, 2005, 119 Stat. 

213, provided that: 

‘‘(a) REGULATIONS.—Not later than 6 months after the 

date of enactment of this Act [Apr. 20, 2005], the Board 

[of Governors of the Federal Reserve System], in consultation with the other Federal banking agencies (as 

defined in section 3 of the Federal Deposit Insurance 

Act [12 U.S.C. 1813]), the National Credit Union Administration Board, and the Federal Trade Commission, 

shall promulgate regulations to provide guidance regarding the meaning of the term ‘clear and conspicuous’, as used in subparagraphs (A), (B), and (C) of 

section 127(b)(11) and clauses (ii) and (iii) of section 

127(c)(6)(A) of the Truth in Lending Act [subsecs. (b)(11) 

and (c)(6)(A) of this section]. 

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Page 1425 TITLE 15—COMMERCE AND TRADE § 1637a 

‘‘(b) EXAMPLES.—Regulations promulgated under subsection (a) shall include examples of clear and conspicuous model disclosures for the purposes of disclosures required by the provisions of the Truth in Lending Act [15 U.S.C. 1601 et seq.] referred to in subsection 

(a). 

‘‘(c) STANDARDS.—In promulgating regulations under 

this section, the Board [of Governors of the Federal Reserve System] shall ensure that the clear and conspicuous standard required for disclosures made under 

the provisions of the Truth in Lending Act referred to 

in subsection (a) can be implemented in a manner 

which results in disclosures which are reasonably understandable and designed to call attention to the nature and significance of the information in the notice.’’ 

REGULATIONS; EFFECTIVE DATE 

For provisions relating to promulgation of regulations to implement amendment by Pub. L. 100–709, and 

effective date of such amendment in connection with 

those regulations, see section 7 of Pub. L. 100–709, set 

out as a note under section 1637a of this title. 

Pub. L. 100–583, § 7, Nov. 3, 1988, 102 Stat. 2968, provided that: ‘‘Any regulation required to be prescribed 

by the Board under the amendments made by section 2 

[amending this section and section 1632 of this title] 

shall— 

‘‘(1) take effect not later than the end of the 150-day 

period beginning on the date of the enactment of this 

Act [Nov. 3, 1988]; and 

‘‘(2) apply only with respect to applications, solicitations, and other material distributed after the end 

of the 150-day period beginning after the end of the 

period referred to in paragraph (1), except that— 

‘‘(A) in the case of applications and solicitations 

subject to paragraph (3) or (4)(C) of section 127(c) of 

the Truth in Lending Act [15 U.S.C. 1637(c)(3), 

(4)(C)] (as added by section 2), such period shall be 

240 days; and 

‘‘(B) any card issuer may, at its option, comply 

with the requirements of the amendments made by 

this Act [see Short Title of 1988 Amendment note 

under section 1601 of this title] prior to the applicable effective date, in which case the amendments 

made by this Act shall be fully applicable to such 

card issuer.’’ 

REPORTS TO CONGRESS 

Pub. L. 111–24, title III, §305(b), May 22, 2009, 123 Stat. 

1750, provided that: 

‘‘(1) STUDY.—The Comptroller General of the United 

States shall, from time to time, review the reports submitted by creditors under section 127(r) of the Truth in 

Lending Act [15 U.S.C. 1637(r)], as added by this section, 

and the marketing practices of creditors to determine 

the impact that college affinity card agreements and 

college student card agreements have on credit card 

debt. 

‘‘(2) REPORT.—Upon completion of any study under 

paragraph (1), the Comptroller General shall periodically submit a report to the Congress on the findings 

and conclusions of the study, together with such recommendations for administrative or legislative action 

as the Comptroller General determines to be appropriate.’’ 

Pub. L. 100–583, § 8, Nov. 3, 1988, 102 Stat. 2969, provided that: ‘‘Not later than 1 year after the regulations 

prescribed under section 7 of this Act [set out as a note 

above] become effective and annually thereafter, the 

Board of Governors of the Federal Reserve System 

shall transmit to the Congress a report containing an 

assessment by the Board of the profitability of credit 

card operations of depository institutions, including an 

analysis of any impact of the amendments made by this 

Act [see Short Title of 1988 Amendment note under section 1601 of this title] on such profitability.’’ 

§ 1637a. Disclosure requirements for open end 

consumer credit plans secured by consumer’s 

principal dwelling 

(a) Application disclosures 

In 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 

Each annual percentage rate imposed in connection with extensions of credit under the 

plan and a statement that such rate does not 

include costs other than interest. 

(2) Variable percentage rate 

In 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 

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§ 1637a TITLE 15—COMMERCE AND TRADE Page 1426 

(I) a statement that interest rate information will be provided on or with each periodic statement. 

(3) Other fees imposed by the creditor 

An itemization of any fees imposed by the 

creditor in connection with the availability or 

use of credit under such plan, including annual 

fees, application fees, transaction fees, and 

closing costs (including costs commonly described as ‘‘points’’), and the time when such 

fees are payable. 

(4) Estimates of fees which may be imposed by 

third parties 

(A) Aggregate amount 

An estimate, based on the creditor’s experience with such plans and stated as a single 

amount or as a reasonable range, of the aggregate amount of additional fees that may 

be imposed by third parties (such as governmental authorities, appraisers, and attorneys) in connection with opening an account 

under the plan. 

(B) Statement of availability 

A statement that the consumer may ask 

the creditor for a good faith estimate by the 

creditor of the fees that may be imposed by 

third parties. 

(5) Statement of risk of loss of dwelling 

A 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 

available 

A 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 change 

A 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 

A statement that the consumer should 

make or otherwise retain a copy of information disclosed under this subparagraph. 

(7) Rights of creditor with respect to extensions of credit 

A 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 

payments 

The 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 

An example, based on a $10,000 outstanding 

balance and the interest rate (other than a 

rate not based on the index under the plan) 

which is, or was recently, in effect under such 

plan, showing the minimum monthly or periodic payment, and the time it would take to 

repay the entire $10,000 if the consumer paid 

only the minimum periodic payments and obtained no additional extensions of credit. 

(10) Statement concerning balloon payments 

If, 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 amortization 

If 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 

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Page 1427 TITLE 15—COMMERCE AND TRADE § 1637a 

(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 

Any limitation contained in the plan on 

the number of extensions of credit and the 

amount of credit which may be obtained 

during any month or other defined time period. 

(B) Minimum balance and other transaction 

amount requirements 

Any 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 deductibility 

A 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 

Any other term which the Bureau requires, 

in regulations, to be disclosed. 

(b) Time and form of disclosures 

(1) Time of disclosure 

(A) In general 

The disclosures required under subsection 

(a) with respect to any open end consumer 

credit plan which provides for any extension 

of credit which is secured by the consumer’s 

principal dwelling and the pamphlet required under subsection (e) shall be provided 

to any consumer at the time the creditor 

distributes an application to establish an account under such plan to such consumer. 

(B) Telephone, publications, and third party 

applications 

In the case of telephone applications, applications contained in magazines or other 

publications, or applications provided by a 

third party, the disclosures required under 

subsection (a) and the pamphlet required 

under subsection (e) shall be provided by the 

creditor before the end of the 3-day period 

beginning on the date the creditor receives a 

completed application from a consumer. 

(2) Form 

(A) In general 

Except as provided in paragraph (1)(B), the 

disclosures required under subsection (a) 

shall be provided on or with any application 

to establish an account under an open end 

consumer credit plan which provides for any 

extension of credit which is secured by the 

consumer’s principal dwelling. 

(B) Segregation of required disclosures from 

other information 

The disclosures required under subsection 

(a) shall be conspicuously segregated from 

all other terms, data, or additional information provided in connection with the application, either by grouping the disclosures 

separately on the application form or by 

providing the disclosures on a separate form, 

in accordance with regulations of the Bureau. 

(C) Precedence of certain information 

The disclosures required by paragraphs (5), 

(6), and (7) of subsection (a) shall precede all 

of the other required disclosures. 

(D) Special provision relating to variable interest rate information 

Whether or not the disclosures required 

under subsection (a) are provided on the application form, the variable rate information 

described in subsection (a)(2) may be provided separately from the other information 

required to be disclosed. 

(3) Requirement for historical table 

In preparing the table required under subsection (a)(2)(G), the creditor shall consistently select one rate of interest for each year 

and the manner of selecting the rate from year 

to year shall be consistent with the plan. 

(c) Third party applications 

In 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 

For purposes of this section and sections 1647 

and 1665b of this title, the term ‘‘principal dwelling’’ includes any second or vacation home of 

the consumer. 

(e) Pamphlet 

In 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— 

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§ 1638 TITLE 15—COMMERCE AND TRADE Page 1428 

(1) a pamphlet published by the Bureau pursuant to section 4 of the Home Equity 1 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.) 

REFERENCES IN TEXT 

Section 4 of the Home Equity Loan Consumer Protection Act of 1988, referred to in subsec. (e)(1), is section 

4 of Pub. L. 100–709, which is set out as a note below. 

AMENDMENTS 

2010—Subsecs. (a)(14), (b)(2)(B), (e). Pub. L. 111–203 

substituted ‘‘Bureau’’ for ‘‘Board’’ wherever appearing. 

2005—Subsec. (a)(13). Pub. L. 109–8 substituted ‘‘tax 

deductibility’’ for ‘‘consultation of tax advisor’’ in 

heading, designated existing provisions as introductory 

provisions and subpar. (A), inserted dash, substituted 

‘‘; and’’ for period at end of subpar. (A), and added subpar. (B). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 2005 AMENDMENT 

Amendment by Pub. L. 109–8 effective 180 days after 

Apr. 20, 2005, and not applicable with respect to cases 

commenced under Title 11, Bankruptcy, before such effective date, except as otherwise provided, see section 

1501 of Pub. L. 109–8, set out as a note under section 101 

of Title 11. 

EFFECTIVE DATE 

For effective date of section, see Regulations; Effective Date note below. 

REGULATIONS 

Pub. L. 109–8, title XIII, § 1302(c), Apr. 20, 2005, 119 

Stat. 209, provided that: 

‘‘(1) IN GENERAL.—The Board [of Governors of the 

Federal Reserve System] shall promulgate regulations 

implementing the amendments made by this section 

[amending this section and sections 1638, 1664, and 1665b 

of this title]. 

‘‘(2) EFFECTIVE DATE.—Regulations issued under paragraph (1) shall not take effect until the later of— 

‘‘(A) 12 months after the date of enactment of this 

Act [Apr. 20, 2005]; or 

‘‘(B) 12 months after the date of publication of such 

final regulations by the Board.’’ 

REGULATIONS; EFFECTIVE DATE 

Pub. L. 100–709, § 7, Nov. 23, 1988, 102 Stat. 4734, provided that: 

‘‘(a) REGULATIONS.—Before the end of the 60-day period beginning on the date of the enactment of this Act 

[Nov. 23, 1988], the Board of Governors of the Federal 

Reserve System shall prescribe such regulations as 

may be necessary to carry out the proposes [sic] of the 

amendments made by this Act [enacting this section 

and sections 1647 and 1665b of this title, amending sections 1632 and 1637 of this title, and enacting provisions 

set out as notes under this section and section 1601 of 

this title]. 

1So in original. Probably should be followed by ‘‘Loan’’. 

‘‘(b) EFFECTIVE DATE.—The amendments made by this 

Act, and the regulations prescribed pursuant to subsection (a) with respect to such amendments, shall 

apply to— 

‘‘(1) any agreement to open an account under an 

open end consumer credit plan under which extensions of credit are secured by a consumer’s principal 

dwelling which is entered into after the end of the 5-

month period beginning on the date on which the regulations prescribed under subsection (a) become final; 

and 

‘‘(2) any application to open such an account which 

is distributed by, or received by a creditor, after the 

end of such 5-month period. 

‘‘(c) VOLUNTARY COMPLIANCE.—Notwithstanding subsection (b), any creditor may comply with the amendments made by this Act, in accordance with the regulations prescribed by the Board, before the effective date 

established under such subsection.’’ 

CONSUMER EDUCATION 

Pub. L. 100–709, § 4, Nov. 23, 1988, 102 Stat. 4733, provided that: ‘‘The Board of Governors of the Federal Reserve System shall develop and prepare a pamphlet for 

distribution to consumers which contains— 

‘‘(1) a general description of open end consumer 

credit plans secured by the consumer’s principal 

dwelling and the terms and conditions under which 

such loans are generally extended; and 

‘‘(2) a discussion of the potential advantages and 

disadvantages of such plans, including how to compare among home equity plans and between home equity and closed end credit plans.’’ 

§ 1638. Transactions other than under an open 

end credit plan 

(a) Required disclosures by creditor 

For 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 

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Page 1429 TITLE 15—COMMERCE AND TRADE § 1638 

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. 

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§ 1638 TITLE 15—COMMERCE AND TRADE Page 1430 

(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 

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 

1So in original. The comma probably should not appear. 

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 

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Page 1431 TITLE 15—COMMERCE AND TRADE § 1638 

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) REPAYMENT ANALYSIS REQUIRED TO INCLUDE 

ESCROW PAYMENTS.— 

(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 

If a consumer credit sale is one of a series of 

consumer credit sales transactions made pursuant to an agreement providing for the addition 

of the deferred payment price of that sale to an 

existing outstanding balance, and the person to 

whom the credit is extended has approved in 

writing both the annual percentage rate or rates 

and the method of computing the finance charge 

or charges, and the creditor retains no security 

interest in any property as to which he has received payments aggregating the amount of the 

sales price including any finance charges attributable thereto, then the disclosure required 

under subsection (a) for the particular sale may 

be made at any time not later than the date the 

first payment for that sale is due. For the purposes of this subsection, in the case of items 

purchased on different dates, the first purchased 

shall be deemed first paid for, and in the case of 

items purchased on the same date, the lowest 

price shall be deemed first paid for. 

(e) Terms and disclosure with respect to private 

education loans 

(1) Disclosures required in private education 

loan applications and solicitations 

In 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— 

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§ 1638 TITLE 15—COMMERCE AND TRADE Page 1432 

(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 nonFederal 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 approval 

Contemporaneously 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. 

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(3) Self-certification of information 

(A) In general 

Before a private educational lender may 

consummate a private education loan with 

respect to a student attending an institution 

of higher education, the lender shall obtain 

from the applicant for the private education 

loan the form developed by the Secretary of 

Education under section 155 of the Higher 

Education Act of 1965 [20 U.S.C. 1019d], 

signed by the applicant, in written or electronic form. 

(B) Rule of construction 

No other provision of this subsection shall 

be construed to require a private educational lender to perform any additional 

duty under this paragraph, other than collecting the form required under subparagraph (A). 

(4) Disclosures at the time of private education 

loan consummation 

Contemporaneously 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 

Not later than 2 years after August 14, 

2008, the Bureau shall, based on consumer 

testing, and in consultation with the Secretary of Education, develop and issue model 

forms that may be used, at the option of the 

private educational lender, for the provision 

of disclosures required under this subsection. 

(B) Format 

Model 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 

Any private educational lender that elects 

to provide a model form developed under 

this subsection that accurately reflects the 

practices of the private educational lender 

shall be deemed to be in compliance with the 

disclosures required under this subsection. 

(6) Effective period of approved rate of interest 

and loan terms 

(A) In general 

With respect to a private education loan, 

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 the rates and terms of the loan may not 

be changed by the private educational lender 

during that period. 

(B) Prohibition on changes 

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 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 

With respect to a private education loan, the 

borrower may cancel the loan, without penalty to the borrower, at any time within 3 

business days of the date on which the loan is 

consummated, and the private educational 

lender shall disclose such right to the borrower in accordance with paragraph (4). 

(8) Prohibition on disbursement 

No funds may be disbursed with respect to a 

private education loan until the expiration of 

the 3-day period described in paragraph (7). 

(9) Bureau regulations 

In issuing regulations under this subsection, 

the Bureau shall prevent, to the extent possible, duplicative disclosure requirements for 

private educational lenders that are otherwise 

required to make disclosures under this subchapter, except that in any case in which the 

disclosure requirements of this subsection differ or conflict with the disclosure requirements of any other provision of this subchapter, the requirements of this subsection 

shall be controlling. 

(10) Definitions 

For purposes of this subsection, the terms 

‘‘covered educational institution’’, ‘‘private 

educational lender’’, and ‘‘private education 

loan’’ have the same meanings as in section 

1650 of this title. 

(11) Duties of lenders participating in preferred lender arrangements 

Each private educational lender that has a 

preferred lender arrangement with a covered 

educational institution shall annually, by a 

date determined by the Bureau, in consultation with the Secretary of Education, provide 

to the covered educational institution such information as the Bureau determines to include 

in the model form developed under paragraph 

(5) for each type of private education loan that 

the lender plans to offer to students attending 

the covered educational institution, or to the 

families of such students, for the next award 

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§ 1638 TITLE 15—COMMERCE AND TRADE Page 1434 

year (as that term is defined in section 481 of 

the Higher Education Act of 1965 [20 U.S.C. 

1088]). 

(f) Periodic statements for residential mortgage 

loans 

(1) In general 

The 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 

may prescribe in regulations. 

(2) Development and use of standard form 

The Board 2 shall develop and prescribe a 

standard form for the disclosure required 

under this subsection, taking into account 

that the statements required may be transmitted in writing or electronically. 

(3) Exception 

Paragraph (1) shall not apply to any fixed 

rate residential mortgage loan where the creditor, assignee, or servicer provides the obligor 

with a coupon book that provides the obligor 

with substantially the same information as required in paragraph (1). 

(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.) 

REFERENCES IN TEXT 

The Real Estate Settlement Procedures Act, referred 

to in subsec. (b)(2)(A), probably refers to the Real Estate Settlement Procedures Act of 1974, Pub. L. 93–533, 

Dec. 22, 1974, 88 Stat. 1724, which is classified principally to chapter 27 (§2601 et seq.) of Title 12, Banks 

2So in original. Probably should be ‘‘Bureau’’. 

and Banking. For complete classification of this Act to 

the Code, see Short Title note set out under section 

2601 of Title 12 and Tables. 

The Higher Education Act of 1965, referred to in subsec. (e)(1)(M), (N), (2)(M)(i), (N), is Pub. L. 89–329, Nov. 

8, 1965, 79 Stat. 1219. Title IV of the Act is classified 

generally to subchapter IV (§ 1070 et seq.) of chapter 28 

of Title 20, Education. For complete classification of 

this Act to the Code, see Short Title note set out under 

section 1001 of Title 20 and Tables. 

AMENDMENTS 

2010—Pub. L. 111–203, §1100A(2), substituted ‘‘Bureau’’ 

for ‘‘Board’’ wherever appearing. 

Subsec. (a)(16) to (19). Pub. L. 111–203, §1419, added 

pars. (16) to (19). 

Subsec. (b)(4). Pub. L. 111–203, §1465, added par. (4). 

Subsec. (f). Pub. L. 111–203, § 1420, added subsec. (f). 

2008—Subsec. (b)(2). Pub. L. 110–289, §2502(a)(1), designated existing provisions as subpar. (A). 

Subsec. (b)(2)(A). Pub. L. 110–343, § 130(a)(1), substituted ‘‘Except as provided in subparagraph (G), in 

the case’’ for ‘‘In the case’’. 

Pub. L. 110–289, §2502(a)(5), (6), struck out 

‘‘, whichever is earlier’’ after ‘‘consummation of the 

transaction’’ and ‘‘If the disclosure statement furnished within three days of the written application 

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 statement at the time of settlement or consummation.’’ at the end. 

Pub. L. 110–289, §2502(a)(4), which directed insertion of 

‘‘, which shall be at least 7 business days before consummation of the transaction’’ after ‘‘written application’’, was executed by making the insertion after 

‘‘written application’’ the first place appearing. 

Pub. L. 110–289, §2502(a)(2), (3), substituted ‘‘any extension of credit that is secured by the dwelling of a 

consumer’’ for ‘‘a residential mortgage transaction, as 

defined in section 1602(w) of this title’’ and ‘‘and’’ for 

‘‘before the credit is extended, or’’. 

Subsec. (b)(2)(B) to (F). Pub. L. 110–289, § 2502(a)(6), 

added subpars. (B) to (F). 

Subsec. (b)(2)(G). Pub. L. 110–343, § 130(a)(2), amended 

subpar. (G) generally. Prior to amendment, subpar. (G) 

read as follows: ‘‘The requirements of subparagraphs 

(B), (C), (D) and (E) shall not apply to extensions of 

credit relating to plans described in section 101(53D) of 

title 11.’’ 

Pub. L. 110–289, §2502(a)(6), added subpar. (G). 

Subsec. (e). Pub. L. 110–315 added subsec. (e). 

2005—Subsec. (a)(15). Pub. L. 109–8, §1302(b)(1)(A), 

added par. (15). 

Subsec. (b)(3). Pub. L. 109–8, § 1302(b)(1)(B), added par. 

(3). 

1996—Subsec. (a)(14). Pub. L. 104–208 added par. (14). 

1980—Subsec. (a). Pub. L. 96–221, § 614(a), substituted 

provisions setting forth required disclosures by the 

creditor for transactions other than under an open end 

credit plan, for provisions setting forth required disclosures by the creditor for sales not under open end credit plans. 

Subsec. (b). Pub. L. 96–221, § 614(b), designated existing provisions as par. (1), inserted provisions relating 

to the conspicuous segregation of required disclosures, 

and struck out provisions authorizing the required information to be disclosed in the signed evidence of indebtedness, and added par. (2). 

Subsec. (c). Pub. L. 96–221, § 614(c), designated existing 

provisions as par. (1), substituted ‘‘total sale’’ for ‘‘deferred payment’’, and added par. (2). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by section 1100A(2) of Pub. L. 111–203 effective on the designated transfer date, see section 

1100H of Pub. L. 111–203, set out as a note under section 

552a of Title 5, Government Organization and Employees. 

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Page 1435 TITLE 15—COMMERCE AND TRADE § 1638a 

Amendment by sections 1419, 1420, and 1465 of Pub. L. 

111–203 effective on the date on which final regulations 

implementing that amendment take effect, or on the 

date that is 18 months after the designated transfer 

date if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as a 

note under section 1601 of this title. 

EFFECTIVE DATE OF 2008 AMENDMENT 

Pub. L. 110–343, div. A, title I, § 130(b), Oct. 3, 2008, 122 

Stat. 3797, provided that: ‘‘The amendments made by 

subsection (a) [amending this section] shall take effect 

as if included in the amendments made by section 2502 

of the Mortgage Disclosure Improvement Act of 2008 

(Public Law 110–289) [amending this section and section 

1640 of this title].’’ 

Pub. L. 110–315, title X, §1003, Aug. 14, 2008, 122 Stat. 

3478, provided that: 

‘‘(a) IN GENERAL.—Except as provided in subsection 

(b) and as otherwise provided in this title [see Short 

Title of 2008 Amendment note set out under section 1601 

of this title], this title and the amendments made by 

this title shall become effective on the date of enactment of this Act [Aug. 14, 2008]. 

‘‘(b) EFFECT NOTWITHSTANDING REGULATIONS.—Paragraphs (1), (2), (3), (4), (6), (7), and (8) of section 128(e) [15 

U.S.C. 1638(e)] and section 140(c) of the Truth in Lending Act [15 U.S.C. 1650(c)], as added by this title, shall 

become effective on the earlier of the date on which 

regulations issued under section 1002 [set out as a note 

below] become effective [Such regulations were issued 

effective Sept. 14, 2009, with compliance optional until 

Feb. 14, 2010. See 74 F.R. 41194.] or 18 months after the 

date of enactment of this Act [Aug. 14, 2008].’’ 

Pub. L. 110–289, div. B, title V, § 2502(c), July 30, 2008, 

122 Stat. 2857, provided that: 

‘‘(1) GENERAL DISCLOSURES.—Except as provided in 

paragraph (2), the amendments made by subsection (a) 

[amending this section] shall become effective 12 

months after the date of enactment of this Act [July 

30, 2008]. 

‘‘(2) VARIABLE INTEREST RATES.—Subparagraph (C) of 

section 128(b)(2) of the Truth in Lending Act (15 U.S.C. 

1638(b)(2)(C)), as added by subsection (a) of this section, 

shall become effective on the earlier of— 

‘‘(A) the compliance date established by the Board 

for such purpose, by regulation; or 

‘‘(B) 30 months after the date of enactment of this 

Act [July 30, 2008].’’ 

EFFECTIVE DATE OF 2005 AMENDMENT 

Amendment by Pub. L. 109–8 effective 180 days after 

Apr. 20, 2005, and not applicable with respect to cases 

commenced under Title 11, Bankruptcy, before such effective date, except as otherwise provided, see section 

1501 of Pub. L. 109–8, set out as a note under section 101 

of Title 11. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

REGULATIONS 

Pub. L. 110–315, title X, §1002, Aug. 14, 2008, 122 Stat. 

3478, provided that: ‘‘Not later than 365 days after the 

date of enactment of this Act [Aug. 14, 2008], the Board 

of Governors of the Federal Reserve System shall issue 

regulations in final form to implement paragraphs (1), 

(2), (3), (4), (6), (7), and (8) of section 128(e) [15 U.S.C. 

1638(e)] and section 140(c) of the Truth in Lending Act 

[15 U.S.C. 1650(c)], as added by this title, which regulations shall become effective not later than 6 months 

after their date of issuance.’’ 

§ 1638a. Reset of hybrid adjustable rate mortgages 

(a) Hybrid adjustable rate mortgages defined 

For purposes of this section, the term ‘‘hybrid 

adjustable rate mortgage’’ means a consumer 

credit transaction secured by the consumer’s 

principal residence with a fixed interest rate for 

an introductory period that adjusts or resets to 

a variable interest rate after such period. 

(b) Notice of reset and alternatives 

During 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 

The Board may require the notice in paragraph (b) or other notice consistent with this 

chapter for adjustable rate mortgage loans that 

are not hybrid adjustable rate mortgage loans. 

(Pub. L. 90–321, title I, § 128A, as added Pub. L. 

111–203, title XIV, § 1418(a), July 21, 2010, 124 Stat. 

2153.) 

REFERENCES IN TEXT 

This chapter, referred to in subsec. (c), was in the 

original ‘‘this Act’’ meaning Pub. L. 90–321, May 29, 

1968, 82 Stat. 146, which is classified principally to this 

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§ 1639 TITLE 15—COMMERCE AND TRADE Page 1436 

chapter. For complete classification of this Act to the 

Code, see Short Title note set out under section 1601 of 

this title and Tables. 

EFFECTIVE DATE 

Section effective on the date on which final regulations implementing such section take effect, or on the 

date that is 18 months after the designated transfer 

date, if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as an 

Effective Date of 2010 Amendment note under section 

1601 of this title. 

§ 1639. Requirements for certain mortgages 

(a) Disclosures 

(1) Specific disclosures 

In addition to other disclosures required 

under this subchapter, for each mortgage referred to in section 1602(aa) 1 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 rate 

In 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 

The disclosures required by this section 

shall be given not less than 3 business days 

prior to consummation of the transaction. 

(2) New disclosures required 

(A) In general 

After providing the disclosures required by 

this section, a creditor may not change the 

terms of the extension of credit if such 

changes make the disclosures inaccurate, 

unless new disclosures are provided that 

meet the requirements of this section. 

(B) Telephone disclosure 

A 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— 

1See References in Text note below. 

(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 

If a creditor extends to a consumer a second 

offer of credit with a lower annual percentage 

rate, the transaction may be consummated 

without regard to the period specified in paragraph (1) with respect to the second offer. 

(4) Modifications 

The Bureau may, if it finds that such action 

is necessary to permit homeowners to meet 

bona fide personal financial emergencies, prescribe regulations authorizing the modification or waiver of rights created under this subsection, to the extent and under the circumstances set forth in those regulations. 

(c) No prepayment penalty 

(1) In general 2 

(A) Limitation on terms 

A mortgage referred to in section 1602(aa) 1 

of this title may not contain terms under 

which a consumer must pay a prepayment 

penalty for paying all or part of the principal before the date on which the principal 

is due. 

(B) Construction 

For purposes of this subsection, any method of computing a refund of unearned scheduled interest is a prepayment penalty if it is 

less favorable to the consumer than the actuarial method (as that term is defined in 

section 1615(d) of this title). 

(d) Limitations after default 

A mortgage referred to in section 1602(aa) 1 of 

this title may not provide for an interest rate 

applicable after default that is higher than the 

interest rate that applies before default. If the 

date of maturity of a mortgage referred to in 

subsection 3 1602(aa) 1 of this title is accelerated 

due to default and the consumer is entitled to a 

rebate of interest, that rebate shall be computed 

by any method that is not less favorable than 

the actuarial method (as that term is defined in 

section 1615(d) of this title). 

(e) No balloon payments 

No high-cost mortgage may contain a scheduled payment that is more than twice as large 

as the average of earlier scheduled payments. 

This subsection shall not apply when the payment schedule is adjusted to the seasonal or irregular income of the consumer. 

(f) No negative amortization 

A mortgage referred to in section 1602(aa) 1 of 

this title may not include terms under which 

the outstanding principal balance will increase 

at any time over the course of the loan because 

the regular periodic payments do not cover the 

full amount of interest due. 

2So in original. There is no par. (2). 

3So in original. Probably should be ‘‘section’’. 

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Page 1437 TITLE 15—COMMERCE AND TRADE § 1639 

(g) No prepaid payments 

A mortgage referred to in section 1602(aa) 1 of 

this title may not include terms under which 

more than 2 periodic payments required under 

the loan are consolidated and paid in advance 

from the loan proceeds provided to the consumer. 

(h) Prohibition on extending credit without regard to payment ability of consumer 

A creditor shall not engage in a pattern or 

practice of extending credit to consumers under 

mortgages referred to in section 1602(aa) 1 of this 

title based on the consumers’ collateral without 

regard to the consumers’ repayment ability, including the consumers’ current and expected income, current obligations, and employment. 

(i) Requirements for payments under home improvement contracts 

A 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 

No creditor shall recommend or encourage default on an existing loan or other debt prior to 

and in connection with the closing or planned 

closing of a high-cost mortgage that refinances 

all or any portion of such existing loan or debt. 

(k) Late fees 

(1) In general 

No 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 

If a payment is otherwise a full payment for 

the applicable period and is paid on its due 

date or within an applicable grace period, and 

the only delinquency or insufficiency of payment is attributable to any late fee or delinquency charge assessed on any earlier payment, no late fee or delinquency charge may 

be imposed on such payment. 

(3) Failure to make installment payment 

If, in the case of a loan agreement the terms 

of which provide that any payment shall first 

be applied to any past due principal balance, 

the consumer fails to make an installment 

payment and the consumer subsequently resumes making installment payments but has 

not paid all past due installments, the creditor 

may impose a separate late payment charge or 

fee for any principal due (without deduction 

due to late fees or related fees) until the default is cured. 

(l) Acceleration of debt 

No high-cost mortgage may contain a provision which permits the creditor to accelerate 

the indebtedness, except when repayment of the 

loan has been accelerated by default in payment, or pursuant to a due-on-sale provision, or 

pursuant to a material violation of some other 

provision of the loan document unrelated to 

payment schedule. 

(m) Restriction on financing points and fees 

No 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 

Any mortgage that contains a provision prohibited by this section shall be deemed a failure 

to deliver the material disclosures required 

under this subchapter, for the purpose of section 

1635 of this title. 

(o) ‘‘Affiliate’’ defined 

For purposes of this section, the term ‘‘affiliate’’ has the same meaning as in section 1841(k) 

of title 12. 

(p) Discretionary regulatory authority of Bureau 

(1) Exemptions 

The 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) Prohibitions 

The 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 

For purposes of enforcement by the Federal 

Trade Commission, any violation of a regulation 

issued by the Bureau pursuant to subsection 

(l)(2) shall be treated as a violation of a rule promulgated under section 57a of this title regarding unfair or deceptive acts or practices. 

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§ 1639 TITLE 15—COMMERCE AND TRADE Page 1438 

(r) Prohibitions on evasions, structuring of 

transactions, and reciprocal arrangements 

A 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 

A creditor, successor in interest, assignee, or 

any agent of any of the above, may not charge 

a consumer any fee to modify, renew, extend, or 

amend a high-cost mortgage, or to defer any 

payment due under the terms of such mortgage. 

(t) Payoff statement 

(1) Fees 

(A) In general 

Except as provided in subparagraph (B), no 

creditor or servicer may charge a fee for informing or transmitting to any person the 

balance due to pay off the outstanding balance on a high-cost mortgage. 

(B) Transaction fee 

When payoff information referred to in 

subparagraph (A) is provided by facsimile 

transmission or by a courier service, a creditor or servicer may charge a processing fee 

to cover the cost of such transmission or 

service in an amount not to exceed an 

amount that is comparable to fees imposed 

for similar services provided in connection 

with consumer credit transactions that are 

secured by the consumer’s principal dwelling 

and are not high-cost mortgages. 

(C) Fee disclosure 

Prior to charging a transaction fee as provided in subparagraph (B), a creditor or 

servicer shall disclose that payoff balances 

are available for free pursuant to subparagraph (A). 

(D) Multiple requests 

If a creditor or servicer has provided payoff information referred to in subparagraph 

(A) without charge, other than the transaction fee allowed by subparagraph (B), on 4 

occasions during a calendar year, the creditor or servicer may thereafter charge a reasonable fee for providing such information 

during the remainder of the calendar year. 

(2) Prompt delivery 

Payoff balances shall be provided within 5 

business days after receiving a request by a 

consumer or a person authorized by the consumer to obtain such information. 

(u) Pre-loan counseling 

(1) In general 

A creditor may not extend credit to a consumer under a high-cost mortgage without 

first receiving certification from a counselor 

that is approved by the Secretary of Housing 

and Urban Development, or at the discretion 

of the Secretary, a State housing finance authority, that the consumer has received counseling on the advisability of the mortgage. 

Such counselor shall not be employed by the 

creditor or an affiliate of the creditor or be affiliated with the creditor. 

(2) Disclosures required prior to counseling 

No counselor may certify that a consumer 

has received counseling on the advisability of 

the high-cost mortgage unless the counselor 

can verify that the consumer has received 

each statement required (in connection with 

such loan) by this section or the Real Estate 

Settlement Procedures Act of 1974 [12 U.S.C. 

2601 et seq.] with respect to the transaction. 

(3) Regulations 

The Board 4 may prescribe such regulations 

as the Board determines to be appropriate to 

carry out the requirements of paragraph (1). 

(v) Corrections and unintentional violations 

A 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.) 

REFERENCES IN TEXT 

Section 1602(aa) of this title, referred to in text, was 

redesignated section 1602(bb) of this title by Pub. L. 

111–203, title X, §1100A(1)(A), July 21, 2010, 124 Stat. 2107. 

The Real Estate Settlement Procedures Act of 1974, 

referred to in subsec. (u)(2), is Pub. L. 93–533, Dec. 22, 

1974, 88 Stat. 1724, which is classified principally to 

chapter 27 (§ 2601 et seq.) of Title 12, Banks and Bank4So in original. Probably should be ‘‘Bureau’’. 

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Page 1439 TITLE 15—COMMERCE AND TRADE § 1639a 

ing. For complete classification of this Act to the Code, 

see Short Title note set out under section 2601 of Title 

12 and Tables. 

PRIOR PROVISIONS 

A prior section 1639, Pub. L. 90–321, title I, §129, May 

29, 1968, 82 Stat. 156, related to consumer loans not 

under open end credit plans, prior to repeal by Pub. L. 

96–221, title VI, § 614(d)(1), Mar. 31, 1980, 94 Stat. 180. Repeal effective on expiration of two years and six 

months after Mar. 31, 1980, with all regulations, forms, 

and clauses required to be prescribed to be promulgated 

at least one year prior to such effective date, and allowing any creditor to comply with any amendments, 

in accordance with the regulations, forms, and clauses 

prescribed by the Board prior to such effective date, see 

section 625 of Pub. L. 96–221, set out as an Effective 

Date of 1980 Amendment note under section 1602 of this 

title. 

AMENDMENTS 

2018—Subsec. (b)(3), (4). Pub. L. 115–174 added par. (3) 

and redesignated former par. (3) as (4). 

2010—Pub. L. 111–203, §1100A(2), substituted ‘‘Bureau’’ 

for ‘‘Board’’ wherever appearing. 

Subsec. (c)(2). Pub. L. 111–203, §1432(a), struck out par. 

(2) which related to exception to prepayment penalty 

prohibition. 

Subsec. (e). Pub. L. 111–203, §1432(b), amended subsec. 

(e) generally. Prior to amendment, text read as follows: 

‘‘A mortgage referred to in section 1602(aa) of this title 

having a term of less than 5 years may not include 

terms under which the aggregate amount of the regular 

periodic payments would not fully amortize the outstanding principal balance.’’ 

Subsecs. (j) to (l). Pub. L. 111–203, § 1433(a)(2), added 

subsecs. (j) to (l). Former subsecs. (j) to (l) redesignated 

(n) to (p), respectively. 

Subsec. (m). Pub. L. 111–203, §1433(a)(2), added subsec. 

(m). Former subsec. (m) redesignated (q). 

Pub. L. 111–203, §1100A(9), added subsec. (m) and 

struck out former subsec. (m). Prior to amendment, 

text read as follows: ‘‘For purposes of enforcement by 

the Federal Trade Commission, any violation of a regulation issued by the Federal Reserve Board pursuant to 

subsection (l)(2) of this section shall be treated as a violation of a rule promulgated under section 57a of this 

title regarding unfair or deceptive acts or practices.’’ 

Subsecs. (n) to (q). Pub. L. 111–203, § 1433(a)(1), redesignated former subsecs. (j) to (m) as (n) to (q), respectively. 

Subsecs. (r) to (v). Pub. L. 111–203, §1433(b)–(f), added 

subsecs. (r) to (v). 

2009—Subsec. (m). Pub. L. 111–8 added subsec. (m). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by section 1100A(2), (9) of Pub. L. 111–203 

effective on the designated transfer date, see section 

1100H of Pub. L. 111–203, set out as a note under section 

552a of Title 5, Government Organization and Employees. 

Amendment by sections 1432 and 1433 of Pub. L. 

111–203 effective on the date on which final regulations 

implementing that amendment take effect, or on the 

date that is 18 months after the designated transfer 

date if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as a 

note under section 1601 of this title. 

§ 1639a. Duty of servicers of residential mortgages 

(a) In general 

Notwithstanding 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 

A servicer that is deemed to be acting in the 

best interests of all investors or other parties 

under this section shall not be liable to any 

party who is owed a duty under subsection (a)(1), 

and shall not be subject to any injunction, stay, 

or other equitable relief to such party, based 

solely upon the implementation by the servicer 

of a qualified loss mitigation plan. 

(c) Standard industry practice 

The qualified loss mitigation plan guidelines 

issued by the Secretary of the Treasury under 

the Emergency Economic Stabilization Act of 

2008 [12 U.S.C. 5201 et seq.] shall constitute 

standard industry practice for purposes of all 

Federal and State laws. 

(d) Scope of safe harbor 

Any person, including a trustee, issuer, and 

loan originator, shall not be liable for monetary 

damages or be subject to an injunction, stay, or 

other equitable relief, based solely upon the cooperation of such person with a servicer when 

such cooperation is necessary for the servicer to 

implement a qualified loss mitigation plan that 

meets the requirements of subsection (a). 

(e) Reporting 

Each servicer that engages in qualified loss 

mitigation plans under this section shall regularly report to the Secretary of the Treasury the 

extent, scope, and results of the servicer’s modification activities. The Secretary of the Treasury shall prescribe regulations or guidance 

specifying the form, content, and timing of such 

reports. 

(f) Definitions 

As used in this section— 

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§ 1639b TITLE 15—COMMERCE AND TRADE Page 1440 

(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 

No provision of subsection (b) or (d) shall be 

construed as affecting the liability of any 

servicer or person as described in subsection (d) 

for actual fraud in the origination or servicing 

of a loan or in the implementation of a qualified 

loss mitigation plan, or for the violation of a 

State or Federal law, including laws regulating 

the origination of mortgage loans, commonly referred to as predatory lending laws. 

(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.) 

REFERENCES IN TEXT 

The Emergency Economic Stabilization Act of 2008, 

referred to in subsecs. (a)(2)(A), (c), (f)(1)(A), is div. A of 

Pub. L. 110–343, Oct. 3, 2008, 122 Stat. 3765, which is classified principally to chapter 52 (§5201 et seq.) of Title 12, 

Banks and Banking. For complete classification of this 

Act to the Code, see Short Title note set out under section 5201 of Title 12 and Tables. 

AMENDMENTS 

2009—Pub. L. 111–22 amended section generally. Prior 

to amendment, section related to fiduciary duty of 

servicers of pooled residential mortgages without providing for date limitation for implementing modifications or workout plans. 

FINDINGS 

Pub. L. 111–22, div. A, title II, § 201(a), May 20, 2009, 123 

Stat. 1638, provided that: ‘‘Congress finds the following: 

‘‘(1) Increasing numbers of mortgage foreclosures 

are not only depriving many Americans of their 

homes, but are also destabilizing property values and 

negatively affecting State and local economies as 

well as the national economy. 

‘‘(2) In order to reduce the number of foreclosures 

and to stabilize property values, local economies, and 

the national economy, servicers must be given— 

‘‘(A) authorization to— 

‘‘(i) modify mortgage loans and engage in other 

loss mitigation activities consistent with applicable 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 

‘‘(ii) refinance mortgage loans under the Hope 

for Homeowners program; and 

‘‘(B) a safe harbor to enable such servicers to exercise these authorities.’’ 

§ 1639b. Residential mortgage loan origination 

(a) Finding and purpose 

(1) Finding 

The Congress finds that economic stabilization would be enhanced by the protection, limitation, and regulation of the terms of residential mortgage credit and the practices related 

to such credit, while ensuring that responsible, affordable mortgage credit remains 

available to consumers. 

(2) Purpose 

It is the purpose of this section and section 

1639c of this title to assure that consumers are 

offered and receive residential mortgage loans 

on terms that reasonably reflect their ability 

to repay the loans and that are understandable 

and not unfair, deceptive or abusive. 

(b) Duty of care 

(1) Standard 

Subject 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 

The Bureau shall prescribe regulations requiring depository institutions to establish 

and maintain procedures reasonably designed 

to assure and monitor the compliance of such 

depository institutions, the subsidiaries of 

such institutions, and the employees of such 

institutions or subsidiaries with the requirements of this section and the registration procedures established under section 1507 of the 

Secure and Fair Enforcement for Mortgage Licensing Act of 2008 [12 U.S.C. 5106]. 

(c) Prohibition on steering incentives 

(1) In general 

For any residential mortgage loan, no mortgage originator shall receive from any person 

and no person shall pay to a mortgage originator, directly or indirectly, compensation 

that varies based on the terms of the loan 

(other than the amount of the principal). 

(2) Restructuring of financing origination fee 

(A) In general 

For any mortgage loan, a mortgage originator may not receive from any person other 

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Page 1441 TITLE 15—COMMERCE AND TRADE § 1639b 

than the consumer and no person, other than dwelling from another mortgage origithe consumer, who knows or has reason to nator. 

know that a consumer has directly com- (4) Rules of construction 

pensated or will directly compensate a mortgage originator may pay a mortgage originator any origination fee or charge except 

bona fide third party charges not retained by 

the creditor, mortgage originator, or an affiliate of the creditor or mortgage originator. 

(B) Exception 

Notwithstanding 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) Regulations 

The 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 

No 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 

For purposes of providing a cause of action 

for any failure by a mortgage originator, other 

than a creditor, to comply with any requirement imposed under this section and any regulation prescribed under this section, section 

1640 of this title shall be applied with respect 

to any such failure by substituting ‘‘mortgage 

originator’’ for ‘‘creditor’’ each place such 

term appears in each such subsection.1 

(2) Maximum 

The maximum amount of any liability of a 

mortgage originator under paragraph (1) to a 

consumer for any violation of this section 

shall not exceed the greater of actual damages 

or an amount equal to 3 times the total 

amount of direct and indirect compensation or 

gain accruing to the mortgage originator in 

connection with the residential mortgage loan 

involved in the violation, plus the costs to the 

consumer of the action, including a reasonable 

attorney’s fee. 

(e) Discretionary regulatory authority 

(1) In general 

The Bureau shall, by regulations, prohibit or 

condition terms, acts or practices relating to 

residential mortgage loans that the Bureau 

finds to be abusive, unfair, deceptive, predatory, necessary or proper to ensure that responsible, affordable mortgage credit remains 

available to consumers in a manner consistent 

with the purposes of this section and section 

1So in original. Probably should be ‘‘in such section.’’ 

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§ 1639c TITLE 15—COMMERCE AND TRADE Page 1442 

1639c of this title, necessary or proper to effectuate the purposes of this section and section 

1639c of this title, to prevent circumvention or 

evasion thereof, or to facilitate compliance 

with such sections, or are not in the interest 

of the borrower. 

(2) Application 

The regulations prescribed under paragraph 

(1) shall be applicable to all residential mortgage loans and shall be applied in the same 

manner as regulations prescribed under section 1604 of this title. 

(f) Timeshare plans 

This section and any regulations promulgated 

thereunder do not apply to an extension of credit relating to a plan described in section 101(53D) 

of title 11. 

(Pub. L. 90–321, title I, § 129B, as added and 

amended Pub. L. 111–203, title X, § 1100A(2), title 

XIV, §§ 1402(a)(2), 1403–1405(a), July 21, 2010, 124 

Stat. 2107, 2139–2141.) 

REFERENCES IN TEXT 

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, referred to in subsec. (b)(1)(A), is 

title V of div. A of Pub. L. 110–289, July 30, 2008, 122 

Stat. 2810, also known as the S.A.F.E. Mortgage Licensing Act of 2008, which is classified generally to chapter 

51 (§ 5101 et seq.) of Title 12, Banks and Banking. For 

complete classification of this Act to the Code, see 

Short Title note set out under section 5101 of Title 12 

and Tables. 

AMENDMENTS 

2010—Pub. L. 111–203, §1100A(2), substituted ‘‘Bureau’’ 

for ‘‘Board’’ wherever appearing. 

Subsec. (c). Pub. L. 111–203, § 1403, added subsec. (c). 

Subsec. (d). Pub. L. 111–203, § 1404, added subsec. (d). 

Subsecs. (e), (f). Pub. L. 111–203, § 1405(a), added subsecs. (e) and (f). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by section 1100A(2) of Pub. L. 111–203 effective on the designated transfer date, see section 

1100H of Pub. L. 111–203, set out as a note under section 

552a of Title 5, Government Organization and Employees. 

Amendment by sections 1403–1405(a) of Pub. L. 111–203 

effective on the date on which final regulations implementing that amendment take effect, or on the date 

that is 18 months after the designated transfer date if 

such regulations have not been issued by that date, see 

section 1400(c) of Pub. L. 111–203, set out as a note under 

section 1601 of this title. 

EFFECTIVE DATE 

Section effective on the date on which final regulations implementing such section take effect, or on the 

date that is 18 months after the designated transfer 

date if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as an 

Effective Date of 2010 Amendment note under section 

1601 of this title. 

RULE OF CONSTRUCTION 

Pub. L. 111–203, title XIV, § 1415, July 21, 2010, 124 

Stat. 2153, provided that: ‘‘Except as otherwise expressly provided in section 129B or 129C of the Truth in 

Lending Act [15 U.S.C. 1639b, 1639c] (as added by this 

title), no provision of such section 129B or 129C shall be 

construed as superseding, repealing, or affecting any 

duty, right, obligation, privilege, or remedy of any person under any other provision of the Truth in Lending 

Act [15 U.S.C. 1601 et seq.] or any other provision of 

Federal or State law.’’ 

[For definition of ‘‘State’’ as used in section 1415 of 

Pub. L. 111–203, set out above, see section 5301 of Title 

12, Banks and Banking.] 

§ 1639c. Minimum standards for residential mortgage loans 

(a) Ability to repay 

(1) In general 

In accordance with regulations prescribed by 

the Bureau, no creditor may make a residential mortgage loan unless the creditor makes 

a reasonable and good faith determination 

based on verified and documented information 

that, at the time the loan is consummated, the 

consumer has a reasonable ability to repay the 

loan, according to its terms, and all applicable 

taxes, insurance (including mortgage guarantee insurance), and assessments. 

(2) Multiple loans 

If the creditor knows, or has reason to know, 

that 1 or more residential mortgage loans secured by the same dwelling will be made to 

the same consumer, the creditor shall make a 

reasonable and good faith determination, 

based on verified and documented information, 

that the consumer has a reasonable ability to 

repay the combined payments of all loans on 

the same dwelling according to the terms of 

those loans and all applicable taxes, insurance 

(including mortgage guarantee insurance), and 

assessments. 

(3) Basis for determination 

A determination under this subsection of a 

consumer’s ability to repay a residential 

mortgage loan shall include consideration of 

the consumer’s credit history, current income, 

expected income the consumer is reasonably 

assured of receiving, current obligations, debtto-income ratio or the residual income the 

consumer will have after paying non-mortgage 

debt and mortgage-related obligations, employment status, and other financial resources 

other than the consumer’s equity in the dwelling or real property that secures repayment of 

the loan. A creditor shall determine the ability of the consumer to repay using a payment 

schedule that fully amortizes the loan over 

the term of the loan. 

(4) Income verification 

A 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. 

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Page 1443 TITLE 15—COMMERCE AND TRADE § 1639c 

(5) Exemption 

With 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 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 fixedrate 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 

For purposes of determining, under this 

subsection, a consumer’s ability to repay a 

variable rate residential mortgage loan that 

allows or requires the consumer to defer the 

repayment of any principal or interest, the 

creditor shall use a fully amortizing repayment schedule. 

(B) Interest-only loans 

For purposes of determining, under this 

subsection, a consumer’s ability to repay a 

residential mortgage loan that permits or 

requires the payment of interest only, the 

creditor shall use the payment amount required to amortize the loan by its final maturity. 

(C) Calculation for negative amortization 

In making any determination under this 

subsection, a creditor shall also take into 

1See References in Text note below. 

consideration any balance increase that may 

accrue from any negative amortization provision. 

(D) Calculation process 

For 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 

lender 

In 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 

For purposes of this subsection, the term 

‘‘fully indexed rate’’ means the index rate prevailing on a residential mortgage loan at the 

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§ 1639c TITLE 15—COMMERCE AND TRADE Page 1444 

time the loan is made plus the margin that 

will apply after the expiration of any introductory interest rates. 

(8) Reverse mortgages and bridge loans 

This subsection shall not apply with respect 

to any reverse mortgage or temporary or 

bridge loan with a term of 12 months or less, 

including to any loan to purchase a new dwelling where the consumer plans to sell a different dwelling within 12 months. 

(9) Seasonal income 

If documented income, including income 

from a small business, is a repayment source 

for a residential mortgage loan, a creditor 

may consider the seasonality and irregularity 

of such income in the underwriting of and 

scheduling of payments for such credit. 

(b) Presumption of ability to repay 

(1) In general 

Any creditor with respect to any residential 

mortgage loan, and any assignee of such loan 

subject to liability under this subchapter, may 

presume that the loan has met the requirements of subsection (a), if the loan is a qualified mortgage. 

(2) Definitions 

For purposes of this subsection, the following definitions shall apply: 

(A) Qualified mortgage 

The 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 

The term ‘‘average prime offer rate’’ 

means the average prime offer rate for a 

comparable transaction as of the date on 

which the interest rate for the transaction is 

set, as published by the Bureau..2 

(C) Points and fees 

(i) In general 

For purposes of subparagraph (A), the 

term ‘‘points and fees’’ means points and 

fees as defined by section 1602(aa)(4) 1 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). 

(ii) Computation 

For 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 

For purposes of clause (ii), the term 

‘‘bona fide discount points’’ means loan 

discount points which are knowingly paid 

by the consumer for the purpose of reducing, and which in fact result in a bona fide 

2So in original. 

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Page 1445 TITLE 15—COMMERCE AND TRADE § 1639c 

reduction of, the interest rate or timeprice differential applicable to the mortgage. 

(iv) Interest rate reduction 

Subclauses (I) and (II) of clause (ii) shall 

not apply to discount points used to purchase an interest rate reduction unless the 

amount of the interest rate reduction purchased is reasonably consistent with established industry norms and practices for 

secondary mortgage market transactions. 

(D) Smaller loans 

The Bureau shall prescribe rules adjusting 

the criteria under subparagraph (A)(vii) in 

order to permit lenders that extend smaller 

loans to meet the requirements of the presumption of compliance under paragraph (1). 

In prescribing such rules, the Bureau shall 

consider the potential impact of such rules 

on rural areas and other areas where home 

values are lower. 

(E) Balloon loans 

The 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) Definitions 

In 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 harbor 

In 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 transfers 

A 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 requirements 

The consideration and documentation 

requirements described in clause (ii)(I)(ee) 

shall— 

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§ 1639c TITLE 15—COMMERCE AND TRADE Page 1446 

(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 

The Bureau shall prescribe regulations to 

carry out the purposes of this subsection. 

(B) Revision of safe harbor criteria 

(i) In general 

The Bureau may prescribe regulations 

that revise, add to, or subtract from the 

criteria that define a qualified mortgage 

upon a finding that such regulations are 

necessary or proper to ensure that responsible, affordable mortgage credit remains 

available to consumers in a manner consistent with the purposes of this section, 

necessary and appropriate to effectuate 

the purposes of this section and section 

1639b of this title, to prevent circumvention or evasion thereof, or to facilitate 

compliance with such sections. 

(ii) Loan definition 

The 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 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 

In this subparagraph, the term ‘‘Property Assessed Clean Energy financing’’ 

means financing to cover the costs of 

home improvements that results in a tax 

assessment on the real property of the consumer. 

3So in original. Probably should be followed by ‘‘to’’. 

(ii) Regulations 

The Bureau shall prescribe regulations 

that carry out the purposes of subsection 

(a) and apply section 1640 of this title with 

respect to violations under subsection (a) 

of this section with respect to Property 

Assessed Clean Energy financing, which 

shall account for the unique nature of 

Property Assessed Clean Energy financing. 

(iii) Collection of information and consultation 

In 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 

A residential mortgage loan that is not a 

‘‘qualified mortgage’’, as defined under 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. 

(B) Exclusions 

For 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 thresholds 

The Bureau— 

(A) shall publish, and update 

weekly, average prime offer rates; 

(B) may publish multiple rates 

at le

based 

ast 

on 

varying types of mortgage transactions; and 

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Page 1447 TITLE 15—COMMERCE AND TRADE § 1639c 

(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 mortgages 

A 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 

A creditor may not offer a consumer a residential mortgage loan product that has a prepayment penalty for paying all or part of the 

principal after the loan is consummated as a 

term of the loan without offering the consumer a residential mortgage loan product 

that does not have a prepayment penalty as a 

term of the loan. 

(d) Single premium credit insurance prohibited 

No 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 

No residential mortgage loan and no extension of credit under an open end consumer 

credit plan secured by the principal dwelling 

of the consumer may include terms which require arbitration or any other nonjudicial procedure as the method for resolving any controversy or settling any claims arising out of 

the transaction. 

(2) Post-controversy agreements 

Subject to paragraph (3), paragraph (1) shall 

not be construed as limiting the right of the 

consumer and the creditor or any assignee to 

agree to arbitration or any other nonjudicial 

procedure as the method for resolving any 

controversy at any time after a dispute or 

claim under the transaction arises. 

(3) No waiver of statutory cause of action 

No provision of any residential mortgage 

loan or of any extension of credit under an 

open end consumer credit plan secured by the 

principal dwelling of the consumer, and no 

other agreement between the consumer and 

the creditor relating to the residential mortgage loan or extension of credit referred to in 

paragraph (1), shall be applied or interpreted 

so as to bar a consumer from bringing an action in an appropriate district court of the 

United States, or any other court of competent jurisdiction, pursuant to section 1640 of 

this title or any other provision of law, for 

damages or other relief in connection with any 

alleged violation of this section, any other 

provision of this subchapter, or any other Federal law. 

(f) Mortgages with negative amortization 

No 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. 

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§ 1639d TITLE 15—COMMERCE AND TRADE Page 1448 

(g) Protection against loss of anti-deficiency protection 

(1) Definition 

For purposes of this subsection, the term 

‘‘anti-deficiency law’’ means the law of any 

State which provides that, in the event of 

foreclosure on the residential property of a 

consumer securing a mortgage, the consumer 

is not liable, in accordance with the terms and 

limitations of such State law, for any deficiency between the sale price obtained on such 

property through foreclosure and the outstanding balance of the mortgage. 

(2) Notice at time of consummation 

In the case of any residential mortgage loan 

that is, or upon consummation will be, subject 

to protection under an anti-deficiency law, the 

creditor or mortgage originator shall provide 

a written notice to the consumer describing 

the protection provided by the anti-deficiency 

law and the significance for the consumer of 

the loss of such protection before such loan is 

consummated. 

(3) Notice before refinancing that would cause 

loss of protection 

In the case of any residential mortgage loan 

that is subject to protection under an anti-deficiency law, if a creditor or mortgage originator provides an application to a consumer, 

or receives an application from a consumer, 

for any type of refinancing for such loan that 

would cause the loan to lose the protection of 

such anti-deficiency law, the creditor or mortgage originator shall provide a written notice 

to the consumer describing the protection provided by the anti-deficiency law and the significance for the consumer of the loss of such 

protection before any agreement for any such 

refinancing is consummated. 

(h) Policy regarding acceptance of partial payment 

In 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 

This section and any regulations promulgated 

under this section do not apply to an extension 

of credit relating to a plan described in section 

101(53D) of title 11. 

(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.) 

REFERENCES IN TEXT 

Section 1602(aa)(4) of this title, referred to in subsecs. 

(a)(5)(C) and (b)(2)(C)(i), was redesignated section 

1602(bb)(4) of this title by Pub. L. 111–203, title X, 

§ 1100A(1)(A), July 21, 2010, 124 Stat. 2107. 

This part, referred to in subsec. (b)(2)(E)(iv)(IV), was 

in the original ‘‘this subtitle’’, and was translated as 

reading ‘‘this chapter’’, meaning chapter 2 of title I of 

Pub. L. 90–321, to reflect the probable intent of Congress. Title I of Pub. L. 90–321 does not contain subtitles. 

The National Housing Act, referred to in subsec. 

(b)(3)(B)(ii)(I), is act June 27, 1934, ch. 847, 48 Stat. 1246, 

which is classified principally to chapter 13 (§1701 et 

seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see section 1701 of 

Title 12 and Tables. 

The Mortgage Reform and Anti-Predatory Lending 

Act, referred to in subsec. (c)(2)(C), is title XIV of Pub. 

L. 111–203, July 21, 2010, 124 Stat. 2136. For complete 

classification of this Act to the Code, see Short Title of 

2010 Amendment note set out under section 1601 of this 

title and Tables. 

AMENDMENTS 

2018—Subsec. (b)(2)(F). Pub. L. 115–174, §101, added 

subpar. (F). 

Subsec. (b)(3)(C). Pub. L. 115–174, § 307, added subpar. 

(C). 

2015—Subsec. (b)(2)(E)(iv)(I). Pub. L. 114–94 struck out 

‘‘predominantly’’ after ‘‘operates’’. 

2010—Pub. L. 111–203, §1100A(2), substituted ‘‘Bureau’’ 

for ‘‘Board’’ wherever appearing. 

Subsec. (b). Pub. L. 111–203, § 1412, added subsec. (b). 

Subsecs. (c) to (f). Pub. L. 111–203, §1414(a), added subsecs. (c) to (f). 

Subsec. (g). Pub. L. 111–203, §1414(c), added subsec. (g). 

Subsecs. (h), (i). Pub. L. 111–203, § 1414(d), added subsecs. (h) and (i). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by section 1100A(2) of Pub. L. 111–203 effective on the designated transfer date, see section 

1100H of Pub. L. 111–203, set out as a note under section 

552a of Title 5, Government Organization and Employees. 

Amendment by sections 1412 and 1414(a), (c), (d) of 

Pub. L. 111–203 effective on the date on which final regulations implementing that amendment take effect, or 

on the date that is 18 months after the designated 

transfer date, if such regulations have not been issued 

by that date, see section 1400(c) of Pub. L. 111–203, set 

out as a note under section 1601 of this title. 

EFFECTIVE DATE 

Section effective on the date on which final regulations implementing such section take effect, or on the 

date that is 18 months after the designated transfer 

date if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as an 

Effective Date of 2010 Amendment note under section 

1601 of this title. 

RULE OF CONSTRUCTION 

Pub. L. 111–203, title XIV, §1411(a)(1), July 21, 2010, 124 

Stat. 2142, provided that: ‘‘No regulation, order, or 

guidance issued by the Bureau under this title [see Tables for classification] shall be construed as requiring a 

depository institution to apply mortgage underwriting 

standards that do not meet the minimum underwriting 

standards required by the appropriate prudential regulator of the depository institution.’’ 

[For definitions of ‘‘Bureau’’ and ‘‘depository institution’’ as used in section 1411(a)(1) of Pub. L. 111–203, set 

out above, see section 5301 of Title 12, Banks and Banking.] 

§ 1639d. Escrow or impound accounts relating to 

certain consumer credit transactions 

(a) In general 

Except as provided in subsection (b), (c), (d), or 

(e), a creditor, in connection with the conVerDate 0ct 09 2002 10:22 Oct 12, 2021 Jkt 000000 PO 00000 Frm 01448 Fmt 5800 Sfmt 5800 D:\OLRC\DATA\PRINT\2018SUPP220\OUTPUT\PCC\FOLIOS\USC15.20 PROD 
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Page 1449 TITLE 15—COMMERCE AND TRADE § 1639d 

summation of a consumer credit transaction secured by a first lien on the principal dwelling of 

the consumer, other than a consumer credit 

transaction under an open end credit plan or a 

reverse mortgage, shall establish, before the 

consummation of such transaction, an escrow or 

impound account for the payment of taxes and 

hazard insurance, and, if applicable, flood insurance, mortgage insurance, ground rents, and any 

other required periodic payments or premiums 

with respect to the property or the loan terms, 

as provided in, and in accordance with, this section. 

(b) When required 

No 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 general 

The 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 institutions 

The 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 

account 

An 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 

Escrow accounts need not be established for 

loans secured by shares in a cooperative. Insurance premiums need not be included in escrow 

accounts for loans secured by dwellings or units, 

where the borrower must join an association as 

a condition of ownership, and that association 

has an obligation to the dwelling or unit owners 

to maintain a master policy insuring the dwellings or units. 

(f) Clarification on escrow accounts for loans not 

meeting statutory test 

For 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)]. 

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§ 1639d TITLE 15—COMMERCE AND TRADE Page 1450 

(g) Administration of mandatory escrow or impound accounts 

(1) In general 

Except as may otherwise be provided for in 

this subchapter or in regulations prescribed by 

the Bureau, escrow or impound accounts established pursuant to subsection (b) shall be 

established in a federally insured depository 

institution or credit union. 

(2) Administration 

Except 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 

If prescribed by applicable State or Federal 

law, each creditor shall pay interest to the 

consumer on the amount held in any impound, 

trust, or escrow account that is subject to this 

section in the manner as prescribed by that 

applicable State or Federal law. 

(4) Penalty coordination with RESPA 

Any action or omission on the part of any 

person which constitutes a violation of the 

Real Estate Settlement Procedures Act of 1974 

or any regulation prescribed under such Act 

for which the person has paid any fine, civil 

money penalty, or other damages shall not 

give rise to any additional fine, civil money 

penalty, or other damages under this section, 

unless the action or omission also constitutes 

a direct violation of this section. 

(h) Disclosures relating to mandatory escrow or 

impound account 

In 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) Definitions 

For purposes of this section, the following 

definitions shall apply: 

(1) Flood insurance 

The term ‘‘flood insurance’’ means flood insurance coverage provided under the national 

flood insurance program pursuant to the National Flood Insurance Act of 1968 [42 U.S.C. 

4001 et seq.]. 

(2) Hazard insurance 

The term ‘‘hazard insurance’’ shall have the 

same meaning as provided for ‘‘hazard insurance’’, ‘‘casualty insurance’’, ‘‘homeowner’s 

insurance’’, or other similar term under the 

law of the State where the real property securing the consumer credit transaction is located. 

(3) Insured credit union 

The term ‘‘insured credit union’’ has the 

meaning given the term in section 1752 of title 

12. 

(4) Insured depository institution 

The term ‘‘insured depository institution’’ 

has the meaning given the term in section 1813 

of title 12. 

(j) Disclosure notice required for consumers who 

waive escrow services 

(1) In general 

If— 

(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) Disclosure requirements 

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 nonVerDate 0ct 09 2002 10:22 Oct 12, 2021 Jkt 000000 PO 00000 Frm 01450 Fmt 5800 Sfmt 5800 D:\OLRC\DATA\PRINT\2018SUPP220\OUTPUT\PCC\FOLIOS\USC15.20 PROD 
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Page 1451 TITLE 15—COMMERCE AND TRADE § 1639e 

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.) 

REFERENCES IN TEXT 

This part, referred to in subsec. (c)(1)(D), was in the 

original ‘‘this subtitle’’, and was translated as reading 

‘‘this chapter’’, meaning chapter 2 of title I of Pub. L. 

90–321, to reflect the probable intent of Congress. Title 

I of Pub. L. 90–321 does not contain subtitles. 

The Real Estate Settlement Procedures Act of 1974, 

referred to in subsec. (g)(2)(A), (4), is Pub. L. 93–533, 

Dec. 22, 1974, 88 Stat. 1724, which is classified principally to chapter 27 (§2601 et seq.) of Title 12, Banks 

and Banking. For complete classification of this Act to 

the Code, see Short Title note set out under section 

2601 of Title 12 and Tables. 

The Flood Disaster Protection Act of 1973, referred to 

in subsec. (g)(2)(B), is Pub. L. 93–234, Dec. 31, 1973, 87 

Stat. 975. For complete classification of this Act to the 

Code, see Short Title of 1973 Amendment note set out 

under section 4001 of Title 42, The Public Health and 

Welfare, and Tables. 

The National Flood Insurance Act of 1968, referred to 

in subsec. (i)(1), is title XIII of Pub. L. 90–448, Aug. 1, 

1968, 82 Stat. 572, which is classified principally to chapter 50 (§ 4001 et seq.) of Title 42, The Public Health and 

Welfare. For complete classification of this Act to the 

Code, see Short Title note set out under section 4001 of 

Title 42 and Tables. 

AMENDMENTS 

2018—Subsec. (c). Pub. L. 115–174, § 108(1)(A), (B), (D), 

designated existing provisions as par. (1) and inserted 

heading, redesignated former pars. (1) to (4) as subpars. 

(A) to (D), respectively, of par. (1) and realigned margins, and added par. (2). 

Subsec. (c)(1). Pub. L. 115–174, §108(1)(B), (C), which 

directed substitution of ‘‘The Bureau’’ for ‘‘The Board’’ 

in introductory provisions, and ‘‘the Bureau’’ for ‘‘the 

Board’’ wherever appearing, duplicated the amendment 

made by Pub. L. 111–203, § 1100A(2), which had already 

been executed. See 2010 Amendment note below. 

Subsec. (i)(3), (4). Pub. L. 115–174, §108(2), added pars. 

(3) and (4). 

2015—Subsec. (c)(1). Pub. L. 114–94 struck out ‘‘predominantly’’ after ‘‘operates’’. 

2010—Pub. L. 111–203, §1100A(2), which directed substitution of ‘‘Bureau’’ for ‘‘Board’’ wherever appearing in 

Pub. L. 90–321, was executed to this section, which was 

added to Pub. L. 90–321 by section 1461(a) of Pub. L. 

111–203. 

Subsec. (j). Pub. L. 111–203, § 1462, added subsec. (j). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by section 1100A(2) of Pub. L. 111–203 effective on the designated transfer date, see section 

1100H of Pub. L. 111–203, set out as a note under section 

552a of Title 5, Government Organization and Employees. 

Amendment by section 1462 of Pub. L. 111–203 effective on the date on which final regulations implementing that amendment take effect, or on the date 

that is 18 months after the designated transfer date if 

such regulations have not been issued by that date, see 

section 1400(c) of Pub. L. 111–203, set out as a note under 

section 1601 of this title. 

EFFECTIVE DATE 

Section effective on the date on which final regulations implementing such section take effect, or on the 

date that is 18 months after the designated transfer 

date if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as an 

Effective Date of 2010 Amendment note under section 

1601 of this title. 

EXEMPTIONS AND MODIFICATIONS 

Pub. L. 111–203, title XIV, § 1461(b), July 21, 2010, 124 

Stat. 2181, provided that: ‘‘The Board may prescribe 

rules that revise, add to, or subtract from the criteria 

of section 129D(b) of the Truth in Lending Act [15 

U.S.C. 1639d(b)] if the Board determines that such rules 

are in the interest of consumers and in the public interest.’’ 

§ 1639e. Appraisal independence requirements 

(a) In general 

It shall be unlawful, in extending credit or in 

providing any services for a consumer credit 

transaction secured by the principal dwelling of 

the consumer, to engage in any act or practice 

that violates appraisal independence as described in or pursuant to regulations prescribed 

under this section. 

(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 

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§ 1639e TITLE 15—COMMERCE AND TRADE Page 1452 

(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 

No certified or licensed appraiser conducting, 

and no appraisal management company procuring or facilitating, an appraisal in connection with a consumer credit transaction secured 

by the principal dwelling of a consumer may 

have a direct or indirect interest, financial or 

otherwise, in the property or transaction involving the appraisal. 

(e) Mandatory reporting 

Any mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal 

management company, or any other person involved in a real estate transaction involving an 

appraisal in connection with a consumer credit 

transaction secured by the principal dwelling of 

a consumer who has a reasonable basis to believe an appraiser is failing to comply with the 

Uniform Standards of Professional Appraisal 

Practice, is violating applicable laws, or is otherwise engaging in unethical or unprofessional 

conduct, shall refer the matter to the applicable 

State appraiser certifying and licensing agency. 

(f) No extension of credit 

In connection with a consumer credit transaction secured by a consumer’s principal dwelling, a creditor who knows, at or before loan consummation, of a violation of the appraisal independence standards established in subsections 1 

(b) or (d) shall not extend credit based on such 

appraisal unless the creditor documents that the 

creditor has acted with reasonable diligence to 

determine that the appraisal does not materially misstate or misrepresent the value of such 

dwelling. 

(g) Rules and interpretive guidelines 

(1) In general 

Except as provided under paragraph (2), the 

Board, the Comptroller of the Currency, the 

Federal Deposit Insurance Corporation, the 

National Credit Union Administration Board, 

the Federal Housing Finance Agency, and the 

1So in original. Probably should be ‘‘subsection’’. 

Bureau may jointly issue rules, interpretive 

guidelines, and general statements of policy 

with respect to acts or practices that violate 

appraisal independence in the provision of 

mortgage lending services for a consumer 

credit transaction secured by the principal 

dwelling of the consumer and mortgage brokerage services for such a transaction, within 

the meaning of subsections (a), (b), (c), (d), (e), 

(f), (h), and (i). 

(2) Interim final regulations 

The Board shall, for purposes of this section, 

prescribe interim final regulations no later 

than 90 days after July 21, 2010, defining with 

specificity acts or practices that violate appraisal independence in the provision of mortgage lending services for a consumer credit 

transaction secured by the principal dwelling 

of the consumer or mortgage brokerage services for such a transaction and defining any 

terms in this section or such regulations. 

Rules prescribed by the Board under this paragraph shall be deemed to be rules prescribed 

by the agencies jointly under paragraph (1). 

(h) Appraisal report portability 

Consistent with the requirements of this section, the Board, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration 

Board, the Federal Housing Finance Agency, 

and the Bureau may jointly issue regulations 

that address the issue of appraisal report portability, including regulations that ensure the 

portability of the appraisal report between lenders for a consumer credit transaction secured by 

a 1-4 unit single family residence that is the 

principal dwelling of the consumer, or mortgage 

brokerage services for such a transaction. 

(i) Customary and reasonable fee 

(1) In general 

Lenders and their agents shall compensate 

fee appraisers at a rate that is customary and 

reasonable for appraisal services performed in 

the market area of the property being appraised. Evidence for such fees may be established by objective third-party information, 

such as government agency fee schedules, academic studies, and independent private sector 

surveys. Fee studies shall exclude assignments 

ordered by known appraisal management companies. 

(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 

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Page 1453 TITLE 15—COMMERCE AND TRADE § 1639h 

performing appraisals in accordance with 

the Uniform Standards of Professional Appraisal Practice. 

(B) Rule of construction related to appraisal 

donations 

If a fee appraiser voluntarily donates appraisal services to an organization eligible 

to receive tax-deductible charitable contributions, such voluntary donation shall be 

considered customary and reasonable for the 

purposes of paragraph (1). 

(3) Exception for complex assignments 

In the case of an appraisal involving a complex assignment, the customary and reasonable fee may reflect the increased time, difficulty, and scope of the work required for 

such an appraisal and include an amount over 

and above the customary and reasonable fee 

for non-complex assignments. 

(j) Sunset 

Effective on the date the interim final regulations are promulgated pursuant to subsection 

(g), the Home Valuation Code of Conduct announced by the Federal Housing Finance Agency 

on December 23, 2008, shall have no force or effect. 

(k) Penalties 

(1) First violation 

In addition to the enforcement provisions referred to in section 1640 of this title, each person who violates this section shall forfeit and 

pay a civil penalty of not more than $10,000 for 

each day any such violation continues. 

(2) Subsequent violations 

In the case of any person on whom a civil 

penalty has been imposed under paragraph (1), 

paragraph (1) shall be applied by substituting 

‘‘$20,000’’ for ‘‘$10,000’’ with respect to all subsequent violations. 

(3) Assessment 

The agency referred to in subsection (a) or 

(c) of section 1607 of this title with respect to 

any person described in paragraph (1) shall assess any penalty under this subsection to 

which such person is subject. 

(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.) 

AMENDMENTS 

2018—Subsec. (i)(2). Pub. L. 115–174 designated existing provisions as subpar. (A) and inserted heading, redesignated former subpars. (A) and (B) as cls. (i) and 

(ii), respectively, of subpar. (A) and realigned margins, 

and added subpar. (B). 

EFFECTIVE DATE 

Section effective on the date on which final regulations implementing such section take effect, or on the 

date that is 18 months after the designated transfer 

date if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as an 

Effective Date of 2010 Amendment note under section 

1601 of this title. 

§ 1639f. Requirements for prompt crediting of 

home loan payments 

(a) In general 

In connection with a consumer credit transaction secured by a consumer’s principal dwelling, no servicer shall fail to credit a payment to 

the consumer’s loan account as of the date of receipt, except when a delay in crediting does not 

result in any charge to the consumer or in the 

reporting of negative information to a consumer 

reporting agency, except as required in subsection (b). 

(b) Exception 

If a servicer specifies in writing requirements 

for the consumer to follow in making payments, 

but accepts a payment that does not conform to 

the requirements, the servicer shall credit the 

payment as of 5 days after receipt. 

(Pub. L. 90–321, title I, § 129F, as added Pub. L. 

111–203, title XIV, § 1464(a), July 21, 2010, 124 Stat. 

2184.) 

EFFECTIVE DATE 

Section effective on the date on which final regulations implementing such section take effect, or on the 

date that is 18 months after the designated transfer 

date if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as an 

Effective Date of 2010 Amendment note under section 

1601 of this title. 

§ 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.) 

EFFECTIVE DATE 

Section effective on the date on which final regulations implementing such section take effect, or on the 

date that is 18 months after the designated transfer 

date if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as an 

Effective Date of 2010 Amendment note under section 

1601 of this title. 

§ 1639h. Property appraisal requirements 

(a) In general 

A creditor may not extend credit in the form 

of a higher-risk mortgage to any consumer without first obtaining a written appraisal of the 

property to be mortgaged prepared in accordance with the requirements of this section. 

(b) Appraisal requirements 

(1) Physical property visit 

Subject to the rules prescribed under paragraph (4), an appraisal of property to be secured by a higher-risk mortgage does not meet 

the requirement of this section unless it is 

performed by a certified or licensed appraiser 

who conducts a physical property visit of the 

interior of the mortgaged property. 

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§ 1640 TITLE 15—COMMERCE AND TRADE Page 1454 

(2) Second appraisal under certain circumstances 

(A) In general 

If the purpose of a higher-risk mortgage is 

to finance the purchase or acquisition of the 

mortgaged property from a person within 180 

days of the purchase or acquisition of such 

property by that person at a price that was 

lower than the current sale price of the property, the creditor shall obtain a second appraisal from a different certified or licensed 

appraiser. The second appraisal shall include 

an analysis of the difference in sale prices, 

changes in market conditions, and any improvements made to the property between 

the date of the previous sale and the current 

sale. 

(B) No cost to applicant 

The cost of any second appraisal required 

under subparagraph (A) may not be charged 

to the applicant. 

(3) Certified or licensed appraiser defined 

For 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 

The Board, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau shall jointly 

prescribe regulations to implement this section. 

(B) Exemption 

The agencies listed in subparagraph (A) 

may jointly exempt, by rule, a class of loans 

from the requirements of this subsection or 

subsection (a) if the agencies determine that 

the exemption is in the public interest and 

promotes the safety and soundness of creditors. 

(c) Free copy of appraisal 

A creditor shall provide 1 copy of each appraisal conducted in accordance with this section in connection with a higher-risk mortgage 

to the applicant without charge, and at least 3 

days prior to the transaction closing date. 

(d) Consumer notification 

At the time of the initial mortgage application, the applicant shall be provided with a 

statement by the creditor that any appraisal 

prepared for the mortgage is for the sole use of 

the creditor, and that the applicant may choose 

to have a separate appraisal conducted at the 

expense of the applicant. 

(e) Violations 

In addition to any other liability to any person under this subchapter, a creditor found to 

have willfully failed to obtain an appraisal as required in this section shall be liable to the applicant or borrower for the sum of $2,000. 

(f) Higher-risk mortgage defined 

For purposes of this section, the term ‘‘higherrisk 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.) 

REFERENCES IN TEXT 

The Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989, referred to in subsec. (b)(3)(B), 

is Pub. L. 101–73, Aug. 9, 1989, 103 Stat. 183. Title XI of 

the Act is classified principally to chapter 34A (§ 3331 et 

seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see Short Title of 

1989 Amendment note set out under section 1811 of Title 

12 and Tables. 

EFFECTIVE DATE 

Section effective on the date on which final regulations implementing such section take effect, or on the 

date that is 18 months after the designated transfer 

date if such regulations have not been issued by that 

date, see section 1400(c) of Pub. L. 111–203, set out as an 

Effective Date of 2010 Amendment note under section 

1601 of this title. 

§ 1640. Civil liability 

(a) Individual or class action for damages; 

amount of award; factors determining 

amount of award 

Except 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, 

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Page 1455 TITLE 15—COMMERCE AND TRADE § 1640 

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 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 of this title, or any of paragraphs 

(4) through (13) of section 1637(b) of this title, or 

1So in original. The semicolon probably should be a comma. 

2So in original. Probably should be preceded by ‘‘section’’. 

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 

A creditor or assignee has no liability under 

this section or section 1607 of this title or section 1611 of this title for any failure to comply 

with any requirement imposed under this part 

or part E, if within sixty days after discovering 

an error, whether pursuant to a final written examination report or notice issued under section 

1607(e)(1) of this title or through the creditor’s 

or assignee’s own procedures, and prior to the 

institution of an action under this section or the 

receipt of written notice of the error from the 

obligor, the creditor or assignee notifies the person concerned of the error and makes whatever 

adjustments in the appropriate account are necessary to assure that the person will not be required to pay an amount in excess of the charge 

actually disclosed, or the dollar equivalent of 

the annual percentage rate actually disclosed, 

whichever is lower. 

(c) Unintentional violations; bona fide errors 

A creditor or assignee may not be held liable 

in any action brought under this section or section 1635 of this title for a violation of this subchapter if the creditor or assignee shows by a 

preponderance of evidence that the violation 

was not intentional and resulted from a bona 

fide error notwithstanding the maintenance of 

procedures reasonably adapted to avoid any 

such error. Examples of a bona fide error include, but are not limited to, clerical, calculaVerDate 0ct 09 2002 10:22 Oct 12, 2021 Jkt 000000 PO 00000 Frm 01455 Fmt 5800 Sfmt 5800 D:\OLRC\DATA\PRINT\2018SUPP220\OUTPUT\PCC\FOLIOS\USC15.20 PROD 
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§ 1640 TITLE 15—COMMERCE AND TRADE Page 1456 

tion, computer malfunction and programing, 

and printing errors, except that an error of legal 

judgment with respect to a person’s obligations 

under this subchapter is not a bona fide error. 

(d) Liability in transaction or lease involving 

multiple obligors 

When there are multiple obligors in a consumer credit transaction or consumer lease, 

there shall be no more than one recovery of 

damages under subsection (a)(2) for a violation 

of this subchapter. 

(e) Jurisdiction of courts; limitations on actions; 

State attorney general enforcement 

Except 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 

No provision of this section, section 1607(b) of 

this title, section 1607(c) of this title, section 

1607(e) of this title, or section 1611 of this title 

imposing any liability shall apply to any act 

done or omitted in good faith in conformity 

with any rule, regulation, or interpretation 

thereof by the Bureau or in conformity with any 

interpretation or approval by an official or employee of the Federal Reserve System duly authorized by the Bureau to issue such interpretations or approvals under such procedures as the 

Bureau may prescribe therefor, notwithstanding 

that after such act or omission has occurred, 

such rule, regulation, interpretation, or approval is amended, rescinded, or determined by 

judicial or other authority to be invalid for any 

reason. 

(g) Recovery for multiple failures to disclose 

The multiple failure to disclose to any person 

any information required under this part or part 

D or E of this subchapter to be disclosed in connection with a single account under an open end 

consumer credit plan, other single consumer 

credit sale, consumer loan, consumer lease, or 

other extension of consumer credit, shall entitle 

the person to a single recovery under this section but continued failure to disclose after a recovery has been granted shall give rise to rights 

to additional recoveries. This subsection does 

not bar any remedy permitted by section 1635 of 

this title. 

(h) Offset from amount owed to creditor or assignee; rights of defaulting consumer 

A person may not take any action to offset 

any amount for which a creditor or assignee is 

potentially liable to such person under subsection (a)(2) against any amount owed by such 

person, unless the amount of the creditor’s or 

assignee’s liability under this subchapter has 

been determined by judgment of a court of competent jurisdiction in an action of which such 

person was a party. This subsection does not bar 

a consumer then in default on the obligation 

from asserting a violation of this subchapter as 

an original action, or as a defense or counterclaim to an action to collect amounts owed by 

the consumer brought by a person liable under 

this subchapter. 

(i) Class action moratorium 

(1) In general 

During 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. 

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Page 1457 TITLE 15—COMMERCE AND TRADE § 1640 

(2) Exceptions for certain alleged violations 

Paragraph (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 

A private educational lender (as that term is 

defined in section 1650(a) of this title) has no liability under this section for failure to comply 

with section 1638(e)(3) of this title).3 

(k) Defense to foreclosure 

(1) In general 

Notwithstanding any other provision of law, 

when a creditor, assignee, or other holder of a 

residential mortgage loan or anyone acting on 

behalf of such creditor, assignee, or holder, 

initiates a judicial or nonjudicial foreclosure 

of the residential mortgage loan, or any other 

action to collect the debt in connection with 

such loan, a consumer may assert a violation 

by a creditor of paragraph (1) or (2) of section 

1639b(c) of this title, or of section 1639c(a) of 

this title, as a matter of defense by 

recoupment or set off without regard for the 

time limit on a private action for damages 

under subsection (e). 

(2) Amount of recoupment or setoff 

(A) In general 

The amount of recoupment or set-off under 

paragraph (1) shall equal the amount to 

which the consumer would be entitled under 

subsection (a) for damages for a valid claim 

brought in an original action against the 

creditor, plus the costs to the consumer of 

the action, including a reasonable attorney’s 

fee. 

(B) Special rule 

Where such judgment is rendered after the 

expiration of the applicable time limit on a 

private action for damages under subsection 

(e), the amount of recoupment or set-off 

under paragraph (1) derived from damages 

under subsection (a)(4) shall not exceed the 

amount to which the consumer would have 

been entitled under subsection (a)(4) for 

damages computed up to the day preceding 

the expiration of the applicable time limit. 

(l) Exemption from liability and rescission in 

case of borrower fraud or deception 

In addition to any other remedy available by 

law or contract, no creditor or assignee shall be 

liable to an obligor under this section, if such 

obligor, or co-obligor has been convicted of obtaining by actual fraud such residential mortgage loan. 

3So in original. The closing parenthesis probably should not 

appear. 

(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.) 

AMENDMENTS 

2010—Pub. L. 111–203, §1100A(2), substituted ‘‘Bureau’’ 

for ‘‘Board’’ wherever appearing. 

Subsec. (a)(2)(A)(ii). Pub. L. 111–203, §1416(a)(1), substituted ‘‘$200’’ for ‘‘$100’’ and ‘‘$2,000’’ for ‘‘$1,000’’. 

Subsec. (a)(2)(B). Pub. L. 111–203, § 1416(a)(2), substituted ‘‘$1,000,000’’ for ‘‘$500,000’’. 

Subsec. (a)(4). Pub. L. 111–203, § 1416(a)(3), inserted 

‘‘, paragraph (1) or (2) of section 1639b(c) of this title, or 

section 1639c(a) of this title’’ after ‘‘section 1639 of this 

title’’. 

Subsec. (e). Pub. L. 111–203, §1422, substituted ‘‘section 1639, 1639b, 1639c, 1639d, 1639e, 1639f, 1639g, or 1639h 

of this title may also’’ for ‘‘section 1639 of this title 

may also’’. 

Pub. L. 111–203, § 1416(b), in first sentence substituted 

‘‘Except as provided in the subsequent sentence, any 

action’’ for ‘‘Any action’’ and inserted after first sentence ‘‘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.’’ 

Subsec. (k). Pub. L. 111–203, §1413, added subsec. (k). 

Subsec. (l). Pub. L. 111–203, §1417, added subsec. (l). 

2009—Subsec. (a). Pub. L. 111–24, §201(b), in concluding 

provisions, substituted ‘‘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) 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 Board 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.’’ 

for ‘‘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, section 1637(a) of this 

title, or of paragraph (4), (5), (6), (7), (8), (9), or (10) of 

section 1637(b) of this title or for failing to comply with 

disclosure requirements under State law for any term 

or item which the Board 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 those paragraphs 

of section 1637(b) of this title.’’ 

Pub. L. 111–22, § 404(b), which directed insertion of 

‘‘subsection (f) or (g) of section 1641 of this title,’’ after 

‘‘section 1635 of this title,’’, was executed by making 

the insertion only in the introductory provisions to reflect the probable intent of Congress. 

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§ 1640 TITLE 15—COMMERCE AND TRADE Page 1458 

Subsec. (a)(2)(A)(iii), (iv). Pub. L. 111–24, §107, added 

cl. (iii) and redesignated former cl. (iii) as (iv). 

2008—Subsec. (a). Pub. L. 110–315, § 1012(a)(1)(B), in 

fourth sentence of concluding provisions, substituted 

‘‘1635 of this title,’’ for ‘‘1635 of this title or’’ and inserted ‘‘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,’’ before ‘‘or for failing’’. 

Pub. L. 110–289, §2502(b)(2), in concluding provisions, 

inserted ‘‘or section 1638(b)(2)(C)(ii) of this title,’’ before ‘‘or for failing to comply’’ and ‘‘or section 

1638(b)(2)(C)(ii) of this title’’ before ‘‘. With respect to’’. 

Subsec. (a)(2)(A)(iii). Pub. L. 110–289, §2502(b)(1), substituted ‘‘not less than $400 or greater than $4,000’’ for 

‘‘not less than $200 or greater than $2,000’’. 

Subsec. (a)(3). Pub. L. 110–315, §1012(a)(1)(A), inserted 

‘‘or 1638(e)(7)’’ after ‘‘section 1635’’. 

Subsec. (e). Pub. L. 110–315, § 1012(a)(2), inserted before 

period at end of first sentence ‘‘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’’. 

Subsec. (j). Pub. L. 110–315, §1012(a)(3), added subsec. 

(j). 

1995—Subsec. (a)(2)(A)(iii). Pub. L. 104–29 added cl. 

(iii). 

Subsec. (i). Pub. L. 104–12 added subsec. (i). 

1994—Subsec. (a)(4). Pub. L. 103–325, § 153(a), added 

par. (4). 

Subsec. (e). Pub. L. 103–325, §153(b), inserted at end 

‘‘An action to enforce a violation of section 1639 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.’’ 

1988—Subsec. (a). Pub. L. 100–583 substituted ‘‘in subsections (a) and (b) of section 1637’’ for ‘‘in section 1637’’ 

in third sentence and inserted provisions limiting liability of card issuer under this section to cardholders 

who pay fee or use credit card or charge card. 

1980—Subsec. (a). Pub. L. 96–221, §615(b), in introductory text inserted provisions respecting applicability of 

section 1635 of this title, and in text following numbered pars. inserted provisions relating to disclosures 

required under sections 1637 and 1638 of this title. 

Subsec. (a)(2)(B). Pub. L. 96–221, §615(a)(1), substituted 

provisions respecting recovery under this subparagraph 

in any class action or series of class actions, for provisions respecting recovery in a class action. 

Subsec. (a)(3). Pub. L. 96–221, § 615(a)(2), inserted provisions relating to right of rescission under section 1635 

of this title. 

Subsec. (b). Pub. L. 96–221, § 615(a)(3), substituted provisions relating to correction of errors within sixty 

days by a creditor or assignee, for provisions relating 

to correction of errors within fifteen days by a creditor. 

Subsec. (c). Pub. L. 96–221, §615(a)(3), substituted provisions relating to liability of a creditor or assignee in 

any action brought under this section or section 1635 of 

this title, for provisions relating to liability of a creditor in any action brought under this section. 

Subsec. (d). Pub. L. 96–221, § 615(a)(3), substituted provisions relating to liability in transaction or lease involving multiple obligors, for provisions relating to liability of subsequent assignees original creditor. 

Subsec. (e). Pub. L. 96–221, §615(a)(4), inserted provisions relating to limitations on actions. 

Subsec. (f). Pub. L. 96–221, § 615(a)(5), inserted references to section 1607(b), (c), and (e) of this title. 

Subsec. (g). Pub. L. 96–221, § 615(a)(6), inserted provisions relating to remedy under section 1635 of this title. 

Subsec. (h). Pub. L. 96–221, §615(a)(7), substituted provisions relating to offset from amounts owed to the 

creditor or assignee, and rights of defaulting consumer, 

for provisions relating to offset from amounts owed to 

the creditor. 

1976—Subsec. (a). Pub. L. 94–240, § 4(1), inserted ‘‘or E’’ 

after ‘‘part D’’. 

Subsec. (a)(2)(A). Pub. L. 94–240, § 4(2), designated existing provision as cl. (i) and added cl. (ii). 

Subsec. (a)(2)(B). Pub. L. 94–240, §4(3), substituted 

‘‘lesser of $500,000’’ for ‘‘lesser of $100,000’’. 

Subsec. (b). Pub. L. 94–240, §4(4), inserted ‘‘or part E 

of this subchapter’’ after ‘‘this part’’ and struck out 

‘‘finance’’ after ‘‘required to pay a’’. 

Subsec. (f). Pub. L. 94–222 inserted ‘‘or in conformity 

with any interpretation or approval by an official or 

employee of the Federal Reserve System duly authorized by the Board to issue such interpretations or approvals under such procedures as the Board may prescribe therefor’’ after ‘‘by the Board’’, and substituted 

‘‘interpretation, or approval’’ for ‘‘or interpretation’’ 

before ‘‘is amended’’. 

Subsec. (g). Pub. L. 94–240, § 4(5), inserted ‘‘or part D 

or E of this subchapter’’ after ‘‘this part’’, and ‘‘consumer lease’’ after ‘‘consumer loan’’. 

1974—Subsec. (a). Pub. L. 93–495, §408(a), substituted 

provisions setting forth determination of amount of liability of any creditor failing to comply with any requirement imposed under part D of this subchapter or 

this part, for provisions setting forth determination of 

amount of liability of any creditor failing to disclose in 

connection with any consumer credit transaction any 

information required under this part to be disclosed to 

specified persons. 

Subsec. (b). Pub. L. 93–495, §408(b), inserted ‘‘for any 

failure to comply with any requirement imposed under 

this part,’’ before ‘‘if within’’. 

Subsec. (c). Pub. L. 93–495, §408(c), substituted ‘‘subchapter’’ for ‘‘part’’. 

Subsec. (f). Pub. L. 93–495, § 406, added subsec. (f). 

Subsec. (g). Pub. L. 93–495, §407, added subsec. (g). 

Subsec. (h). Pub. L. 93–495, § 408(d), added subsec. (h). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by section 1100A(2) of Pub. L. 111–203 effective on the designated transfer date, see section 

1100H of Pub. L. 111–203, set out as a note under section 

552a of Title 5, Government Organization and Employees. 

Amendment by sections 1413, 1416, 1417, and 1422 of 

Pub. L. 111–203 effective on the date on which final regulations implementing that amendment take effect, or 

on the date that is 18 months after the designated 

transfer date, if such regulations have not been issued 

by that date, see section 1400(c) of Pub. L. 111–203, set 

out as a note under section 1601 of this title. 

EFFECTIVE DATE OF 2009 AMENDMENT 

Amendment by Pub. L. 111–24 effective 9 months after 

May 22, 2009, except as otherwise specifically provided, 

see section 3 of Pub. L. 111–24, set out as a note under 

section 1602 of this title. 

EFFECTIVE DATE OF 2008 AMENDMENT 

Pub. L. 110–315, title X, § 1012(b), Aug. 14, 2008, 122 

Stat. 3482, provided that: ‘‘The amendments made by 

this section [amending this section] shall have the 

same effective date as provisions referred to in section 

1003(b) [set out as a note under section 1638 of this 

title].’’ 

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Page 1459 TITLE 15—COMMERCE AND TRADE § 1641 

EFFECTIVE DATE OF 1980 AMENDMENT (d) Rights upon assignment of certain mortgages 

Amendment by Pub. L. 96–221 effective on expiration (1) In general 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

EFFECTIVE DATE OF 1976 AMENDMENT 

Amendment by Pub. L. 94–240 effective on expiration 

of one year after Mar. 23, 1976, see section 6 of Pub. L. 

94–240, set out as an Effective Date note under section 

1667 of this title. 

EFFECTIVE DATE OF 1974 AMENDMENT 

Amendment by Pub. L. 93–495 effective Oct. 28, 1974, 

see section 416 of Pub. L. 93–495, set out as an Effective 

Date note under section 1665a of this title. 

DETERMINATION OF LIABILITY PRIOR TO OCTOBER 28, 

1974 

Pub. L. 93–495, title IV, §408(e), Oct. 28, 1974, 88 Stat. 

1519, provided that: ‘‘The amendments made by sections 

406, 407, and 408 [amending this section] shall apply in 

determining the liability of any person under chapter 2 

or 4 of the Truth in Lending Act [this part or part D of 

this subchapter], unless prior to the date of enactment 

of this Act [Oct. 28, 1974] such liability has been determined by final judgment of a court of competent jurisdiction and no further review of such judgment may be 

had by appeal or otherwise.’’ 

§ 1641. Liability of assignees 

(a) Prerequisites 

Except as otherwise specifically provided in 

this subchapter, any civil action for a violation 

of this subchapter or proceeding under section 

1607 of this title which may be brought against 

a creditor may be maintained against any assignee of such creditor only if the violation for 

which such action or proceeding is brought is 

apparent on the face of the disclosure statement, except where the assignment was involuntary. For the purpose of this section, a violation 

apparent on the face of the disclosure statement 

includes, but is not limited to (1) a disclosure 

which can be determined to be incomplete or inaccurate from the face of the disclosure statement or other documents assigned, or (2) a disclosure which does not use the terms required to 

be used by this subchapter. 

(b) Proof of compliance with statutory provisions 

Except as provided in section 1635(c) of this 

title, in any action or proceeding by or against 

any subsequent assignee of the original creditor 

without knowledge to the contrary by the assignee when he acquires the obligation, written 

acknowledgement of receipt by a person to 

whom a statement is required to be given pursuant to this subchapter shall be conclusive proof 

of the delivery thereof and, except as provided in 

subsection (a), of compliance with this part. 

This section does not affect the rights of the obligor in any action against the original creditor. 

(c) Right of rescission by consumer unaffected 

Any consumer who has the right to rescind a 

transaction under section 1635 of this title may 

rescind the transaction as against any assignee 

of the obligation. 

Any person who purchases or is otherwise 

assigned a mortgage referred to in section 

1602(aa) 1 of this title shall be subject to all 

claims and defenses with respect to that mortgage that the consumer could assert against 

the creditor of the mortgage, unless the purchaser or assignee demonstrates, by a preponderance of the evidence, that a reasonable person exercising ordinary due diligence, could 

not determine, based on the documentation required by this subchapter, the itemization of 

the amount financed, and other disclosure of 

disbursements that the mortgage was a mortgage referred to in section 1602(aa) 1 of this 

title. The preceding sentence does not affect 

rights of a consumer under subsection (a), (b), 

or (c) of this section or any other provision of 

this subchapter. 

(2) Limitation on damages 

Notwithstanding 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 

The amount of damages that may be awarded under paragraph (2)(B) shall be reduced by 

the amount of any damages awarded under 

paragraph (2)(A). 

(4) Notice 

Any person who sells or otherwise assigns a 

mortgage referred to in section 1602(aa) 1 of 

this title shall include a prominent notice of 

the potential liability under this subsection as 

determined by the Bureau. 

(e) Liability of assignee for consumer credit 

transactions secured by real property 

(1) In general 

Except 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 described 

For the purpose of this section, a violation is 

apparent on the face of the disclosure statement if— 

1See References in Text note below. 

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§ 1642 TITLE 15—COMMERCE AND TRADE Page 1460 

(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 

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 

2605(i)(2) of title 12. 

(4) Applicability 

This subsection shall apply to all consumer 

credit transactions in existence or consummated on or after September 30, 1995. 

(g) Notice of new creditor 

(1) In general 

In 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 

As used in this subsection, the term ‘‘mortgage loan’’ means any consumer credit transaction that is secured by the principal dwelling of a consumer. 

(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.) 

REFERENCES IN TEXT 

Section 1602(aa) of this title, referred to in subsec. 

(d)(1), (4), was redesignated section 1602(bb) of this title 

by Pub. L. 111–203, title X, § 1100A(1)(A), July 21, 2010, 

124 Stat. 2107. 

AMENDMENTS 

2010—Subsec. (d)(4). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’. 

2009—Subsec. (g). Pub. L. 111–22 added subsec. (g). 

1995—Subsec. (e). Pub. L. 104–29, § 7(a), added subsec. 

(e). 

Subsec. (f). Pub. L. 104–29, § 7(b), added subsec. (f). 

1994—Subsec. (d). Pub. L. 103–325 added subsec. (d). 

1980—Pub. L. 96–221 added subsecs. (a) and (c), designated existing provisions as subsec. (b), substituted 

‘‘excepted as provided in subsection (a)’’ for ‘‘unless the 

violation is apparent on the face of the statement’’, and 

struck out exception for actions under section 1640(d) of 

this title. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

§ 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.) 

EFFECTIVE DATE 

Pub. L. 91–508, title V, §503(1), Oct. 26, 1970, 84 Stat. 

1127, provided that: ‘‘Section 132 of such Act [this section] takes effect on date of enactment of this title 

[Oct. 26, 1970].’’ 

§ 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 

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Page 1461 TITLE 15—COMMERCE AND TRADE § 1644 

quired 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 

In any action by a card issuer to enforce liability for the use of a credit card, the burden of 

proof is upon the card issuer to show that the 

use was authorized or, if the use was unauthorized, then the burden of proof is upon the card 

issuer to show that the conditions of liability 

for the unauthorized use of a credit card, as set 

forth in subsection (a), have been met. 

(c) Liability imposed by other laws or by agreement with issuer 

Nothing in this section imposes liability upon 

a cardholder for the unauthorized use of a credit 

card in excess of his liability for such use under 

other applicable law or under any agreement 

with the card issuer. 

(d) Exclusiveness of liability 

Except as provided in this section, a cardholder incurs no liability from the unauthorized 

use of a credit card. 

(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.) 

AMENDMENTS 

1980—Subsec. (a). Pub. L. 96–221 revised existing provisions into pars. (1) and (2) and, as so revised, in par. 

(1) made changes in structure and phraseology and revised means of notice and verification, and in par. (2) 

made changes in phraseology. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

EFFECTIVE DATE 

Pub. L. 91–508, title V, §503(2), Oct. 26, 1970, 84 Stat. 

1127, provided that: ‘‘Section 133 of such Act [this section] takes effect upon the expiration of 90 days after 

such date of enactment [Oct. 26, 1970].’’ 

§ 1644. Fraudulent use of credit cards; penalties 

(a) Use, attempt or conspiracy to use card in 

transaction affecting interstate or foreign 

commerce 

Whoever knowingly in a transaction affecting 

interstate or foreign commerce, uses or attempts or conspires to use any counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained credit card to obtain money, 

goods, services, or anything else of value which 

within any one-year period has a value aggregating $1,000 or more; or 

(b) Transporting, attempting or conspiring to 

transport card in interstate commerce 

Whoever, with unlawful or fraudulent intent, 

transports or attempts or conspires to transport 

in interstate or foreign commerce a counterfeit, 

fictitious, altered, forged, lost, stolen, or fraudulently obtained credit card knowing the same to 

be counterfeit, fictitious, altered, forged, lost, 

stolen, or fraudulently obtained; or 

(c) Use of interstate commerce to sell or transport card 

Whoever, with unlawful or fraudulent intent, 

uses any instrumentality of interstate or foreign commerce to sell or transport a counterfeit, fictitious, altered, forged, lost, stolen, or 

fraudulently obtained credit card knowing the 

same to be counterfeit, fictitious, altered, 

forged, lost, stolen, or fraudulently obtained; or 

(d) Receipt, concealment, etc., of goods obtained 

by use of card 

Whoever knowingly receives, conceals, uses, or 

transports money, goods, services, or anything 

else of value (except tickets for interstate or 

foreign transportation) which (1) within any 

one-year period has a value aggregating $1,000 or 

more, (2) has moved in or is part of, or which 

constitutes interstate or foreign commerce, and 

(3) has been obtained with a counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained credit card; or 

(e) Receipt, concealment, etc., of tickets for interstate or foreign transportation obtained by 

use of card 

Whoever knowingly receives, conceals, uses, 

sells, or transports in interstate or foreign commerce one or more tickets for interstate or foreign transportation, which (1) within any oneyear period have a value aggregating $500 or 

more, and (2) have been purchased or obtained 

with one or more counterfeit, fictitious, altered, 

forged, lost, stolen, or fraudulently obtained 

credit cards; or 

(f) Furnishing of money, etc., through use of card 

Whoever in a transaction affecting interstate 

or foreign commerce furnishes money, property, 

services, or anything else of value, which within 

any one-year period has a value aggregating 

$1,000 or more, through the use of any counterfeit, fictitious, altered, forged, lost, stolen, or 

fraudulently obtained credit card knowing the 

same to be counterfeit, fictitious, altered, 

forged, lost, stolen, or fraudulently obtained— 

shall be fined not more than $10,000 or imprisoned not more than ten years, or both. 

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§ 1645 TITLE 15—COMMERCE AND TRADE Page 1462 

(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.) 

AMENDMENTS 

1974—Pub. L. 93–495 generally reorganized provisions 

by designating former unlettered paragraph cls. (a) to 

(f), and as so designated, expanded prohibitions relating 

to fraudulent use of credit cards, decreased amount required for fraudulent use from a retail value aggregating $5,000, or more, to enumerated amounts for particular activities, and increased the punishment from a 

sentence of not more than five years to a sentence of 

not more than ten years. 

EFFECTIVE DATE OF 1974 AMENDMENT 

Amendment by Pub. L. 93–495 effective Oct. 28, 1974, 

see section 416 of Pub. L. 93–495, set out as an Effective 

Date note under section 1665a of this title. 

EFFECTIVE DATE 

Pub. L. 91–508, title V, §503(3), Oct. 26, 1970, 84 Stat. 

1127, provided that: ‘‘Section 134 of such Act [this section] applies to offenses committed on or after such 

date of enactment [Oct. 26, 1970].’’ 

§ 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.) 

EFFECTIVE DATE 

Section effective Oct. 28, 1974, see section 416 of Pub. 

L. 93–495, set out as a note under section 1665a of this 

title. 

§ 1646. Dissemination of annual percentage rates; 

implementation, etc. 

(a) Annual percentage rates 

The Bureau shall collect, publish, and disseminate to the public, on a demonstration basis in 

a number of standard metropolitan statistical 

areas to be determined by the Bureau, the annual percentage rates charged for representative 

types of nonsale credit by creditors in such 

areas. For the purpose of this section, the Bureau is authorized to require creditors in such 

areas to furnish information necessary for the 

Bureau to collect, publish, and disseminate such 

information. 

(b) Credit card price and availability information 

(1) Collection required 

The Bureau shall collect, on a semiannual 

basis, credit card price and availability information, including the information required to 

be disclosed under section 1637(c) of this title, 

from a broad sample of financial institutions 

which offer credit card services. 

(2) Sample requirements 

The 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 

Each financial institution in the broad sample established pursuant to paragraph (2) shall 

report the information to the Bureau in accordance with such regulations or orders as 

the Bureau may prescribe. 

(4) Public availability of collected information; 

report to Congress 

The 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 

The Bureau is authorized to enter into contracts or other arrangements with appropriate 

persons, organizations, or State agencies to 

carry out its functions under subsections (a) and 

(b) and to furnish financial assistance in support 

thereof. 

(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.) 

AMENDMENTS 

2010—Pub. L. 111–203 substituted ‘‘Bureau’’ for 

‘‘Board’’ wherever appearing. 

1988—Subsecs. (b), (c). Pub. L. 100–583 added subsec. 

(b), redesignated former subsec. (b) as (c), and substituted ‘‘subsections (a) and (b)’’ for ‘‘subsection (a)’’. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE 

Section effective on expiration of two years and six 

months after Mar. 31, 1980, with all regulations, forms, 

and clauses required to be prescribed to be promulgated 

at least one year prior to such effective date, and allowing any creditor to comply with any amendments, 

in accordance with the regulations, forms, and clauses 

prescribed by the Board prior to such effective date, see 

section 625 of Pub. L. 96–221, set out as an Effective 

Date of 1980 Amendment note under section 1602 of this 

title. 

§ 1647. Home equity plans 

(a) Index requirement 

In the case of extensions of credit under an 

open end consumer credit plan which are subject 

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Page 1463 TITLE 15—COMMERCE AND TRADE § 1647 

to a variable rate and are secured by a consumer’s principal dwelling, the index or other 

rate of interest to which changes in the annual 

percentage rate are related shall be based on an 

index or rate of interest which is publicly available and is not under the control of the creditor. 

(b) Grounds for acceleration of outstanding balance 

A 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 

No open end consumer credit plan under 

which extensions of credit are secured by a 

consumer’s principal dwelling may contain a 

provision which permits a creditor to change 

unilaterally any term required to be disclosed 

under section 1637a(a) of this title or any other 

term, except a change in insignificant terms 

such as the address of the creditor for billing 

purposes. 

(2) Certain changes not precluded 

Notwithstanding the provisions of subsection 1 (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 

1So in original. Probably should be ‘‘paragraph’’. 

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 

Upon the request of the consumer and at the 

time an agreement is entered into by a consumer to open an account under an open end 

consumer credit plan under which extensions 

of credit are secured by the consumer’s principal dwelling, the consumer shall be given a 

list of the categories of contract obligations 

which are deemed by the creditor to be material obligations of the consumer under the 

agreement for purposes of paragraph (2)(D). 

(4) Consumer benefit 

(A) In general 

For purposes of paragraph (2)(F), a change 

shall be deemed to benefit the consumer if 

the change is unequivocally beneficial to the 

borrower and the change is beneficial 

through the entire term of the agreement. 

(B) Bureau categorization 

The Bureau may, by regulation, determine 

categories of changes that benefit the consumer. 

(d) Terms changed after application 

If any term or condition described in section 

1637a(a) of this title which is disclosed to a consumer in connection with an application to open 

an account under an open end consumer credit 

plan described in such section (other than a 

variable feature of the plan) changes before the 

account is opened, and if, as a result of such 

change, the consumer elects not to enter into 

the plan agreement, the creditor shall refund all 

fees paid by the consumer in connection with 

such application. 

(e) Additional requirements relating to refunds 

and imposition of nonrefundable fees 

(1) In general 

No nonrefundable fee may be imposed by a 

creditor or any other person in connection 

with any application by a consumer to establish an account under any open end consumer 

credit plan which provides for extensions of 

credit which are secured by a consumer’s principal dwelling before the end of the 3-day period beginning on the date such consumer receives the disclosure required under section 

1637a(a) of this title and the pamphlet required 

under section 1637a(e) of this title with respect 

to such application. 

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§ 1648 TITLE 15—COMMERCE AND TRADE Page 1464 

(2) Constructive receipt 

For purposes of determining when a nonrefundable fee may be imposed in accordance 

with this subsection if the disclosures and 

pamphlet referred to in paragraph (1) are 

mailed to the consumer, the date of the receipt of the disclosures by such consumer shall 

be deemed to be 3 business days after the date 

of mailing by the creditor. 

(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.) 

AMENDMENTS 

2010—Subsec. (c)(4)(B). Pub. L. 111–203 substituted 

‘‘Bureau’’ for ‘‘Board’’ in heading and text. 

1994—Subsec. (b). Pub. L. 103–325 inserted at end 

‘‘This subsection does not apply to reverse mortgage 

transactions.’’ 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE 

For effective date of section, see Regulations; Effective Date note below. 

REGULATIONS; EFFECTIVE DATE 

For provisions relating to promulgation of regulations to implement amendment by Pub. L. 100–709 [enacting this section], and effective date of such amendment in connection with those regulations, see section 

7 of Pub. L. 100–709, set out as a note under section 

1637a of this title. 

§ 1648. Reverse mortgages 

(a) In general 

In 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 cost 

In 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.) 

AMENDMENTS 

2010—Subsec. (a)(1). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’ in two places. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

§ 1649. Certain limitations on liability 

(a) Limitations on liability 

For 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 transVerDate 0ct 09 2002 10:22 Oct 12, 2021 Jkt 000000 PO 00000 Frm 01464 Fmt 5800 Sfmt 5800 D:\OLRC\DATA\PRINT\2018SUPP220\OUTPUT\PCC\FOLIOS\USC15.20 PROD 
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Page 1465 TITLE 15—COMMERCE AND TRADE § 1650 

action 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) Exceptions 

Subsection (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.) 

AMENDMENTS 

2010—Subsec. (a)(2). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’. 

1996—Subsec. (a). Pub. L. 104–208 substituted ‘‘For any 

closed end consumer credit transaction that is secured 

by real property or a dwelling, that is subject to this 

subchapter, and’’ for ‘‘For any consumer credit transaction subject to this subchapter’’. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1996 AMENDMENT 

Pub. L. 104–208, div. A, title II, §2107(b), Sept. 30, 1996, 

110 Stat. 3009–402, provided that: ‘‘The amendment 

made by subsection (a) [amending this section] shall be 

effective as of September 30, 1995.’’ 

§ 1650. Preventing unfair and deceptive private 

educational lending practices and eliminating conflicts of interest 

(a) Definitions 

As 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 

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§ 1650 TITLE 15—COMMERCE AND TRADE Page 1466 

(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 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 

1So in original. The word ‘‘of’’ probably should not appear. 

(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 arrangements 

A 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 

A private educational lender may not use the 

name, emblem, mascot, or logo of the covered 

educational institution, or other words, pictures, or symbols readily identified with the 

covered educational institution, in the marketing of private education loans in any way 

that implies that the covered educational institution endorses the private education loans offered by the private educational lender. 

(d) Advisory Board compensation 

Any person who is employed in the financial 

aid office of a covered educational institution, 

or who otherwise has responsibilities with respect to private education loans or other financial aid of the institution, and who serves on an 

advisory board, commission, or group established by a private educational lender or group 

of such lenders shall be prohibited from receiving anything of value from the private educational lender or group of lenders. Nothing in 

this subsection prohibits the reimbursement of 

reasonable expenses incurred by an employee of 

a covered educational institution as part of 

their service on an advisory board, commission, 

or group described in this subsection. 

(e) Prohibition on prepayment or repayment fees 

or penalty 

It shall be unlawful for any private educational lender to impose a fee or penalty on a 

borrower for early repayment or prepayment of 

any private education loan. 

(f) Credit card protections for college students 

(1) Disclosure required 

An institution of higher education shall publicly disclose any contract or other agreement 

made with a card issuer or creditor for the 

purpose of marketing a credit card. 

(2) Inducements prohibited 

No 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 

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Page 1467 TITLE 15—COMMERCE AND TRADE § 1651 

(C) at an event sponsored by or related to 

an institution of higher education. 

(3) Sense of the Congress 

It 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 

With respect to a private education loan involving a student obligor and 1 or more cosigners, the creditor shall not declare a default or accelerate the debt against the student obligor on the sole basis of a bankruptcy 

or death of a cosigner. 

(2) Cosigner release in case of death of borrower 

(A) Release of cosigner 

The holder of a private education loan, 

when notified of the death of a student obligor, shall release within a reasonable timeframe any cosigner from the obligations of 

the cosigner under the private education 

loan. 

(B) Notification of release 

A holder or servicer of a private education 

loan, as applicable, shall within a reasonable 

time-frame notify any cosigners for the private education loan if a cosigner is released 

from the obligations of the cosigner for the 

private education loan under this paragraph. 

(C) Designation of individual to act on behalf 

of the borrower 

Any lender that extends a private education loan shall provide the student obligor 

an option to designate an individual to have 

the legal authority to act on behalf of the 

student obligor with respect to the private 

education loan in the event of the death of 

the student obligor. 

(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.) 

REFERENCES IN TEXT 

The Higher Education Act of 1965, referred to in subsec. (a)(3)(B)(iv)(II), (8)(A)(i), is Pub. L. 89–329, Nov. 8, 

1965, 79 Stat. 1219. Title IV of the Act is classified generally to subchapter IV (§1070 et seq.) of chapter 28 of 

Title 20, Education. For complete classification of this 

Act to the Code, see Short Title note set out under section 1001 of Title 20 and Tables. 

AMENDMENTS 

2018—Subsec. (a). Pub. L. 115–174, § 601(a)(1), added 

par. (1) and redesignated former pars. (1) to (8) as (2) to 

(9), respectively. 

Subsec. (g). Pub. L. 115–174, § 601(a)(2), added subsec. 

(g). 

2010—Subsec. (f)(2)(B). Pub. L. 111–203 substituted 

‘‘Bureau’’ for ‘‘Board’’. 

2009—Subsec. (f). Pub. L. 111–24 added subsec. (f). 

EFFECTIVE DATE OF 2018 AMENDMENT 

Pub. L. 115–174, title VI, §601(b), May 24, 2018, 132 Stat. 

1365, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall only apply to 

private education loan agreements entered into on or 

after the date that is 180 days after the date of enactment of this Act [May 24, 2018].’’ 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 2009 AMENDMENT 

Amendment by Pub. L. 111–24 effective 9 months after 

May 22, 2009, except as otherwise specifically provided, 

see section 3 of Pub. L. 111–24, set out as a note under 

section 1602 of this title. 

EFFECTIVE DATE 

Subsec. (c) of this section effective on the earlier of 

the date on which regulations issued under section 1002 

of Pub. L. 110–315 (set out as a Regulations note under 

section 1638 of this title) become effective or 18 months 

after Aug. 14, 2008, see section 1003(b) of Pub. L. 110–315, 

set out as an Effective Date of 2008 Amendment note 

under section 1638 of this title. Such regulations were 

issued effective Sept. 14, 2009, with compliance optional 

until Feb. 14, 2010. 

§ 1651. Procedure for timely settlement of estates 

of decedent obligors 

The Bureau, in consultation with the Bureau 1 

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.) 

AMENDMENTS 

2010—Pub. L. 111–203, §1100A(3), substituted ‘‘the Bureau’’ for ‘‘the Federal Trade Commission’’. 

Pub. L. 111–203, §1100A(2), substituted ‘‘The Bureau’’ 

for ‘‘The Board’’. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

1So in original. 

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§ 1661 TITLE 15—COMMERCE AND TRADE Page 1468 

EFFECTIVE DATE 

Section effective 9 months after May 22, 2009, except 

as otherwise specifically provided, see section 3 of Pub. 

L. 111–24, set out as an Effective Date of 2009 Amendment note under section 1602 of this title. 

PART C—CREDIT ADVERTISING AND LIMITS ON 

CREDIT CARD FEES 

§ 1661. Catalogs and multiple-page advertisements 

For the purposes of this part, a catalog or 

other multiple-page advertisement shall be considered a single advertisement if it clearly and 

conspicuously displays a credit terms table on 

which the information required to be stated 

under this part is clearly set forth. 

(Pub. L. 90–321, title I, § 141, May 29, 1968, 82 Stat. 

158.) 

EFFECTIVE DATE 

Pub. L. 90–321, title V, §504(b), May 29, 1968, 82 Stat. 

167, provided that chapter 3 of title I, which enacted 

sections 1661 to 1665 of this title, is effective July 1, 

1969. 

§ 1662. Advertising of downpayments and installments 

No advertisement to aid, promote, or assist directly or indirectly any extension of consumer 

credit may state 

(1) that a specific periodic consumer credit 

amount or installment amount can be arranged, unless the creditor usually and customarily arranges credit payments or installments for that period and in that amount. 

(2) that a specified downpayment is required 

in connection with any extension of consumer 

credit, unless the creditor usually and customarily arranges downpayments in that amount. 

(Pub. L. 90–321, title I, § 142, May 29, 1968, 82 Stat. 

158.) 

§ 1663. Advertising of open end credit plans 

No advertisement to aid, promote, or assist directly or indirectly the extension of consumer 

credit under an open end credit plan may set 

forth any of the specific terms of that plan unless it also clearly and conspicuously sets forth 

all of the following items: 

(1) Any minimum or fixed amount which 

could be imposed. 

(2) In any case in which periodic rates may 

be used to compute the finance charge, the 

periodic rates expressed as annual percentage 

rates. 

(3) Any other term that the Bureau may by 

regulation require to be disclosed. 

(Pub. L. 90–321, title I, § 143, May 29, 1968, 82 Stat. 

158; Pub. L. 96–221, title VI, §§ 613(f), 619(a), Mar. 

31, 1980, 94 Stat. 177, 183; Pub. L. 111–203, title X, 

§ 1100A(2), July 21, 2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Par. (3). Pub. L. 111–203 substituted ‘‘Bureau’’ 

for ‘‘Board’’. 

1980—Pub. L. 96–221 in existing introductory text 

struck out applicability of rate determined under section 1637(a)(5) of this title, and amended section generally substituting items setting forth minimum or 

fixed amount, etc., set out in pars. (1) to (3), for items 

time period, etc., set out in pars. (1) to (5). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

§ 1664. Advertising of credit other than open end 

plans 

(a) Exclusion of open end credit plans 

Except as provided in subsection (b), this section applies to any advertisement to aid, promote, or assist directly or indirectly any consumer credit sale, loan, or other extension of 

credit subject to the provisions of this subchapter, other than an open end credit plan. 

(b) Advertisements of residential real estate 

The provisions of this section do not apply to 

advertisements of residential real estate except 

to the extent that the Bureau may by regulation 

require. 

(c) Rate of finance charge expressed as annual 

percentage rate 

If any advertisement to which this section applies states the rate of a finance charge, the advertisement shall state the rate of that charge 

expressed as an annual percentage rate. 

(d) Requisite disclosures in advertisement 

If any advertisement to which this section applies states the amount of the downpayment, if 

any, the amount of any installment payment, 

the dollar amount of any finance charge, or the 

number of installments or the period of repayment, then the advertisement shall state all of 

the following items: 

(1) The downpayment, if any. 

(2) The terms of repayment. 

(3) The rate of the finance charge expressed 

as an annual percentage rate. 

(e) Credit transaction secured by principal 

dwelling of consumer 

Each advertisement to which this section applies that relates to a consumer credit transaction that is secured by the principal dwelling 

of a consumer in which the extension of credit 

may exceed the fair market value of the dwelling, and which advertisement is disseminated in 

paper form to the public or through the Internet, as opposed to by radio or television, shall 

clearly and conspicuously state that— 

(1) 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 

(2) the consumer should consult a tax adviser for further information regarding the deductibility of interest and charges. 

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Page 1469 TITLE 15—COMMERCE AND TRADE § 1665b 

(Pub. L. 90–321, title I, § 144, May 29, 1968, 82 Stat. 

158; Pub. L. 96–221, title VI, § 619(b), Mar. 31, 1980, 

94 Stat. 183; Pub. L. 109–8, title XIII, § 1302(b)(2), 

Apr. 20, 2005, 119 Stat. 209; Pub. L. 111–203, title 

X, § 1100A(2), July 21, 2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Subsec. (b). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’. 

2005—Subsec. (e). Pub. L. 109–8 added subsec. (e). 

1980—Subsec. (d). Pub. L. 97–221 substituted items setting forth downpayment, etc., set out in pars. (1) to (3), 

for items setting forth cash price or amount of loan, 

etc., set out in pars. (1) to (4). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 2005 AMENDMENT 

Amendment by Pub. L. 109–8 effective 180 days after 

Apr. 20, 2005, and not applicable with respect to cases 

commenced under Title 11, Bankruptcy, before such effective date, except as otherwise provided, see section 

1501 of Pub. L. 109–8, set out as a note under section 101 

of Title 11. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

§ 1665. Nonliability of advertising media 

There is no liability under this part on the 

part of any owner or personnel, as such, of any 

medium in which an advertisement appears or 

through which it is disseminated. 

(Pub. L. 90–321, title I, § 145, May 29, 1968, 82 Stat. 

159.) 

§ 1665a. Use of annual percentage rate in oral 

disclosures; exceptions 

In responding orally to any inquiry about the 

cost of credit, a creditor, regardless of the method used to compute finance charges, shall state 

rates only in terms of the annual percentage 

rate, except that in the case of an open end credit plan, the periodic rate also may be stated and, 

in the case of an other than open end credit plan 

where a major component of the finance charge 

consists of interest computed at a simple annual 

rate, the simple annual rate also may be stated. 

The Bureau may, by regulation, modify the requirements of this section or provide an exception from this section for a transaction or class 

of transactions for which the creditor cannot determine in advance the applicable annual percentage rate. 

(Pub. L. 90–321, title I, § 146, as added Pub. L. 

93–495, title IV, § 401(a), Oct. 28, 1974, 88 Stat. 

1517; amended Pub. L. 96–221, title VI, § 623(a), 

Mar. 31, 1980, 94 Stat. 185; Pub. L. 111–203, title X, 

§ 1100A(2), July 21, 2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Pub. L. 111–203 substituted ‘‘Bureau’’ for 

‘‘Board’’. 

1980—Pub. L. 96–221 substituted provisions relating to 

use of annual percentage rate in oral disclosures by 

creditors, for provisions setting forth requirements for 

advertisements concerning consumer credit repayable 

in more than four installments. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

EFFECTIVE DATE 

Pub. L. 93–495, title IV, §416, Oct. 28, 1974, 88 Stat. 

1521, provided that: ‘‘This title [enacting this section 

and sections 1614 and 1645 of this title, amending sections 1603, 1607, 1635, 1637, 1640, and 1644 of this title, and 

enacting provision set out as a note under section 1640 

of this title] takes effect upon the date of its enactment [Oct. 28, 1974], except that sections 409 [amending 

section 1631 of this title] and 411 [amending section 1637 

of this title] take effect upon the expiration of one year 

after the date of its enactment [Oct. 28, 1974].’’ 

§ 1665b. Advertising of open end consumer credit 

plans secured by consumer’s principal dwelling 

(a) In general 

If any advertisement to aid, promote, or assist, directly or indirectly, the extension of consumer credit through an open end consumer 

credit plan under which extensions of credit are 

secured by the consumer’s principal dwelling 

states, affirmatively or negatively, any of the 

specific terms of the plan, including any periodic payment amount required under such plan, 

such advertisement shall also clearly and conspicuously set forth the following information, 

in such form and manner as the Bureau may require: 

(1) Loan fees and opening cost estimates 

Any loan fee the amount of which is determined as a percentage of the credit limit applicable to an account under the plan and an 

estimate of the aggregate amount of other fees 

for opening the account, based on the creditor’s experience with the plan and stated as a 

single amount or as a reasonable range. 

(2) Periodic rates 

In any case in which periodic rates may be 

used to compute the finance charge, the periodic rates expressed as an annual percentage 

rate. 

(3) Highest annual percentage rate 

The highest annual percentage rate which 

may be imposed under the plan. 

(4) Other information 

Any other information the Bureau may by 

regulation require. 

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§ 1665c TITLE 15—COMMERCE AND TRADE Page 1470 

(b) Tax deductibility 

(1) In general 

If any advertisement described in subsection 

(a) contains a statement that any interest expense incurred with respect to the plan is or 

may be tax deductible, the advertisement 

shall not be misleading with respect to such 

deductibility. 

(2) Credit in excess of fair market value 

Each advertisement described in subsection 

(a) that relates to an extension of credit that 

may exceed the fair market value of the dwelling, and which advertisement is disseminated 

in paper form to the public or through the 

Internet, as opposed to by radio or television, 

shall include 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. 

(c) Certain terms prohibited 

No advertisement described in subsection (a) 

with respect to any home equity account may 

refer to such loan as ‘‘free money’’ or use other 

terms determined by the Bureau by regulation 

to be misleading. 

(d) Discounted initial rate 

(1) In general 

If any advertisement described in subsection 

(a) includes an initial annual percentage rate 

that is not determined by the index or formula 

used to make later interest rate adjustments, 

the advertisement shall also state with equal 

prominence the current annual percentage 

rate that would have been applied using the 

index or formula if such initial rate had not 

been offered. 

(2) Quoted rate must be reasonably current 

The annual percentage rate required to be 

disclosed under the paragraph (1) rate must be 

current as of a reasonable time given the 

media involved. 

(3) Period during which initial rate is in effect 

Any advertisement to which paragraph (1) 

applies shall also state the period of time during which the initial annual percentage rate 

referred to in such paragraph will be in effect. 

(e) Balloon payment 

If any advertisement described in subsection 

(a) contains a statement regarding the minimum monthly payment under the plan, the advertisement shall also disclose, if applicable, the 

fact that the plan includes a balloon payment. 

(f) ‘‘Balloon payment’’ defined 

For purposes of this section and section 1637a 

of this title, the term ‘‘balloon payment’’ 

means, with respect to any open end consumer 

credit plan under which extensions of credit are 

secured by the consumer’s principal dwelling, 

any repayment option under which— 

(1) the account holder is required to repay 

the entire amount of any outstanding balance 

as of a specified date or at the end of a specified period of time, as determined in accordance with the terms of the agreement pursuant to which such credit is extended; and 

(2) the aggregate amount of the minimum 

periodic payments required would not fully 

amortize such outstanding balance by such 

date or at the end of such period. 

(Pub. L. 90–321, title I, § 147, as added Pub. L. 

100–709, § 2(c), Nov. 23, 1988, 102 Stat. 4730; amended Pub. L. 109–8, title XIII, § 1302(a)(2), Apr. 20, 

2005, 119 Stat. 208; Pub. L. 111–203, title X, 

§ 1100A(2), July 21, 2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Subsecs. (a), (c). Pub. L. 111–203 substituted 

‘‘Bureau’’ for ‘‘Board’’ wherever appearing. 

2005—Subsec. (b). Pub. L. 109–8 designated existing 

provisions as par. (1), inserted par. heading, and added 

par. (2). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 2005 AMENDMENT 

Amendment by Pub. L. 109–8 effective 180 days after 

Apr. 20, 2005, and not applicable with respect to cases 

commenced under Title 11, Bankruptcy, before such effective date, except as otherwise provided, see section 

1501 of Pub. L. 109–8, set out as a note under section 101 

of Title 11. 

EFFECTIVE DATE 

For effective date of section, see Regulations; Effective Date note below. 

REGULATIONS; EFFECTIVE DATE 

For provisions relating to promulgation of regulations to implement amendment by Pub. L. 100–709 [enacting this section], and effective date of such amendment in connection with those regulations, see section 

7 of Pub. L. 100–709, set out as a note under section 

1637a of this title. 

§ 1665c. Interest rate reduction on open end consumer credit plans 

(a) In general 

If a creditor increases the annual percentage 

rate applicable to a credit card account under an 

open end consumer credit plan, based on factors 

including the credit risk of the obligor, market 

conditions, or other factors, the creditor shall 

consider changes in such factors in subsequently 

determining whether to reduce the annual percentage rate for such obligor. 

(b) Requirements 

With respect to any credit card account under 

an open end consumer credit plan, the creditor 

shall— 

(1) maintain reasonable methodologies for 

assessing the factors described in subsection 

(a); 

(2) not less frequently than once every 6 

months, review accounts as to which the annual percentage rate has been increased since 

January 1, 2009, to assess whether such factors 

have changed (including whether any risk has 

declined); 

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Page 1471 TITLE 15—COMMERCE AND TRADE § 1665e 

(3) reduce the annual percentage rate previously increased when a reduction is indicated by the review; and 

(4) in the event of an increase in the annual 

percentage rate, provide in the written notice 

required under section 1637(i) of this title a 

statement of the reasons for the increase. 

(c) Rule of construction 

This section shall not be construed to require 

a reduction in any specific amount. 

(d) Rulemaking 

The Bureau 1 shall issue final rules not later 

than 9 months after May 22, 2009, to implement 

the requirements of and evaluate compliance 

with this section, and subsections (a), (b), and 

(c) shall become effective 15 months after May 

22, 2009. 

(Pub. L. 90–321, title I, § 148, as added Pub. L. 

111–24, title I, § 101(c), May 22, 2009, 123 Stat. 1737; 

amended Pub. L. 111–203, title X, § 1100A(2), July 

21, 2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Subsec. (d). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE 

Section effective 9 months after May 22, 2009, except 

as otherwise specifically provided, see section 3 of Pub. 

L. 111–24, set out as an Effective Date of 2009 Amendment note under section 1602 of this title. 

§ 1665d. Reasonable penalty fees on open end 

consumer credit plans 

(a) In general 

The amount of any penalty fee or charge that 

a card issuer may impose with respect to a credit card account under an open end consumer 

credit plan in connection with any omission 

with respect to, or violation of, the cardholder 

agreement, including any late payment fee, 

over-the-limit fee, or any other penalty fee or 

charge, shall be reasonable and proportional to 

such omission or violation. 

(b) Rulemaking required 

The Bureau, in consultation with the Comptroller of the Currency, the Board of Directors 

of the Federal Deposit Insurance Corporation, 

the Director of the Office of Thrift Supervision, 

and the National Credit Union Administration 

Board, shall issue final rules not later than 9 

months after May 22, 2009, to establish standards 

for assessing whether the amount of any penalty 

fee or charge described under subsection (a) is 

reasonable and proportional to the omission or 

violation to which the fee or charge relates. 

Subsection (a) shall become effective 15 months 

after May 22, 2009. 

(c) Considerations 

In issuing rules required by this section, the 

Bureau shall consider— 

1So in original. Probably should be ‘‘Board’’. 

(1) the cost incurred by the creditor from 

such omission or violation; 

(2) the deterrence of such omission or violation by the cardholder; 

(3) the conduct of the cardholder; and 

(4) such other factors as the Bureau may 

deem necessary or appropriate. 

(d) Differentiation permitted 

In issuing rules required by this subsection, 

the Bureau may establish different standards for 

different types of fees and charges, as appropriate. 

(e) Safe harbor rule authorized 

The Bureau, in consultation with the Comptroller of the Currency, the Board of Directors 

of the Federal Deposit Insurance Corporation, 

the Director of the Office of Thrift Supervision, 

and the National Credit Union Administration 

Board, may issue rules to provide an amount for 

any penalty fee or charge described under subsection (a) that is presumed to be reasonable 

and proportional to the omission or violation to 

which the fee or charge relates. 

(Pub. L. 90–321, title I, § 149, as added Pub. L. 

111–24, title I, § 102(b)(1), May 22, 2009, 123 Stat. 

1740; amended Pub. L. 111–203, title X, § 1100A(2), 

July 21, 2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Subsecs. (b) to (e). Pub. L. 111–203, § 1100A(2), 

which directed amendment of this section by substituting ‘‘Bureau’’ for ‘‘Board’’ wherever appearing, 

was executed by making the substitution for ‘‘Board’’ 

the first time appearing in subsecs. (b) and (e), and 

wherever appearing in subsecs. (c) and (d), to reflect 

the probable intent of Congress. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE 

Section effective 9 months after May 22, 2009, except 

as otherwise specifically provided, see section 3 of Pub. 

L. 111–24, set out as an Effective Date of 2009 Amendment note under section 1602 of this title. 

§ 1665e. Consideration of ability to repay 

A card issuer may not open any credit card account for any consumer under an open end consumer credit plan, or increase any credit limit 

applicable to such account, unless the card 

issuer considers the ability of the consumer to 

make the required payments under the terms of 

such account. 

(Pub. L. 90–321, title I, § 150, as added Pub. L. 

111–24, title I, § 109(a), May 22, 2009, 123 Stat. 

1743.) 

EFFECTIVE DATE 

Section effective 9 months after May 22, 2009, except 

as otherwise specifically provided, see section 3 of Pub. 

L. 111–24, set out as an Effective Date of 2009 Amendment note under section 1602 of this title. 

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§ 1666 TITLE 15—COMMERCE AND TRADE Page 1472 

PART D—CREDIT BILLING 

§ 1666. Correction of billing errors 

(a) Written notice by obligor to creditor; time for 

and contents of notice; procedure upon receipt of notice by creditor 

If a creditor, within sixty days after having 

transmitted to an obligor a statement of the obligor’s account in connection with an extension 

of consumer credit, receives at the address disclosed under section 1637(b)(10) of this title a 

written notice (other than notice on a payment 

stub or other payment medium supplied by the 

creditor if the creditor so stipulates with the 

disclosure required under section 1637(a)(7) of 

this title) from the obligor in which the obligor— 

(1) sets forth or otherwise enables the creditor to identify the name and account number 

(if any) of the obligor, 

(2) indicates the obligor’s belief that the 

statement contains a billing error and the 

amount of such billing error, and 

(3) sets forth the reasons for the obligor’s belief (to the extent applicable) that the statement contains a billing error, 

the creditor shall, unless the obligor has, after 

giving such written notice and before the expiration of the time limits herein specified, agreed 

that the statement was correct— 

(A) not later than thirty days after the receipt of the notice, send a written acknowledgment thereof to the obligor, unless the action 

required in subparagraph (B) is taken within 

such thirty-day period, and 

(B) not later than two complete billing cycles of the creditor (in no event later than 

ninety days) after the receipt of the notice and 

prior to taking any action to collect the 

amount, or any part thereof, indicated by the 

obligor under paragraph (2) either— 

(i) make appropriate corrections in the account of the obligor, including the crediting 

of any finance charges on amounts erroneously billed, and transmit to the obligor a 

notification of such corrections and the 

creditor’s explanation of any change in the 

amount indicated by the obligor under paragraph (2) and, if any such change is made 

and the obligor so requests, copies of documentary evidence of the obligor’s indebtedness; or 

(ii) send a written explanation or clarification to the obligor, after having conducted 

an investigation, setting forth to the extent 

applicable the reasons why the creditor believes the account of the obligor was correctly shown in the statement and, upon request of the obligor, provide copies of documentary evidence of the obligor’s indebtedness. In the case of a billing error where the 

obligor alleges that the creditor’s billing 

statement reflects goods not delivered to the 

obligor or his designee in accordance with 

the agreement made at the time of the 

transaction, a creditor may not construe 

such amount to be correctly shown unless he 

determines that such goods were actually 

delivered, mailed, or otherwise sent to the 

obligor and provides the obligor with a 

statement of such determination. 

After complying with the provisions of this subsection with respect to an alleged billing error, 

a creditor has no further responsibility under 

this section if the obligor continues to make 

substantially the same allegation with respect 

to such error. 

(b) Billing error 

For the purpose of this section, a ‘‘billing 

error’’ consists of any of the following: 

(1) A reflection on a statement of an extension of credit which was not made to the obligor or, if made, was not in the amount reflected on such statement. 

(2) A reflection on a statement of an extension of credit for which the obligor requests 

additional clarification including documentary evidence thereof. 

(3) A reflection on a statement of goods or 

services not accepted by the obligor or his designee or not delivered to the obligor or his designee in accordance with the agreement made 

at the time of a transaction. 

(4) The creditor’s failure to reflect properly 

on a statement a payment made by the obligor 

or a credit issued to the obligor. 

(5) A computation error or similar error of 

an accounting nature of the creditor on a 

statement. 

(6) Failure to transmit the statement required under section 1637(b) of this title to the 

last address of the obligor which has been disclosed to the creditor, unless that address was 

furnished less than twenty days before the end 

of the billing cycle for which the statement is 

required. 

(7) Any other error described in regulations 

of the Bureau. 

(c) Action by creditor to collect amount or any 

part thereof regarded by obligor to be a billing error 

For the purposes of this section, ‘‘action to 

collect the amount, or any part thereof, indicated by an obligor under paragraph (2)’’ does 

not include the sending of statements of account, which may include finance charges on 

amounts in dispute, to the obligor following 

written notice from the obligor as specified 

under subsection (a), if— 

(1) the obligor’s account is not restricted or 

closed because of the failure of the obligor to 

pay the amount indicated under paragraph (2) 

of subsection (a), and 

(2) the creditor indicates the payment of 

such amount is not required pending the creditor’s compliance with this section. 

Nothing in this section shall be construed to 

prohibit any action by a creditor to collect any 

amount which has not been indicated by the obligor to contain a billing error. 

(d) Restricting or closing by creditor of account 

regarded by obligor to contain a billing error 

Pursuant to regulations of the Bureau, a creditor operating an open end consumer credit plan 

may not, prior to the sending of the written explanation or clarification required under paragraph (B)(ii), restrict or close an account with 

respect to which the obligor has indicated pursuant to subsection (a) that he believes such account to contain a billing error solely because of 

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Page 1473 TITLE 15—COMMERCE AND TRADE § 1666b 

the obligor’s failure to pay the amount indicated to be in error. Nothing in this subsection 

shall be deemed to prohibit a creditor from applying against the credit limit on the obligor’s 

account the amount indicated to be in error. 

(e) Effect of noncompliance with requirements 

by creditor 

Any creditor who fails to comply with the requirements of this section or section 1666a of 

this title forfeits any right to collect from the 

obligor the amount indicated by the obligor 

under paragraph (2) of subsection (a) of this section, and any finance charges thereon, except 

that the amount required to be forfeited under 

this subsection may not exceed $50. 

(Pub. L. 90–321, title I, § 161, as added Pub. L. 

93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1512; 

amended Pub. L. 96–221, title VI §§ 613(g), 620, 

Mar. 31, 1980, 94 Stat. 177, 184; Pub. L. 111–203, 

title X, §§ 1087, 1100A(2), July 21, 2010, 124 Stat. 

2086, 2107.) 

CODIFICATION 

Pub L. 111–203, § 1100A(2), which directed the substitution of ‘‘Bureau’’ for ‘‘Board’’ wherever appearing in 

title I of Pub. L. 90–321, was executed to this section, 

which is section 161 of title I of Pub. L. 90–321. Section 

1087 of Pub. L. 111–203, which directed the making of an 

identical amendment in title III of Pub. L. 93–495, 

which added this section to title I of Pub. L. 90–321, has 

not been executed. 

AMENDMENTS 

2010—Subsecs. (b)(7), (d). Pub. L. 111–203, § 1100A(2), 

substituted ‘‘Bureau’’ for ‘‘Board’’. See Codification 

note above. 

1980—Subsec. (a). Pub. L. 96–221, § 613(g), substituted 

‘‘(b)(10)’’ for ‘‘(b)(11)’’ and ‘‘(a)(7)’’ for ‘‘(a)(8)’’. 

Subsec. (b)(6), (7). Pub. L. 96–221, § 620(a), added par. 

(6) and redesignated former par. (6) as (7). 

Subsec. (c). Pub. L. 96–221, § 620(b), inserted provisions 

respecting finance charges on amounts in dispute. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

EFFECTIVE DATE 

Pub. L. 93–495, title III, §308, Oct. 28, 1974, 88 Stat. 

1517, provided that: ‘‘This title [enacting this section 

and sections 1666a to 1666j of this title, amending sections 1601, 1602, 1610, 1631, 1632, and 1637 of this title, and 

enacting provision set out as a note under section 1601 

of this title] takes effect upon the expiration of one 

year after the date of its enactment [Oct. 28, 1974].’’ 

SHORT TITLE 

Title III of Pub. L. 93–495, which is classified principally to this part, is known as the ‘‘Fair Credit Billing Act’’. For complete classification of Title III to the 

Code, see Short Title of 1974 Amendment note set out 

under section 1601 of this title and Tables. 

§ 1666a. Regulation of credit reports 

(a) Reports by creditor on obligor’s failure to pay 

amount regarded as billing error 

After receiving a notice from an obligor as 

provided in section 1666(a) of this title, a creditor or his agent may not directly or indirectly 

threaten to report to any person adversely on 

the obligor’s credit rating or credit standing because of the obligor’s failure to pay the amount 

indicated by the obligor under section 1666(a)(2) 

of this title, and such amount may not be reported as delinquent to any third party until the 

creditor has met the requirements of section 

1666 of this title and has allowed the obligor the 

same number of days (not less than ten) thereafter to make payment as is provided under the 

credit agreement with the obligor for the payment of undisputed amounts. 

(b) Reports by creditor on delinquent amounts in 

dispute; notification of obligor of parties notified of delinquency 

If a creditor receives a further written notice 

from an obligor that an amount is still in dispute within the time allowed for payment under 

subsection (a) of this section, a creditor may not 

report to any third party that the amount of the 

obligor is delinquent because the obligor has 

failed to pay an amount which he has indicated 

under section 1666(a)(2) of this title, unless the 

creditor also reports that the amount is in dispute and, at the same time, notifies the obligor 

of the name and address of each party to whom 

the creditor is reporting information concerning 

the delinquency. 

(c) Reports by creditor of subsequent resolution 

of delinquent amounts 

A creditor shall report any subsequent resolution of any delinquencies reported pursuant to 

subsection (b) to the parties to whom such delinquencies were initially reported. 

(Pub. L. 90–321, title I, § 162, as added Pub. L. 

93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1513.) 

§ 1666b. Timing of payments 

(a) Time to make payments 

A creditor may not treat a payment on a credit card account under an open end consumer 

credit plan as late for any purpose, unless the 

creditor has adopted reasonable procedures designed to ensure that each periodic statement 

including the information required by section 

1637(b) of this title is mailed or delivered to the 

consumer not later than 21 days before the payment due date. 

(b) Grace period 

If an open end consumer credit plan provides a 

time period within which an obligor may repay 

any portion of the credit extended without incurring an additional finance charge, such additional finance charge may not be imposed with 

respect to such portion of the credit extended 

for the billing cycle of which such period is a 

part, unless a statement which includes the 

amount upon which the finance charge for the 

period is based was mailed or delivered to the 

consumer not later than 21 days before the date 

specified in the statement by which payment 

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§ 1666c TITLE 15—COMMERCE AND TRADE Page 1474 

must be made in order to avoid imposition of 

that finance charge. 

(Pub. L. 90–321, title I, § 163, as added Pub. L. 

93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1514; 

amended Pub. L. 111–24, title I, § 106(b)(1), May 

22, 2009, 123 Stat. 1742; Pub. L. 111–93, § 2, Nov. 6, 

2009, 123 Stat. 2998.) 

AMENDMENTS 

2009—Pub. L. 111–24 amended section generally, adding provisions relating to late payments and delivery of 

periodic statements, substituting provisions requiring 

a 21-day statement delivery period for provisions requiring a 14-day period before the imposition of additional finance charges, and striking provisions relating 

to excusable cause for creditor’s failure to make timely 

mailing or delivery of periodic statements. 

Subsec. (a). Pub. L. 111–93 inserted ‘‘a credit card account under’’ after ‘‘payment on’’. 

EFFECTIVE DATE 

Pub. L. 111–24, title I, §106(b)(2), May 22, 2009, 123 Stat. 

1742, provided that: ‘‘Notwithstanding section 3 [see Effective Date of 2009 Amendment note set out under section 1602 of this title], section 163 of the Truth in Lending Act [15 U.S.C. 1666b], as amended by this subsection, 

shall become effective 90 days after the date of enactment of this Act [May 22, 2009].’’ 

§ 1666c. Prompt and fair crediting of payments 

(a) In general 

Payments received from an obligor under an 

open end consumer credit plan by the creditor 

shall be posted promptly to the obligor’s account as specified in regulations of the Bureau. 

Such regulations shall prevent a finance charge 

from being imposed on any obligor if the creditor has received the obligor’s payment in readily identifiable form, by 5:00 p.m. on the date on 

which such payment is due, in the amount, manner, and location indicated by the creditor to 

avoid the imposition thereof. 

(b) Application of payments 

(1) In general 

Upon receipt of a payment from a cardholder, the card issuer shall apply amounts in 

excess of the minimum payment amount first 

to the card balance bearing the highest rate of 

interest, and then to each successive balance 

bearing the next highest rate of interest, until 

the payment is exhausted. 

(2) Clarification relating to certain deferred interest arrangements 

A creditor shall allocate the entire amount 

paid by the consumer in excess of the minimum payment amount to a balance on which 

interest is deferred during the last 2 billing cycles immediately preceding the expiration of 

the period during which interest is deferred. 

(c) Changes by card issuer 

If a card issuer makes a material change in 

the mailing address, office, or procedures for 

handling cardholder payments, and such change 

causes a material delay in the crediting of a 

cardholder payment made during the 60-day period following the date on which such change 

took effect, the card issuer may not impose any 

late fee or finance charge for a late payment on 

the credit card account to which such payment 

was credited. 

(Pub. L. 90–321, title I, § 164, as added Pub. L. 

93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1514; 

amended Pub. L. 111–24, title I, § 104, May 22, 

2009, 123 Stat. 1741; Pub. L. 111–203, title X, 

§§ 1087, 1100A(2), July 21, 2010, 124 Stat. 2086, 2107.) 

CODIFICATION 

Pub L. 111–203, § 1100A(2), which directed the substitution of ‘‘Bureau’’ for ‘‘Board’’ wherever appearing in 

title I of Pub. L. 90–321, was executed to this section, 

which is section 164 of title I of Pub. L. 90–321. Section 

1087 of Pub. L. 111–203, which directed the making of an 

identical amendment in title III of Pub. L. 93–495, 

which added this section to title I of Pub. L. 90–321, has 

not been executed. 

AMENDMENTS 

2010—Subsec. (a). Pub. L. 111–203, § 1100A(2), substituted ‘‘Bureau’’ for ‘‘Board’’. See Codification note 

above. 

2009—Pub. L. 111–24, § 104(1), substituted ‘‘Prompt and 

fair crediting of payments’’ for ‘‘Prompt crediting of 

payments’’ in section catchline, designated existing 

provisions as subsec. (a), and inserted subsec. (a) heading. 

Subsec. (a). Pub. L. 111–24, § 104(2), (3), inserted ‘‘, by 

5:00 p.m. on the date on which such payment is due,’’ 

after ‘‘in readily identifiable form’’ and substituted 

‘‘manner, and location’’ for ‘‘manner, location, and 

time’’. 

Subsecs. (b), (c). Pub. L. 111–24, §104(4), added subsecs. 

(b) and (c). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE OF 2009 AMENDMENT 

Amendment by Pub. L. 111–24 effective 9 months after 

May 22, 2009, except as otherwise specifically provided, 

see section 3 of Pub. L. 111–24, set out as a note under 

section 1602 of this title. 

§ 1666d. Treatment of credit balances 

Whenever a credit balance in excess of $1 is 

created in connection with a consumer credit 

transaction through (1) transmittal of funds to a 

creditor in excess of the total balance due on an 

account, (2) rebates of unearned finance charges 

or insurance premiums, or (3) amounts otherwise owed to or held for the benefit of an obligor, the creditor shall— 

(A) credit the amount of the credit balance 

to the consumer’s account; 

(B) refund any part of the amount of the remaining credit balance, upon request of the 

consumer; and 

(C) make a good faith effort to refund to the 

consumer by cash, check, or money order any 

part of the amount of the credit balance remaining in the account for more than six 

months, except that no further action is required in any case in which the consumer’s 

current location is not known by the creditor 

and cannot be traced through the consumer’s 

last known address or telephone number. 

(Pub. L. 90–321, title I, § 165, as added Pub. L. 

93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1514; 

amended Pub. L. 96–221, title VI, § 621(a), Mar. 31, 

1980, 94 Stat. 184.) 

AMENDMENTS 

1980—Pub. L. 96–221 substituted provisions relating to 

duties of creditor whenever a credit balance in excess 

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Page 1475 TITLE 15—COMMERCE AND TRADE § 1666h 

of $1 is created in connection with a consumer credit 

transaction, for provisions relating to duties of creditor 

whenever an obligor transmits funds to creditor in excess of the total balance due on an open end consumer 

credit account. 

EFFECTIVE DATE OF 1980 AMENDMENT 

Amendment by Pub. L. 96–221 effective on expiration 

of two years and six months after Mar. 31, 1980, with all 

regulations, forms, and clauses required to be prescribed to be promulgated at least one year prior to 

such effective date, and allowing any creditor to comply with any amendments, in accordance with the regulations, forms, and clauses prescribed by the Board 

prior to such effective date, see section 625 of Pub. L. 

96–221, set out as a note under section 1602 of this title. 

§ 1666e. Notification of credit card issuer by seller of return of goods, etc., by obligor; credit 

for account of obligor 

With respect to any sales transaction where a 

credit card has been used to obtain credit, where 

the seller is a person other than the card issuer, 

and where the seller accepts or allows a return 

of the goods or forgiveness of a debit for services 

which were the subject of such sale, the seller 

shall promptly transmit to the credit card 

issuer, a credit statement with respect thereto 

and the credit card issuer shall credit the account of the obligor for the amount of the transaction. 

(Pub. L. 90–321, title I, § 166, as added Pub. L. 

93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1514.) 

§ 1666f. Inducements to cardholders by sellers of 

cash discounts for payments by cash, check 

or similar means; finance charge for sales 

transactions involving cash discounts 

(a) Cash discounts 

With respect to credit 1 card which may be 

used for extensions of credit in sales transactions in which the seller is a person other 

than the card issuer, the card issuer may not, by 

contract or otherwise, prohibit any such seller 

from offering a discount to a cardholder to induce the cardholder to pay by cash, check, or 

similar means rather than use a credit card. 

(b) Finance charge 

With respect to any sales transaction, any discount from the regular price offered by the seller for the purpose of inducing payment by cash, 

checks, or other means not involving the use of 

an open-end credit plan or a credit card shall 

not constitute a finance charge as determined 

under section 1605 of this title if such discount 

is offered to all prospective buyers and its availability is disclosed clearly and conspicuously. 

(Pub. L. 90–321, title I, § 167, as added Pub. L. 

93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515; 

amended Pub. L. 94–222, § 3(c)(1), Feb. 27, 1976, 90 

Stat. 197; Pub. L. 97–25, title I, § 101, July 27, 1981, 

95 Stat. 144.) 

AMENDMENTS 

1981—Subsec. (b). Pub. L. 97–25 substituted ‘‘With respect to any sales transaction, any discount from the 

regular price offered by the seller for the purpose of inducing payment by cash, checks, or other means not in1So in original. Probably should be preceded by ‘‘a’’. 

volving the use of an open-end credit plan or a credit 

card shall not constitute a finance charge as determined under section 1605 of this title if such discount 

is offered to all prospective buyers and its availability 

is disclosed clearly and conspicuously’’ for ‘‘With respect to any sales transaction, any discount not in excess of 5 per centum offered by the seller for the purpose of inducing payment by cash, check, or other 

means not involving the use of a credit card shall not 

constitute a finance charge as determined under section 1605 of this title, if such discount is offered to all 

prospective buyers and its availability is disclosed to 

all prospective buyers clearly and conspicuously in accordance with regulations of the Board’’. 

1976—Subsec. (a). Pub. L. 94–222 temporarily designated existing provisions as par. (1) and added par. 

(2). See Termination Date of 1976 Amendment note 

below. 

TERMINATION DATE OF 1976 AMENDMENT 

Section 3(c)(2) of Pub. L. 94–222, as amended by Pub. 

L. 95–630, title XV, §1501, Nov. 10, 1978, 92 Stat. 3713; 

Pub. L. 97–25, title II, § 201, July 27, 1981, 95 Stat. 44, provided that: ‘‘The amendments made by paragraph (1) 

[amending this section] shall cease to be effective on 

February 27, 1984.’’ 

NULLIFICATION OF BOARD RULES AND REGULATIONS 

UNDER SUBSECTION (b) OF THIS SECTION IN EFFECT 

ON JULY 26, 1981 

Pub. L. 97–25, title I, § 103, July 27, 1981, 95 Stat. 144, 

provided that: ‘‘Any rule or regulation of the Board of 

Governors of the Federal Reserve System pursuant to 

section 167(b) of the Truth in Lending Act [subsec. (b) 

of this section], as such section was in effect on the day 

before the date of enactment of this Act [July 27, 1981], 

is null and void.’’ 

§ 1666g. Tie-in services prohibited for issuance of 

credit card 

Notwithstanding any agreement to the contrary, a card issuer may not require a seller, as 

a condition to participating in a credit card 

plan, to open an account with or procure any 

other service from the card issuer or its subsidiary or agent. 

(Pub. L. 90–321, title I, § 168, as added Pub. L. 

93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515.) 

§ 1666h. Offset of cardholder’s indebtedness by 

issuer of credit card with funds deposited 

with issuer by cardholder; remedies of creditors under State law not affected 

(a) Offset against consumer’s funds 

A card issuer may not take any action to offset a cardholder’s indebtedness arising in connection with a consumer credit transaction 

under the relevant credit card plan against 

funds of the cardholder held on deposit with the 

card issuer unless— 

(1) such action was previously authorized in 

writing by the cardholder in accordance with a 

credit plan whereby the cardholder agrees periodically to pay debts incurred in his open 

end credit account by permitting the card 

issuer periodically to deduct all or a portion of 

such debt from the cardholder’s deposit account, and 

(2) such action with respect to any outstanding disputed amount not be taken by the 

card issuer upon request of the cardholder. 

In the case of any credit card account in existence on the effective date of this section, the 

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§ 1666i TITLE 15—COMMERCE AND TRADE Page 1476 

previous written authorization referred to in 

clause (1) shall not be required until the date 

(after such effective date) when such account is 

renewed, but in no case later than one year after 

such effective date. Such written authorization 

shall be deemed to exist if the card issuer has 

previously notified the cardholder that the use 

of his credit card account will subject any funds 

which the card issuer holds in deposit accounts 

of such cardholder to offset against any amounts 

due and payable on his credit card account 

which have not been paid in accordance with the 

terms of the agreement between the card issuer 

and the cardholder. 

(b) Attachments and levies 

This section does not alter or affect the right 

under State law of a card issuer to attach or 

otherwise levy upon funds of a cardholder held 

on deposit with the card issuer if that remedy is 

constitutionally available to creditors generally. 

(Pub. L. 90–321, title I, § 169, as added Pub. L. 

93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515.) 

REFERENCES IN TEXT 

For effective date of this section, referred to in subsec. (a), see Effective Date note set out under section 

1666 of this title. 

§ 1666i. Assertion by cardholder against card 

issuer of claims and defenses arising out of 

credit card transaction; prerequisites; limitation on amount of claims or defenses 

(a) Claims and defenses assertible 

Subject to the limitation contained in subsection (b), a card issuer who has issued a credit 

card to a cardholder pursuant to an open end 

consumer credit plan shall be subject to all 

claims (other than tort claims) and defenses 

arising out of any transaction in which the credit card is used as a method of payment or extension of credit if (1) the obligor has made a good 

faith attempt to obtain satisfactory resolution 

of a disagreement or problem relative to the 

transaction from the person honoring the credit 

card; (2) the amount of the initial transaction 

exceeds $50; and (3) the place where the initial 

transaction occurred was in the same State as 

the mailing address previously provided by the 

cardholder or was within 100 miles from such address, except that the limitations set forth in 

clauses (2) and (3) with respect to an obligor’s 

right to assert claims and defenses against a 

card issuer shall not be applicable to any transaction in which the person honoring the credit 

card (A) is the same person as the card issuer, 

(B) is controlled by the card issuer, (C) is under 

direct or indirect common control with the card 

issuer, (D) is a franchised dealer in the card 

issuer’s products or services, or (E) has obtained 

the order for such transaction through a mail 

solicitation made by or participated in by the 

card issuer in which the cardholder is solicited 

to enter into such transaction by using the credit card issued by the card issuer. 

(b) Amount of claims and defenses assertible 

The amount of claims or defenses asserted by 

the cardholder may not exceed the amount of 

credit outstanding with respect to such transaction at the time the cardholder first notifies 

the card issuer or the person honoring the credit 

card of such claim or defense. For the purpose of 

determining the amount of credit outstanding in 

the preceding sentence, payments and credits to 

the cardholder’s account are deemed to have 

been applied, in the order indicated, to the payment of: (1) late charges in the order of their 

entry to the account; (2) finance charges in 

order of their entry to the account; and (3) debits to the account other than those set forth 

above, in the order in which each debit entry to 

the account was made. 

(Pub. L. 90–321, title I, § 170, as added Pub. L. 

93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515.) 

§ 1666i–1. Limits on interest rate, fee, and finance 

charge increases applicable to outstanding 

balances 

(a) In general 

In the case of any credit card account under 

an open end consumer credit plan, no creditor 

may increase any annual percentage rate, fee, or 

finance charge applicable to any outstanding 

balance, except as permitted under subsection 

(b). 

(b) Exceptions 

The prohibition under subsection (a) shall not 

apply to— 

(1) an increase in an annual percentage rate 

upon the expiration of a specified period of 

time, provided that— 

(A) prior to commencement of that period, 

the creditor disclosed to the consumer, in a 

clear and conspicuous manner, the length of 

the period and the annual percentage rate 

that would apply after expiration of the period; 

(B) the increased annual percentage rate 

does not exceed the rate disclosed pursuant 

to subparagraph (A); and 

(C) the increased annual percentage rate is 

not applied to transactions that occurred 

prior to commencement of the period; 

(2) an increase in a variable annual percentage rate in accordance with a credit card 

agreement that provides for changes in the 

rate according to operation of an index that is 

not under the control of the creditor and is 

available to the general public; 

(3) an increase due to the completion of a 

workout or temporary hardship arrangement 

by the obligor or the failure of the obligor to 

comply with the terms of a workout or temporary hardship arrangement, provided that— 

(A) the annual percentage rate, fee, or finance charge applicable to a category of 

transactions following any such increase 

does not exceed the rate, fee, or finance 

charge that applied to that category of 

transactions prior to commencement of the 

arrangement; and 

(B) the creditor has provided the obligor, 

prior to the commencement of such arrangement, with clear and conspicuous disclosure 

of the terms of the arrangement (including 

any increases due to such completion or failure); or 

(4) an increase due solely to the fact that a 

minimum payment by the obligor has not been 

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Page 1477 TITLE 15—COMMERCE AND TRADE § 1666j 

received by the creditor within 60 days after 

the due date for such payment, provided that 

the creditor shall— 

(A) include, together with the notice of 

such increase required under section 1637(i) 

of this title, a clear and conspicuous written 

statement of the reason for the increase and 

that the increase will terminate not later 

than 6 months after the date on which it is 

imposed, if the creditor receives the required 

minimum payments on time from the obligor during that period; and 

(B) terminate such increase not later than 

6 months after the date on which it is imposed, if the creditor receives the required 

minimum payments on time during that period. 

(c) Repayment of outstanding balance 

(1) In general 

The creditor shall not change the terms governing the repayment of any outstanding balance, except that the creditor may provide the 

obligor with one of the methods described in 

paragraph (2) of repaying any outstanding balance, or a method that is no less beneficial to 

the obligor than one of those methods. 

(2) Methods 

The methods described in this paragraph 

are— 

(A) an amortization period of not less than 

5 years, beginning on the effective date of 

the increase set forth in the notice required 

under section 1637(i) of this title; or 

(B) a required minimum periodic payment 

that includes a percentage of the outstanding balance that is equal to not more 

than twice the percentage required before 

the effective date of the increase set forth in 

the notice required under section 1637(i) of 

this title. 

(d) Outstanding balance defined 

For purposes of this section, the term ‘‘outstanding balance’’ means the amount owed on a 

credit card account under an open end consumer 

credit plan as of the end of the 14th day after the 

date on which the creditor provides notice of an 

increase in the annual percentage rate, fee, or finance charge in accordance with section 1637(i) 

of this title. 

(Pub. L. 90–321, title I, § 171, as added Pub. L. 

111–24, title I, § 101(b)(2), May 22, 2009, 123 Stat. 

1736.) 

PRIOR PROVISIONS 

A prior section 171 of Pub. L. 90–321 was renumbered 

section 173 and is classified to section 1666j of this title. 

EFFECTIVE DATE 

Section effective 9 months after May 22, 2009, except 

as otherwise specifically provided, see section 3 of Pub. 

L. 111–24, set out as an Effective Date of 2009 Amendment note under section 1602 of this title. 

§ 1666i–2. Additional limits on interest rate increases 

(a) Limitation on increases within first year 

Except in the case of an increase described in 

paragraph (1), (2), (3), or (4) of section 1666i–1(b) 

of this title, no increase in any annual percentage rate, fee, or finance charge on any credit 

card account under an open end consumer credit 

plan shall be effective before the end of the 1-

year period beginning on the date on which the 

account is opened. 

(b) Promotional rate minimum term 

No increase in any annual percentage rate applicable to a credit card account under an open 

end consumer credit plan that is a promotional 

rate (as that term is defined by the Bureau) 

shall be effective before the end of the 6-month 

period beginning on the date on which the promotional rate takes effect, subject to such reasonable exceptions as the Bureau may establish, 

by rule. 

(Pub. L. 90–321, title I, § 172, as added Pub. L. 

111–24, title I, § 101(d), May 22, 2009, 123 Stat. 1738; 

amended Pub. L. 111–203, title X, § 1100A(2), July 

21, 2010, 124 Stat. 2107.) 

AMENDMENTS 

2010—Subsec. (b). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’ in two places. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE 

Section effective 9 months after May 22, 2009, except 

as otherwise specifically provided, see section 3 of Pub. 

L. 111–24, set out as an Effective Date of 2009 Amendment note under section 1602 of this title. 

§ 1666j. Applicability of State laws 

(a) Consistency of provisions 

This part does not annul, alter, or affect, or 

exempt any person subject to the provisions of 

this part from complying with, the laws of any 

State with respect to credit billing practices, except to the extent that those laws are inconsistent with any provision of this part, and then 

only to the extent of the inconsistency. The Bureau is authorized to determine whether such inconsistencies exist. The Bureau may not determine that any State law is inconsistent with 

any provision of this part if the Bureau determines that such law gives greater protection to 

the consumer. 

(b) Exemptions by Bureau from credit billing requirements 

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 

or that such law gives greater protection to the 

consumer, and that there is adequate provision 

for enforcement. 

(c) Finance charge or other charge for credit for 

sales transactions involving cash discounts 

Notwithstanding any other provisions of this 

subchapter, any discount offered under section 

1666f(b) of this title shall not be considered a finance charge or other charge for credit under 

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§ 1667 TITLE 15—COMMERCE AND TRADE Page 1478 

the usury laws of any State or under the laws of 

any State relating to disclosure of information 

in connection with credit transactions, or relating to the types, amounts or rates of charges, or 

to any element or elements of charges permissible under such laws in connection with the extension or use of credit. 

(Pub. L. 90–321, title I, § 173, formerly § 171, as 

added Pub. L. 93–495, title III, § 306, Oct. 28, 1974, 

88 Stat. 1516; amended Pub. L. 94–222, § 3(d), Feb. 

27, 1976, 90 Stat. 198; renumbered § 173, Pub. L. 

111–24, title I, § 101(b)(1), May 22, 2009, 123 Stat. 

1736; Pub. L. 111–203, title X, §§ 1087, 1100A(2), 

July 21, 2010, 124 Stat. 2086, 2107.) 

CODIFICATION 

Pub L. 111–203, § 1100A(2), which directed the substitution of ‘‘Bureau’’ for ‘‘Board’’ wherever appearing in 

title I of Pub. L. 90–321, was executed to this section, 

which is section 173 of title I of Pub. L. 90–321. Section 

1087 of Pub. L. 111–203, which directed the making of an 

identical amendment in title III of Pub. L. 93–495, 

which added this section to title I of Pub. L. 90–321, has 

not been executed. 

AMENDMENTS 

2010—Subsecs. (a), (b). Pub. L. 111–203, § 1100A(2), substituted ‘‘Bureau’’ for ‘‘Board’’ wherever appearing. See 

Codification note above. 

1976—Subsec. (c). Pub. L. 94–222 added subsec. (c). 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

PART E—CONSUMER LEASES 

§ 1667. Definitions 

For purposes of this part— 

(1) The term ‘‘consumer lease’’ means a contract in the form of a lease or bailment for the 

use of personal property by a natural person 

for a period of time exceeding four months, 

and for a total contractual obligation not exceeding $50,000,1 primarily for personal, family, or household purposes, whether or not the 

lessee has the option to purchase or otherwise 

become the owner of the property at the expiration of the lease, except that such term 

shall not include any credit sale as defined in 

section 1602(g) 2 of this title. Such term does 

not include a lease for agricultural, business, 

or commercial purposes, or to a government or 

governmental agency or instrumentality, or 

to an organization. 

(2) The term ‘‘lessee’’ means a natural person who leases or is offered a consumer lease. 

(3) The term ‘‘lessor’’ means a person who is 

regularly engaged in leasing, offering to lease, 

or arranging to lease under a consumer lease. 

(4) The term ‘‘personal property’’ means any 

property which is not real property under the 

laws of the State where situated at the time 

offered or otherwise made available for lease. 

(5) The terms ‘‘security’’ and ‘‘security interest’’ mean any interest in property which 

secures payment or performance of an obligation. 

1See Adjustments for Inflation note below. 

2See References in Text note below. 

(Pub. L. 90–321, title I, § 181, as added Pub. L. 

94–240, § 3, Mar. 23, 1976, 90 Stat. 257; amended 

Pub. L. 111–203, title X, § 1100E(a)(2), July 21, 

2010, 124 Stat. 2111.) 

REFERENCES IN TEXT 

Section 1602(g) of this title, referred to in par. (1), was 

redesignated section 1602(h) of this title by Pub. L. 

111–203, title X, §1100A(1)(A), July 21, 2010, 124 Stat. 2107. 

AMENDMENTS 

2010—Par. (1). Pub. L. 111–203 substituted ‘‘$50,000’’ for 

‘‘$25,000’’. 

EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 

111–203, set out as a note under section 552a of Title 5, 

Government Organization and Employees. 

EFFECTIVE DATE 

Pub. L. 94–240, §6, Mar. 23, 1976, 90 Stat. 261, provided 

that: ‘‘This Act [enacting this section and sections 

1667a to 1667e of this title, amending sections 1601 and 

1640 of this title, and enacting provisions set out as a 

note under section 1601 of this title] takes effect one 

year after the date of its enactment [Mar. 23, 1976].’’ 

ADJUSTMENTS FOR INFLATION 

On and after Dec. 31, 2011, dollar amount described in 

par. (1) of this section to be adjusted annually by the 

annual percentage increase in the Consumer Price 

Index for Urban Wage Earners and Clerical Workers, 

see section 1100E(b) of Pub. L. 111–203, set out as a note 

under section 1603 of this title. 

§ 1667a. Consumer lease disclosures 

Each lessor shall give a lessee prior to the consummation of the lease a dated written statement on which the lessor and lessee are identified setting out accurately and in a clear and 

conspicuous manner the following information 

with respect to that lease, as applicable: 

(1) A brief description or identification of 

the leased property; 

(2) The amount of any payment by the lessee 

required at the inception of the lease; 

(3) The amount paid or payable by the lessee 

for official fees, registration, certificate of 

title, or license fees or taxes; 

(4) The amount of other charges payable by 

the lessee not included in the periodic payments, a description of the charges and that 

the lessee shall be liable for the differential, if 

any, between the anticipated fair market 

value of the leased property and its appraised 

actual value at the termination of the lease, if 

the lessee has such liability; 

(5) A statement of the amount or method of 

determining the amount of any liabilities the 

lease imposes upon the lessee at the end of the 

term and whether or not the lessee has the option to purchase the leased property and at 

what price and time; 

(6) A statement identifying all express warranties and guarantees made by the manufacturer or lessor with respect to the leased property, and identifying the party responsible for 

maintaining or servicing the leased property 

together with a description of the responsibility; 

(7) A brief description of insurance provided 

or paid for by the lessor or required of the lesVerDate 0ct 09 2002 10:22 Oct 12, 2021 Jkt 000000 PO 00000 Frm 01478 Fmt 5800 Sfmt 5800 D:\OLRC\DATA\PRINT\2018SUPP220\OUTPUT\PCC\FOLIOS\USC15.20 PROD