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ATTACHMENT A 

Truth in Lending Act, 15 U.S.C. §§ 1601-1666j 
§ 1601 TITLE 15-COMMERCE AND TRADE Page 4 

Sec. SUBCHAPTER I-CONSUMER CREDIT COST 

168ls-l. Information on overdue child support obliga­ DISCLOSURE 

tions. 

168ls-2. Responsibilities of furnishers of information to PART A-GENERAL PROVISIONS consumer reporting agencies. 

1681&-3. Affiliate sharing. 

Relation to State laws. § 1601. Congressional findings and 1681t. declaration of 

1681u. Disclosures to FBI for counterintelligence pur­ purpose 

poses. (a) Informed use of credit 

1681v. Disclosures to governmental agencies for coun­ The Congress finds that economic stabilization terterrorism purposes. would be enhanced and the among 1681w. Disposal of competition records. 

1681x. Corporate and technological circumvention the various financial institutions and other firms 

prohibited. engaged in the extension of consumer credit would 

be strengthened by the informed use of credit. 

SUBCHAPTER IV-EQUAL CREDIT OPPORTUNITY The informed use of credit results from an aware1691. Scope of prohibition. ness of the cost thereof by consumers. It is the 

1691a. Definitions; rules of construction. purpose of this subchapter to assure a meaning1691b. Promulgation of regulations by the Bureau. ful disclosure of credit terms so that the consum1691c. Administrative enforcement. er will be able to compare more readily the var16910-l. Incentives for self-testing and self-correction. ious credit terms available to him and avoid the 

1691c-2. Small business loan data collection. uninformed use of credit, and to protect the con­ 1691d. Applicability of other laws. sumer against inaccurate and unfair credit bill1691e. Civil liability. ing and credit card practices. 169lf. Annual reports to Congress; contents. 

(b) Terms of personal property leases SUBCHAPTER V-DEBT COLLECTION PRACTICES 

The Congress also finds that there has been a 1692. Congressional findings and declaration of pur- recent trend toward leasing automobiles and other 

pose. durable goods for consumer use as an alternative 1692a. Definitions. to installment credit sales and that these leases 1692b. Acquisition of location information. have been Communication in offered without adequate cost disclo­ 1692c. connection with debt collec- sures. tion. It is the purpose of this subchapter to as1692d. Hara.ssment or abuse. sure a meaningful disclosure of the terms of leases 

1692e. False or misleading representations. of personal property for personal, family, or house1692f. Unfair practices. hold purposes so as to enable the lessee to com~ 

1692g. Validation of debts. pare more readily the various lease terms avail1692h. Multiple debts. able to him, limit balloon payments in consumer 

16921. Legal actions by debt collectors. leasing, enable comparison of lease terms with 

1692j. Furnishing certain deceptive forms. credit terms where appropriate, and to assure mean­ 1692k. Civil liability. ingful and accurate disclosures of lease terms in 

16921. Administrative enforcement. advertisements. 

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

other Federal agencies. (Pub. L. 90-321, title I, § 102, May 29, 1968, 82 Stat. 

1692n. Relation to State laws. 146; Pub. L. 93-495, title III, § 302, Oct. 28, 1974, 88 

16920. Exemption for State regulation. Stat. 1511; Pub. L. 94-240, § 2, Mar. 23, 1976, 90 Stat. 

1692p Exception for certain bad check enforcement 257.) 

programs operated by private entities. 

AMENDMENTS 

SUBCHAPTER VI-ELECTRONIC FUND TRANSFERS 1976-Pub. L. 94--240 designated existing provisions as 

1693. Congressional findings and declaration of pur- subsec. (a) and added subsec. (b). 

pose. 1974-Pub. L. 93--4.95 inserted provisions expanding purposes of subchapter to include 1693a. Definitions. protection of consumer 

against inaccurate and unfair credit billing and credit 1693b. Regulations. card practices. 1693c. Terms and conditions of transfers. 

1693d. Documentation of transfers. EFFECTIVE DATE OF 2010 AMENDMENT 1693e. Preauthorized transfers. 

1693f. Error resolution. Pub. L. 111-203, title XIV, § 1400(c), July 21, 2010, 124 

1693g. Consumer liability. Stat. 2136, provided that: 

1693h. Liability of financial institutions. "(1) REGULATIONS.-The regulations required to be prescribed under this title [see Tables for classification] or 1693i. Issuance of cards or other means of access. the amendments made by this title shall- 1693j. Suspension of obligations. "(A) be prescribed in final form before the end of the 1693k. Compulsory use of electronic fund transfers. 18-month period beginning on the designated transfer 16931. Waiver of rights. date; and 16931-1. General-use prepaid cards, gin certificates, "(B) take effect not later than 12 months after the and store gift cards. date of issuance of the regulations in final form. 

1693m. Civil liability. "(2) EFFECTIVE DATE ESTABLISHED BY RULE.-Except 1693n. Criminal liability. as provided in paragraph (3), a section, or provision there16930. Administrative enforcement. of, of this title shall take effect on the date on which the 

16930-l. Remittance transfers. final regulations implementing such section, or provi16930-2. Reasonable fees and rules for payment card sion, take effect. 

transactions. "(3) EFFECTIVE DATE.-A section of this title for which 

1693p. Reports to Congress. regulations have not been issued on the date that is 18 

1693q. Relation to State laws. months after the designated transfer date shall take ef1693r. Exemption for State regulation. fect on such date." 

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Page 5 TITLE 15---COMMERCE AND TRADE § 1601 

EFFECTIVE DATE OF 1976 AMENDMENT Pub. L. 110-241, § 1, June 3, 2008, 122 Stat. 1565, provided 

that: "This Act [amending section 1681n of this title and Amendment by Pub. L. 94-240 effective on expiration of enacting provisions set out as notes under section 1681n one year after Mar. 23, 1976, see section 6 of Pub. L. of this title] may be cited as the 'Credit and Debit Card 94-240, set out as an Effective Date note under section Receipt Clarification Act of 2007'." 1667 of this title. 

SHORT TITLE OF 2003 AMENDMENT EFFECTIVE DATE OF 1974 AMENDMENT 

Pub. L. 108--159, § l(a), Dec. 4, 2003, 117 Stat. 1952, pro­ For effective date of amendment by Pub. L. 93--495, see vided that: "This Act [enacting sections 1681c-l, 1681c-2, section 308 of Pub. L. 93--495, set out as an Effective Date 1681s--3, 1681 w, and 168lx of this title and sections 9701 to note under section 1666 of this title. 9708 of Title 20, Education, amending sections 1681a, 1681b, 

1681c, 1681g, 1681i, 1681j, 1681m, 16810, 1681p, 1681s, 1681s--2, EFFECTIVE DATE 168H, 1681u, and 1681 v of this title and section 5318 of 

Section 504(a) of Pub. L. 90-321 provided that this part Title 31, Money and Finance, enacting provisions set out 

is effective May 29, 1968. as notes under this section, sections 1681, 1681a, 1681b, 

1681c, 1681c-1, 16811, 1681j, 1681m, 1681n, 1681s-2, 168ls--3 of 

SHORT TITLE OF 2018 AMENDMENT this title, and section 9701 of Title 20, and amending provisions set out as a note under this section] may be cited Pub. L. 115-174, § l(a), May 24, 2018, 132 Stat. 1296, pro­ as the 'Fair and Accurate Credit Transactions Act of vided that: "This Act [see Tables for classification] may 2003'." be cited as the 'Economic Growth, Regulatory Relief, 

and Consumer Protection Act'." SHORT TITLE OF 1999 AMENDMENT 

SHORT TITLE OF 2015 AMENDMENT Pub. L. 106-102, title VII, § 701, Nov. 12, 1999, 113 Stat. 

Pub. L. 1463, provided that: "This subtitle [subtitle A (§§ 701-705) 114-94, div. G, title LXXXIX, §89001, Dec. 4, of title VII of Pub. L. 106-102, amending sections 1693b, 2015, 129 Stat. 1799, provided that: "This title [amending 1693c, and 1693h of this title] may be cited as the 'ATM sections 1639c and 1639d of this title and enacting provi­ Fee Reform Act of 1999'." sions set out as a note under section 5512 of Title 12, 

Banks and Banking] may be cited as the 'Helping ExSHORT TITLE OF 1998 AMENDMENT pand Lending Practices in Rural Communities Act of 

2015' or the 'HELP Rural Communities Act of 2015'." Pub. L. 105-347, § 1, Nov. 2, 1998, 112 Stat. 3208, provided 

that: "This Act [amending sections 1681a to 1681c, 1681g, SHORT TITLE OF 2010 AMENDMENT 16811, 1681k, and 1681s of this title and enacting proviPub. L. sions 111-319, set § out 1, Dec. as a 18, note 2010, under 124 Stat. section 1681a 3457, of pro­ this title] 

vided that: may "This Act be cited as [amending the 'Consumer section 1681m Reporting of this Employment 

title and enacting Clarification provisions Act of 1998' set ." out as a note under section 1681m of this title] may be cited as the 'Red Flag 

Program Clarification Act SHORT TITLE OF 1996 AMENDMENT of 2010'." 

Pub. L. 111-203, title XIV, § 1400(a), July 21, 2010, 124 Pub. L. 104-208, div. A, title II, § 2401, Sept. 30, 1996, 110 

Stat. 2136, provided that: "This title [see Tables for clas­ Stat. 3009-426, provided that: "This chapter [chapter 1 

sification] may be cited as the 'Mortgage Reform and (§§ 2401-2422) of subtitle D of title II of div. A of Pub. L. 

Anti-Predatory Lending Act'." 104-208, enacting section 1681s-2 of this title, amending 

sections 1681a to 1681e, 1681g to 1681j, 1681m to 16810, SHORT TITLE OF 2009 AMENDMENT 1681q to 1681s, and 1681t of this title, and enacting proviPub. L. 111-93, § 1, Nov. 6, 2009, 123 Stat. 2998, provided sions set out as notes under sections 1681a, 1681b, and 

that: "This Act [amending section 1666b of this title] 1681g of this title] may be cited as the 'Consumer Credit 

may be cited as the 'Credit CARD Technical Corrections Reporting Reform Act of 1996'." 

Act of 2009'." 

Pub. L. 111-24, § l(a), May 22, 2009, 123 Stat. 1734, pro­ SHORT TITLE OF 1995 AMENDMENTS 

vided that: "This Act [enacting sections 1616, 1651, 1665c Pub. L. 104-29, § 1, Sept. 30, 1995, 109 Stat. 271, provided to 1665e, 1666i-l, 1666i-2, and 16931-1 of this title and sec­ that: "This Act [enacting section 1649 of this title, amend­ tion la-7b of Title 16, Conservation, amending sections ing sections 1605, 1631, 1635, 1640, and 1641 of this title, 1602, 1632, 1637, 1640, 1650, 1666b, 1666c, 1666j, 1681b, 1681j, and enacting provisions set out as notes under section and 1693m to 1693r of this title, enacting provisions set 1605 of this title] may be cited as the 'Truth in Lending out as notes under sections 1602, 1637, 1638, 1666b, 168lj, Act Amendments of 1995'." and 16931-1 of this title and section 5311 of Title 31, Mon­ Pub. L. 104-12, § 1, May 18, 1995, 109 Stat. 161, provided ey and Finance, and amending provisions set out as notes that: "This Act [amending section 1640 of this title] may under sections 1638 and 1693 of this title] may be cited as be cited as the 'Truth in Lending Class Action Relief Act the 'Credit Card Accountability Responsibility and Dis­ of 1995'." closure Act of 2009' or the 'Credit CARD Act of 2009'." 

SHORT TITLE OF 1994 AMENDMENT SHORT TITLE OF 2008 AMENDMENT 

Pub. L. 103--325, title I, § 151, Sept. 23, 1994, 108 Stat. Pub. L. 110-315, title X, § 1001, Aug. 14, 2008, 122 Stat. 2190, provided that: "This subtitle [subtitle B (§§ 151-158) 3478, provided that: "This title [enacting section 1650 of of title I of Pub. L. 103--325, enacting sections 1639 and this title and sections 1019d and 9709 of Title 20, Educa­ 1648 of this title, amending sections 1602, 1604, 1610, 1640, tion, amending sections 1602, 1603, 1638, and 1640 of this 1641, and 1647 of this title, and enacting provisions set title, section 2903 of Title 12, Banks and Banking, and out as notes under this section and section 1602 of this section 1092 of Title 20, and enacting provisions set out title] may be cited as the 'Home Ownership and Equity as notes under sections 1638 and 1640 of this title, section Protection Act of 1994'." 2903 of Title 12, and section 9709 of Title 20) may be cited 

as the 'Private Student Loan Transparency and Improve­ SHORT TITLE OF 1992 AMENDMENT ment Act of 2008'." 

Pub. L. 110-289, div. B, title V, § 2501, July 30, 2008, 122 Pub. L. 102--537, § 1, Oct. 27, 1992, 106 Stat. 3531, provided 

Stat. 2855, provided that: "This title [amending sections that: "This Act [ enacting section 1681s--1 of this title, 

1638 and 1640 of this title and sections 24 and 338a of amending section 1681a of this title, and enacting proviTitle 12, Banks and Banking, and enacting provisions set sions set out as a note under section 1681a of this title] 

out as a note under section 1638 of this title] may be cit­ may be cited as the 'Ted Weiss Child Support Enforceed as the 'Mortgage Disclosure Improvement Act of 2008'." ment Act of 1992'." 

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§ 1601 TITLE 15--COMMERCE AND TRADE Page 6 

SHORT TITLE OF 1988 AMENDMENTS chapter II-A of this chapter] may be cited as the 'Credit 

Repair Organizations Act'." Pub. L. 100-709, § 1, Nov. 23, 1988, 102 Stat. 4725, pro­ Section 601 of title VI of Pub. L. 90-321, as added by vided that: "This Act (enacting sections 1637a, 1647, and Pub. L. 91-508, title VI, § 601, Oct. 26, 1970, 84 Stat. 1128, 1665b of this title, amending sections 1632 and 1637 of as amended by Pub. L. 108-159, title VIII, § 811(a), Dec. 4, this title, and enacting provisions set out as notes under 2003, 117 Stat. 2011, provided that: "This title [enacting section 1637a of this title] may be cited as the 'Home Eq­ subchapter III of this chapter] may be cited as the 'Fair uity Loan Consumer Protection Act of 1988'." Credit Reporting Act'." Pub. L. 100-583, § 1, Nov. 3, 1988, 102 Stat. 2960, provided Section 709 of title VII of Pub. L. 90-321, as added by that: "This Act [amending sections 1610, 1632, 1637, 1640, section l(b) of Pub. L. 94-239, Mar. 23, 1976, 90 Stat. 251, and 1646 of this title and enacting provisions set out as a provided that: "This title [enacting subchapter IV of this note under section 1637 of this title] may be cited as the chapter and notes set out under section 1691 of this title] 'Fair Credit and Charge Card Disclosure Act of 1988'." 

may be cited as the 'Equal Credit Opportunity Act'." 

Section 801 of title VIII of Pub. L. 90-321, as added by SHORT TITLE OF 1981 AMENDMENT Pub. L. 95-109, Sept. 20, 1977, 91 Stat. 874, provided that: 

Pub. L. 97-25, §1, July 27, 1981, 95 Stat. 144, provided: "This title [enacting subchapter V of this chapter] may 

"That this Act [amending sections 1602 and 1666f of this be cited as the 'Fair Debt Collection Practices Act'." 

title, section 29 of Title 12, Banks and Banking, and sec­ Section 901 of title IX of Pub. L. 90-321, as added Pub. 

tions 205 and 212 of Title 42, The Public Health and Wel­ L. 95-630, title XX, § 2001, Nov. 10, 1978, 92 Stat. 3728, profare; enacting provisions set out as notes under this sec­ vided that: "This title (enacting subchapter VI of this 

tion and sections 1602 and 1666f of this title; and amend­ chapter] may be cited as the 'Electronic Fund Transfer 

ing provisions set out as notes under sections 1602 and Act'. 1

' 

1666f of this title] may be cited as the 'Cash Discount 

Act'.') SEVERABILITY 

Pub. L. 90-321, title V, §501, May 29, 1968, 82 Stat. 167, SHORT TITLE OF 1980 AMENDMENT provided that: "If a provision enacted by this Act [see 

Pub. L. 96-221, title VI, §601, Mar. 31, 1980, 94 Stat. 168, Short Title note above], is held invalid, all valid proviprovided that: "This title (enacting section 1646 of this sions that are severable from the invalid provision retitle, amending sections 57a, 1602 to 1607, 1610, 1612, 1613, main in effect. If a provision enacted by this Act is held 

1631, 1632, 1635, 1637, 1638, 1640, 1641, 1643, 1663, 1664, 1665a, invalid in one or more of its applications, the provision 

1666, 1666d, 1667d, and 169lf of this title, repealing sec­ remains in effect in all valid applications that are severtions 1614, 1636, and 1639 of this title, and enacting provi­ able from the invalid application or applications." 

sions set out as notes under sections 1602 and 1607 of this 

be EXEMPTION OR MoDIFICATION OF MORTGAGE DISCLOSURE title] may cited as the 'Truth in Lending Simplifica­ REQUIREMENTS tion and Reform Act' .. " 

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

SHORT TITLE OF 1976 AMENDMENTS Stat. 2142, provided that: "Notwithstanding any other 

Pub. L. provision of this title [see Tables for classification], in 94-240, § 1, Mar. 23, 1976, 90 Stat. 257, provided order to improve consumer awareness and understanding that: "This Act [enacting sections 1667 to 1667e of this 

of transactions involving residential mortgage loans through title, amending this section and section 1640 of this title, the use of disclosures, the Board may, by rule, exempt and enacting provisions set out as a note under section 

from or modify disclosure requirements, in whole or in 1667 of this title] may be cited as the 'Consumer Leasing 

Act part, for any class of residential mortgage loans if the of 1976'." 

Pub. L. Board determines that such exemption or modification is 94-239, § l(a), Mar. 23, 1976, 90 Stat. 251, pro­ in the interest of consumers and in the public interest." vided that: "This Act [enacting section 169lf of this title, 

amending this section and sections 1691b, 1691c, 1691d, ANALYSIS OF FURTHER RESTRICTIONS ON OFFERS OF 169le of this title, repealing section 1609 of this title, en­ CREDIT OR INSURANCE acting provisions set out as notes under this section, and 

repealing provision set out as a note under this section] Pub. L. 108-159, title n, §213(e), Dec. 4, 2003, 117 Stat. 

may be cited as the 'Equal Credit Opportunity Act Amend­ 1979, provided that: 

ments of 1976'." "(l) IN GENERAL-The Board shall conduct a study 

Section l(c) of Pub. L. 94-239 repealed section 501 of ofPub. L. 93-495, title V, Oct. 28, 1974, 88 Stat. 1521, which "(A) the ability of consumers to avoid receiving writprovided that subchapter IV of this chapter and notes ten offers of credit or insurance in connection with 

set out under section 1691 were to be cited as the "Equal transactions not initiated by the consumer; and 

Credit Opportunity Act". "(B) the potential impact that any further restrictions on providing consumers with such written offers 

SHORT TITLE OF 1974 AMENDMENT of credit or insurance would have on consumers. 

"(2) REPORT.-The Board shall submit a report sum­ Pub. L. 93-495, title III, §301, Oct. 28, 1974, 88 Stat. 1511, marizing the results of the study required under para­ provided that: "This title [enacting sections 1666 to 1666j graph (1) to the Congress not later than 12 months after of this title, amending this section and sections 1602, the date of enactment of this Act [Dec. 4, 2003], together 1610, 1631, 1632, and 1637 of this title, and enacting provi­ w1th such recommendations for legislative or adminis­ sion set out as a note under section 1666 of this title] trative action as the Board may determine to be appro­ may be cited as the 'Fair Credit Billing Act'." priate. 

"(3) CONTENT OF REPORT.-The repart described in para­ SHORT TITLE graph (2) shall address the following issues: 

Pub. L. 90-321, § 1, May 29, 1968, 82 Stat. 146, provided "(A) The current statutory or voluntary mechanisms 

that: "This Act [enacting this chapter, sections 891 to that are available to a consumer to notify lenders and 

896 of Title 18, Crimes and Criminal Procedure, and pro­ insurance providers that the consumer does not wish 

visions set out as notes under this section, sections 1631 to receive written offers of credit or insurance. 

and 1671 of this title, and section 891 of Title 18] may be "(B) The extent to which consumers are currently 

cited as the 'Consumer Credit Protection Act'." utilizing existing statutory and voluntary mechanisms 

Pub. L. 90-321, title I, §101, May 29, 1968, 82 Stat. 146, to avoid receiving offers of credit or insurance. 

provided that: "This title [enacting this subchapter] may "(C) The benefits provided to consumers as a result 

be cited as the 'Truth in Lending Act'." of receiving written offers of credit or insurance. 

Section 401 of title IV of Pub. L. 90--321, as added by "(D) Whether consumers incur significant costs or 

Pub. L. 104-208, div. A, title II, § 2451, Sept. 30, 1996, 110 are otherwise adversely affected by the receipt of writStat. 3009-454, provided that: "This title [enacting sub- ten offers of credit or insurance. 

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Page 7 TITLE 15-COMMERCE AND TRADE § 1602 

"(E) Whether further restricting the ability of lend­ visions set out as notes under this section, sections 1631 

ers and insurers to provide written offers of credit or and 1671 of this title, and section 891 of Title 18] may be 

insurance to consumers would affect--- drawn from them." 

"(1) the cost consumers pay to obtain credit or insurance; GRAMMATICAL USAGES 

"(ii) the availability of credit or insurance; Pub. L. 90---321, title V, § 503, May 30, 1968, 82 Stat. 167, 

"(iii) consumers' knowledge about new or alterna­ provided that: "In this Act [enacting this chapter, sec­ tive products and services; tions 891 to 896 of Title 18, Crimes and Criminal Proce­

"(iv) the ability of lenders or insurers to compete dure, and provisions set out as notes under this section, with one another; and sections 1631 and 1671 of this title, and section 891 of 

"(v) the ability to offer credit or insurance prod­ Title 18]: ucts to consumers who have been traditionally un­ "(1) The word 'may' is used to indicate that an ac­ derserved." tion either is authorized or is permitted. [For definitions of terms used in section 213(e) of Pub. "(2) The word 'shall' is used to indicate that an ac­ L. 108---159, set out above, see section 2 of Pub. L. 108---159, tion is both authorized and required. set out as a Definitions note under section 1681 of this "(3) The phrase 'may not' is used to indicate that an title.] action is both unauthorized and forbidden. 

"(4) Rules of law are stated in the indicative mood." 

FEDERAL RESERVE STUDY OF HOME EQUITY LENDING 

AND APPROPRIATE INTEREST RATE INDEX DEFINITION 

Pub. L. 103-325, title I, § 157, Sept. 23, 1994, 108 Stat. Pub. L. 111-203, title XIV, § 1495, July 21, 2010, 124 Stat. 

2197, provided that: "During the period beginning 180 2207, provided that: "For purposes of this title [see Tables 

days after the date of enactment of this Act [Sept. 23, for classification], the term 'designated transfer date' 

1994] and ending 2 years after that date of enactment, means the date established under section 1062 of this Act 

the Board of Governors of the Federal Reserve System [12 u.s.c. 5582]." 

shall conduct a study and submit to the Congress a report, including recommendations for any appropriate leg­ § 1602. Definitions and rules of construction 

islation, regarding-

"(!) whether a consumer engaging in an open end (a) The definitions and rules of construction set 

credit transaction (as defined in section 103 of the Truth forth in this section are applicable for the purin Lending Act [15 U.S.C. 1602]) secured by the consum­ poses of this subchapter. 

er's principal dwelling is provided adequate protections (b) BUREAU.-The term "Bureau" means the Buunder Federal law, including section 127 A of the Truth reau of Consumer Financial Protection. 

in Lending Act [15 U.S.C. 1637a]; and (c) The term "Board" refers to the Board of "(2) whether a more appropriate interest rate index Governors of the Federal Reserve System. exists for purposes of subparagraph (A) of section (d) The term "organization" means a corpora­ 103(aa)(l) [now 103(bb)(l)] of the Truth in Lending Act 

(as added by section 152(a) of this Act [15 U.S.C. tion, government or governmental subdivision or 

1602(bb)(l)(A)l) than the yield on Treasury securities agency, trust, estate, partnership, cooperative, or 

referred to in that subparagraph." association. 

(e) The term "person" means a natural person 

HEARINGS ON HOME EQUITY LENDING or an organization. 

Pub. L. 103-325, title I, § 158, Sept. 23, 1994, 108 Stat. (f) The term "credit" means the right granted 

2197, as amended by Pub. L. 111-203, title X, § 1096, July by a creditor to a debtor to defer payment of debt 

21, 2010, 124 Stat. 2102, provided that: or to incur debt and defer its payment. "(a) HEARINGS.-Not less than once during the 3-year (g) The term "creditor" refers only to a person period beginning on the date of enactment of this Act who both (1) regularly extends, whether in con­ [Sept. 23, 1994], and regularly thereafter, the Bureau, in nection with loans, sales of property or services, consultation with the Advisory Board to the Bureau, shall or otherwise, consumer credit which is payable by conduct a public hearing to examine the home equity 

loan market and the adequacy of existing regulatory agreement in more than four installments or for 

and legislative provisions and the provisions of this sub­ which the payment of a finance charge is or may 

title [see Short Title of 1994 Amendment note above] in be required, and (2) is the person to whom the 

protecting the interests of consumers, and low-income debt arising from the consumer credit transac­ consumers in particular. tion is initially payable on the face of the evi­

"(b) PARTICIPATION.-ln conducting hearings required dence of indebtedness or, if there is no such evi­ by subsection (a), the Bureau shall solicit participation dence of indebtedness, by agreement. Notwithstand­ from consumers, representatives of consumers, lenders, ing the preceding sentence, in the case of an open­ and other interested parties." end credit plan involving a credit card, the card 

STUDY BY FEDERAL RESERVE BOARD OF GoVERNORS issuer and any person who honor:s the credit card 

COVERING EFFECT OF CHARGE CARD TRANSAarIONS and offers a discount which is a finance charge 

UPON CARD ISSUERS, MERCHANTS, AND CONSUMERS are creditors. For the purpose of the requirements 

Pub. L. 97-25, title II, § 202, July 27, 1981, 95 Stat. 145, imposed under part D of this subchapter and secdirected Board of Governors of Federal Reserve System, tions 1637(a)(5), 1637(a)(6), 1637(a)(7), 1637(b)(l), 

not later than 2 years after July 27, 1981, to prepare a 1637(b)(2), 1637(b)(3), 1637(b)(8), and 1637(b)(10) of 

study and submit its findings to Congress on the effect this title, the term "creditor" shall also include 

of charge card transactions upon card issuers, merchants, card issuers whether or not the amount due is 

and consumers. payable by agreement in more than four installments or the payment of a finance charge is or INFERENCE OF LEGISLATIVE INTENT IN SE=ION 

CAPTIONS AND CATCHLINES may be required, and the Bureau shall, by regulation, apply these requirements to such card isPub. L. 90---321, title V, § 502, May 29, 1968, 82 Stat. 167, suers, to the extent appropriate, even though the provided that: ''Captions and catchlines are intended sole­ requirements are by their terms applicable only ly as aids to convenient reference, and no inference as to 

the legislative intent with respect to any provision en­ to creditors offering open-end credit plans. Any 

acted by this Act [enacting this chapter, section 891 to person who originates 2 or more mortgages re896 of Title 18, Crimes and Criminal Procedure, and pro- ferred to in subsection (aa) in any 12-month peCase 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 5 of 92 PageID #: 120 
§ 1602 TITLE 15---COMMERCE AND TRADE Page 8 

riod or any person who originates 1 or more such ity for such use and from which the cardholder 

mortgages through a mortgage broker shall be receives no benefit. 

considered to be a creditor for purposes of this (q) The term "discount" as used in section 1666f 

subchapter. The term "creditor" includes a pri­ of this title means a reduction made from the 

vate educational lender (as that term is defined regular price. The term "discount" as used in 

in section 1650 of this title) for purposes of this section 1666f of this title shall not mean a sur­ charge. subchapter. (r) The term "surcharge" as used in this sec­ (h) The term "credit sale" refers to any sale in tion and section 1666f of this title means any which the seller is a creditor. The term includes means of increasing the regular price to a card­ any contract in the form of a bailment or lease if holder which is not imposed upon customers pay­ the bailee or lessee contracts to pay as compensa­ ing by cash, check, or similar means." tion for use a sum substantially equivalent to or (s) The term "State" refers to any State, the in excess of the aggregate value of the property Commonwealth of Puerto Rico, the District of and services involved and it is agreed that the Columbia, and any territory or possession of the 

bailee or lessee will become, or for no other or a United States. 

nominal consideration has the option to become, (t) The term "agricultural purposes" includes 

the owner of the property upon full compliance the production, harvest, exhibition, marketing, with his obligations under the contract. transportation, processing, or manufacture of ag­

(i) The adjective "consumer", used with refer­ ricultural products by a natural person who cul­ ence to a credit transaction, characterizes the tivates, plants, propagates, or nurtures those agtransaction as one in which the party to whom ricultural products, including but not limited to 

credit is offered or extended is a natural person, the acquisition of farmland, real property with a and the money, property, or services which are farm residence, and personal property and serv­ the subject of the transaction are primarily for ices used primarily in farming. 

personal, family, or household purposes. (u) The term "agricultural products" includes 

(j) The terms "open end credit plan'' and "open agricultural, horticultural, viticultural, and dairy 

end consumer credit plan'' mean a plan under which products, livestock, wildlife, poultry, bees, forest 

the creditor reasonably contemplates repeated trans­ products, fish and shellfish, and any products thereactions, which prescribes the terms of such trans­ of, including processed and manufactured prodactions, and which provides for a finance charge ucts, and any and all products raised or produced 

which may be computed from time to time on the on farms and any processed or manufactured prodoutstanding unpaid balance. A credit plan or open ucts thereof. 

end consumer credit plan which is an open end (v) The term "material disclosures" means the 

credit plan or open end consumer credit plan with­ disclosure, as required by this subchapter, of the 

in the meaning of the preceding sentence is an annual percentage rate, the method of determinopen end credit plan or open end consumer credit ing the finance charge and the balance upon which 

plan even if credit information is verified from a finance charge will be imposed, the amount of 

time to time. the finance charge, the amount to be financed, 

(k) The term "adequate notice," as used in sec­ the total of payments, the number and amount of 

tion 1643 of this title, means a printed notice to a payments, the due dates or periods of payments 

cardholder which sets forth the pertinent facts scheduled to repay the indebtedness, and the disclearly and conspicuously so that a person against closures required by section 1639(a) of this title. 

whom it is to operate could reasonably be expect­ (w) The term "dwelling" means a residential 

ed to have noticed it and understood its meaning. structure or mobile home which contains one to 

Such notice may be given to a cardholder by print­ four family housing units, or individual units of 

ing the notice on any credit card, or on each peri­ condominiums or cooperatives. 

odic statement of account, issued to the cardhold­ (x) The term "residential mortgage transaction" 

er, or by any other means reasonably assuring means a transaction in which a mortgage, deed of 

the receipt thereof by the cardholder. trust, purchase money security interest arising 

(I) The term "credit card" means any card, plate, under an installment sales contract, or equivalent 

coupon book or other credit device existing for consensual security interest is created or retained 

the purpose of obtaining money, property, labor, against the consumer's dwelling to finance the acor services on credit. quisition or initial construction of such dwelling. 

(m) The term "accepted credit card" means any (y) As used in this section and section 1666f of 

credit card which the cardholder has requested this title, the term "regular price" means the 

and received or has signed or has used, or author­ tag or posted price charged for the property or ized another to use, for the purpose of obtaining service if a single price is tagged or posted, or 

money, property, labor, or services on credit. the price charged for the property or service when 

(n) The term "cardholder" means any person to payment is made by use of an open-end credit 

whom a credit card is issued or any person who plan or a credit card if either (1) no price is tagged 

has agreed with the card issuer to pay obligations or posted, or (2) two prices are tagged or posted, 

arising from the issuance of a credit card to an­ one of which is charged when payment is made by 

other person. use of an open-end credit plan or a credit card 

(o) The term "card issuer" means any person and the other when payment is made by use of 

who issues a credit card, or the agent of such per­ cash, check, or similar means. For purposes of this 

son with respect to such card. definition, payment by check, draft, or other nego­

(p) The term "unauthorized use," as used in tiable instrument which may result in the debiting 

section 1643 of this title, means a use of a credit of an open-end credit plan or a credit cardholder's 

card by a person other than the cardholder who open-end account shall not be considered payment 

does not have actual, implied, or apparent author- made by use of the plan or the account. 

Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 6 of 92 PageID #: 121 
Page 9 TITLE 15-COMMERCE AND TRADE § 1602 

(z) Any reference to any requirement imposed (ii) In the case of a transaction in which 

under this subchapter or any provision thereof the rate of interest varies solely in accordincludes reference to the regulations of the Bu­ ance with an index, the interef!t rate deterreau under this subchapter or the provision there­ mined by adding the index rate in effect on 

of in question. the date of consummation of the transac­

(aa) The disclosure of an amount or percentage tion to the maximum margin permitted at 

which is greater than the amount or percentage any time during the loan agreement. 

required to be disclosed under this subchapter does (iii) In the case of any other transaction 

not in itself constitute a violation of this sub­ in which the rate may vary at any time 

chapter. during the term of the loan for any reason, 

(bb) HIGH-COST MORTGAGE.­ the interest charged on the transaction at 

(!) DEFINITION.- the maximum rate that may be charged dur­

(A) IN GENERAL.-The term "high-cost mort­ ing the term of the loan. 

gage", and a mortgage referred to in this sub­ (C) MORTGAGE INSURANCE.-For the purposes section, rrieans a consumer credit transaction of computing the total points and fees under that is secured by the consumer's principal paragraph (4), the total points and fees shall dwelling, other than a reverse mortgage trans­ exclude- action, if- (!) any premium provided by an ·agency of (i) in the case of a credit transaction the Federal Government or an agency of a secured- State; (!) by a first mortgage on the consum­ (ii) any amount that is not in excess of er's principal dwelling, the annual percent­ the amount payable under policies in effect 

age rate at consummation of the transac­ at the time of origination under section tion will exceed by more than 6.5 percent­ 203(c)(2)(A) of the National Housing Act (12 

age points (8.5 percentage points, if the U.S.C. 1709(c)(2)(A)), provided that the pre­ dwelling is personal property and the trans­ mium, charge, or fee is required to be re­ action is for less than $50,000) the average fundable on a pro-rated basis and the refund 

prime offer rate, as defined in section is automatically issued upon notification of 

1639c(b)(2)(B) of this title, for a compara­ the satisfaction of the underlying mortgage 

ble transaction; or loan; and 

(II) by a subordinate or junior mortgage (iii) any premium paid by the consumer 

on the consumer's principal dwelling, the after closing. 

annual percentage rate at consummation (2)(A) After the 2-year period beginning on the 

of the transaction will exceed by more effective date of the regulations promulgated un­ than 8.5 percentage points the average prime der section 155 of the Riegle Community Develop­ offer rate, as defined in section 1639c(b)(2)(B) ment and Regulatory Improvement Act of 1994, 

of this title, for a comparable transaction; and no more frequently than biennially after the 

first increase or decrease under this subparagraph, (ii) the total points and fees payable in the Bureau may by regulation increase or decrease connection with the transaction, other than the number of percentage points specified in para­ bona fide third party charges not retained graph (l)(A), if the Bureau determines that the by the mortgage originator, creditor, or an increase or decrease is-- affiliate of the creditor or mortgage origi­ (i) consistent with the consumer protections nator, exceed- against abusive lending provided by the amend­

(!) in the case of a transaction for $20,000 ments made by subtitle B of title I of the Riegle or more, 5 percent of the total transac­ Community Development and Regulatory Improvetion amount; or ment Act of 1994; and 

(II) in the case of a transaction for less (ii) warranted by the need for credit. 

than $20,000, the lesser of 8 percent of the (B) An increase or decrease under subparagraph total transaction amount or $1,000 (or such (A)- other dollar amount as the Board shall (i) may not result in the number of percent­ prescribe by regulation); or age points referred to in paragraph (l)(A)(i)(I) 

(iii) the credit transaction documents per­ being less than 6 percentage points or greater 

mit the creditor to charge or collect prepay­ than 10 percentage points; and 

ment fees or penalties more than 36 months (ii) may not result in the number of percentafter the transaction closing or such fees or age points referred to in paragraph (l)(A)(i)(ll) 

penalties exceed, in the aggregate, more than being less than 8 percentage points or greater 

2 percent of the amount prepaid. than 12 percentage points. 

(B) INTRODUCTORY RATES TAKEN INTO AC­ (C) In determining whether to increase or deCOUNT .-For purposes of subparagraph (A)(i), crease the number of percentage points referred 

the annual percentage rate of interest shall to in subparagraph (A), the Bureau shall consult 

be determined based on the following interest with representatives ·of consumers, including lowrate: income consumers, and lenders. 

(i) In the case of a fixed-rate transaction (3) The amount specified in paragraph (l)(B)(ii) 

in which the annual percentage rate will shall be adjusted annually on January 1 by the 

not vary during the term of the loan, the annual percentage change in the Consumer Price 

interest rate in effect on the date of con­ Index, as reported on June 1 of the year preceding 

summation of the transaction. such adjustment. 

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§ 1602 TITLE 15-COMMERCE AND TRADE Page 10 

(4) For purposes of paragraph (l)(B), points and (1) COMMISSION.-Unless otherwise specified, 

fees shall include- the term "Commission'' means the Federal Trade 

(A) all items included in the finance charge, Commission. 

except interest or the time-price differential; (2) MORTGAGE ORIGINATOR.-The term "mort­

(B) all compensation paid directly or indirect­ gage originator''-

ly by a consumer or creditor to a mortgage (A) means any person who, for direct or inoriginator from any source, including a mort­ direct compensation or gain, or in the expecgage originator that is also the creditor in a tation of direct or indirect compensation or 

table-funded transaction; gain-

(C) each of the charges listed in section 1605(e) (i) takes a residential mortgage loan apof this title (except an escrow for future pay­ plication; 

ment of taxes), unless-- (ii) assists a consumer in obtaining or ap­

(i) the charge is reasonable; plying to obtain a residential mortgage loan; 

(ii) the creditor receives no direct or indi­ or 

rect compensation; and (iii) offers or negotiates terms of a resi­

(iii) the charge is paid to a third party un­ dential mortgage loan; 

affiliated with the creditor; and (B) includes any person who represents to 

(D) premiums or other charges payable at or the public, through advertising or other means 

before closing for any credit life, credit disabil­ of communicating or providing information 

ity, credit unemployment, or credit property in­ (including the use of business cards, stationsurance, or any other accident, loss-of-income, ery, brochures, signs, rate lists, or other prolife or health insurance, or any payments di­ motional items), that such person can or will 

rectly or indirectly for any debt cancellation or provide any of the services or perform any of 

suspension agreement or contract, except that the activities described in subparagraph (A); 

insurance premiums or debt cancellation or sus­ (C) does not include any person who ispension fees calculated and paid in full on a (i) not otherwise described in subparagraph 

monthly basis shall not be considered financed (A) or (B) and who performs purely adminisby the creditor; trative or clerical tasks on behalf of a per­

(E) the maximum prepayment fees and pen­ son who is described in any such subparaalties which may be charged or collected under graph; or 

the terms of the credit transaction; (ii) a retailer of manufactured or modular 

(F) all prepayment fees or penalties that are homes or an employee of the retailer if the 

incurred by the consumer if the loan refinances retailer or employee, as applicablea previous loan made or currently held by the (!) does not receive compensation or gain 

same creditor or an affiliate of the creditor; for engaging in activities described in suband paragraph (A) that is in excess of any com­

(G) such other charges as the Bureau deter­ pensation or gain received in a comparamines to be appropriate. ble cash transaction; 

(II) discloses to the consumer- (5) CALCULATION OF POINTS AND FEES FOR OPEN­ (aa) in writing any corporate affili­ END CONSUMER CREDIT PLANS.-In the case of open­ ation with any creditor; and end consumer credit plans, points and fees shall (bb) if the retailer has a corporate af­ be calculated, for purposes of this section and filiation with any creditor, at least 1 un­ section 1639 of this title, by adding the total points affiliated creditor; and and fees known at or before closing, including the 

maximum prepayment penalties which may be (III) does not directly negotiate with the 

charged or collected under the terms of the credit consumer or lender on loan terms (includtransaction, plus the minimum additional fees the ing rates, fees, and other costs). 

consumer would be required to pay to draw down (D) does not include a person or entity that an amount equal to the total credit line. only performs real estate brokerage activities (6) This subsection shall not be construed to and is licensed or registered in accordance limit the rate of interest or the finance charge with applicable State law, unless such person that a person may charge a consumer for any ex­ or entity is compensated by a lender, a mort­ tension of credit. gage broker, or other mortgage originator or (cc) The term "reverse mortgage transaction" by any agent of such lender, mortgage broker, means a nonrecourse transaction in which a mort­ or other mortgage originator; gage, deed of trust, or equivalent consensual se­ (E) does not include, with respect to a resi­ curity interest is created against the consumer's dential mortgage loan, a person, estate, or principal dwelling- trust that provides mortgage financing for the 

(!) securing one or more advances; and sale of 3 properties in any 12-month period to (2) with respect to which the payment of any purchasers of such properties, each of which principal, interest, and shared appreciation or is owned by such person, estate, or trust and equity is due and payable (other than in the serves as security for the loan, provided that case of default) only after- such loan- (A) the transfer of the dwelling; (i) is not made by a person, estate, or trust (B) the consumer ceases to occupy the dwell­ that has constructed, or acted as a contrac­ ing as a principal dwelling; or tor for the construction of, a residence on (C) the death of the consumer. the property in the ordinary course of busi­

(dd) DEFINITIONS RELATING TO MORTGAGE ORIGI­ ness of such person, estate, or trust; 

NATION AND RESIDENTIAL MORTGAGE LOANS.- (ii) is fully amortizing; 

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Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 9 of 92 PageID #: 124 

Page 11 TITLE 15-COMMERCE AND TRADE § 1602 

(iii) is with respect to a sale for which the from which the mortgage's interest rate will be 

seller determines in good faith and docu­ discounted does not exceed by more than 1 perments that the buyer has a reasonable abil­ centage pointthe loan; (A) the average prime offer rate, as defined ity to repay section 1639c of this (iv) has a fixed rate or an adjustable rate in title; or 

(B) if secured by a personal property loan, that is adjustable after 5 or more years, subthe average rate on a loan in connection with ject to reasonable annual and lifetime limi­ which insurance is provided under title I of the tations on interest rate increases; and National Housing Act (12 U.S.C. 1702 et seq.). (v) meets any other criteria the Board may 

prescribe; (2) Unless 2 bona fide discount points have 

been excluded under paragraph (1), up to and in­

(F) does not include the creditor (except the cluding 1 bona fide discount point payable by creditor in a table-funded transaction) under the consumer in connection with the mortgage, paragraph (1), (2), or (4) of section 1639b(c) of but only if the interest rate from which the 

this title; and mortgage's interest rate will be discounted does 

(G) does not include a servicer or servicer not exceed by more than 2 percentage points- employees, agents and contractors, includin:5 (A) the average prime offer rate, as defined 

but not limited to those who offer or negoti­ in section 1639c of this title; or ate terms of a residential mortgage loan for (B) if secured by a personal property loan, 

purposes of renegotiating, modifying, replac­ the average rate on a loan in connection with 

ing and subordinating principal of existing mort­ which insurance is provided under title I of the 

gages where borrowers are behind in their pay­ National Housing Act (12 U.S.C. 1702 et seq.). 

ments, in default or have a reasonable likelihood falling behind. (3) For purposes of paragraph (1), the term of being in default or ''bona fide discount points'' means loan discount 

(3) NATIONWIDE MORTGAGE LICENSING SYSTEM points which are knowingly paid by the consum­ AND REGISTRY.-The term "Nationwide Mortgage er for the purpose of reducing, and which in 

Licensing System and Registry" has the same fact result in a bona fide reduction of, the inmeaning as in the Secure and Fair Enforcement terest rate or time-price differential applicable for Mortgage Licensing Act of 2008 [12 U.S.C. to the mortgage. 5101 et seq.]. (4) Paragraphs (1) and (2) shall not apply to 

(4) OTHER DEFINITIONS RELATING TO MORT­ discount points used to purchase an interest 

GAGE ORIGINATOR.-For purposes of this subsec­ rate reduction unless the amount of the intertion, a person "assists a consumer in obtaining est rate reduction purchased is reasonably con­ or applying to obtain a residential mortgage sistent with established industry norms and prac­ loan" by, among other things, advising on resi­ tices for secondary mortgage market transacdential mortgage loan terms (including rates, tions. 

fees, and other costs), preparing residential mort­

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

gage loan packages, or collecting information 147: Pub. L. 91-508, title V, § 501, Oct. 26, 1970, 84 on behalf of the consumer with regard to a res­ Stat. 1126; Pub. L. 93-495, title m, § 303, Oct. 28, idential mortgage loan. 1974, 88 Stat. 1511; Pub. L. 94-222, §3(a), Feb. 27, (5) RESIDENTIAL MORTGAGE LOAN.-The term 

1976, 90 Stat. 197; Pub. L. 96--221, title VI, §§ 602, "residential mortgage loan" means any consum­ 603(a), (b), 604, 612(a)(2), (b), Mar. 31, 1980, 94 Stat. er credit transaction that is secured by a mort168, 169, 175, 176; Pub. L. 97-25, title I, § 102, July gage, deed of trust, or other equivalent conse1:­

27, 1981, 95 Stat. 144; Pub. L. 97-320, title VII, §702(a), ·sual security interest on a dwelling or on resiOct. 15, 1982, 96 Stat. 1538; Pub. L. 103-325, title I, dential real property that includes a dwelling, §§ 152(a)-(c), 154(a), Sept. 23, 1994, 108 Stat. 2190, other than a consumer credit transaction under 2191, 2196; Pub. L. 110-315, title X, an open end credit plan or, for purposes of sec­ § lOll(b), Aug. 

14 2008, 122 Stat. 3481; Pub. L. 111-24, title I, § 108, tions 1639b and 1639c of this title and section 

M~y 22, 2009, 123 Stat. 1743; Pub. L. 111-203, title 1638(a) (16), (17), (18), and (19) of this title, and 

X § ll00A(l), (2), title XIV, §§ 1401, 1431, July 21, sections 1638(f) and 1640(k) of this title, and any 2010, 124 Stat. 2107, 2137, 2157; Pub. L. 115-174, title regulations promulgated thereunder, an extenI, §107, May 24, 2018, 132 Stat. 1304.) sion of credit relating to a plan described in 

section 101(53D) of title 11. REFERENCES IN TEXT 

(6) SECRETARY.-The term "Secretary", when The Riegle Community Development and Regulatory used in connection with any transaction or per­ Improvement Act of 1994, referred to in subsec. (bb)(2)(A)(i), son involved with a residential mortgage loan, is Pub. L. 103-325, Sept. 23, 1994, 108 Stat. 2160. Section means the Secretary of Housing and Urban De­ 155 of the Act is set out below. For classification of subvelopment. title B of title I of the Act, known as the "Home Owner­

(7) SERVICER.-The term "servicer" has the ship and Equity Protection Act of 1994", see Short Title 

same meaning as in section 2605(1)(2) of title 12. of 1994 Amendment note set out under section 1601 of 

this title. For complete classification of this Act to the 

(ee) BONA FIDE DISCOUNT POINTS AND PREPAY­ Code, see Short Title note set out under section 4701 of 

MENT PENALTIES.-For the purposes of determin­ Title 12, Banks and Banking, and Tables. 

ing the amount of points and fees for purposes of The Secure and Fair Enforcement for Mortgage Licenssubsection (aa), either the amounts described in ing 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 paragraph (1) or (2) of the following paragraphs, known· as the S.A.F.E. Mortgage Licensing Act of 2008, but not both, shall be excluded: which is classified generally to chapter 51 (§ 5101 et seq.) 

(1) Up to and including 2 bona fide discount of Title 12, Banks and Banking. For complete classificapoints payable by the consumer in connection tion of this Act to the Code, see Short Title note set out 

with the mortgage, but only if the interest rate under section 5101 of Title 12 and Tables. 
§ 1602 TITLE !~COMMERCE AND TRADE Page 12 

The National Housing Act, referred to in subsec. (ee)(l)(B), ing subpars. (D) to (F) and redesignating former subpar. 

(2)(B), is act June 27, 1934, ch. 847, 48 Stat. 1246. Title I of (D) as (G), was executed by making the amendment to 

the Act is classified generally to subchapter II (§ 1702 et subsec. (bb)(4) to reflect the probable intent of Congress 

seq.) of chapter 13 of Title 12, Banks and Banking. For and the redesignation of subsec. (aa) as (bb) by Pub. L. 

complete classification of this Act to the Code, see sec­ 111-203, § llOO(A)(l). See above. 

tion 1701 of Title 12 and Tables. Subsec. (bb)(5), (6). Pub. L. 111-203, § 1431(c)(2), which 

directed amendment of subsec. (aa) by adding par. (5) AMENDMENTS and redesignating former par. (5) as (6), was executed by 

making the amendment to subsec. (bb) to reflect the 2018--Subsecs. (cc), (dd). Pub. L. 115--174, § 107(1), redes­ probable intent of Congress and the redesignation of sub­ ignated subsec. (cc), relating to definitions relating to 

mortgage sec. (aa) as (bb) by Pub. L. 111-203, § llOO(A)(l). See above. origination and residential mortgage loans, as Subsec. (CC). Pub. L. 111-203, § 1401, added subsec. (cc) (dd). Former subsec. (dd) redesignated (ee). relating to definitions relating to mortgage origination Subsec. (dd)(2)(C). Pub. L. 115--174, § 107(2), added sub­ and residential mortgage loans. par. (C) and struck out former subpar. (C) which read as Pub. L. 111-203, § llOO(A)(l), redesignated subsec. (bb) follows: "does not include any person who is (i) not other­ as (cc) defining the term "reverse mortgage transac­ wise described in subparagraph (A) or (B) and who per­ tion". forms purely administrative or clerical tasks on behalf Subsec. (dd). Pub. L. 111-203, 143l(d), added· subsec. of a person who is described in any such subparagraph, § 

(dd). or (ii) an employee of a retailer of manufactured homes 

who 2009---Subsec. (1). Pub. L. 111-24 substituted "terms 'open is not described in clause (i) or (iii) of subparagraph end credit plan' and 'open end consumer credit plan' mean" (A) and who does not advise a consumer on loan terms for "term 'open end credit plan' means" in first sentence (including rates, and other costs);". and inserted "or open end conswner credit plan'' after Subsec. (ee). Pub. 115--174, §107(1), redesignated sub- "credit plan" wherever appearing in second sentence. sec. (dd) as (ee). 

L. 2008-Subsec. (f). Pub. L. 110-315 inserted at end 2010-Pub. 111-203, § "The 1100A(2), which directed substiterm 'creditor' includes a private educational lender tution of "Bureau" for "Board" wherever appearing, was (as 

that term is defined in section 1650 of this title) for pur­ executed by making the substitution wherever appearing 

poses of this subchapter." in subsecs. (g), (z), and (bb)(2)(A), (C), (4)(D), but not in 

subsec. (c), to reflect the probable intent of Congress. 1994-Subsec. (f). Pub. L. 103-325, § 152(c), inserted at 

(z). § end "Any person who originates 2 or more mortgages re­ Subsecs. (b) to Pub. L. 111-203, llOO(A)(l), added 

ferred to in subsection (aa) in any 12-month period or subsec. (b) and redesignated former subsecs. (b) to (z) as any person who originates 1 or more such mortgages (c) to (aa), respectively. through a mortgage broker shall be considered to be a Subsec. (bb). Pub. L. 111-203, § 1431(a), which directed creditor for purposes of this subchapter." amendment of subsec. (aa) by inserting subsec. heading, Subsec. (u). Pub. L. 103--325, 152(b), substituted "the adding par. (1), and striking out former par. (1), was exe­ § 

due dates" for "and the due dates" and inserted before cuted by making the amendment to subsec. (bb) to re­ period at end ", and the disclosures required by section flect the probable intent of Congress and the redesigna­ 1639(a) of this title". tion of subsec. (aa) as (bb) by Pub. L. 111-203, § llOO(A)(l). 

See Subsec. (aa). Pub. 103-325, below. Text of former par. (1) read as follows: "A L. §152(a), added subsec. (aa). 

mortgage referred to in this subsection means a con­ Subsec. (bb). Pub. L. 103-325, §154(a), added subsec. (bb). 

sumer credit transaction that is secured by the consum­ 1982--Subsec. (f). Pub. L. 97-320 struck out provision 

er's principal dwelling, other than a residential mort­ that a person who regularly arranged for the extension 

gage transaction, a reverse mortgage transaction, or a of consumer credit payable in more than four installtransaction under an open end credit plan, if- ments or for which the payment of a finance charge was· 

"(A) the annual percentage rate at consummation of or might have been required from persons not creditors 

the transaction will exceed by more than 10 percent­ was a creditor, and provision that this subchapter apage points the yield on Treasury securities having com­ plied to any creditor, irrespective of his or its statu1:1 as 

parable periods of maturity on the fifteenth day of the a natural person or any type of organization, who was a 

month immediately preceding the month in which the card issuer. 

application for the extension of credit is received by 1981-Subsecs. (x) to (z). Pub. L. 97-25 added subsec. (z) 

the creditor; or and, effective Apr. 10, 1982, redesignated subsecs. (x), (y), 

"(BJ the total points and fees payable by the conswn­ and (z) as (y), (z), and (x), respectively. 

er at or before closing will exceed the greater of- 1980--Subsec. (f). Pub. L. 96-221, §602(a), substituted 

"(i) 8 percent of the total loan amount; or provisions defining term "creditor" as referring only to 

"(ii) $400." a person who both regularly extends consumer credit, 

Pub. L. 111-203, § llOO(A)(l), redesignated subsec. (a.a) subject to specified conditions, and is the person to whom 

as (bb). Former subsec. (bb) redesignated (cc). the debt arising is initially payable on the face of the 

Subsec. (bb)(2)(B). Pub. L. 111-203, § 1431(b), which di­ indebtedness or by agreement, and notwithstanding such 

rected amendment of subsec. (aa)(2) by adding subpar. provisions, also refers to a person regularly arranging 

(B) and striking out former subpar. (B), was executed by for the extension of conswner credit, and a card issuer 

making the amendment to subsec. (bb)(2) to reflect the and any person honoring the credit card, subject to specprobable intent of Congress and the redesignation of sub­ ified conditions, for provisions defining term "creditor" 

sec. (aa) as (bb) by Pub. L. 111-203, § llOO(A)(l). See above. as referring only to creditors who regularly extend, or 

Text of former subpar. (B) read as follows: "An increase arrange for the extension of credit payable in more than 

or decrease under subparagraph (A) may not result in four installments or where a finance charge is or may be 

the number of percentage points referred to in subpara- required, and substituted "(a)(5)" for "(a)(6)", "(a)(6)" 

graph (A) being- · for "(a)(7)", "(a)(7)" for "(a)(8)", "(b)(8)" for "(b)(9)", and 

"(i) less that 8 percentage points; or "(b)(lO)" for "(b)(ll)". 

"(ii) greater than 12 percentage points." Subsec. (g). Pub. L. 96-221, §602(b), substituted "in which 

Subsec. (bb)(4)(B). Pub. L. 111-203, § 143l(c)(l)(A), which the seller is a creditor" for "with respect to which credit 

directed amendment of subsec. (aa)(4) by adding subpar. is extended or arranged by the seller". 

(B) and struck out former subpar. (B), was executed by Subsec. (h). Pub. L. 96-221, § 603(a), struck out applicamaking the amendment to subsec. (bb)(4) to reflect the bility to agricultural purposes. 

probable intent of Congress and the redesignation of sub­ Subsec. (i). Pub. L. 96-221, § 604, inserted provisions resec. (aa) as (bb) by Pub. L. 111-203, §llOO(A)(l). See above. specting the reasonable contemplations of the creditor, 

Text of former subpar. (B) read as follows: "all compen­ and verification of credit information from time to time. 

sation paid to mortgage brokers;". Subsecs. (s), (t). Pub. L. 96-221, §603(b), added subsecs. 

Subsec. (bb)(4)(D) to (G). Pub. L. 111-203, § 143l(c)(l)(B), (s) and (t). Former subsecs. (s) and (t) redesignated (x) 

(C), which directed amendment of subsec. (aa)(4) by add- and (y), respectively. 

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Page 13 TITLE 15-COMMERCE AND TRADE § 1603 

Subsec. (u). Pub. L. 96-221, §612(a)(2), added subsec. (u). be promulgated at least one year prior to such effective 

Subsecs. (v), (w). Pub. L. 96-221, §612(b), added subsecs. date. 

(v) and (w). "(c) Notwithstanding subsections (a) and (b), any credSubsecs. (x), (y). Pub. L. 96-221, §603(b), redesignated itor may comply with the amendments made by this 

former subsecs. (s) and (t) as (x) and (y), respectively. title, in accordance with the regulations, forms, and clauses 

1976-Subsecs. (p) to (t). Pub. L. 94-222 added subsecs. prescribed by the Board, prior to such effective date. 

(p) and (q) and redesignated former subsecs. (p) to (r) as Any creditor who elects to comply with such amend­

(r) to (t), respectively. ments and any assignee of such a creditor shall be sub1974-Subsec. (f). Pub. L. 93-495 inserted provision re­ ject to the provisions of sections 130 and 131 of the Truth 

quiring the credit to be payable by agreement in more in Lending Act, as amended by sections 615 and 616, re­ than four installments and defining term "creditor" for spectively, of this title [sections 1640 and 1641 of this 

the purposes of the requirements imposed under the enu­ title]." 

merated sections of this chapter. 

1970-Subsecs. (j) to (r). Pub. L. 91-508 added subsecs. EFFECTIVE DATE OF 1974 AMENDMENT 

(j) to (o) and redesignated former subsecs. (j) to (l) as (p) For effective date of amendment by Pub. L. 93-495, see to (r), respectively. section 308 of Pub. L. 93-495, set out as an Effective Date 

note under section 1666 of this title. 

EFFECTIVE DATE OF 2010 AMENDMENT 

REGULATIONS Amendment by section llOOA(l), (2) of Pub. L. 111-203 

effective on the designated transfer date, see section 1100H Pub. L. 111-24, §2, May 22, 2009, 123 Stat. 1735, provided 

of Pub. L. 111-203, set out as a note under section 552a of that: "The Board of Governors of the Federal Reserve 

Title 5, Government Organization and Employees. System (in this Act [see Short Title of 2009 Amendment 

Amendment by sections 1401 and 1431 of Pub. L. 111-203 note set out under section 1601 of this title] referred to 

effective on the date on which final regulations imple­ as the 'Board') may issue such rules and publish such 

menting that amendment take effect, or on the date that model forms as it considers necessary to carry out this 

is 18 months after the designated transfer date if such Act and the amendments made by this Act." 

regulations have not been issued by that date, see sec­ Pub. L. 103-325, title I, § 155, Sept. 23, 1994, 108 Stat. 

tion 1400(c) of Pub. L. 111-203, set out as a note under 2197, provided that: "Not later than 180 days after the 

section 1601 of this title. · date of enactment of this Act [Sept. 23, 1994], the Board 

of Governors of the Federal Reserve System shall issue 

EFFECTIVE DATE OF 2009 AMENDMENT such regulations as may be necessary to carry out this 

subtitle [subtitle B (§§ 151-158) of title I of Pub. L. 103-325, Pub. L. 111-24, §3, May 22, 2009, 123 Stat. 1735, provided see Short Title of 1994 Amendment note set out under that: "This Act [enacting sections 1616, 1651, 1665c to section 1601 of this title], and such regulations shall be­ 1665e, 1666i-l, 16661-2, and 1693l-1 of this title and section come effective on the date on which disclosure regula­ la-7b of Title 16, Conservation, amending this section tions are required to become effective under section 105(d) and sections 1632, 1637, 1640, 1650, 1666b, 1666c, 1666j, 1681b, of the Truth in Lending Act [15 U.S.C. § 1604(d)]." 1681j, and 1693m to 1693r of this title, enacting provisions 

set out as notes under this section and sections 1637, APPLICABILITY OF 1994 AMENDMENTS AND REGULATIONS 

1638, 1666b, 168lj, and 1693l-1 of this title and section 5311 TO SUBSECTION (aa) MORTGAGES 

of Title 31, Money and Finance, and amending provisions 

set out as notes under sections 1638 and 1693 of this title] Pub. L. 103-325, title I, § 156, Sept. 23, 1994, 108 Stat. 

and the amendments made by this Act shall become ef­ 2197, provided that: "This subtitle [subtitle B (§§ 151-158) 

fective 9 months a~er the date of enactment of this Act of title I of Pub. L. 103-325, see Short Title of 1994 Amend­

[May 22, 2009], except as otherwise specifically provided ment note set out under section 1601 of this title], and 

in this Act." the amendments made by this subtitle, shall apply to every mortgage referred to in section 103(aa) of the Truth 

EFFECTIVE DATE OF 1982 AMENDMENT 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 

Pub. L. 97-320, title VII, § 702(b), Oct. 15, 1982, 96 Stat. on which regulations issued under section 155 [set out 

1538, provided that: "The amendment made by subsec­ above] become effective." 

tion (a) [amending this section] shall take effect on the 

effective date of title V1 of the Depository Institutions § 1603. Exempted transactions 

Deregulation and Monetary Control Act of 1980 [two years 

and six months after Mar. 31, 1980, see Effective Date of This subchapter does not apply to the following: 

1980 Amendment note below]." (1) Credit transactions involving extensions of 

credit primarily for business, commercial, or EFFECTIVE DATE OF 1981 AMENDMENT agricultural purposes, or to government or govSection 102(b) of Pub. L. 97-25 provided that the amend­ ernmental agencies or instrumentalities, or to 

ment made by that section is effective Apr. 10, 1982. organizations. 

(2) Transactions in securities or commodities 

EFFECTIVE DATE OF 1980 AMENDMENT accounts by a broker-dealer registered with the 

Pub. L. 96-221, title V1, §625, Mar. 31, 1980, 94 Stat. 185, Securities and Exchange Commission. 

as amended by Pub. L. 97-25, title m, §301, July 27, 1981, (3) Credit transactions, other than those in 

95 Stat. 145; Pub. L. 97-110, title III, §301, Dec. 26, 1981, 95 which a security interest is or will be acquired 

Stat. 1515, provided that: in real property, or in personal property used or ''(a) Except as provided in section 608(b) [set out as an expected to be used as the principal dwelling of 

Effective Date of 1980 Amendment note under section the consumer and other than private education 1607 of this title], the amendments made by this title loans (as that term is defined in section 1650(a) [enacting section 1646 of this title, amending sections of this title), in which the total amount financed 57a, 1602 to 1606, 1610, 1612, 1613, 1631, 1632, 1635, 1637, 1 1638, 1640, 1641, 1643, 1663, 1664, 1665a, 1666, 1666d, 1667d, exceeds $50,000.

and 1691f of this title, repealing sections 1614, 1636, and (4) Transactions under public utility tariffs, 

1639 of this title, and enacting provisions set out as a if the Bureau determines that a State regulanote under section 1601 of this title] shall take effect tory body regulates the charges for the public 

upon the expiration of two years and six months after utility services involved, the charges for delayed 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 1 See Adjustments for Inflation note below. 

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§ 1604 TITLE 15--COMMERCE AND TRADE Page 14 

payment, and any discount allowed for early amendments, in accordance with the regulations, forms, 

payment. and clauses prescribed by the Board prior to such effec­

(5) Transactions for which the Bureau, by rule, tive date, see section 625 of Pub. L. 96-221, set out as a 

under this subchapter title. coverage note under section 1602 of this determines that 

is not necessary to carry out the purposes of EFFECTIVE DATE OF 1974 AMENDMENT this subchapter. Amendment by Pub. L. 93-495 effective Oct. 28, 1974, see (6) Repealed. Pub. L. 96--221, title VI, § 603(c)(3), section 416 of Pub. L. 93--495, set out as an Effective Date Mar. 31, 1980, 94 Stat. 169. note under section 1665a of this title. 

(7) Loans made, insured, or guaranteed pursuant to a program authorized by title IV of EXCEPTIONS IN AREAS WHERE MAJOR DISASTER EXISTS 

the Higher Education Act of 1965 [20 U.S.C. 1070 Board of Governors of Federal Reserve System authoret seq.]. ized to make exceptions to requirements of this subchapwhich the Presi­ (Pub. L. 90-321, title I, § 104, May 29, 1968, 82 Stat. ter for transactions within an area in 

dent has determined that a major disaster exists, if Board 147; Pub. L. 93---495, title IV, § 402, Oct. 28, 1974, 88 determines that exception can reasonably be expected to Stat. 1517; Pub. L. 96--221, title VI,§ 603(c), Mar. 31, alleviate hardships to the public that outweigh possible 1980, 94 Stat. 169; Pub. L. 97-320, title VII, § 701(a), adverse effects, see section 50002 of Pub. L. 105-18, set 

Oct. 15, 1982, 96 Stat. 1538; Pub. L. 104-208, div. A, out as a note under section 4008 of Title 12, Banks and 

title II, § 2102(a), Sept. 30, 1996, 110 Stat. 3009-398; Banking, and similar provisions listed thereunder. 

Pub. L. 110--315, title X, § 1022, Aug. 14, 2008, 122 

Stat. 3488; Pub. L. 111-203, title X, §§ 1100A(2), ADJUSTMENTS FOR INFLATION 

ll00E(a)(l), July 21, 2010, 124 Stat. 2107, 2111.) Pub. L. 111-203, title X, § llOOE(b), July 21, 2010, 124 

Stat. 2111, provided that: "On and after December 31, REFERENCES IN TEXT 2011, the Bureau [of Consumer Financial Protection) shall 

adjust annually the dollar amounts described in sections The Higher Education Act of 1965, referred to in par. 104(3) and 181(1) of the Truth in Lending Act [15 U.S.C. (7), is Pub. L. 89-329, Nov. 8, 1965, 79 Stat. 1219. Title IV of 1603(3), 1667(1)) (as amended by this section), by the an­ the Act is classified generally to subchapter IV (§ 1070 et nual percentage increase in the Consumer Price Index seq.) of chapter 28 of Title 20, Education. For complete for Urban Wage Earners and Clerical Workers, as pub­ classification of this Act to the Code, see Short Title lished by the Bureau of Labor Statistics, rounded to the note set out under section 1001 of Title 20 and Tables. 

nearest multiple of $100, or $1,000, as applicable." Threshold amounts in effect during particular periods of time AMENDMENTS can be found in Code of Federal Regulations, Title 12, 

2010-Par. (3). Pub. L. 111-203, § ll00E(a)(l), substituted Supplement I to Part 1013, under Section 1013.2-Definitions, "$50,000" for "$25,000". under 2(e)--Consumer Lease, paragraph 11. 

Pars. (4), (5). Pub. L. 111-203, § 1100A(2), substituted 

"Bureau" for "Board". § 1604. Disclosure guidelines 2008-Par. (3). Pub. L. 110--315 inserted "and other than 

private education loans (as that term is defined in sec­ (a) Promulgation, contents. etc., of regulations 

tion 1650(a) of this title)" after "consumer". The Bureau shall prescribe regulations to carry 1996-Pars. (5) to (7). Pub. L. 104-208 added par. (5) and out the purposes of this subchapter. Except with redesignated former pars. (5) and (6) as (6) and (7), re­ respect to the provisions of section 1639 of this spectively. 

(6). Pub. L. 97-320 added par. (6). title that apply to a mortgage referred to in sec­ 1982--Par. 1 1980-Par. (1). Pub. L. 96-221, §603(c)(l), inserted provi­ tion 1602(aa) of this title, such regulations may 

sion relating to applicability to agricultural purposes. contain such additional requirements, classificaPar. (3). Pub. L. 96-221, §603(c)(2), substituted provision tions, differentiations, or other provisions, and may 

excepting security interest in real property, or in per­ provide for such adjustments and exceptions for 

sonal property used as the consumer's principal dwell­ all or any class of transactions, as in the judg­ ing, for provisions excepting real property transactions. ment of the Bureau are necessary or proper to ef­ Par. (5). Pub. L. 96-221, § 603(c)(3), struck out par. (5) fectuate the purposes of this subchapter, to pre­ which related to credit transactions primarily for agricultural purposes where the amount financed exceeds vent circumvention or evasion thereof, or to fa­

$25,000. cilitate compliance therewith. 

1974-Par. (5). Pub. L. 93--495 added par. (5). (b) Model disclosure forms and clauses; publica­ EFFECTIVE DATE OF 2010 AMENDMENT tion, criteria, compliance, etc. 

Amendment by Pub. L. 111-203 effective on the desig­ The Bureau shall publish a single, integrated 

nated transfer date, see section 1100H of Pub. L. 111-203, disclosure for mortgage loan transactions (includset out as a note under section 552a of Title 5, Govern­ ing real estate settlement cost statements) which 

ment Organization and Employees. includes the disclosure requirements of this subchapter in conjunction with the disclosure require­ EFFECTIVE DATE OF 1982 AMENDMENT ments of the Real Estate Settlement Procedures 

Section 70l(c) of Pub. L. 97-320, as amended by Pub. L. Act of 1974 [12 U.S.C. 2601 et seq.] that, taken to97-457, §31, Jan. 12, 1983, 96 Stat. 2511, provided that: gether, may apply to a transaction that is subject "The amendment made by subsection (a) (amending this to both or either provisions of law. The purpose of section) and subsection (b) (enacting section 1099 of Title such be to facilitate com­ 20, Education) shall be effective with loans model disclosure shall respect to 

made prior to, on, and after the date of the enactment of pliance with the disclosure requirements of this 

this Act [Oct. 15, 1982)." subchapter and the Real Estate Settlement Procedures Act of 1974, and to aid the borrower or EFFECTIVE DATE OF 1980 AMENDMENT lessee in understanding the transaction by utilizAmendment by Pub. L. 96-221 effective on expiration of ing readily understandable language to simplify 

two years and six months after Mar. 31, 1980, with all the technical nature of the disclosures. In devisregulations, 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 1 See References in Text note below. 

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Page 15 TITLE 15-COMMERCE AND TRADE § 1604 

ing such forms, the Bureau shall consider the use (A) The amount of the loan and whether the 

by creditors or lessors of data processing or simi­ disclosures, right of rescission, and other prolar automated equipment. Nothing in this subchap­ visions provide a benefit to the consumers who 

ter may be construed to require a creditor or les­ are parties to such transactions, as determined sor to use any such model form or clause pre­ by the Bureau. 

scribed by the Bureau under this section. A cred­ (B) The extent to which the requirements of 

itor or lessor shall be deemed to be in compliance this subchapter complicate, hinder, or make 

with the disclosure provisions of this subchapter more expensive the credit process for the class 

with respect to other than numerical disclosures of transactions. 

if the creditor or lessor (1) uses any appropriate (C) The status of the borrower, includingmodel form or clause as published by the Bureau, (i) any related financial arrangements of 

or (2) uses any such model form or clause and the borrower, as determined by the Bureau; 

changes it by (A) deleting any information which (ii) the financial sophistication of the boris not required by this subchapter, or (B) rear­ rower relative to the type of transaction; 

ranging the format, if in making such deletion or and 

rearranging the format, the creditor or lessor does (iii) the importance to the borrower of the 

not affect the substance, clarity, or meaningful credit, related supporting property, and covsequence of the disclosure. erage under this subchapter, as determined 

by the Bureau; (c) Procedures applicable for adoption of model (D) whether the loan is secured by the prin­ forms and clauses cipal residence of the consumer; and Model disclosure forms and cla\lses shall be adopt­ (E) whether the goal of consumer protection ed by the Bureau after notice duly given in the would be undermined by such an exemption. Federal Register and an opportunity for public 

comment in accordance with section 553 of title 5. (g) Waiver for certain borrowers 

In general (d) Effective dates of regulations containing new (1) 

disclosure requirements The Bureau, by regulation, may exempt from 

Any regulation of the Bureau, or any amend­ the requirements of this subchapter certain credment or interpretation thereof, requiring any dis­ it transactions if-

(A) the transaction involves a consumer­ closure which differs from the disclosures previously required by this part, part D, or part E or (i) with an annual earned income of more 

by any regulation of the Bureau promulgated there­ than $200,000; or 

under shall have an effective date of that October (ii) having net assets in excess of $1,000,000 

at the time of the transaction; and 1 which follows by at least six months the date of 

promulgation, except that the Bureau may at its (B) a waiver that is handwritten, signed, discretion take interim action by regulation, amend­ and dated by the consumer is first obtained 

ment, or interpretation to lengthen the period of from the consumer. time permitted for creditors or lessors to adjust (2) Adjustments by the Bureau their forms to accommodate new requirements or shorten the length of time for creditors or lessors The Bureau, at its discretion, may adjust the 

to make such adjustments when it makes a spe­ annual earned income and net asset requirecific finding that such action is necessary to com­ ments of paragraph (1) for inflation. 

ply with the findings of a court or to prevent un­ (h) Deference fair or deceptive disclosure practices. Notwithstanding the previous sentence, any creditor or lessor Notwithstanding any power granted to any Fedmay comply with any such newly promulgated eral agency under this subchapter, the deference 

disclosure requirements prior to the effective date that a court affords to the Bureau with respect to 

of the requirements. a determination made by the Bureau relating to 

the meaning or interpretation of any provision of 

(f) 2 Exemption authority this subchapter, other than section 1639e or 1639h 

of this title, shall be applied as if the Bureau (1) In general were the only agency authorized to apply, enforce, The Bureau may exempt, by regulation, from interpret, or administer the provisions of this suball or part of this ,subchapter all or any class of chapter. transactions, other than transactions involving 

any mortgage described in section 1602(aa) 1 of (i) Authority of the Board to prescribe rules 

this title, for which, in the determination of the Notwithstanding subsection (a), the Board shall 

Bureau, coverage under all or part of this sub­ have authority to prescribe rules under this subchapter does not provide a meaningful benefit chapter with respect to a person described in sec­ to consumers in the form of useful information tion 5519(a) of title 12. Regulations prescribed un­ or protection. der this subsection may contain such classifications, differentiations, or other provisions, as in (2) Factors for consideration the judgment of the Board are necessary or prop­ In determining which classes of transactions er to effectuate the purposes of this subchapter, to exempt in whole or in part under paragraph to prevent circumvention or evasion thereof, or to 

(1), the Bureau shall consider the following fac­ facilitate compliance therewith. 

tors and publish its rationale at the time a proposed exemption is published for comment: (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. 2 So in original. No subsec. (e) has been enacted. 23, 1994, 108 Stat. 2194; Pub. L. 104-208, div. A, title 

Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 13 of 92 PageID #: 128 
§ 1605 TITLE 15-COMMERCE AND TRADE 

II, §§ 2102(b), 2104, Sept. 30, 1996, 110 Stat. 3009-399, tive date, and allowing any creditor to comply ~ith any 

3009--401; Pub. L. 111-203, title X, § 1100A(2), (4)-(7), amendments, in accordance with the regulations, forms, 

title XIV, § 1472(c), July 21, 2010, 124 Stat. 2107, and clauses prescribed by the Board prior to such effec2108, 2190.) tive date, see section 625 of Pub. L. 96-221, set out as a note under section 1602 of this title. 

REFERENCES IN TEXT § 1605. Determination of finance charge Section 1602(aa) of this title, referred to in subsecs. (a) 

and (f)(l), was redesignated section 1602(bb) of this title (a) "Finance charge" defined 

by Pub. L. 111-203, title X, § llOOA(l)(A), July 21, 2010, 124 Except as otherwise provided in this section, Stat. 2107. the amount of the finance charge in connection The Real Estate Settlement Procedures Act of 1974, re­ with any consumer credit transaction shall be ferred to in subsec. (b), is Pub. L. 93-533, Dec. 22, 1974, 88 determined as the sum of all charges, payable di­ Stat. 1724, which is classified principally to chapter 27 

(§2601 et seq.) of Title 12, Banks and Banking. For com­ rectly or indirectly by the person to whom the 

plete classification of this Act to the Code, see Short credit is extended, and imposed directly or indiTitle note set out under section 2601 of Title-12 and Tables. rectly by the creditor as an incident to the extension of credit. The finance charge does not inAMENDMENTS clude charges of a type payable in a comparable 

2010-Subsec. (a). Pub. L. 111-203, § 1100A(2), (4), substi­ cash transaction. The finance charge shall not 

tuted "Bureau" for "Board" in two places, substituted include fees and amounts imposed by third party "Except with respect to the provisions of section 1639 of closing agents (including settlement agents, attorthis title that apply to a mortgage referred to in section neys, and escrow and title companies) if the cred­ 1602(aa) of this title, such regulations may contain such itor does not require the imposition of the charges additional requirements,"for "Except in the case of a 

mortgage referred to in section 1602(aa) of this title, or the services provided and does not retain the 

these regulations may contain such", and inserted "all charges. Examples of charges which are included 

or" after "exceptions for". in the finance charge include any of the following 

Subsec. (b). Pub. L. 111-203, § 1100A(2), (5), substituted types of charges which are applicable: 

"Bureau" for· "Board" wherever appearing in last three (1) Interest, time price differential, and any 

sentences and substituted first two sentences for former amount payable under a point, discount. or other· 

first sentence which read as follows: "The Board shall system or additional charges. publish model disclosure forms and clauses for common (2) Service or carrying charge. transactions to facilitate compliance with the disclosure (3) Loan fee, finder's fee, or similar charge. requirements of this subchapter and to aid the borrower 

or lessee in understanding the transaction by utilizing (4) Fee for an investigation or credit report. 

readily understandable language to simplify the techni­ (5) Premium or other charge for any guarancal nature of the disclosures." tee or insurance protecting the creditor against 

Subsecs. (c), (d). Pub. L. 111-203, § 1100A(2), substituted the obligor's default or other credit loss. 

"Bureau" for "Board" wherever appearing. (6) Borrower-paid mortgage broker fees, includSubsec. (f). Pub. L. 111-203, § 1100A(2), (6), substituted ing fees paid directly to the broker or the lend­ "Bureau" for "Board" wherever appearing and inserted er (for delivery to the broker) whether such fees "all or" after "from all or part of this subchapter" in or par. (1). are paid in cash financed. 

Subsec. (g). Pub. L. 111-203, § ll00A(2), substituted "Bu­ (b) Life, accident, or health insurance premiums reau" for "Board" in pars. (1) and (2). included in finance charge Subsec. (h). Pub. L. 111-203, § 1472(c), which directed Charges or premiums for credit life, accident, or addition of subsec. (h) at end of section, was executed by 

adding subsec. (b) before subsec. (i), to reflect the prob­ health insurance written in connection with any 

able intent of Congress and prior amendment by Pub. L. consumer credit transaction shall be included in 

111-203, § 1100A(7). See below. the finance charges unless 

Subsec. (i). Pub. L. 111-203, § 1100A(7), added subsec. (i). (1). the coverage of the debtor by the insur1996-Subsec. (f). Pub, L. 104-208, §2102(b), added sub­ ance is not a factor in the approval by the cred­ sec. (f). itor of the extension of credit, and this fact is Subsec. (g). Pub. L. 104-208, § 2104, added subsec. (g). clearly disclosed in writing to the person apply­ 1994-Subsec. (a). Pub. L. 103-325 substituted "Except ing for or obtaining the extension of credit; and in the case of a mortgage referred to in section 1602(aa) 

of this title, these" for "These" in second sentence. (2) in order to obtain the insurance in connec1980-Pub. L. 9&-221 designated existing provisions as tion with the extension of credit, the person to 

subsec. (a) and added subsecs. (b) to (d). whom the credit is extended must give specific 

affirmative written indication of his desire to EFFECTIVE DATE OF 2010 AMENDMENT do so after written disclosure to him of the 

Amendment by section 1100A(2), (4)-(7) of Pub. L. 111-203 cost thereof. 

effective on the designated transfer date, see section 1100H (c) Property damage and liability insurance pre­ of Pub. L. 111-203, set out as a note under section 552a of 

Title in 5, Government Organization and Employees. miums included finance charge 

Amendment by section 1472(c) of Pub. L. 111-203 effec­ Charges or premiums for insurance, written in 

tive on the date on which final regulations implementing connection with any consumer credit transaction, 

that amendment take effect, or on the date that is 18 against loss of or damage to property or against months after the designated transfer date if such regu­ liability arising out of the ownership or use of lations have not been issued by that date, see section property, shall be included in the finance charge 1400(c) of Pub. L. 111-203, set out as a note under section unless a clear and specific statement in writing is 1601 of this title. furnished by the creditor to the person to whom 

EFFECTIVE DATE OF 1980 AMENDMENT the credit is extended, setting forth the cost of 

Amendment the insurance by Pub. L. 9&-221 effective on expiration of if obtained from or through the 

two years and six months after Mar. 31, 1980, with all creditor, and stating that the person to whom the 

regulations, forms, and clauses required to be prescribed credit is extended may choose the person through 

to be promulgated at least one year prior to such effec- which the insurance is to be obtained. 

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Page 17 TITLE 15---COMMERCE AND TRADE § 1605 

(d) Items exempted from computation of finance (B) in the case of a transaction, other than 

charge in all credit transactions a mortgage referred to in section 1602(aa) 1 of 

this title, which- If any of the following items is itemized and 

(i) is a refinancing of the principal bal­ disclosed in accordance with the regulations of ance then due and any accrued and unpaid the Bureau in connection with any transaction, finance charges of a residential mortgage then the creditor need not include that item in transaction as defined in section 1602(w) 1 of the computation of the finance charge with re­ this title, or is any subsequent refinancing spect to that transaction: of such a transaction; and (1) Fees and charges prescribed by law which (ii) does not provide any new consolidaactually are or will be paid to public officials tion or new advance; for determining the existence of or for perfect­ the amount disclosed the finance charge or releasing or satisfying any security re­ if as ing does not vary from the actual finance charge lated to the credit transaction. by more than an amount equal to one percent (2) The premium payable for any insurance in of the total amount of credit extended. lieu of perfecting any security interest otherwise required by the creditor in connection with (Pub. L. 90--321, title I, § 106, May 29, 1968, 82 Stat. 

the transaction, if the premium does not ex­ 148; Pub. L. 96-221, title VI § 606, Mar. 31, 1980, 94 

ceed the fees and charges described in para­ Stat. 170; Pub. L. 104-29, §§ 2(a), (b)(l), (c}--(e), 3(a), 

Sept. 30, 1995, 109 Stat. 271, 272; Pub. L. 111-203, graph (1) which would otherwise be payable. title X, § 1100A(2), July 21; 2010, 124 Stat. 2107 .) (3) Any tax levied on security instruments or 

on documents evidencing indebtedness if the pay­ REFERENCES IN TEXT ment of such taxes is a precondition for recording the instrument securing the evidence of in­ Subsecs. (aa) and (w) of section 1602 of this title, referred to in subsec. (f)(2)(B), were redesignated subsecs. debtedness. (bb) and (x), respectively, of section 1602 of this title by 

Pub. L. 111-203, title X, § ll00A(l)(A), July 21, 2010, 124 

(e) Items exempted from computation of finance Stat. 2107. 

charge in extensions of credit secured by an 

interest in real property AMENDMENTS 

The following items, when charged in connec­ 2010-Subsec. (d). Pub. L. 111-203 substituted "Bureau" 

tion with any extension of credit secured by an for "Board" in introductory provisions. 

1995--Subsec. (a). Pub. L. 104-29, § 2(a), in introductory interest in real property, shall not be included in provisions inserted after second sentence "The finance the computation of the finance charge with re­ charge shall not include fees and amounts imposed by spect to that transaction: third party closing agents (including settlement agents, 

(1) Fees or premiums for title examination, attorneys, and escrow and title companies) if the credtitle insurance, or similar purposes. itor does not require the imposition of the charges or the 

(2) Fees for preparation of loan-related docu­ services provided and does not retain the charges.•' 

Subsec. (a)(6). Pub. L. 104-29, § 2(b )(1), added par. (6). ments. Subsec. (d)(3). Pub. L. 104-29, §2(c), added par. (3). (3) Escrows for future payments of taxes and Subsec. (e)(2). Pub. L. 104-29, § 2(d), amended par. (2) insurance. generally, substituting "loan-related" for "a deed, settle­

( 4) Fees for notarizing deeds and other docu­ ment statement, or other". 

ments. Subsec. (e)(5). Pub. L. 104-29, §2(e), inserted before pe­

(5) Appraisal fees, including fees related to riod ", including fees related to any pest infestation or 

any pest infestation or flood hazard inspections flood hazard inspections conducted prior to closing". 

Subsec. (f). Pub. L. 104-29, § 3(a), added subsec. (f). conducted prior to closing. 1980-Subsec. (a). Pub. L. 96-221, § 606(a), inserted pro­ (6) Credit reports. visions excluding charges of a type payable in comparable cash transactions and indicated that pars. (1) to (5) 

(f) Tolerances for accuracy are examples of charges. 

In connection with credit transactions not un­ Subsec. (d). Pub. L. 96-221, § 606(b), struck out pars. (3) 

der an open end credit plan that are secured by and ( 4) setting forth applicability to taxes and any other 

type of charge, respectively. real property or a dwelling, the disclosure of the 

finance charge and other disclosures affected by EFFECTIVE DATE OF 2010 AMENDMENT 

any finance charge- Amendment by Pub. L. 111-203 effective on the desig­ (1) shall be treated as being accurate for pur­ nated transfer date, see section 1100H of Pub. L. 111-203, 

poses of this subchapter if the amount disclosed set out as a note under section 552a of Title 5; Govern­ as the finance charge- ment Organization and Employees. 

(A) does not vary from the actual finance 

charge by more than $100; or EFFECTIVE DATE OF 1995 AMENDMENT 

(B) is greater than the amount required to Pub. L. 104-29, § 2(b)(2), Sept. 30, 1995, 109 Stat. 271, pro­ be disclosed under this subchapter; and vided that: "The amendment made by para.graph (1) [amend­

(2) shall be treated as being accurate for pur­ ing this section] shall take effect on the earlier of­

"(A) 60 days after the date on which the Board of poses of section 1635 of this title if- Governors of the Federal Reserve System issues final (A) except as provided in subparagraph (B), regulations under paragraph (3) [set out below]; or the amount disclosed as the finance charge "(B) the date that is 12 months after the date of the 

does not vary from the actual finance charge enactment of this Act [Sept. 30, 1995]." 

by more than an amount equal to one-half of 

one percent of the total amount of credit extended; or 1 See References in Text note below. 

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§ 1606 TITLE 15-COMMERCE AND TRADE Page 18 

EFFECTIVE DATE OF 1980 AMENDMENT terially simplifies computation while retainAmendment by Pub. L. 96-221 effective on expiration of ing reasonable accuracy as compared with the 

two years and six months after Mar. 31, 1980. with all rate determined under subparagraph (A). 1 

regulations, forms, and clauses required to be prescribed (2) in the case of any extension of credit un­ to be promulgated at least one year prior to such effec­ der an open end credit plan, as the quotient (ex­ tive date, and allowing any creditor to comply with any 

amendments, in accordance with the regulations, forms, pressed as a percentage) of the total finance 

and clauses prescribed by the Board prior to such effec­ charge for the period to which it relates divided 

tive date, see section 625 of Pub. L. 96-221, set out as a by the amount upon which the finance charge note under section 1602 of this title. for that period is based, multiplied by the num­ ber of such periods in a year. REGULATIONS 

(b) Computation of rate of finance charges for Pub. L. 104-29, §2(b)(3), Sept. 30, 1995, 109 Stat. 271, provided that: "The Board of Governors of the Federal Re­ balances within a specified range 

serve System shall promulgate regulations implement­ Where a creditor imposes the same finance charge ing the amendment made by paragraph (1) [amending for balances within a specified range, the annual 

this section) by no later than 6 months after the date of percentage rate shall be computed on the median the enactment of this Act [Sept. 30, 1995]." balance within the range, except that if the BuENSURING THAT FINANCE CHARGES REFLECT COST OF reau determines that a rate so computed would 

CREDIT not be meaningful, or would be materially misleading, the annual percentage rate shall be com­ Pub. L. 104-29, § 2(f), Sept. 30, 1995, 109 Stat. 272, provided that: puted on such other basis as the Bureau may be 

"(l) REPORT.- regulation require. 

"(A) IN GENERAL.-Not later than 6 months after the (c) Allowable tolerances for purposes of compli­ date of the enactment of this Act [Sept. 30, 1995], the 

Board of Governors of the Federal Reserve System shall ance with disclosure requirements 

submit to the Congress a report containing recommen­ The disclosure of an annual percentage rate is 

dations on any regulatory or statutory changes accurate for the purpose of this subchapter if the 

necessary- rate disclosed is within a tolerance not greater "(!) to ensure that finance charges imposed in con­ than one-eighth of 1 per centum more or less than nection with consumer credit transactions more ac­ the actual rate or rounded to the nearest one­ curately reflect the cost of providing credit; and fourth of 1 per centum. The Bureau may allow a "(ii) to address abusive refinancing practices engaged in for the purpose of avoiding rescission. greater tolerance to simplify compliance where 

"(B) REPORT REQUIREMENTS.-In preparing the re­ irregular payments are involved. 

port under this paragraph, the Board shall- (d) Use of rate tables or charts having allowable "(i) consider the extent to which it is feasible to 

include in finance charges all charges payable direct­ variance from determined rates 

ly or indirectly by the consumer to whom credit is The Bureau may authorize the use of rate tables 

extended, and imposed directly or indirectly by the or charts which may provide for the disclosure of 

creditor as an incident to the extension of credit (es­ annual percentage rates which vary from the rate 

pecially those charges excluded from finance charges determined in accordance with subsection (a)(l)(A) under section 106 of the Truth in Lending Act (15 by not more than such tolerances as the Bureau U.S.C. 1605) as of the date of the enactment of this 

Act), excepting only those charges which are payable may allow. The Bureau may not allow a tolerance 

in a comparable cash transaction; and greater than 8 per centum of that rate except to 

"(ii) consult with and consider the views of affect­ simplify compliance where irregular payments are ed industries and consumer groups. involved. 

"(2) REGULATIONS.-The Board of Governors of the Federal Reserve System shall prescribe any appropriate reg­ (e) Authorization of tolerances in determining 

ulation in order to effect any change included in the re­ annual percentage rates 

port under paragraph (1), and shall publish the regula­ In the case of creditors determining the annual 

tion in the Federal Register before the end of the 1-year percentage rate in a manner other than as deperiod beginning on the date of enactment of this Act." scribed in subsection (d), the Bureau may author­

§ 1606. Determination of annual percentage rate ize other reasonable tolerances. 

(a) "'Annual percentage rate" defined (Pub. L. 90-321, title I, § 107, May 29, 1968, 82 Stat. 

149; Pub. L. 96-221, title VI, The annual percentage rate applicable to any § 607, Mar. 31, 1980, 94 

Stat. 170; Pub. L. 111-203, title X, 1100A(2), July extension of consumer credit shall be determined, § 

21, 2010, 124 Stat. 2107.) in accordance with the regulations of the Bureau, 

(1) in the case of any extension of credit other AMENDMENTS than under an open end credit plan, as (A) that nominal annual percentage rate which 2010-Pub. L. 111-203 substituted "Bureau" for "Board" 

wherever appearing. will yield a sum equal to the amount of the 1980-Subsec. (c). Pub. L. 96-221, §607(a), substituted finance charge when it is applied to the un­ provisions relating to allowable tolerances for purposes paid balances of the amount financed, calcu­ of compliance with disclosure requirements, for provilated according to the actuarial method of sions relating to rounding off of annual percentage rates 

allocating payments made on a debt between which are converted from single add-on or other rates. 

the amount financed and the amount of the Subsec. (e). Pub. L. 96-221, § 607(b), struck out reference 

finance charge, pursuant to which a payment to subsection (c) of this section. 

Subsec. struck out subsec. is applied first to the accumulated finance (f). Pub. L. 96-221, § 607(0), 

(f) setting forth requirements for form of expressing per­ charge and the balance is applied to the un­ centage rates prior to Jan. 1, 1971. paid amount financed; or (B) the rate determined by any method prescribed by the Bureau as a method which ma- 1 So In original. 

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Page 19 TITLE 15--COMMERCE AND TRADE § 1607 

EFFECTIVE DATE OF 2010 AMENDMENT (b) Violations of this subchapter deemed violaAmendment by Pub. L. 111-203 effective on the desig­ tions of pre-existing statutory requirements; 

nated transfer date, see section 1100H of Pub. L. 111-203, additional agency powers 

set out as a note under section 552a of Title 5, Govern­ For the purpose of the exercise by any agency ment Organization and Employees. referred to in subsection (a) of its powers under EFFECTIVE DATE OF 1980 AMENDMENT any Act referred to in that subsection, a violation 

Amendment by Pub. L. 96--221 effective on expiration of of any requirement imposed under this subchaptwo years and six months after Mar. 31, 1980, with all ter shall be deemed to be a violation of a requireregulations, forms, and clauses required to be prescribed ment imposed under that Act. In addition to its 

to be promulgated at least one year prior to such effec­ powers under any provision of law specifically re­ tive date, and allowing any creditor to comply with any ferred to in subsection (a), each of the agencies amendments, in accordance with the regulations, forms, referred to in that subsection may exercise, for and clauses prescribed by the Board prior to such effec­ the purpose of enforcing compliance with any re­ tive date, see section 625 of Pub. L. 96-221, set out as a quirement imposed under this subchapter, anY other note under section 1602 of this title. authority conferred on it by law. 

§ 1607. Administrative enforcement 

(c) Overall enforcement authority of the Federal (a) Enforcing agencies Trade Commission Subject to subtitle B of the Consumer Financial Except to the extent that enforcement of the Protection Act of 2010 [12 U.S.C. 5511 et seq.), com­ requirements imposed under this subchapter is pliance with the requirements imposed under this specifically committed to some other Government subchapter shall be enforced underagency under any of paragraphs (1) through (5) of (1) section 8 of the Federal Deposit Insurance subsection (a), and subject to subtitle B of the Act [12 U.S.C. 1818], by the appropriate Federal Consumer Financial Protection Act of 2010 [12 U.S.C. banking agency, as defined in section 3(q) of 5511 et seq.), the Federal Trade Commission shall the Federal Deposit Insurance Act (12 U.S.C. be authorized to enforce such requirements. For 1813(q)), with respect to- the purpose of the exercise by the Federal Trade (A) national banks, Federal savings associa­ Commission of its functions and powers under the tions, and Federal branches and Federal agen­ Federal Trade Commission Act [15 U.S.C. 41 et cies of foreign banks; seq.], a violation of any requirement imposed un­ (B) member banks of the Federal Reserve der this subchapter shall be deemed a violation of System (other than national banks), branches a requirement imposed under that Act. All of the and agencies of foreign banks (other than Fed­ functions and powers of the Federal Trade Com­ eral branches, Federal agencies, and insured mission under the Federal Trade Commission Act State branches of foreign banks), commercial are available to the Federal Trade Commission to lending companies owned or controlled by for­ enforce compliance by any person with the require­ eign banks, and organizations operating un­ ments under this subchapter, irrespective of wheth­ der section 25 or 25A of the Federal Reserve er that person is engaged in commerce or meets Act [12 U.S.C. 601 et seq., 611 et seq.]; and 

aey other jurisdictional tests under the Federal (C) banks and State savings associations in­ Trade Commission Act. sured by the Federal Deposit Insurance Corporation (other than members of the Federal (d) Rules and regulations Reserve System), and insured State branches The authority of the Bureau to issue regula­ of foreign banks; tions under this subchapter does not impair the 

(2) the Federal Credit Union Act [12 U.S.C. authority of any other agency designated in this 

1751 et seq.), by the Director of the National section to make rules respecting its own proceCredit Union Administration, with respect to dures in enforcing compliance with requirements 

any Federal credit union; imposed under this subchapter. 

(3) part A of subtitle VII of title 49, by the 

Secretary of Transportation, with respect to any (e) Adjustment of finance charges; procedures 

air carrier or foreign air carrier subject to that applicable, coverage, criteria, etc. 

part; (1) In carrying out its enforcement activities 

( 4) the Packers and Stockyards Act, 1921 [7 under this section, each agency referred to in subU.S.C. 181 et seq.) (except as provided in section section (a) or (c), in cases where an annual per406 of that Act [7 U.S.C. 226, 227)), by the Sec­ centage rate or finance charge was inaccurately 

retary of Agriculture, with respect to any ac­ disclosed, shall notify the creditor of such disclotivities subject to that Act; sure error and is authorized in accordance with 

(5) the Farm Credit Act of 1971 [12 U.S.C. 2001 the provisions of this subsection to require the 

et seq.), by the Farm Credit Administration with creditor to make an adjustment to the account of 

respect to any Federal land bank, Federal land the person to whom credit was extended, to as­ bank association, Federal intermediate credit sure that such person will not be required to pay 

bank, or production credit association; and a finance charge in excess of the finance charge 

(6) subtitle E of the Consumer Financial Pro­ actually disclosed or the dollar equivalent of the 

tection Act of 2010 [12 U.S.C. 5561 et seq.], by the annual percentage rate actually disclosed, whichBureau, with respect to any person subject to ever is lower. For the purposes of this subsection, 

this subchapter. except where such disclosure error resulted from 

(7) sections 21B and 21C of the Securities Ex­ a willful violation which was intended to mislead 

change Act of 1934 [15 U.S.C. 78u-2, 78u-3], in the person to whom credit was extended, in deterthe case of a broker or dealer, other than a de­ mining whether a disclosure error has occurred 

pository institution, by the Securities and Ex­ and in calculating anY adjustment, (A) each agency 

change Commission. shall apply (i) with respect to the annual percent-
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§ 1607 TITLE 15-COMMERCE AND TRADE Page 20 

age rate, a tolerance of one-quarter of 1 percent (3) Notwithstanding paragraph (2), no adjust­ more or less than the actual rate, determined with­ ment shall be orderedout regard to section 1606(c) of this title, and (ii) (A) if it would have a significantly adverse 

with respect to the finance charge, a correspond­ impact upon the safety or soundness of the creding numerical tolerance as generated by the toler­ itor, but in any such case, the agency mayance provided under this subsection for the annu­ (i) require a partial adjustment in an amount 

al percentage rate; except that (B) with respect which does not have such an impact; or 

to transactions consummated after two years fol­ (ii) require the full adjustment, but permit 

the creditor to make the required adjustment lowing March 31, 1980, each agency shall apply (i) in partial payments over an extended period for transactions that have a scheduled amortiza­ of time which the agency considers to be rea­ tion of ten years or less, with respect to the an­ sonable, if (in the case of an agency referred nual percentage rate, a tolerance not to exceed to in paragraph (1), (2), or (3) of subsection one-quarter of 1 percent more or less than the ac­ (a)), the agency determines that a partial ad­ tual rate, determined without regard to section justment or making partial payments over an 1606(c) of this title, but in no event a tolerance of extended period is necessary to avoid causing less than the tolerances allowed under section 1606(c) the creditor to become undercapitalized pur­ of this title, (ii) for transactions that have a sched­ suant to section 38 of the Federal Deposit In­ uled amortization of more than ten years, with surance Act. [12 U.S.C. 18310]; respect to the annual percentage rate, only such 

tolerances as are allowed under section 1606(c) of (B) the 1 amount of the adjustment would be 

this title, and (iii) for all transactions, with re­ less than $1, except that if more than one year 

spect to the finance charge, a corresponding nu­ bas elapsed since the date of the violation, the 

merical tolerance as generated by the tolerances agency may require that such amount be paid 

provided under this subsection for the annual per­ into the Treasury of the United States, or centage rate. (C) except where such disclosure error result­

(2) Each agency shall require such an adjust­ ed from a willful violation which was intended 

ment when it determines that such disclosure er­ to mislead the person to whom credit was ex­ ror resulted from (A) a clear and consistent pat­ tended, in the case of an open-end credit plan, 

tern or practice of violations, (B) gross negligence, more than two years after the violation, or in or (C) a willful violation which was intended to the case of any other extension of credit, as folmislead the person to whom the credit was ex­ lows: 

tended. Notwithstanding the preceding sentence, (i) with respect to creditors that are subject 

except where such disclosure error resulted from to examination by the agencies referred to in a willful violation which was intended to mislead paragraphs (1) through (3) of subsection (a) of 

the person to whom credit was extended, an agency this section, except in connection with violaneed not require such an adjustment if it deter­ tions arising from practices identified in the 

mines that such disclosure error- current examination and only in connection with 

(A) resulted from an error involving the dis­ transactions that are consummated after the 

closure of a fee or charge that would otherwise date of the immediately preceding examination, 

be excludable in computing the finance charge, except that where practices giving rise to violaincluding but not limited to violations involving tions identified in earlier examinations have not 

the disclosures described in sections 1605(b), (c) been corrected, adjustments for those violations 

and (d) of this title, in which event the agency shall be required in connection with transacmay require such remedial action as it deter­ tions consummated after the date of examinamines to be equitable, except that for transac­ tion in which such practices were first identitions consummated after two years after March fied; 

31, 1980, such an adjustment shall be ordered for (ii) with respect to creditors that are not subviolations of section 1605(b) of this title; ject to examination by such agencies, except in 

(B) involved a disclosed amount which was 10 connection with transactions that are consumper centum or less of the amount that should mated after May 10, 1978; and 

have been disclosed and (i) in cases where the (iii) in no event after the later of (I) the expierror involved a disclosed finance charge, the ration of the life of the credit extension, or (II) 

annual percentage rate was disclosed correctly, two years after the agreement to extend credit 

and (ii) in cases where the error involved a dis­ was consummated. 

closed annual percentage rate, the finance charge (4)(A) Notwithstanding any other provision of was disclosed correctly; in which event the agency this section, an adjustment under this subsection 

may require such adjustment as it determines may be required by an agency referred to in subto be equitable; section (a) or (c) only by an order issued in ac­ (C) involved a total failure to disclose either cordance with cease and desist procedures pro­ the annual percentage rate or the finance charge, vided by the provision of law referred to in such in which event the agency may require such ad­ subsections. justment as it determines to be equitable; or (B) In case of an agency which is not authorized (D) resulted from any other unique circum­ to conduct cease and desist proceedings, such an stance involving clearly technical and nonsub­ order may be issued after an agency bearing on stantive disclosure violations that do not ad­ the record conducted at least thirty but not more versely affect information provided to the con­ than sixty days after notice of the alleged viola­ sumer and that have not misled or otherwise de­ tion is served on the creditor. Such a bearing ceived the consumer. 

In the case of other such disclosure errors, each 

agency may require such an adjustment. 1 So in original. Probably should be preceded by "if". 
Page 21 TITLE 15--COMMERCE AND TRADE § 1607 

shall be deemed to be a hearing which is subject is classified generally to chapter 23 (§ 2001 et seq.) of 

to the provisions of section 8(h) of the Federal Title 12, Banks and Banking. For complete classification 

Deposit Insurance Act [12 U.S.C. 1818(h)] and shall of this Act to the Code, see Short Title note set out under section 2001 of Title 12 and Tables. be subject to judicial review as provided therein. The Federal Trade Commission Act, referred to in sub­ (5) Except as otherwise specifically provided in sec. (c), is act Sept. 26, 1914, ch. 311, 38 Stat. 717, which is this subsection and notwithstanding any provi­ classified generally to subchapter I (§ 41 et seq.) of chap­ sion of law referred to in subsection (a) or (c), no ter 2 of this title. For complete classification of this Act 

agency referred to in subsection (a) or (c) may re­ to the Code, see section 58 of this title and Tables. 

quire a creditor to make dollar adjustments for 

errors in any requirements under this subchapter, CODIFICATION 

except with regard to the requirements of section In subsec. (a)(3), "part A of subtitle VII of title 49" 

1666d of this title. substituted for "the Federal Aviation Act of 1958" and 

(6) A creditor shall not be subject to an order to "that part" substituted for "that Act" on authority of 

make an adjustment, if within sixty days after Pub. L. 103-272, §6(b), July 5, 1994, 108 Stat. 1378, the first 

discovering a disclosure error, whether pursuant section of which enacted subtitles II, III, and V to X of 

Title 49, Transportation. to a final written examination report or through 

the creditor's own procedures, the creditor noti­ AMENDMENTS fies the person concerned of the error and adjusts 

the account so as to assure that such person will 2010-Subsec. (a). Pub. L. 111-203, § 1100A(8)(A), added 

subsec. (a) and struck out former subsec. (a) which listed not be required to pay a finance charge in excess agencies under which compliance with subchapter require­ of the finance charge actually disclosed or the ments would be enforced. dollar equivalent of the annual percentage rate Subsec. (a)(7). Pub. L. 111-203, § 1414(b), added par. (7). actually disclosed, whichever is lower. Subsec. (c). Pub. L. 111-203, § 1100A(8)(B), added subsec. (7) Notwithstanding the second sentence of sub­ (c) and struck out former subsec. (c). Prior to amendsection (e)(l), subsection (e)(3)(C)(i), and subsec­ ment, text read as follows: "Except to the extent that 

tion (e)(3)(C)(ii), each agency referred to in sub­ enforcement of the requirements imposed under this subsection (a) or (c) shall require an adjustment for chapter is specifically committed to some other Governan annual percentage rate disclosure error that ment agency under subsection (a) of this section, the 

exceeds a tolerance of one quarter of one percent Federal Trade Commission shall enforce such requirements. For the purpose of the exercise by the Federal less than the actual rate, determined without re­ Trade Commission of its functions and powers under the gard to section 1606(c) of this title, with respect Federal Trade Commission Act, a violation of any re­ to any transaction consummated between Janu­ quirement imposed under this subchapter shall be deemed 

ary 1, 1977, and March 31, 1980. a violation of a requirement imposed under that Act. All 

(Pub. L. 90-321, title I, § 108, May 29, 1968, 82 Stat. of the functions and powers of the Federal Trade Com150; Pub. L. 91-206, § 3, Mar. 10, 1970, 84 Stat. 49; mission under the Federal Trade Commission Act are 

available to the Commission to enforce compliance by Pub. L. 93-495, title IV, § 403, Oct. 28, 1974, 88 Stat. 

any person with the requirements imposed under this 1517; Pub. L. 95-630, title V, §501, Nov. 10, 1978, 92 subchapter, irrespective of whether that person is en­ Stat. 3680; Pub. L. 96-221, title VI, § 608(a); (c), gaged in commerce or meets any other jurisdictional Mar. 21, 1980, 94 Stat. 171, 173; Pub. L. 98-443, §9(n), tests in the Federal Trade Commission Act." 

Oct. 4, 1984, 98 Stat. 1708; Pub. L. 101-73, title VII, Subsec. (d). Pub. L. 111-203, § 1100A(2), substituted "Bu­

§ 744(k), Aug. 9, 1989, 103 Stat. 439; Pub. L. 102-242, reau" for "Board". 

title II, §212(b), Dec. 19, 1991, 105 Stat. 2299; Pub. 1996-Subsec. (e)(3). Pub. L. 104-208 struck out "ordered 

L. 102-550, title XVI, § 1604(a)(5), Oct. 28, 1992, 106 (A) if" and inserted "ordered--

Stat. 4082; Pub. L. 104-208, div. A, title II, § 2106, "(A) if"; 

Sept. 30, 1996, 110 Stat. 3009-402; Pub. L. 111-203, struck out "may require a partial" and inserted "mayrequire a partial"; title X, § 1100A(2), (8), title XIV, § 1414(b), July 21, " ( i) 

struck out ", .except that with respect to any transac­ 2010, 124 Stat. 2107, 2108, 2152.) tion consumated after March 31, 1980, the agency shall 

REFERENCES IN TEXT require" and inserted "; or "(ii) require"; The Consumer Financial Protection Act of 2010, re­ directed the substitution of "reasonable, if (in the case ferred to in subsecs. (a) and (c), is title X of Pub. L. of an agency referred to in paragraph (1), (2), or (3) of 111-203, July 21, 2010, 124 Stat. 1955. Subtitles B (§§ 1021-1029A) subsection (a)), the agency determines that a partial ad­ and E (§§ 1051-1058) of the Act are classified generally to justment or making partial payments over an extended . parts B (§5511 et seq.) and E (§5561 et seq.), respectively, period is necessary to avoid causing the creditor to be­ of subchapter V of chapter 53 of Title 12, Banks and come undercapitalized pursuant to section 38 of the Fed- Banking. For complete classification of this Act to the eral Deposit Insurance Act; • · Code, see Short Title note set out under section 5301 of "(B) the"; Title 12 and Tables. for "reasonable, (B) the", which was executed by making Sections 25 and 25A of the Federal Reserve Act, re­ the substitution for "reasonable, (B) if the"; and struck ferred to in subsec. (a)(l)(B), are classified to subchap­ out "(C) except" and inserted ters I (§ 601 et seq.) and II (§ 611 et seq.), respectively, of "(C) except". chapter 6 of Title 12, Banks and Banking. 

The Federal Credit Union Act, referred to in subsec. 1992-Subsec. (a)(l)(C). Pub. L. 102--550 substituted semicolon for period at end. (a){2), is act June 26, 1934, ch. 750, 48 Stat. 1216, which is 

classified generally to chapter 14 (§ 1751 et seq.) of Title 1991---Subsec. (a). Pub. L. 102--242, §212(b)(2), inserted 

12. For complete classification of this Act to the Code, at end "The terms used in paragraph (1) that are not 

see section 1751 of Title 12 and Tables. defined in this subchapter or otherwise defined in secThe Packers and Stockyards Act, 1921, referred to in tion 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 

subsec. (a)(4), is act Aug. 15, 1921, ch. 64, 42 Stat. 159, 1813(s)) shall have the meaning given to them in section 

which is classified generally to chapter 9 (§ 181 et seq.) of l(b) of the International Banking Act of 1978 (12 U.S.C. 

Title 7, Agriculture. For complete classification of this 3101)." 

Act to the Code, see section 181 of Title 7 and Tables. Pub. L. 102--242, § 212(b)(l), added par. (1) and struck out 

The Farm Credit Act of 1971, referred to in subsec. former par. (1) which read as follows: "section 8 of the 

(a)(5), is Pub. L. 92--181, Dec. 10, 1971, 85 Stat. 583, which Federal Deposit Insurance Act, in the case of 

32· 709 _ T _ TF D Sig-3 

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§ 1608 TITLE 15---COMMERCE AND TRADE Page 22 

"(A) national banks, by the Comptroller of the Cur­ tration and vested authority for management of Adminrency. istration in National Credit Union Administration Board. 

"(B) member banks of the Federal Reserve System 

(other than national banks), by the Board. § 1608. Views of other agencies 

"(C) banks insured by the Federal Deposit Insurance 

Corporation (other than members of the Federal Re­ In the exercise of its functions under this subserve System), by the Board of Directors of the Fed­ chapter, the Bureau may obtain upon requests the 

eral Deposit Insurance Corporation." views of any other Federal agency which, in the 

1989---Subsec. (a)(2). Pub. L. 101-73 amended par. (2) judgment of the Bureau, exercises regulatory or generally. Prior to amendment, par. (2) read as follows: supervisory functions with respect to any class of 

"section 5(d) of the Home Owner's Loan Act of 1933, sec­ creditors subject to this subchapter. tion 407 of the National Housing Act, and sections 6(1) 

and 17 of the Federal Home Loan Bank Act, by the Fed­ (Pub. L. 90-321, title I, § 109, May 29, 1968, 82 Stat. 

eral Home Loan Bank Board (acting directly or through 150; Pub. L. 111-203, title X, § 1100A(2), July 21, 

the Federal Savings and Loan Insurance Corporation), in 2010, 124 Stat. 2107.) the case of any institution subject to any of those provisions." AMENDMENTS 

1984-Subsec. (a)(4). Pub. L. 98-443 substituted "Secre­ 2010--Pub. L. 111-203 substituted "Bureau" for "Board" tary of Transportation" for "Civil Aeronautics Board". in two places. 1980--Subsec. (e). Pub. L. 9&-221, § 608(a), added subsec. 

(e). EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 96-221, §608(c), struck out in pars. (l)(A)(i) and 

(7) ", except in the case of an irregular mortgage lend­ Amendment by Pub. L. 111-203 effective on the desiging transaction" after "section 1606(c) of this title". See nated transfer date, see section 1100H of Pub. L. 111-203, 

Effective Date of 1980 Amendment note below. set out as a note under section 552a of Title 5, Govern1974-Subsec. (a)(4) to (6). Pub. L. 93--495 redesignated ment Organization and Employees. 

pars. (5) and (6) as (4) and (5), respectively. Former par. 

(4), which related to enforcement by the Interstate Com­ § 1609. Repealed. Pub. L. 94-239, § 3(b)(l), Mar. 23, 

merce Commission, was struck out. 1976, 90 Stat. 253 

Section, Pub. L. 90-321, title I, § 110, May 29, 1968, 82 EFFECTIVE DATE OF 2010 AMENDMENT 

Stat. 151, provided for establishment of an advisory com­ Amendment by section 1100A(2), (8) of Pub. L. 111-203 mittee authorized to seek to achieve a fair representa­ effective on the designated transfer date, see section 1100H tion of interests of sellers of merchandise on credit, lendof Pub. L. 111-203, set out as a note under section 552a of ers, and the public. 

Title 5, Government Organization and Employees. 

Amendment by section 1414(b) of Pub. L. 111-203 effec­ EFFECTIVE DATE OF REPEAL 

tive on the date on which final regulations implementing Repeal effective Mar. 23, 1976, see section 708 of Pub. L. that amendment take effect, or on the date that is 18 90-321, set out as an Effective Date note under section months after the designated transfer date if such regu­ 1691 of this title. lations have not been issued by that date, see section 

1400(c) of Pub. L. 111-203, set out as a note under section § 1610. Effect on other laws 1601 of this title. 

(a) Inconsistent provisions; procedures applicaEFFECTIVE DATE OF 1992 AMENDMENT ble for determination 

Amendment by Pub. L. 102-550 effective as if included (1) Except as provided in subsection (e), this 

in the Federal Deposit Insurance Corporation Improve­ part and parts B and C, do not annul, alter, or af­ ment Act of 1991, Pub. L. 102--242, as of Dec. 19, 1991, see fect the laws of any State relating to the disclo­ section 1609(a) of Pub. L. 102--550, set out as a note under sure of information in connection with credit trans­ section 191 of Title 12, Banks and Banking. actions, except to the extent that those laws are 

EFFECTIVE DATE OF 1984 AMENDMENT inconsistent with the provisions of this subchapter, and then only to the extent of the inconsistAmendment by Pub. L. 98-443 effective Jan. 1, 1985, see ency. Upon its own motion or upon the request of section 9(v) of Pub. L. 98-443, set out as a note under sec­ any creditor, State, or other interested party which tion 5314 of Title 5, Government Organization and Employees. is submitted in accordance with procedures prescribed in regulations of the Bureau, the Bureau 

EFFECTIVE DATE OF 1980 AMENDMENT shall determine whether any such inconsistency 

exists. If the Bureau determines that a State-re­ Pub. L. 96-221, title VI, §608(b), Mar. 31, 1980, 94 Stat. 

173, provided that: "This section [amending this section] quired disclosure is inconsistent, creditors. locatshall take effect on the date of enactment of the Truth ed in that State may not make disclosures using 

in Lending Simplification and Reform Act [Mar. 31, 1980]." the inconsistent term or form, and shall incur no 

Pub. L. 96-221, title VI, § 608(c), Mar. 31, 1980, 94 Stat. liability under the law of that State for failure to 

173, provided that the amendment made by that section use such term or form, notwithstanding that such 

is effective one year after Mar. 31, 1980. determination is subsequently amended, rescinded, or determined by judicial or other authority EFFECTIVE DATE OF 1974 AMENDMENT to be invalid for any reason. Amendment by Pub. L. 93--495 effective Oct. 28, 1974, see (2) Upon its own motion or upon the request of 

section 416 of Pub. L. 93--495, set out as an Effective Date any creditor, State, or other interested party which note under section 1665a of this title. is submitted in accordance with procedures preTRANSFER OF FUNCTIONS scribed in regulations of the Bureau, the Bureau 

shall determine whether any disclosure required "National Credit Union Administration Board" substi­ under the law of any State is substantially the tuted for "Director of the Bureau of Federal Credit Unions" same in meaning as a disclosure required under in subsec. (a)(3) pursuant to section 3 of Pub. L. 91-206 If and section 501 of Pub. L. 95---630 [12 U.S.C. 1752a] which this subchapter. the Bureau determines that a 

transferred functions of Bureau of Federal Credit Unions, State-required disclosure is substantially the same 

and Director thereof, to National Credit Union Adminis- in meaning as a disclosure required by this subCase 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 20 of 92 PageID #: 135 
Page 23 TITLE 15-COMMERCE AND TRADE § 1611 

chapter, then creditors located in that State may (C), Sept. 23, 1994, 108 Stat. 2194; Pub. L. 111-203, 

make such disclosure in compliance with such State title X, § 1100A(2), July 21, 2010, 124 Stat. 2107 .) 

law in lieu of the disclosure required by this subchapter, except that the annual percentage rate REFERENCES IN TEX'l' 

and finance charge shall be disclosed as required Section 1602(aa) of this title, referred to in subsec. (b), 

by section 1632 of this title, and such State-re­ was redesignated section 1602(bb) of this title by Pub. L. 

quired disclosure may not be made in lieu of the 111-203, title X, § llOOA(l)(A), July 21, 2010, 124 Stat. 2107. 

disclosures applicable to certain mortgages under AMENDMENTS section 1639 of this title. 

2010--Subsec. (a). Pub. L. 111-203 substituted "Bureau" 

(b) State credit charge statutes for "Board" wherever appearing. 

Except as provided in section 1639 of this title, 1994-Subsec. (a)(2). Pub. L. 103--325, § 152(e)(2)(B), which 

directed the amendment of par. (2) by inserting ", and this subchapter does not otherwise annul, alter or such State-required disclosure may not be made in lieu affect in any manner the meaning, scope or ap­ of the disclosures applicable to certain mortgages under plicability of the laws of any State, including, but section 1639 of this title" before period, was executed by 

not limited to, laws relating to the types, amounts making the insertion before period at end of par. (2), to 

or rates of charges, or any element or elements of reflect the probable intent of Congress. 

charges, permissible under such laws in connec­ Subsec. (b). Pub. L. 103--325, § 152(e)(2)(C), substituted 

tion with the extension or use of credit, nor does "Except as provided in section 1639 of this title. this 

this subchapter extend the applicability of those subchapter" for "This subchapter" and inserted at end 

"The provisions of section 1639 of this title do not annul, laws to any class of persons or transactions to alter, or affect the applicability of the laws of any State which they would not otherwise apply. The provi­ or exempt any person subject to the provisions of section sions of section 1639 of this title do not annul, al­ 1639 of this title from complying with the laws of any 

ter, or affect the applicability of the laws of any State, with respect to the requirements for mortgages 

State or exempt any person subject to the provi­ referred to in section 1602(aa) of this title, except to the 

sions of section 1639 of this title from complying extent that those State laws are inconsistent with any 

with the laws of any State, with respect to the provisions of section 1639 of this title, and then only to 

requirements for mortgages referred to in section the extent of the inconsistency.'' 

1602(aa) 1 of this title, except to the extent that 1988-Subsec. (a)(l). Pub. L. 100-583, § 4(1), substituted 

"Except as provided in subsection (e), this part" for "This those State laws are inconsistent with any provi­ part". sions of section 1639 of this title, and then only to Subsec. (e). Pub. L. 100-583, § 4(2), added subsec. (e). the extent of the inconsistency. 198(}-.Subsec. (a). Pub. L. 96-221 designated existing 

provisions as par. (1), substituted provisions respecting (c) Disclosure as evidence the effect of this part and parts B and C of this subIn any action or proceeding in any court involv­ chapter, and procedures applicable for determination, for 

ing a consumer credit sale, the disclosure of the provisions respecting the effect of this subchapter, and 

annual percentage rate as required under this sub­ added par. (2). 

chapter in connection with that sale may not be 1974-Subsec. (d). Pub. L. 93--495 inserted reference to 

received as evidence that the sale was a loan or section 1666e of this title. 

any type of transaction other than a credit sale. EFFECTIVE DATE OF 2010 AMENDMENT 

(d) Contract or other obligations under State or Amendment by Pub. L. 111-203 effective on the desigFederal law nated transfer date, see section 1100H of Pub. L. 111-203, 

set out as a note under section 552a of Title 5, Govern­ Except as specified in sections 1635, 1640, and ment Organization and Employees. 1666e of this title, this subchapter and the regulations issued thereunder do not affect the validity EFFECTIVE DATE OF 1980 AMENDMENT or enforceability of any contract or obligation under State or Federal law. Amendment by Pub. L. 96--221 effective on expiration of 

two years and six months after Mar. 31, 1980, with all 

(e) Certain credit and charge card application regulations, forms, and clauses required to be prescribed 

to be promulgated at least one year prior to such effec­ and solicitation disclosure provisions tive date, and allowing any creditor to comply with any The provisions of subsection (c) of section 1632 amendments, in accordance with the regulations, forms, 

of this title and subsections (c), (d), (e), and (f) of and clauses prescribed by the Board prior to such effecsection 1637 of this title shall supersede any pro­ tive date, see section 625 of Pub. L. 96--221, set out as a 

vision of the law of any State relating to the dis­ note under section 1602 of this title. 

closure of information in any credit or charge EF'FECTIVE DATE OF card application or solicitation which is subject 1974 AMENDMENT 

to the requirements of section 1637(c) of this title For effective date of amendment by Pub. L. 93-495, see 

or any renewal notice which is subject to the re­ section 308 of Pub. L. 93--495, set out as an Effective Date 

quirements of section 1637(d) of this title, except note under section 1666 of this title. 

that any State may employ or establish State 

laws for the purpose of enforcing the requirements § 1611. Criminal liability for willful and knowing 

violation of such sections. 

(Pub. L. 90-321, title I, § 111, May 29, 1968, 82 Stat. Whoever willfully and knowingly 

151; Pub. L. 93-495, title III, § 307(b), Oct. 28, 1974, (1) gives false or inaccurate information or 

88 Stat. 1516; Pub. L. 96-221, title VI, § 609, Mar. 31, fails to provide information which he is required 

1980, 94 Stat. 173; Pub. L. 100-583, § 4, Nov. 3, 1988, to disclose under the provisions of this subchap102 Stat. 2967; Pub. L. 103-325, title I, §152(e)(2)(B), ter or any regulation issued thereunder, 

(2) uses any chart or table authorized by the 

Bureau under section 1606 of this title in such a 1 See References in Text note below. manner as to consistently understate the annuCase 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 21 of 92 PageID #: 136 
§ 1612 TITLE 15-COMMERCE AND TRADE Page 24 

al percentage rate determined under section 94 Stat. 184; Pub. L. 111-203, title X, § 1100A(2), 1606(a)(l)(A) of this title, or July 21, 2010, 124 Stat. 2107.) 

(3) otherwise fails to comply with any requirement imposed under this subchapter, AMENDMENTS 

shall be fined not more than $6,000 or imprisoned 2010--Subsec. (a). Pub. L. 111-203 substituted "Bureau" 

for "Board". not more than one year, or both. 1980-Pub. L. 96-221 amended section generally, desig­

(Pub. L. 90-321, title I, § 112, May 29, 1968, 82 Stat. nating existing provisions as subsec. (b) and adding sub151; Pub. L. 111-203, title X, § 1100A(2), July 21, secs. (a), (c), and (d). 

2010, 124 Stat. 2107.) EFFECTIVE DATE OF 2010 AMENDMENT 

AMENDMENTS Amendment by Pub. L. 111-203 effective on the desig2010--Par. (2). Pub. L. 111-203 substituted "Bureau" for nated transfer date, see section 1100H of Pub. L. 111-203, 

''Board''. set out as a note under section 552a of Title 5, Government Organization and Employees. 

EFFECTIVE DATE OF 2010 AMENDMENT 

EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 111-203 effective on the designated transfer date, see section 1100H of Pub. L. 111-203, Amendment by Pub. L. 96-221 effective on expiration of 

set out as a note under section 552a of Title 5, Govern­ two years and six months after Mar. 31, 1980, with all 

ment Organization and Employees. regulations, forms, and clauses required to be prescribed 

to be promulgated at least one year prior to such effec­

§ 1612. Effect on government agencies tive date, and allowing any creditor to comply with any 

amendments, in accordance with the regulations, forms, (a) Consultation requirements respecting compli­ and clauses prescribed by the Board prior to such effec­ ance of credit instruments issued to partici­ tive date, see section 625 of Pub. L. 96--221, set out as a pating creditor note under section 1602 of this title. 

Any department or agency of the United States 

which administers a credit program in which it § 1618. Annual reports to Congress by Bureau 

extends, insures, or guarantees consumer credit Each year the Bureau shall make a report to and in which it provides instruments to a cred­ the Congress concerning the administration of its itor which contain any disclosures required by functions under this subchapter, including such this subchapter shall, prior to the issuance or recommendations as the Bureau deems necessary continued use of such instruments, consult with or appropriate. In addition, each report of the Bu­ the Bureau to assure that such instruments com­ reau shall include its assessment of the extent to ply with this subchapter. which compliance with the requirements imposed 

(b) Inapplicability of Federal civil or criminal under this subchapter is being achieved. 

penalties to Federal, State, and local agencies (Pub. L. 90-321, title I, § 114, May 29, 1968, 82 Stat. 

No civil or criminal penalty provided under this 151; Pub. L. 96-221, title VI, § 610(a), Mar. 31, 1980, 

subchapter for any violation thereof may be im­ 94 Stat. 174; Pub. L. 97-375, title II, § 209(b), Dec. 

posed upon the United States or any department 21, 1982, 96 Stat. 1825; Pub. L. 111-203, title X, or agency thereof, or upon any State or political § 1100A(2), July 21, 2010, 124 Stat. 2107 .) 

subdivision thereof, or any agency of any State or political subdivision. AMENDMENTS 

(c) Inapplicability of Federal civil or criminal 2010--Pub. L. 111-203 substituted "Bureau" for "Board'' 

penalties to participating creditor where vio­ wherever appearing. 

1982-Pub. L. 97-375 struck out requirement that the lating instrument issued by United States Attorney General make a report on the same terms as A creditor participating in a credit program ad­ the Board. 

ministered, insured, or guaranteed by any depart­ 1980--Pub. L. 96-221 substituted "Each year" for "Not 

ment or agency or the United States shall not be later than January 3 of each year after 1969,". 

held liable for a civil or criminal penalty under 

this subchapter in any case in which the viola­ EFFECTIVE DATE OF 2010 AMENDMENT 

tion results from the use of an instrument re­ Amendment by Pub. L. 111-203 effective on the desigquired by any such department or agency. nated transfer date, see section 1100H of Pub. L. 111-203, 

set out as a note under section 552a of Title 5, Govern­ (d) Applicability of State penalties to violations ment Organization and Employees. by participating creditor · 

A creditor participating in a credit program ad­ EFFECTIVE DATE OF 1980 AMENDMENT 

ministered, insured, or guaranteed by any depart­ Amendment by Pub. L. 96-221 effective on expiration of 

ment or agency of the United States shall not be two years and six months after Mar. 31, 1980, with all 

held liable for a civil or criminal penalty under regulations, forms, and clauses required to be prescribed 

the laws of any State ( other than laws determined to be promulgated at least one year prior to such effective date, and allowing any creditor to comply with any under section 1610 of this title to be inconsistent amendments, in accordance with the regulations, forms, with this subchapter) for any technical or proce­ and clause_s prescribed by the Board prior to such effec­ dural failure, such as a failure to use a specific tive date, see section 625 of Pub. L. 96-221, set out as a form, to make information available at a specific note under section 1602 of this title. 

place on an instrument, or to use a specific typeface, as required by State law, which is caused by § 1614. Repealed. Pub. L. 96-221, title VI, § 616(b), the use of an instrument required to be used by Mar. 81, 1980, 94 Stat. 182 

such department or agency. Section, Pub. L. 9(H321, title I, § 115, as added Pub. L. 

(Pub. L. 90-321, title I, § 113, May 29, 1968, 82 Stat. 93-495, title IV, § 413(a), Oct. 28, 1974, 88 Stat. 1520, related 

151; Pub. L. 96-221, title VI, § 622(a), Mar. 31, 1980, to liability of assignees. See section 1641 of this title. 

Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 22 of 92 PageID #: 137 
Page 25 TITLE !&--COMMERCE AND TRADE § 1616 

EFFECTIVE DATE OF REPEAL (3) 1 free annual statement 

Repeal effective on expiration of two years and six A consumer shall be entitled to obtain 1 statemonths after Mar. 31, 1980, with all regulations, forms, ment under paragraph (1) each year without charge. and clauses required to be prescribed to be promulgated 

at least.one year prior to such effective date, and allow­ (4) Additional statements subject to reasonable 

ing any creditor to comply with any amendments, in ac­ fees 

cordance with the regulations, forms, and clauses pre­ Any creditor may impose a reasonable fee t~ scribed by the Board prior to such effective cl.ate, see cover the cost of providing any statement un­ section 625 of Pub. L. 96--221, set out as an Effective Date der paragraph (1) to any consumer in addition of 1980 Amendment note under section 1602 of this title. 

to the 1 free annual statement required under 

§ 1615. Prohibition on use of "Rule of 78's" in con- paragraph (3) if the amount of the charge for 

nection with mortgage refinancings and such additional statement is disclosed to the 

other consumer loans consumer before furnishing such statement. 

(a) Prompt refund of unearned interest required (d) Definitions 

(1) In general For the purpose of this sectionIf a consumer prepays in full the financed (1) Actuarial method 

amount under any consumer credit transaction, The term "actuarial method" means the meth­ the creditor shall promptly refund any unearned od of allocating payments made on a debt be­ portion of the interest charge to the consumer. 

1 tween the amount financed and the finance charge (2) Exception for refund of de minimus amount pursuant to which a payment is applied first to 

No refund shall be required under paragraph the accumulated finance charge and any remain­

(1) with respect to the prepayment of any con­ der is subtracted from, or any deficiency is add­ sumer credit transaction if the total amount of ed to, the unpaid balance of the amount financed. 

the refund would be less than $1. (2) Consumer, credit 

(3) Applicability to refinanced transactions and The terms "consumer" and "creditor" have acceleration by the creditor the meanings given to such terms in section 

This subsection shall apply with respect to 1602 of this title. 

any prepayment of a consumer credit transac­ (3) Creditor tion described in paragraph (1) without regard 

to the manner or the reason for the prepay­ The term "creditor"-

ment, including- (A) has the meaning given to such term in 

(A) any prepayment made in connection with section 1602 of this title; and 

the refinancing, consolidation, or restructur­ (B) includes any assignee of any creditor 

ing of the transaction; and with respect to credit extended in connection 

(B) any prepayment made as a result of the with any consumer credit transaction and any 

acceleration of the obligation to repay the subsequent assignee with respect to such credit. . amount due with respect to the transaction. 

(b) Use of "Rule of 78's" prohibited (Pub. L. 102-550, title IX, § 933, Oct. 28, 1992, 106 

For the purpose of calculating any refund of in­ Stat. 3891.) 

terest required under subsection (a) for any pre­ CODIFICATION 

computed consumer credit transaction of a term Section was enacted as part of the Housing and Com­ exceeding 61 months which is consummated after munity Development Act of 1992, and not as part of the September 30, 1993, the creditor shall compute the Consumer Credit Protection Act which comprises this 

refund based on a method which is at least as fa­ chapter. vorable to the consumer as the actuarial method. 

(c) Statement of prepayment amount § 1616. Board review of consumer credit plans 

and regulations (1) In general 

Before the the 5-day period beginning (a) Required review end of 

on the date an oral or written request is re­ Not later than 2 years after the effective date of 

ceived by a creditor from a consumer for the this Act and every 2 years thereafter, except as 

disclosure of the amount due on any precom­ provided in subsection (c)(2), the Board shall conputed consumer credit account, the creditor or duct a review, within the limits of its existing reassignee shall provide the consumer with a state­ sources available for reporting purposes, of the 

ment of- consumer credit card market, including-

(A) the amount necessary to prepay the ac­ (1) the terms of credit card agreements and 

count in full; and the practices of credit card issuers; 

(B) if the amount disclosed pursuant to sub­ (2) the effectiveness of disclosure of terms, 

paragraph (A) includes an amount which is fees, and other expenses of credit card plans; 

required to be refunded under this section with (3) the adequacy of protections against unfair 

respect to such prepayment, the amount of or deceptive acts or practices relating to credit 

such refund. card plans; and 

(2) Written statement required if request is in (4) whether or not, and to what extent, the 

writing implementation of this Act and the amendments 

made by this Act has affected- If the customer's request is in writing, the state­ (A) cost and availability of credit, particu­ ment under paragraph (1) shall be in writing. larly with respect to non-prime borrowers; 

(B) the safety and soundness of credit card 1 So in original. Probably should be "de minimis". issuers; 

Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 23 of 92 PageID #: 138 
§ 1631 TITLE 15-COMMERCE AND TRADE Page 26 

(C) the use of risk-based pricing; or specifically provided in Pub. L. 111-24, see section 3 of 

(D) credit card product innovation. Pub. L. 111-24, set out as an Effective Date of 2009 Amendment note under section 1602 of this title. 

(b) Solicitation of public comment This Act, referred to in subsecs. (a)(4) and (e)(l), is 

In connection with conducting the review re­ Pub. L. 111-24, May 22, 2009, 123 Stat. 1734, known as the 

quired by subsection (a), the Board shall solicit Credit Card Accountability Responsibility and Disclosure 

comment from consumers, credit card issuers, and Act of 2009, and also as the Credit CARD Act of 2009, 

which enacted this section and sections 1651, 1665c to other interested parties, such as through hear­ 1665e, 1666i-l, 16661-2, and 16931-1 of this title and section ings or written comments. la-7b of Title 16, Conservation, amended sections 1602, 

(c) Regulations 1632, 1637, 1640, 1650, 1666b, 1666c, 1666j, 1681b, 1681j, and 

1693m to 1693r of this title, enacted provisions set out as (1) Notice notes under sections 1602, 1637, 1638, 1666b, 168lj, and 16931-1 

Following the review required by subsection of this title and section 5311 of Title 31, Money and Fi­

(a), the Board shall publish a notice in the Fed­ nance, and amended provisions set out as notes under 

eral Register that- sections 1638 and 1693 of this title. For coml],let,e classification of this Act to the Code, see Short of 2009 (A) summarizes the review, the comments Amendment note set out under section 1601 of this title received from the public solicitation, and other and Tables. evidence gathered by the Board, such as through The Federal Trade Commission Act, referred to in sub­ consumer testing or other research; and sec. (e)(2), is act Sept. 26, 1914, ch. 311, 38 Stat. 717, which 

(B) either- is classified generally to subchapter I (§41 et seq.) of 

(i) proposes new or revised regulations or chapter 2 of this title. For complete classification of this 

interpretations to update or revise disclo­ Act to the Code, see section 58 of this title and Tables. 

sures and protections for consumer credit CODIFICATION 

cards, as appropriate; or Section was enacted as part of the Credit Card Ac­

(ii) states the reason for the determina­ countability Responsibility and Disclosure Act of 2009, tion of the Board that new or revised regu­ also known as the Credit CARD Act of 2009, and not as 

lations are not necessary. part of the Consumer Credit Protection Act which com­ prises this chapter. (2) Revision of review period following materiaJ revision of regulations EFFECTIVE DATE 

In the event that the Board materially re­ Section effective 9 months after May 22, 2009, except as 

vises regulations on consumer credit card plans, otherwise specifically provided, see section 3 of Pub. L. 

a review need not be conducted until 2 years af­ 111-24, set out as an Effective Date of 2009 Amendment 

note under section 1602 of this title. ter the effective date of the revised regulations, 

which thereafter shall be treated as the new DEFINITION 

date for the biennial review required by subsec­ For definition of "Board", see section 2 of Pub. L. tion (a). 111-24, set out as a Regulations note under section 1602 

of this title. (d) Board report to the Congress 

The Board shall report to Congress not less fre­ PART B-CREDIT TRANSACTIONS 

quently than every 2 years, except as provided in § 1631. Disclosure requiren1ents 

subsection (c)(2), on the status of its most recent (a) Duty of creditor or lessor respecting one or review, its efforts to address any issues identified n1ore than one obligor from the review, and any recommendations for 

legislation. Subject to subsection (b), a creditor or lessor 

shall disclose to the person who is obligated on a (e) AdditionaJ reporting consumer lease or a consumer credit transaction 

The Federal banking agencies (as that term is the information required under this subchapter. 

defined in section 1813 of title 12) and the Federal In a transaction involving more than one obligor, 

Trade Commission shall provide annually to the a creditor or lessor, except in a transaction under 

Board, and the Board shall include in its annual section 1635 of this title, need not disclose to more 

report to Congress under section 247 of title 12, than one of such obligors if the obligor given disinformation about the supervisory and enforce­ closure is a primary obligor. 

ment activities of the agencies with respect to (b) Creditor or lessor required to make disclocompliance by credit card issuers with applicable sure Federal consumer protection statutes and regula­ If a transaction involves one creditor as defined tions, including- in section 1602(f) 1 of this title, or one lessor as (1) this Act, the amendments made by this defined in section 1667(3) of this title, such cred­ Act," and regulations prescribed under this Act itor or lessor shall make the disclosures. If a trans­ and such amendments; and action involves more than one creditor or lessor, (2) section 5 of the Federal Trade Commission only one creditor or lessor shall by required to Act [15 U.S.C. 45], and regulations prescribed make the disclosures. The Bureau shall by regu­ under the Federal Trade Commission Act [15 lation specify which creditor or lessor shall make U.S.C. 41 et seq.], including part 227 of title 12 of the disclosures. the Code of Federal Regulations, as prescribed (c) Estimates as satisfying statutory require­ by the Board (referred to as "Regulation AA"). ments; basis of disclosure for per diem inter­

(Pub. L. 111-24, title V, § 502, May 22, 2009, 123 est 

Stat. 1755.) The Bureau may provide by regulation that any 

REFERENCES IN TEXT portion of the information required to be disclosed 

The effective date of this Act, referred to in subsec. 

(a), is 9 months after May 22, 2009, except as otherwise 1 See References in Text note below. 

Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 24 of 92 PageID #: 139 
Page 27 TITLE 15--COMMERCE AND TRADE § 1682 

by this subchapter may be given in the form of upon whom a finance charge is or may be imposed" after 

estimates where the provider of such information ''extended''. 

is not in a position to know exact information. In Subsec. (b). Pub. L. 93-495, §307(d), inserted reference 

to part D of this subchapter. the case of any consumer credit transaction a Subsec. (c). Pub. L. 93-495, §409, added subsec (c). portion of the interest on which is determined on 

a per diem basis and is to be collected upon the EFFECTIVE DATE OF 2010 AMENDMENT 

consummation of such transaction, any disclo­ Amendment by Pub. L. 111-203 effective on the desig­ sure with respect to such portion of interest shall nated transfer date, see section 1100H of Pub. L. 111-203, be deemed to be accurate for purposes of this set out as a note under section 552a of Title 5, Govern­ subchapter if the disclosure is based on informa­ ment Organization and Employees. tion actually known to the creditor at the time 

that the disclosure documents are being prepared EFFECTIVE DATE OF 1980 AMENDMENT 

for the consummation of the transaction. Amendment by Pub. L. 96-221 effective on expiration of 

two years and six months after Mar. 31, 1980, with all 

(d) Tolerances for numerical disclosures regulations, forms, and clauses required to be prescribed 

The Bureau shall determine whether tolerances to be promulgated at least one year prior to such effective date, and allowing any creditor to comply With any for numerical disclosures other than the annual amendments, in accordance with the regulations, forms, percentage rate are necessary to facilitate com­ and clauses prescribed by the Board prior to such effec­ pliance with this subchapter, and if it determines tive date, see section 625 of Pub. L. 96-221, set out as a that such tolerances are necessary to facilitate note under section 1602 of this title. 

compliance, it shall by regulation permit disclosures within such tolerances. The Bureau shall EFFECTIVE DATE OF 1976 AMENDMENT 

exercise its authority to permit tolerances for nu­ Amendment by Pub. L. 94-205 effective Jan. 2, 1976, see merical disclosures other than the annual percent­ section 12 of Pub. L. 94-205, set out as a note under secage rate so that such tolerances are narrow enough tion 2602 of Title 12, Banks and Banking. 

to prevent such t,olerances from resulting in misleading disclosures or disclosures that circumvent EFFECTIVE DATE OF 1974 AMENDMENT 

the purposes of this subchapter. 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 (Pub. L. 90-321, title I, § 121, May 29, 1968, 82 Stat. as an Effective Date note under section 1666 of this title. 152; Pub. L. 93-495, title III, § 307(c), (d), title IV, For effective date of amendment by section 409 of Pub. 

§ 409, Oct. 28, 1974, 88 Stat. 1516, 1519; Pub. L. 94-205, L. 93-495, see section 416 of Pub. L. 93---495, set out as an § 11, Jan. 2, 1976, 89 Stat. 1159; Pub. L. 96-221, title Effective Date note under section 1665a of this title. 

V1, § 611, Mar. 31, 1980, 94 Stat. 174; Pub. L. 104-29, 

§ 3(b), Sept. 30, 1995, 109 Stat. 273; Pub. L. 111-203, EFFECTIVE DATE 

title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.) Pub. L. 90-321, title V, §504(b), May 29, 1968, 82 Stat. 

167, provided in part that chapter 2 of title I, which enREFERENCES IN TEXT acted sections 1631 to 1641 of this title, is effective July 

1, 1969. Section 1602(f) of this title, referred to in subsec. (b), 

was redesignated section 1602(g) of this title by Pub. L. REAL ESTATE SETTLEMENT PROCEDURES 111-203, title X, § llOOA(l)(A), July 21, 2010, 124 Stat. 2107. 

Provisions of Real Estate Settlement Procedures Act 

AMENDMENTS of 1974, as superseding provisions of subsec. (c) of this 

section insofar as applying to federally related mortgage 2010-Subsecs. (b) to (d). Pub. L. 111-203 substituted loans, see section 2605 of Title 12, Banks and Banking. "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 § 1682. Form of disclosure; additional information 

interest on which is determined on a per diem basis and (a) Information clearly and conspicuously dis- is to be collected upon the consummation of such trans­ closed; "annual percentage rate" and "fi. action, any disclosure With respect to such portion of in­ nance charge"; order of disclosures and use terest shall be deemed to be accurate for purposes of 

this subchapter if the disclosure is based on information of different terminology 

actually known to the creditor at the time that the dis­ Information required by this subchapter shall 

closure documents are being prepared for the consumma­ be disclosed clearly and conspicuously, in accordtion of the transaction." ance with regulations of the Bureau. The terms 

1980-Subsec. (a). Pub. L. 96-221 substituted provisions "annual percentage rate" and "finance charge" respecting to which obliger duty of creditor or lessor, shall be disclosed more conspicuously than other where one or more than one obliger ls involved, is owed, terms, data, or information provided in connec­ for provisions setting forth clear and conspicuous disclosure requirements for creditors to persons extended con­ tion with a transaction, except information relatsumer credit. ing to the identify of the creditor. Except as proSubsec. (b). Pub. L. 96-221 substituted provisions relat­ vided in subsection (c), regulations of the Bureau 

ing to disclosure requirements of creditor or lessor, for need not require that disclosures pursuant to this 

provisions relating to statement of information where subchapter be made in the order set forth in this more than one obliger is involved. subchapter and, except as otherwise provided, may Subsecs. (c), (d). Pub. L. 96-221 added subsecs. (c) and permit the use of terminology different from that 

(d). employed in this subchapter if it conveys substan1976-Subsec. (c). Pub. L. 94-205 struck out subsec. (c) tially the same meaning. which related to disclosure including a full statement of 

closing costs incurred and permitted estimates of such (b) Optional information by creditor or lessor information where the lender was not in a position to 

know exact information. Any creditor or lessor may supply additional 

1974-Subsec. (a). Pub. L. 93-495, §307(c), inserted ref­ information or explanation with any disclosures erence to part D of this subchapter and struck out "and required under parts D and E and, except as proCase 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 25 of 92 PageID #: 140 
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§ 1632 TITLE 15-COMMERCE AND TRADE Page 28 

vided in sections 1637a(b)(3) and 1638(b)(l) of this ( 4) Exception 

title, under this part. This subsection shall not apply to individual­

(c) Tabular format required for certain disclo­ ly negotiated changes to contractual terms, such 

sures under section 1637(c) as individually modified workouts or renegotiations of amounts owed by a consumer under an (1) In general open end consumer credit plan. The information described in paragraphs (l)(A), (5) Regulations (3)(B)(i)(I), (4)(A), and (4)(C)(i)(I) of section 1637(c) 

of this title shall be- The Bureau, in consultation with the other 

(A) disclosed in the form and manner which Federal banking agencies (as that term is dethe Bureau shall prescribe by regulations; and fined in section 1681a of this title) and the Bu­

(B) placed in a conspicuous and prominent reau, 1 may promulgate regulations to implement 

location on or with any written application, this subsection, including specifying the format 

solicitation, or other document or paper with for posting the agreements on the Internet sites 

respect to which such disclosure is required. of creditors and establishing exceptions to paragraphs (1) and (2), in any case in which the ad­

(2) Tabular format ministrative burden outweighs the benefit of in­

(A) Form of table to he prescribed creased transparency, such as where a credit 

In the regulations prescribed under para­ card plan has a de minimis number of consumgraph (l)(A) of this subsection, the Bureau er account holders. 

shall require that the disclosure of such in­ (Pub. L. 90-321, title I, § 122, May 29, 1968, 82 Stat. 

formation shall, to the extent the Bureau de­ 152; Pub. L. 93---495, title III, § 307(e), (f), Oct. 28, 

termines to be practicable and appropriate, 1974, 88 Stat. 1516, 1517; Pub. L. 96-221, title VI, 

be in the form of a table which- § 611, Mar. 31, 1980, 94 Stat. 175; Pub. L. 100-583, 

(i) contains clear and concise headings for § 2(b), Nov. 3, 1988, 102 Stat. 2966; Pub. L. 100-709, 

each item of such information; and § 2(d), Nov. 23, 1988, 102 Stat. 4731; Pub. L. 111-24, 

(ii) provides a clear and concise form for title II, § 204, May 22, 2009, 123 Stat. 1746; Pub. L. 

stating each item of information required 111-203, title X, § 1100A(2), (3), July 21, 2010, 124 

to be. disclosed under each such heading. Stat. 2107.) 

(B) Bureau discretion in prescribing order AMENDMENTS and wording of table 

2010-Subsecs. (a), (c). Pub. L. 111-203, § 1100A(2), subIn prescribing the form of the table under stituted "Bureau" for "Board" wherever appearing. subparagraph (A), the Bureau may- Subsec. (d)(2), (3). Pub. L. 111-203, § 1100A(2), substitut­

(i) list the items required to be included ed "Bureau" for "Board" wherever appearing. 

in the table in a different order than the or­ Subsec. (d)(5). Pub. L. 111-203 substituted "The Buder in which such items are set forth in reau, in" for "The Board, in" and "and the Bureau, may" 

paragraph (l)(A) or (4)(A) of section 1637(c) for "and the Federal Trade Commission, may". 

2009--Subsec. (d). Pub. L. 111-24 added subsec. (d). of this title; and 1988---Subsec. (a). Pub. L. 100-583, § 2(b)(l), substituted 

(ii) subject to subparagraph (C), employ "Except as provided in subsection (c), regulations" for 

terminology which is different than the ter­ ''Regulations". 

minology which is employed in section 1637(c) Subsec. (b). Pub. L. 100-709 substituted "sections 1637a(b)(3) 

of this title if such terminology conveys sub­ and 1638(b)(l)" for "section 1638(b)(l)". 

stantially the same meaning. Subsec. (c). Pub. L. 100-583, § 2(b)(2), added subsec. (c). 

1980-Subsec. (a). Pub. L. 96-221 substituted provisions (C) Grace period setting forth form of disclosure to meet requirements of 

Either the heading or the statement under this subchapter, for provisions setting forth form of disthe heading which relates to the time period closure authorized under this part or part D of this subreferred to in section 1637(c)(l)(A)(iii) of this chapter. 

Subsec. (b). Pub. L. 96-221 substituted provisions set­ title shall contain the term "grace period". ting forth disclosure requirements for additional infor­

(d) Additional electronic disclosures mation by creditors or lessors, for provisions setting forth 

disclosure requirements for additional information by credi­

(1) Posting agreements tors. 

Each creditor shall establish and maintain an 1974-Subsecs. (a), (b). Pub. L. 93-495 inserted referInternet site on which the creditor shall post ences to part D of this subchapter. 

the written agreement between the creditor and EFFECTIVE DATE OF 2010 AMENDMENT 

the consumer for each credit card account un­ Amendment by Pub. L. 111-203 effective on the desig­ der an open-end consumer credit plan. nated transfer date, see section 1100H of Pub. L. 111-203, 

(2) Creditor to provide contracts to the Bu­ set out as a note under section 552a of Title 5, Governreau ment Organization and Employees. 

Each creditor shall provide to the Bureau, in EFFECTIVE DATE OF 2009 AMENDMENT 

electronic format, the consumer credit card agree­ Amendment by Pub. L. 111-24 effective 9 months after 

ments that it publishes on its Internet site. May 22, 2009, except as otherwise specifically provided, 

see section 3 of Pub. L. 111-24, set out as a note under (3) Record repository section 1602 of this title. 

The Bureau shall establish and maintain on EFFECTIVE DATE OF 1988 AMENDMENT its publicly available Internet site a central repository of the consumer credit card agreements For effective date of amendments by Pub. L. 100-709, 

received from creditors pursuant to this sub­ see Regulations; Effective Date note below. 

section, and such agreements shall be easily 

accessible and retrievable by the public. 1 So in original. 
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Page 29 TITLE 15-COMMERCE AND TRADE § 1685 

EFFECTIVE DATE OF 1980 AMENDMENT the obligor shall have the right to rescind the 

Amendment by Pub. L. 96--221 effective on expiration of transaction until midnight of the third business 

two years and six months after Mar. 31, 1980, with all day following the consummation of the transacregulations, forms, and clauses required to be prescribed tion or the delivery of the information and rescisto be promulgated at least one year prior to such effec­ sion forms required under this section together tive date, and allowing any creditor to comply with any with a statement containing the material discloamendments, in accordance with the regulations, forms, sures required under this subchapter, whichever and clauses prescribed by the Board prior to such effec­ is later, by notifying the creditor, in accordance tive date, see section 625 of Pub. L. 96-221, set out as a with regulations of the Bureau, of his intention note under section 1602 of this title. 

to do so. The creditor shall clearly and conspicuEFFECTIVE DATE OF 1974 AMENDMENT ously disclose, in accordance with regulations of 

For effective date of amendment by Pub. L. 93-495, see the Bureau, to any obligor in a transaction subsection 308 of Pub. L. 93-495, set out as an Effective Date ject to this section the rights of the obligor under 

note under section 1666 of this title. this section. The creditor shall also provide, in 

accordance with regulations of the Bureau, ap­ REGULATIONS; EFFECTIVE DATE propriate forms for the obligor to exercise his right 

For provisions relating to promulgation of regulations to rescind any transaction subject to this sec­ to implement amendment by Pub. L. 100-709, and effec­ tion. 

tive date of such amendment in connection with those 

regulations, see section 7 of Pub. L. 100-709, set out as a (b) Return of money or property following rescisnote under section 1637.a of this title. sion 

For provisions relating to promulgation of regulations When an obligor exercises his right to rescind to implement amendment by Pub. L. 100-583, and effective date of such amendment in connection with those under subsection (a), he is not liable for any firegulations, see section 7 of Pub. L. 100-583, set out as a nance or other charge, and any security interest 

note under section 1637 of this title. given by the obligor, including any such interest 

arising by operation of law, becomes void upon 

§ 1683. Exemption for State-regulated transac­ such a rescission. Within 20 days after receipt of 

tions a notice of rescission, the creditor shall return to 

the obligor any money or property given as ear­ The Bureau shall by regulation exempt from the nest money, downpayment, or otherwise, and shall requirements of this part any class of credit trans­ take any action necessary or appropriate to re­ actions within any State if it determines that un­ flect the termination of any security interest cre­ der the law of that State that class of transactions ated under the transaction. If the creditor has is subject to requirements substantially similar to delivered any property to the obligor, the obligor those imposed under this part, and that there is 

may retain possession of it. Upon the perform­ adequate provision for enforcement. ance of the creditor's obligations under this sec­ (Pub. L. 90-321, title I, § 123, May 29, 1968, 82 Stat. tion, the obligor shall tender the property to the 

152; Pub. L. 111-203, title X, § 1100A(2), July 21, creditor, except that if return of the property in 

2010, 124 Stat. 2107.) kind would be impracticable or inequitable, the 

obligor shall tender its reasonable value. Tender AMENDMENTS shall be made at the location of the property or at 

2010-Pub. L. 111-203 substituted "Bureau" for "Board". the residence of the obligor, at the option of the 

obligor. If the creditor does not take possession of EFFECTIVE DATE OJ;' 2010 AMENDMENT the property within 20 days after tender by the obAmendment by Pub. L. 111-203 effective on the desig­ ligor, ownership of the property vests in the obnated transfer date, see section 1100H of Pub. L. 111-203, liger without obligation on his part to pay for it. set out as a note under section 552a of Title 5, Govern­ The procedures prescribed by this subsection shall ment Organization and Employees. apply except when otherwise ordered by a court. 

§ 1634. Effect of subsequent occurrence (c) Rebuttable presumption of delivery of reIf information disclosed in accordance with this quired disclosures 

part is subsequently rendered inaccurate as the Notwithstanding any rule of evidence, written 

result of any act, occurrence, or agreement sub­ acknowledgment of receipt of any disclosures re­ sequent to the delivery of the required disclosures, quired under this subchapter by a person to whom 

the inaccuracy resulting therefrom does not con­ information, forms, and a statement is required stitute a violation of this part. to be given pursuant to this section does no more 

(Pub. L. 90-321, title I, § 124, May 29, 1968, 82 Stat. than create a rebuttable presumption of delivery 

152.) thereof. 

(d) Modification and waiver of rights § 1635. Right of rescission as to certain transac­ The Bureau may, if it finds that such action is tions 

necessary in order to permit homeowners to meet 

(a) Disclosure of obligor's right to rescind bona fide personal financial emergencies, prescribe 

Except as otherwise provided in this section, in regulations authorizing the modification or waivthe case of any consumer credit transaction (in­ er of any rights created under this section to the 

cluding opening or increasing the credit limit for extent and under the circumstances set forth in 

an open end credit plan) in which a security in­ those regulations. 

terest, including any such-interest arising by operation of law, is or will be retained or acquired (e) Exempted transactions; reapplication of proin any property which is used as the principal visions 

dwelling of the person to whom credit is extended, This section does not apply to-
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§ 1635 TITLE 15-COMMERCE AND TRADE Page 30 

(1) a residential mortgage transaction as de­ transaction equivalent to other rescission rights 

fined in section 1602(w) 1 of this title; provided by this section, if-

(2) a transaction which constitutes a refinanc­ (A) a mortgage broker fee is not included in 

ing or consolidation (with no new advances) of the finance charge in accordance with the laws 

the principal balance then due and any accrued and regulations in effect at the time the con­ and unpaid finance charges of an existing ex­ sumer credit transaction was consummated; 

tension of credit by the same creditor secured or 

by an interest in the same property; (B) the form of notice of rescission for the 

(3) a transaction in which an agency of a State transaction is not the appropriate form of writis the creditor; or ten notice published and adopted by the Bu­

(4) advances under a preexisting open end cred­ reau or a comparable written notice, and othit plan if a security interest has already been erwise complied with all the requirements of 

retained or acquired and such advances are in this section regarding notice. 

accordance with a previously established credit (2) Tolerance for disclosures limit for such plan. Notwithstanding section 1605(f) of this title, 

(f) Time limit for exercise of right and subject to the time period provided in subAn obligor's right of rescission shall expire three section (f), for the purposes of exercising any 

years atter the date of consummation of the trans­ rescission rights after the initiation of any juaction or upon the sale of the property, whichever dicial or nonjudicial foreclosure process on the 

occurs first, notwithstanding the fact that the in­ principal dwelling of the obligor securing an exformation and forms required under this section tension of credit, the disclosure of the finance 

or any other disclosures required under this part charge and other disclosures affected by any fihave not been delivered to the obligor, except that nance charge shall be treated as being accurate 

if (1) any agency empowered to enforce the provi­ for purposes of this section if the amount dissions of this subchapter institutes a proceeding closed as the finance charge does not vary from 

to enforce the provisions of this section within the actual finance charge by more than $35 or 

three years after the date of consummation of is greater than the amount required to be disthe transaction, (2) such agency finds a violation closed under this subchapter. 

of this section, and (3) the obligor's right to re­ (3) Right of recoupment under State law 

scind is based in whole or in part on any matter Nothing in this subsection affects a consum­ involved in such proceeding, then the obligor's right er's right of rescission in recoupment under State of rescission shall expire three years after the law. date of consummation of the transaction or upon 

the earlier sale of the property, or upon the expi­ (4) Applicability 

ration of one year following the conclusion of the This subsection shall apply to all consumer proceeding, or any judicial review or period for credit transactions in existence or consummatjudicial review thereof, whichever is later. ed on or after September 30, 1995. 

(g) Additional relief (Pub. L. 90-321, title I, § 125, May 29, 1968, 82 Stat. 

153; Pub. L. 93-495, title IV, §§ 404, 405, 412, Oct. 28, In any action in which it is determined that a 1974, 88 Stat. 1517, 1519; Pub. L. 96-221, title VI, creditor has violated this section, in addition to §612(a)(l), (3)-(6), Mar. 31, 1980, 94 Stat. 175, 176; rescission the court may award relief under sec­ Pub. L. 98-479, title II, §205, Oct. 17, 1984, 98 Stat. tion 1640 of this title for violations of this sub­ 2234; Pub. L. 104-29, §§ 5, 8, Sept. 30, 1995, 109 Stat. chapter not relating to the right to rescind. 274, 275; Pub. L. 111-203, title X, § 1100A(2), July 

(h) Limitation on rescission 21, 2010, 124 Stat. 2107.) 

An obligor shall have no rescission rights aris­ REFERENCES IN TEXT 

ing solely from the form of written notice used by Section 1602(w) of this title, referred to in subsec. (e)(l), the creditor to inform the obligor of the rights of was redesignated section 1602(x) of this title by Pub. L. the obligor under this section, if the creditor pro­ 111-203, title X, §1100A(l)(A), July 21, 2010, 124 Stat. 2107. vided the obligor the appropriate form of written 

notice published and adopted by the Bureau, or a AMENDMENTS 

comparable written notice of the rights of the ob­ 2010-Subsecs. (a), (d), (h), (i)(l)(B). Pub. L. 111-203 subliger, that was properly completed by the credi­ stituted "Bureau" for "Board" wherever appearing. 

tor, and otherwise complied with all other require­ 1995--Subsec. (h). Pub. L. 104-29, §5, added subsec. (h). 

ments of this section regarding notice. Subsec. (i). Pub. L. 104-29, §8, added subsec. (i). 

1984-Subsec. (e). Pub. L. 98-479 redesignated par. (1) as 

(i) Rescission rights in foreclosure subsec. (e), redesignated subpars. (A), (B), (C), and (D) of 

par. (1) as pars. (1), (2), (3), and (4), respectively, and (1) In general struck out par. (2) which read as follows: "The provisions 

Notwithstanding section 1649 of this title, and of paragraph (l)(D) shall cease to be effective 3 years 

subject to the time period provided in subsec­ after the effective date of the Truth in Lending Simplition (f), in addition to any other right of rescis­ fication Reform Act." 

1980-Subsec. (a). Pub. L. 96-221, §612(a)(1), substituted sion available under this section for a transac­ provisions relating to the right of rescission until mid­ tion, after the initiation of any judicial or non­ night of the third business day following the consumma­ judicial foreclosure process on the primary dwell­ tion of the transaction or the delivery of the informaing of an obligor securing an extension of cred­ tion and rescission forms required together with the stateit, the obligor shall have a right to rescind the ment containing the material disclosures required under 

this subcha.pter, whichever is later, for provisions relating to right of rescission until midnight of the third 1 See References in Text note below. business day following the consummation of the trans-
Page 31 TITLE 15--COMMERCE AND TRADE § 1637 

action or the delivery of the required disclosures and all (1) The conditions under which a finance charge 

other material disclosures required under this part, which­ may be imposed, including the time period (if ever is later. any) within which any credit extended may be 

Subsec. (b ). Pub. L. 96--221, § 612(a)(3), ( 4), inserted pro­ repaid without incurring a finance charge, ex­ visions setting forth applicability of procedures prescribed cept that the creditor may, at his election and by this subsection, and substituted "20" for "ten" in two without disclosure, impose no such finance charge places. 

Subsec. (c). Pub. L. 96--221, §612(a)(5), inserted "infor­ if payment is received after the termination of 

mation, forms, and" after "whom". such time period. If no such time period is proSubsec. (e). Pub. L. 96-221, § 612(a)(6), substituted provi­ vided, the creditor shall disclose such fact. 

sions relating to nonapplicability to residential mort­ (2) The method of determining the balance 

gage transactions, refinancing or consolidation transac­ upon which a finance charge will be imposed. tions, etc., for provisions relating to nonapplicability to (3) The method of determining the amount of creation or retention of first liens. the finance charge, including any minimum or Subsec. (f). Pub. L. 96-221, § 612(a)(6), substituted provi­ fixed amount imposed as a finance charge. sions setting forth duration of right of rescission where 

the required information and forms or other disclosures ( 4) Where one or more periodic rates may be 

required under this part have not been delivered to the used to compute the finance charge, each such 

obligor, and exceptions to such term, for provisions setting rate, the range of balances to which it is apforth duration of of rescission where the required dis- plicable, and the corresponding nominal annual 

closures or any material disclosures required un- percentage rate determined by multiplying. the 

der this part have not been delivered to the obligor. periodic rate by the number of periods in a year. Subsec. (g). Pub. L. 96-221, § 612(a)(6), added subsec. (g). (5) Identification of other charges which may 1974-Subsecs. (a), (b). Pub. L. 93-495, §404, inserted 

provisions relating to security interest arising by oper­ be imposed as part of the plan, and their methation of law. od of computation, in accordance with regulaSubsec. (e). Pub. L. 93-495, §412, inserted exemption for tions of the Bureau. consumer credit transactions where a State agency is (6) In cases where the credit is or will be se­ the creditor. cured, a statement that a security interest has 

Subsec. (f). Pub. L. 93-495, § 405, added subsec. (f). been or will be taken in (A) the property purchased as part of the credit transaction, or (B) EFFECTIVE DATE OF 2010 &'IIIENDMENT property not purchased as part of the credit 

Amendment by Pub. L. 111-203 effective on the desig­ transaction identified by item or type. nated transfer date, see section 1100H of Pub. L. 111-203, (7) A statement, in a form prescribed by regu­ set out as a note under section 552a of Title 5, Govern­ lations of the Bureau of the protection provided ment Organization and Employees. by sections 1666 and 1666i of this title to an obEFFECTIVE DATE OF 1980 AMENDMENT liger and the creditor's responsibilities under 

sections 1666a and 1666i of this title. With re­ Amendment by Pub. L. 96--221 effective on expiration of spect to one billing cycle per calendar year, at two years and six months after Mar. 31, 1980, with all intervals of not less than six months or more regulations, forms, and clauses required to be prescribed 

to be promulgated at least one year prior to such effec­ than eighteen months, the creditor shall transtive date, and allowing any creditor to comply with any mit such statement to each obligor to whom the 

amendments, in accordance with the regulations, forms, creditor is required to transmit a statement purand clauses prescribed by the Board prior to such effec­ suant to subsection (b) for such billing cycle. 

tive date, see section 625 of Pub. L. 96--221, set out as a (8) In the case of any account under an open 

note under section 1602 of this title. end consumer credit plan which provides for any 

extension of credit which is secured by the con­ EFFECTIVE DATE OF 1974 AMENDMENT sumer's principal dwelling, any information whichAmendment by Pub. L. 93-495 effective Oct. 28, 1974, see (A) is required to be disclosed under section 

secti.on 416 of Pub. L. 93-495, set out as an Effective Date 1637a(a) of this title; and 

note under section 1665a of this title. (B) the Bureau determines is not described 

in any other paragraph of this subsection. 

§ 1636. Repealed. Pub. L. 96-221, title VI, § 614(e)(l), 

Mar. 31, 1980, 94 Stat. 180 (b) Statement required with each billing cycle 

Section, Pub. L. 90-321, title I, § 126, May 29, 1968, 82 Tbe creditor of any account under an open end 

Stat. 153, related to contents of periodic statements. consumer credit plan shall transmit to the obligor, for each billing cycle at the end of which 

EFFECTIVE DATE OF REPEAL there is an outstanding balance in that account 

Repeal effective on expiration of two years and six or with respect to which a finance charge is immonths after Mar. 31, 1980, with all regulations, forms, posed, a statement setting forth each of the foland clauses required to be prescribed to be promulgated lowing items to the extent applicable: 

at least one year prior to such effective date, and allow­ (1) The outstanding balance in the account at 

ing any creditor to comply with any amendments, in ac­ the beginning of the statement period. cordance with the regulations, forms, and clauses pre­ (2) The amount and date of each extension of scribed by the Board prior to such effective date, see credit during the period, and a brief identifica­ section 625 of Pub. L. 96--221, set out as an Effective Date 

of 1980 Amendment note under section 1602 of this title. tion, on or accompanying the statement of each 

extension of credit in a form prescribed by the 

§ Bureau sufficient to enable the obligor either to 1637. Open end consumer credit plans identify the transaction or to relate it to copies (a) Required disclosures by creditor of sales vouchers or similar instruments previBefore opening any account under an open end ously furnished, except that a creditor's failure 

consumer credit plan, the creditor shall disclose to to disclose such information in accordance with 

the person to whom credit is to be extended each of this paragraph shall not be deemed a failure to 

the following items, to the extent applicable: comply with this part or this subchapter if (A) 

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§ 1637 TITLE 15--COMMERCE AND TRADE Page 32 

the creditor maintains procedures reasonably pay your balance.", or such similar statement 

adapted to procure and provide such informa­ as is established by the Bureau pursuant to con­ tion, and (B) the creditor responds to and treats sumer testing. 

any inquiry for clarification or documentation (B) Repayment information that would apply as a billing error and an erroneously billed amount to the outstanding balance of the consumer un­ under section 1666 of this title. In lieu of com­ der the credit plan, including- plying with the requirements of the previous (i) the number of months (rounded to the 

sentence, in the case of any transaction in which nearest month) that it would take to pay the the creditor and seller are the same person, as entire amount of that balance, if the consum­ defined by the Bureau, and such person's open er pays only the required minimum monthly end credit plan has fewer than 15,000 accounts, payments and if no further advances are made; the creditor may elect to provide only the amount (ii) the total cost to the consumer, includ­ and date of each extension of credit during the ing interest and principal payments, of pay­ period and the seller's name and location where ing that balance the transaction in took place if full, if the consumer pays (A) a brief identification of the transaction has been previously only the required minimum monthly payments 

furnished, and (B) the creditor responds to and and if no further advances are made; 

treats any inquiry for clarification or documen­ (iii) the monthly payment amount that would 

tation as a billing error and an erroneously billed be required for the consumer to eliminate the 

amount under section 1666 of this title. outstanding balance in 36 months, if no fur­

(3) The total amount credited to the account ther advances are made, and the total cost to 

during the period. the consumer, including interest and principal (4) The amount of any finance charge added payments, of paying that balance in full if 

to the account during the period, itemized to the consumer pays the balance over 36 months; show the amounts, if any, due to the applica­ and 

tion of percentage rates and the amount, if any, (iv) a toll-free telephone number at which imposed as a minimum or fixed charge. the consumer may receive information about (5) Where one or more periodic rates may be accessing credit counseling and debt manage­ used to compute the finance charge, each such ment services. rate, the range of balances to which it is applicable, and, unless the annual percentage rate {C)(i) Subject to clause (ii), in making the 

(determined under section 1606(a)(2) of this title) disclosures under subparagraph (B), the crediis required to be disclosed pursuant to para­ tor shall apply the interest rate or rates in efgraph (6), the corresponding nominal annual per­ fect on the date on which the disclosure is made 

centage rate determined by multiplying the peri­ until the date on which the balance would be 

odic rate by the number of periods in a year. paid in full. 

(6) Where the total finance charge exceeds 50 (ii) If the interest rate in effect on the date 

cents for a monthly or longer billing cycle, or on which the disclosure is made is a temporary the pro rata part· of 50 cents for a billing cycle rate that will change under a contractual provi­ shorter than monthly, the total finance charge sion applying an index or formula for subse­ expressed as an annual percentage rate (deter­ quent interest rate adjustment, the creditor shall mined under section 1606(a)(2) of this title), ex­ apply the interest rate in effect on the date on cept that if the finance charge is the sum of which the disclosure is made for as long as that two or more products of a rate times a portion interest rate will apply under that contractual of the balance, the creditor may, in lieu of dis­ provision, and then apply an interest rate based closing a single rate for the total charge, disclose each such rate expressed as an annual on the index or formula in effect on the applicapercentage rate, and the part of the balance to ble billing date. 

which it is applicable. (D) All of the information described in sub­

(7) The balance on which the finance charge paragraph (B) shallwas computed and a statement of how the bal­ (i) be disclosed in the form and manner which 

ance was determined. If the balance is deter­ the Bureau shall prescribe, by regulation, and 

mined without first deducting all credits during in a manner that avoids duplication; and 

the period, that fact and the amount of such (ii) be placed in a conspicuous and promipayments shall also be disclosed. nent location on the billing statement. 

(8) The outstanding balance in the account at (E) In the regulations prescribed under sub­ the end of the period. paragraph {D), the Bureau shall require that (9) The date by which or the period (if any) the disclosure of such information shall be in within which, payment must be made to avoid the form of a table that- additional finance charges, except that the cred­ (i) contains clear and concise headings for itor may, at his election and without disclosure, each item of such information; and impose no such additional finance charge if pay­ (ii) provides a clear and concise form stat­ ment is received after such date or the termi­ ing each item of information required to be nation of such period. disclosed under each such heading. (10) The address to be used by the creditor for 

the purpose of receiving billing inquiries from (F) In prescribing the form of the table under 

the obligor. subparagraph (E), the Bureau shall require that-

(ll)(A) A written statement in the following (i) all of the information in the table, and 

form: "Minimum Payment Warning: Making only not just a reference to the table, be placed on 

the minimum payment will increase the amount the billing statement, as required by this paraof interest you pay and the time it takes to re- graph; and 
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Page 33 TITLE 15-COMMERCE AND TRADE § 1637 

(ii) the items required to be included in the (II) Where an extension of credit is subtable shall be listed in the order in which ject to a variable rate, the fact that the 

such items are set forth in subparagraph (B). rate is variable, the annual percentage rate 

(G) In prescribing in effect at the the form time of of the the table under mailing, and 

subparagraph (D), the Bureau shall employ ter­ how the rate is determined. 

minology which is different than the terminol­ (III) Where more than one rate applies, 

ogy which is employed in subparagraph (B), if the range of balances to which each rate 

such terminology is more easily understood and applies. 

conveys substantially the same meaning. (ii) Annual and other fees (12) REQUIREMENTS RELATING TO LATE PAYMENT DEADLINES AND (I) Any annual fee, other periodic fee, or PENALTIES.-

(A) LATE PAYMENT DEADLINE REQUIRED TO membership fee imposed for the issuance or 

BE DISCLOSED.-ln the case of a credit card availability of a credit card, including any 

account under an open end consumer credit account maintenance fee or other charge implan under which a late fee or charge may be posed based on activity or inactivity for the 

imposed due to the failure of the obligor to account during the billing cycle. 

make payment on or before the due date for (II) Any minimum finance charge imposed 

such payment, the periodic statement required for each period during which any extension 

under subsection (b) with respect to the ac­ of credit which is subject to a finance charge 

count shall include, in a conspicuous location is outstanding. on the billing statement, the date on which (III) Any transaction charge imposed in 

the payment is due or, if different, the date on connection with use of the card to purchase which a late payment fee will be charged, to­ goods or services. gether with the amount of the fee or charge Grace period to be imposed if payment is made after that (iii) 

date. (I) The date by which or the period within 

(B) DISCLOSURE OF INCREASE IN INTEREST which any credit extended under such credRATES FOR LATE PAYMENTS.-If 1 or more late it plan for purchases of goods or services 

payments under an open end consumer credit must be repaid to avoid incurring a finance 

plan may result in an increase in the annual charge, and, if no such period is offered, percentage rate applicable to the account, the .such fact shall be clearly stated. 

statement required under subsection (b) with (II) If the length of such "grace period" respect to the account shall include conspicu­ varies, the card issuer may disclose the range ous notice of such fact, together with the ap­ of days in the grace period, the minimum plicable penalty annual percentage rate, in close number of days in the grace period, or the proximity to the disclosure required under sub­ average number of days in the grace period, paragraph (A) of the date on which payment if the disclosure is identified as such. is due under the terms of the account. 

(iv) (C) PAYMENTS AT LOCAL BRANCHES.-If Balance calculation method the 

creditor, in the case of a credit card account (I) The name of the balance calculation 

referred to in subparagraph (A), is a financial method used in determining the balance on 

institution which maintains branches or of­ which the finance charge is computed if the 

fices at which payments on any such account method used has been defined by the Buare accepted from the obligor in person, the reau, or a detailed explanation of the baldate on which the obligor makes a payment ance calculation method used if the method 

on the account at such branch or office shall has not been so defined. 

be considered to be the date on which the (II) In prescribing regulations to carry out 

payment is made for purposes of determining this clause, the Bureau shall define and name 

whether a late fee or charge may be imposed not more than the 5 balance calculation methdue to the failure of the obligor to make pay­ ods determined by the Bureau to be the most 

ment on or before the due date for such pay­ commonly used methods. 

ment. (B) Other information 

In addition to the information required to 

(c) Disclosure in credit and charge card applica­ be disclosed under subparagraph (A), each ap­ tions and solicitations plication or solicitation to which such subparagraph applies shall disclose clearly and con­ (1) Direct mail applications and solicitations spicuously the following information, subject 

(A) Information in tabular format to subsections (e) and (f): 

Any application to open a credit card ac­ (i) Cash advance fee 

count for any person under an open end con­ Any fee imposed for an extension of cred­ sumer credit plan, or a solicitation to open it in the form of cash. such an account without requiring an applica­ fee tion, mailed to consumers dis­ (ii) Late that is shall 

close the following information, subject to sub­ Any fee imposed for a late payment. 

section (e) and section 1632(c) of this title: (iii) Over-the-limit fee 

(i) Annual percentage rates Any fee imposed in connection with an 

(I) Each annual percentage rate applica­ extension of credit in excess of the amount 

ble to extensions of credit under such credit of credit authorized to be extended with replan. spect to such account. 
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§ 1687 TITLE 15-COMMERCE AND TRADE Page 34 

(2) Telephone solicitations (iii) a clear and conspicuous disclosure of 

(A) In general the date the application or solicitation was printed; and 

In any telephone solicitation to open a cred­ (iv) a disclosure, in a conspicuous and promi­ it card account for any person under an open nent location on the application or solicitaend consumer credit plan, the person making tion, of a toll free telephone number or a the solicitation shall orally disclose the infor­ mailing address at which the applicant may mation described in paragraph (l)(A). contact the creditor to obtain any change 

(B) Exception in the information provided in the application or solicitation since it was printed. Subparagraph (A) shall not apply to any (C) General information without any specific telephone solicitation ifterm (i) the credit card issuer-

(I) does not impose any fee described in An application or solicitation described in 

paragraph (l)(A)(ii)(I); or subparagraph (A) meets the requirement of 

this subparagraph if such application or (II) does not impose any fee in connec­ solicitation- tion with telepho,ne solicitations unless the (i) contains a statement, in a conspicuous consumer signifies acceptance by using the and prominent location on the application card; or solicitation, that-

(ii) the card issuer discloses clearly and (I) there are costs associated with the 

conspicuously in writing the information de­ use of credit cards; and 

scribed in paragraph (1) within 30 days af­ (II) the applicant may contact the credter the consumer requests the card, but in itor to request disclosure of specific inforno event later than the date of delivery of mation of such costs by calling a toll free 

the card; and telephone number or by writing to an address, specified in the application; (iii) the card issuer discloses clearly and 

conspicuously that the consumer is not obli­ (ii) contains a disclosure, in a conspicuous 

gated to accept the card or account and the and prominent location on the application 

consumer will not be obligated to pay any or solicitation, of a toll free telephone numof the fees or charges disclosed unless the ber and a mailing address at which the apconsumer elects to accept the card or ac­ plicant may contact the creditor to obtain 

count by using the card. such information; and 

(iii) does not contain any of the items de­

(8) Applications and solicitations by other means scribed in paragraph (1). 

(A) In general (D) Applications or solicitations containing 

subsection (a) disclosures Any application to open a credit card account for any person under an open end con­ An application or solicitation meets the resumer credit plan, and any solicitation to open quirement of this subparagraph if it contains, 

such an account without requiring an applica­ or is accompanied bytion, that is made available to the public or (i) the disclosures required by paragraphs 

contained in catalogs, magazines, or other pub­ (1) through (6) of subsection (a); 

lications shall meet the disclosure require­ (ii) the disclosures required by subparaments of subparagraph (B), (C), or (D). graphs (A) and (B) of paragraph (1) of this 

subsection included clearly and conspicious­ (B) Specific information ly 1 (except that the provisions of section 

An application or solicitation described in 1632(0) of this title shall not apply); and 

subparagraph (A) meets the requirement of (iii) a toll free telephone number or a mail­ , this subparagraph if such application or so­ ing address at which the applicant may con­ licitation contains- tact the creditor to obtain any change in 

(i) the information- the information provided. 

(!) described in paragraph (l)(A) in the (E) Prompt response to information requests form required under section 1632(c) of this 

title, subject to subsection (e), and Upon receipt of a request for any of the in­

(II) described in paragraph (l)(B) in a formation referred to in subparagraph (B), (C), 

clear and conspicuous form, subject to sub­ or (D), the card issuer or the agent of such 

sections (e) and (f); issuer shall promptly disclose all of the information described in paragraph (1). (ii) a statement, in a conspicuous and prominent location on the application or solicita­ (4) Charge card applications and solicitations 

tion, that- (A) In general 

(I) the information is accurate as of the Any application or solicitation to open a date the application or solicitation was charge card account shall disclose clearly and printed; conspicuously the following information in the (II) the information contained in the ap­ form required by section 1632(c) of this title, plication or solicitation is subject to change subject to subsection (e): after such date; and (i) Any annual fee, other periodic fee, or (ill) the applicant should contact the cred­ membership fee imposed for the issuance or itor for information on any change in the 

information contained in the application 

or solicitation since it was printed; 1 So in original. Probably should be "conspicuously". 
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Page 35 TITLE 15-COMMERCE AND TRADE § 1637 

availability of the charge card, including (D) Issuers of charge cards which provide acany account maintenance fee or other charge cess to open end consUD1er credit plans 

imposed based on activity or inactivity for If a charge card permits the card holder to 

the account during the billing cycle. receive an extension of credit under an open 

(ii) Any transaction charge imposed in con­ end consumer credit plan, which is not mainnection with use of the card to purchase tained by the charge card issuer, the charge 

goods or services. card issuer may provide the information de­

(iii) A statement that charges incurred by scribed in subparagraphs (A) and (B) in the 

use of the charge card are due and payable form required by such subparagraphs in lieu 

upon receipt of a periodic statement ren­ of the information required to be provided 

under paragraph (1), (2), or (3) with respect to dered for such charge card account. 

any credit extended under such plan, if the (B) Other information charge card issuer discloses clearly and con­ In addition to the information required to spicuously to the consumer in the application 

be disclosed under subparagraph (A), each writ­ or solicitation thatten application or solicitation to which such (i) the charge card issuer will make an 

subparagraph applies shall disclose clearly and independent decision as to whether to issue 

conspicuously the following information, sub­ the card; 

ject to subsections (e) and (f): (ii) the charge card may arrive before the 

decision is made with respect to an exten­

(i) Cash advance fee sion of credit under an open end consumer Any fee imposed for an extension of cred­ credit plan; and 

it in the form of cash. (iii) approval by the charge card issuer 

(ii) Late fee does not constitute approval by the issuer 

of the extension of credit. Any fee imposed for a late payment. The information required to be disclosed un­ (iii) Over-the-limit fee der paragraph (1) shall be provided to the charge Any fee imposed in connection with an card holder by the creditor which maintains 

extension of credit in excess of the amount such open end consumer credit plan before the 

of credit authorized to be extended with re­ first extension of credit under such plan. spect to such account. (E) Charge card defined 

(C) Applications and solicitations by other For the purposes of this subsection, the term means "charge card" means a card, plate, or other 

Any application to open .a charge card ac­ single credit device that may be used from 

count, and any solicitation to open such an time to time to obtain credit which is not 

account without requiring an application, that subject to a finance charge. is made available to the public or contained Regulatory authority of the Bureau in catalogs, magazines, or other publications (5) 

shall contain- The Bureau may, by regulation, require the 

(i) the information- disclosure of information in addition to that 

(!) described in subparagraph (A) in the otherwise required by this subsection or subform required under section l632(c) of this section (d), and. modify any disclosure of infortitle, subject to subsection (e), and mation required by this subsection or subsec­

(II) described in subparagraph (B) in a tion (d), in any application to open a credit 

clear and conspicuous form, subject to sub­ card account for any person under an open end 

sections (e) and (f); consumer credit plan or any application to open 

a charge card account for any person, or a so­ (ii) a statement, in a conspicuous and promi­ licitation to open any such account without re­ nent location on the application or solicita­ quiring an application, if the Bureau determines tion, that- that such action is necessary to carry out the 

(I) the information is accurate _as of the purposes of, or prevent evasions of, any para­ date the application or solicitation was graph of this subsection. printed; 

(II) the information contained in the ap­ (6) Additional notice concerning "introductory 

plication or solicitation is subject to change rates" 

after such date; and (A) In general 

(ill) the applicant should contact the cred­ Except as provided in subparagraph (B), an itor for information on any change in the application or solicitation to open a credit card information contained in the application account and all promotional materials accom­ or solicitation since it was printed; panying such application or solicitation for 

(iii) a clear and conspicuous disclosure of which a disclosure is required under paragraph 

the date the application or solicitation was (1), and that offers a temporary annual perprinted; and centage rate of interest, shall-

(iv) a disclosure, in a conspicuous and promi­ (i) use the term "introductory" in immenent location on the application or solicita­ diate proximity to each listing of the temtion, of a toll free telephone number or a porary annual percentage rate applicable to 

mailing address at which the applicant may such account, which term shall appear clearcontact the creditor to obtain any change ly and conspicuously; 

in the information provided in the applica­ (ii) if the annual percentage rate of intertion or solicitation since it was printed. est that will apply after the end of the tern-
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§ 1637 TITLE 15-COMMERCE AND TRADE Page 36 

porary rate period will be a fixed rate, state (ii) the term "introductory period" means in a clear and conspicuous manner in a promi­ the maximum time period for which the temnent location closely proximate to the first porary annual percentage rate may be aplisting of the temporary annual percentage plicable. 

rate ( other than a listing of the temporary (E) Relation to other disclosure requirements 

annual percentage rate in the tabular for­ Nothing in this paragraph may be construed 

mat described in section 1632(c) of this title), to supersede subsection (a) of section 1632 of 

the time period in which the introductory this title, or any disclosure required by para­ period will end and the annual percentage graph (1) or any other provision of this subrate that will apply after the end of the in­ section. 

troductory period; and 

(iii) if the annual percentage rate that (7) Internet-based solicitations 

will apply after the end of the temporary (A) In general 

rate period will vary in accordance with an In any solicitation to open a credit card ac­ index, state in a clear and conspicuous man­ count for any person under an open end con­ ner in a prominent location closely proxi­ sumer credit plan using the Internet or other 

mate to the first listing of the temporary interactive computer service, the person makannual percentage rate (other than a list­ ing the solicitation shall clearly and conspicuing in the tabular format prescribed by sec­ ously disclosetion 1632(c) of this title), the time period in (i) the information described in subparawhich the introductory period will end and graphs (A) and (B) of paragraph (1); and 

the rate that will apply after that, based on (ii) the information described in paragraph 

an annual percentage rate that was in ef­ (6). 

fect within 60 days before the date of mail­ (B) Form of disclosure 

ing the application or solicitation. The disclosures required by subparagraph 

(B) Exception (A) shall be--

Clauses (ii) and (iii) of subparagraph (A) do (i) readily accessible to consumers in close 

not apply with respect to any listing of a proximity to the solicitation to open a credtemporary annual percentage rate on an en­ it card account; and 

velope or other enclosure in which an applica­ (ii) updated regularly to reflect the curtion or solicitation to open a credit card ac­ rent policies, terms, and fee amounts applicount is mailed. cable to the credit card account. 

(C) Conditions for introductory rates (C) Definitions 

An application or solicitation to open a cred­ For purposes of this paragraphit card account for which a disclosure is re­ (i) the term "Internet" means the interquired under paragraph (1), and that offers a national computer network of both Federal 

temporary annual percentage rate of interest and non-Federal interoperable packet switched 

shall, if that rate of interest is revocable under data networks; and 

any circumstance or upon any event, clearly (ii) the term "interactive computer servand conspicuously disclose, in a prominent man­ ice" means any information service, system, 

ner on or with such application or solicitation- or access software provider that provides or 

(i) a general description of the circum­ enables computer access by multiple users 

stances that may result in the revocation of to a computer server, including specifically 

the temporary annual percentage rate; and a service or system that provides access to 

(ii) if the annual percentage rate that will the Internet and such systems operated or 

apply upon the revocation of the temporary services offered by libraries or educational 

annual percentage rate-- institutions. 

(!) will be a fixed rate, the annual per­ (8) Applications from underage consumers centage rate that will apply upon the rev­ Prohibition on issuance ocation of the temporary annual percent­ (A) 

age rate; or No credit card may be issued to, or open 

(II) will vary in accordance with an in­ end consumer credit plan established by or on 

dex, the rate that will apply after the tem­ behalf of, a consumer who has not attained 

porary rate, based on an annual percent­ the age of 21, unless the consumer has subage rate that was in effect within 60 days mitted a written application to the card isbefore the date of mailing the application suer that meets the requirements of subparaor solicitation. graph (B). 

(D) Definitions (B) Application requirements 

In this paragraph- An application to open a credit card account 

(i) the terms "temporary annual percent­ by a consumer who has not attained the age 

age rate of interest" and "temporary annu­ of 21 as of the date of submission of the apal percentage rate" mean any rate of inter­ plication shall requireest applicable to a credit card account for (i) the signature of a cosigner, including 

an introductory period of less than 1 year, the parent, legal guardian, spouse, or any 

if that rate is less than an annual percent­ other individual who has attained the age of 

age rate that was in effect within 60 days 21 having a means to repay debts incurred 

before the date of mailing the application by the consumer in connection with the acor solicitation; and count, indicating joint liability for debts in-
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Page 37 TITLE 15-COMMERCE AND TRADE § 1637 

curred by the consumer in connection with {g) Insurance in· connection with certain open 

the account before the consumer has attained end credit card plans 

the age of 21; or Change in insurance carrier (ii) submission by the consumer of finan­ (1) 

cial information, including through an ap­ Whenever a card issuer that offers any guarplication, indicating an independent means antee or insurance for repayment of all or part 

of repaying any obligation arising from the of the outstanding balance of an open end credproposed extension of credit in connection it card plan proposes to change the person prowith the account. viding that guarantee or insurance, the card is­ suer shall send each insured consumer written (C) Safe harbor notice of· the proposed change not less than 30 The Bureau shall promulgate regulations pro­ days prior to the change, including notice of viding standards that, if met, would satisfy any increase in the rate or substantial decrease the requirements of subparagraph (B)(ii). in coverage or service which will result from 

such change. Such notice may be included on or (d) Disclosure prior to renewal with the monthly statement provided to the con­ (1) In general sumer prior to the month in which the proposed 

A card issuer that has changed or amended change would take effect. 

any term of the account since the last renewal (2) Notice of new insurance coverage that has not been previously disclosed or that 

imposes any fee described in subsection (c)(l)(A) In any case in which a proposed change de­

(ii)(I) or (c)(4)(A)(i) shall transmit to a consum­ scribed in paragraph (1) occurs, the insured coner at least 30 days prior to the scheduled renew­ sumer shall be given the name and address of 

al date of the consumer's credit or charge card the new guarantor or insurer and a copy of the 

account a clear and conspicuous disclosure of- policy or group certificate containing the basic 

(A) the date by which, the month by which, terms and conditions, including the premium or the billing period at the close of which, the rate to be charged. 

account will expire if not renewed; 

(B) the information described in subsection (3) Right to discontinue guarantee or insur­

(c)(l)(A) or (c)(4)(A) that would apply if the ance 

account were renewed, subject to subsection The notices required under paragraphs (1) and 

(e); and (2) shall each include a statement that the con­ (C) the method by which the consumer may sumer has the option to discontinue the insurterminate continued credit availability under ance or guarantee. 

the account. 

(4) No preemption of State law 

(2) Short-term renewals No provision of this subsection shall be con­ The Bureau may by regulation provide for few­ strued as superseding any provision of State er disclosures than are required by paragraph law which is applicable to the regulation of in­ (1) in the case of an account which is renewable surance. for a period of less than 6 months. 

(5) Bureau definition of substantial decrease {e) Other rules for disclosures under subsections in coverage or service (c) and (d) 

The Bureau shall define, in regulations, what 

(1) Fees determined on the basis of a percent­ constitutes a "substantial decrease in coverage age or service" for purposes of paragraph (1). 

If the amount of any fee required to be disclosed under subsection (c) or (d) is determined (h) Prohibition on certain actions for failure to on the basis of a percentage of another amount, incur finance charges the percentage used in making such determina­ A creditor of an account under an open end con­ tion and the identification of the amount against sumer credit plan may not terminate an account which such percentage is applied shall be dis­ prior to its expiration date solely because the con­ closed in lieu of the amount of such fee. sumer has not incurred finance charges on the 

(2) Disclosure only of fees actually imposed account. Nothing in this subsection shall prohibit 

If a credit or charge card issuer does not im­ a creditor from terminating an account for inacpose any fee required to be disclosed under any tivity in 3 or more consecutive months. 

provision of subsection (c) or (d), such provision 

shall not apply with respect to such issuer. (i) Advance notice of rate increase and other 

changes required · (f) Disclosure of range of certain fees which vary 

by State allowed (1) Advance notice of increase in interest rate 

If the amount of any fee required to be dis­ required 

closed by a credit or charge card issuer under In the case of any credit card account under 

paragraph (l)(B), (3)(B)(i)(II), (4)(B), or (4)(C)(i)(II) an open end consumer credit plan, a creditor 

of subsection (c) varies from State to State, the shall provide a written notice of an increase in 

card issuer may disclose the range of such fees an annual percentage rate (except in the case for purposes of subsection ( c) in lieu of the amount of an increase described in paragraph (1), (2), or for each applicable State, if such disclosure in­ (3) of section 1666i-l(b) of this title) not later 

cludes a statement that the amount of such fee than 45 days prior to the effective date of the 

varies from State to State. increase. 
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§ 1637 TITLE 15-COMMERCE AND TRADE Page 38 

(2) Advance notice of other significant changes (2) Disclosure by creditor 

required No election by a consumer under paragraph 

In the case of any credit card account under (1) shall take effect unless the consumer, before 

an open end consumer credit plan, a creditor making such election, received a notice from 

shall provide a written notice of any signifi­ the creditor of any over-the-limit fee in the form 

cant change, as determined by rule of the Bu­ and manner, and at the time, determined by the 

reau, in the terms (including an increase in any Bureau. If the consumer makes the election re­ fee or finance charge, other than as provided in ferred to in paragraph (1), the creditor shall 

paragraph (1)) of the cardholder agreement be­ provide notice to the consumer of the right to 

tween the creditor and the obligor, not later revoke the election, in the form prescribed by 

than 45 days prior to the effective date of the the Bureau, in any periodic statement that inchange. cludes notice of the imposition of an over-thelimit fee during the period covered by the state­ (3) Notice of right to cancel 

ment. 

Each notice required by paragraph (1) or (2) (3) Form of election shall be made in a clear and conspicuous manner, and shall contain a brief statement of the A consumer may make or revoke the election 

right of the obligor to cancel the account pur­ referred to in paragraph (1) orally, electronicalsuant to rules established by the Bureau before ly, or in writing, pursuant to regulations prethe effective date of the subject rate increase or scribed by the Bureau. The Bureau shall preother change. scribe regulations to ensure that the same options are available for both making and revok­ (4) Rule of construction ing such election. 

Closure or cancellation of an account by the (4) Time of election obligor shall not constitute a default under an 

existing cardholder agreement, and shall not trig­ A consumer may make the election referred 

ger an obligation to immediately repay the ob­ to in paragraph (1) at any time, and such elecligation in full or through a method that is less tion shall be effective until the election is rebeneficial to the obligor than one of the meth­ voked in the manner prescribed under paragraph 

ods described in section 1666i-l(c)(2) of this title, (3). 

or the impasition of any other penalty or fee. (5) Regulations 

(j) Prohibition on penalties for on-time payments The Bureau shall prescribe regulations-

(1) Prohibition on double-cycle billing and pen­ (A) governing disclosures under this subsecalties for on-time payments tion; and 

(B) that prevent unfair or deceptive acts or Except as provided in paragraph (2), a cred­ practices in connection with the manipula­ itor may not impose any finance charge on a tion of credit limits designed to increase over­ credit card account under an open end consum­ the-limit fees or other penalty fees. er credit plan as a result of the loss of any time 

period provided by the creditor within which (6) Rule of construction 

the obligor may repay any portion of the credit Nothing in this subsection shall be construed 

extended without incurring a finance charge, with to prohibit a creditor from completing an over­ respect to- the-limit transaction, provided that a consumer (A) any balances for days in billing cycles who has not made a valid election under para­ that precede the most recent billing cycle; or graph (1) is not charged an over-the-limit fee for 

(B) any balances or portions thereof in the such transaction. 

current billing cycle that were repaid within 

such time period. (7) Restriction on fees charged for an over-thelimit transaction (2) Exceptions With respect to a credit card account under Paragraph (1) does not apply to- an open end consumer credit plan, an over-the­ (A) any adjustment to a finance charge as a limit fee may be imposed only once during a result of the resolution of a dispute; or billing cycle if the credit limit on the account (B) any adjustment to a finance charge as a is exceeded, and an over-the-limit fee, with re­ result of the return of a payment for insuffi­ spect to such excess credit, may be imposed cient funds. only once in each of the 2 subsequent billing cy­

(k) Opt-in required for over-the-limit transac­ cles, unless the consumer has obtained an additional extension of credit in excess of such cred­ tions if fees are imposed it limit during any such subsequent cycle or the 

(1) In general consumer reduces the outstanding balance beIn the case of any credit card account under low the credit limit as of the end of such billing an open end consumer credit plan under which cycle. an over-the-limit fee may be imposed by the 

creditor for any extension of credit in excess of (l) Limit on fees related to method of payment 

the amount of credit authorized to be extended With respect to a credit card account under an 

under such account, no such fee shall be charged, open end consumer credit plan, the creditor may 

unless the consumer has expressly elected to not impose a separate fee to allow the obligor to 

permit the creditor, with respect to such ac­ repay an extension of credit or finance charge, 

count, to complete transactions involving the whether such repayment is made by mail, elecextension of credit under such account in ex­ tronic transfer, telephone authorization, or other 

cess of the amount of credit authorized. means, unless such payment involves an expedit-
Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 37 of 92 PageID #: 152 

Page 39 TITLE 15-COMMERCE AND TRADE § 1687 

ed service by a service representative of the cred­ (A) College affinity card 

itor. The term "college affinity card" means a 

(m) Use of term "fixed rate" credit card issued by a credit card issuer unWith der an open end consumer credit respect plan to in the con­ terms of any credit card junction with an agreement account under between an the open issu­ end consumer credit plan, er and an institution the of term higher "fixed", when education, or appearing in conjunction 

with an alumni organization or foundation affili­ a reference to the annual percentage rate or ated with or related to such institution, under interest rate applicable with respect to such ac­ which such cards are count, may issued to only college be stu­ used to refer to an annual dents who have an affinity percentage with rate such or institu­ interest rate that will not change tion, organization and- or vary for any reason over the period specified creditor has agreed clearly and conspicuously in the terms of the ac­ {i) the to donate a 

portion of the proceeds of the credit card count. 

to the institution, organization, or founda­

(n) Standards applicable to initial issuance of tion (including a lump sum or 1-time pay­ subprime or "fee harvester" cards ment of money for access); 

{1) In general (ii) the creditor has agreed to offer disIf the terms of a credit card account counted under an terms to the consumer; or 

open end consumer credit plan require the pay­ (iii) the credit card bears the name, emment of any fees ( other than any late fee, blem, over­ mascot, or logo of such institution, 

the-limit fee, or fee for a payment returned for organization, or foundation, or other words, 

insufficient funds) by the consumer in the pictures, first or symbols readily identified with 

year during which the account is opened such in an institution, organization, or foundation. 

aggregate amount in excess of 25 percent of the (B) College student credit card account 

total amount of credit authorized under the ac­ The term "college student credit card ac­ count when the account is opened, no payment count'' means a credit card account under an of fees ( other than any late fee, over-the- open end consumer credit plan established or limit or fee for a payment returned for in- maintained for or on behalf of any college sufficient funds) may be made from the credit student. made available under the terms of the account. (C) College student (2) Rule of construction The term "college student" means an indi­ No provision of this subsection may be con­ vidual who is a full-time or a part-time stu­ strued as authorizing any imposition or pay­ dent attending an institution of higher edu­ ment of advance fees otherwise prohibited by cation. 

any provision of law. (D) Institution of higher education 

(o) Due dates for credit card accounts The term "institution of higher education" (1) In general · has the same meaning as in section 3 1001 and 

The payment due date for a credit card ac­ 1002 of title 20. 

count under an open end consumer credit plan (2) Reports by creditors 

shall be the same day each month. (A} In general (2) Weekend or holiday due dates Each creditor shall submit an annual re­ If the payment due date for a credit card ac­ port to the Bureau containing the terms and 

count under an open end consumer credit plan conditions of all business, marketing, and pro­ is a day on which the creditor does not receive motional agreements and college affinity card or accept payments by mail (including week­ agreements with an institution of higher eduends and holidays), the creditor may not treat a cation, or an alumni organization or foundapayment received on the next business day as tion affiliated with or related to such institulate for any purpose. tion, with respect to any college student cred­

(p) Parental approval required to increase credit it card issued to a college student at such inlines for accounts for which parent is jointly stitution. 

liable (B) Details of report 

No increase may be made in the amount of cred­ The information required to be reported Ullit authorized to be extended under a credit card der subparagraph (A) includesaccount for which a parent, legal guardian, or (i) any memorandum of understanding bespouse of the consumer, or any other individual tween or among a creditor, an institution of 

has assumed joint liability for debts incurred by higher education, an alumni association, or the consumer in connection with the account be­ foundation that directly or indirectly relates 

fore the consumer attains the age of 21, unless to any aspect of any agreement referred to 

that parent, guardian, or spouse approves in writ­ in such subparagraph or controls or directs 

ing, and assumes joint liability for, such increase. any obligations or distribution of benefits 

(r) 2 College card agreements between or among any such entities; 

(ii) the amount of any payments from the (1) Definitions creditor to the institution, organization, or For purposes of this subsection, the following foundation during the period covered by the 

definitions shall apply: report, and the precise terms of any agree2 So in original. No suhsec. (q) has been enacted. 3 So in original. Probably should be "sections". 
§ 1637 TITLE 15--COMMERCE AND TRADE Page 40 

ment under which such amounts are deter­ Subsec. (o). Pub. L. 111-24, § 106(a), added subsec. (o). 

mined; and · Subsec. (p). Pub. L. 111-24, § 303, added subsec. (p). 

(iii) the number of credit card accounts Subsec. (r). Pub. L. 111-24, § 305(a), added subsec. (r). 

covered by any such agreement that were 2005-Subsec. (b)(ll). Pub. L. 109--8, § 1301(a), added par. 

(11). opened during the period covered by the re­ Subsec. (b)(12). Pub. L. 109--8, § 1305(a), added par. (12). port, and the total number of credit card Subsec. (c)(6). Pub. L. 109--8, § 1303(a), added par. (6). accounts covered by the agreement that were Subsec. (c)(7). Pub. L. 109--8, § 1304(a), added par. (7). outstanding at the end of such period. Subsec. (h). Pub. L. 109--8, § 1306(a), added subsec. (h). 

(C) Aggregation by institution 1988-Subsec. (a)(8). Pub. L. 100--709 added par. (8). 

Subsecs. (c) to (f). Pub. L. 100--583, §2(a), added subsecs. 

The information required to be reported un­ (c) to (f). 

der subparagraph (A) shall be aggregated with Subsec. (g). Pub. L. 100-683, § 6, added subsec. (g). 

respect to each institution of higher educa­ 1980-Subsec. (a)(l). Pub. L. 96-221, § 613(a)(l), inserted 

tion or alumni organization or foundation af­ provisions requiring the creditor to disclose that no "time 

filiated with or related to such institution. period is provided. 

Subsec. (a)(5). Pub. L. 96-221, § 613(a)(2), (3), redesignat­ (D) Initial report ed par. (6) as (5) and inserted provisions relating to idenThe initial report required under subpara­ tification of other charges, and regulations by the Board. 

graph (A) shall be submitted to the Bureau Former par. (5), relating to elective rights of the creditor, was struck out. before the end of the 9-month period begin­ Subsec. (a)(6). Pub. L. 96-221, §613(a)(2), (3), redesignat­ ning on May 22, 2009. ed par. (7) as (6) and revised nomenclature and expanded 

(3) Reports by Bureau statement requirements. Former par. (6) redesignated (5). 

Subsec. (a)(7), (8). Pub. L. 96-221, § 613(a)(2), (d), redes­ The Bureau shall submit to the Congress, and ignated par. (8) as (7) and substituted provisions relating make available to the public, an annual report to one billing cycle per calendar year, for provisions re­ that lists the information concerning credit card lating to each of two billing cycles per year. Former par. 

agreements submitted to the Bureau under para­ (7) redesignated (6). 

graph (2) by each institution of higher educa­ Subsec. (b)(2). Pub. L. 96--221, §613(b), inserted provition, alumni organization, or foundation. sions relating to failure of the creditor to disclose information in accordance with this paragraph, and made mi­

(Pub. L. 90-321, title I, § 127, May 29, 1968, 82 Stat. nor changes in phraseology. 

153; Pub. L. 93-495, title III, §§ 304, 305, title IV, Subsec. (b)(7) to (11). Pub. L. 96-221, §613(c), struck out 

§§ 411, 415, Oct. 28, 1974, 88 Stat. 1511, 1519, 1521; par. (7) which related to elective rights of the creditor, 

Pub. L. 95--221, title VI, § 613(a)-(e), Mar. 31, 1980, and redesignated pars. (8) to (11) as (7) to (10), respec94 Stat. 176, 177; Pub. L. 100-583, §§2(a), 6, Nov. 3, tively. 

Subsec. (c). Pub. L. 96--221, §613(e), struck out subsec. 1988, 102 Stat. 2960, 2968; Pub. L. 100-709, §2(b), (c) which related to the time for making disclosures Nov. 23, 1988, 102 Stat. 4729; Pub. L. 109-8, title with respect to open end consumer credit plans having XIII, §§ 1301(a), 1303(a), 1304(a), 1305(a), 1306(a), Apr. an outstanding balance of more than $1 at or after the 

20, 2005, 119 Stat. 204, 209, 211, 212; Pub. L. 111-24, close of the first full billing cycle. 

title I, §§ lOl(a)(l), 102(a), 103, 105, 106(a), title II, 1974-Subsec. (a)(l). Pub. L. 93-495, § 415(1), inserted ex­

§§ 20l(a), 202, 203, title III, §§ 301, 303, 305(a), May ception relating to nonimposition of a finance charge at 

22, 2009, 123 Stat. 1735, 1738, 1741-1743, 1745--1749; the election of the creditor and Without disclosure. 

Pub. L. 111-203, title X, 1100A(2), July 21, 2010, Subsec. (a)(8). Pub. L. 93-495, §304(a), added par. (8). § Subsec. (b)(2). Pub. L. 93-495, § 411, substituted provi­ 124 Stat. 2107.) sions requiring a brief identification on or accompanying the statement of credit extension sufficient to enable AMENDMENTS the obligor to identify the transaction or relate it to cop­ 2010-Pub. L. 111-203 substituted "Bureau" for "Board" ies of sales vouchers or similar instruments previously wherever appearing. furnished, for provisions requiring for purchases a brief 

2009-Subsec. (b )(11). Pub. L. 111-24, § 201(a), amended identification, unless previously furnished, of the goods 

par. (11) generally, revising the minimum payment dis­ or services purchased. closures required from creditors. Subsec. (b)(lO). Pub. L. 93-495, §415(2), inserted excep­ Subsec. (b)(12). Pub. L. 111-24, § 202, amended par. (12) tion relating to nonimposition of additional finance charge generally. Prior to amendment, par. (12) read as follows: at the election of the creditor and without disclosure. 

"If a late payment fee is to be imposed due to the failure Subsec. (b)(ll). Pub. L. 93-495, §305, added par. (11). of the obligor to make payment on or before a required Subsec. (c). Pub. L. 93-495, § 304(b), substituted provipayment due date, the following shall be stated clearly sions relating to disclosure requirements in a notice mailed 

and conspicuously on the billing statement: or delivered to the obligor not later than the time of 

"(A) The date on which that payment is due or, if mailing the next statement required by subsec. (b) of 

different, the earliest date on which a late payment fee this section, for provisions relating to disclosure requiremay be charged. ments in a notice mailed or delivered to the obliger not "(B) The amount of the late payment fee to be im­ later than thirty days after July 1, 1969. 

posed if payment is made after such date." 

Subsec. (c)(8). Pub. L. 111-24, §301, added par. (8). EFFECTIVE DATE OF 2010 AMENDMENT 

Subsec. (d)(l). Pub. L. 111-24, § 203(3), substituted "A 

Amendment by Pub. L. 111-203 effective on the desig­ card issuer that has changed or amended any term of nated transfer date, see section 1100H of Pub. L. 111-203, the account since the last renewal that has not been pre­ set out as a note under section 552a of Title 5, Govern­ viously disclosed or" for "Except as provided in para­ ment Organization and Employees. graph (2), a card issuer" in introductory provisions. 

Subsec. (d)(2), (3). Pub. L. 111-24, § 203(1), (2), redesig­ EFFECTIVE DATE OF 2009 AMENDMENT nated par. (3) as (2) and struck out former par. (2) which 

provided a special rule for certain disclosures. Amendment by Pub. L. 111-24 effective 9 months after 

Subsec. (!). Pub. L. 111-24, § lOl(a)(l), added subsec. (i). May 22, 2009, except as otherwise specifically provided, 

Subsecs. (j) to (1). Pub. L. 111-24, § 102(a), added sub­ see section 3 of Pub. L. 111-24, set out as a note under 

secs. (j) to (I). section 1602 of this title. 

Subsec. (m). Pub. L. 111-24, § 103, added subsec. (m). Pub. L. 111-24, title I, § 101(a)(2), May 22, 2009, 123 Stat. 

Subsec. (n). Pub. L. 111-24, § 105, added subsec. (n). 1736, provided that: "Notwithstanding section 3 [see EfCase 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 38 of 92 PageID #: 153 
Page 41 TITLE 15-COMMERCE AND TRADE § 1637 

fective Date of 2009 Amendment note set out under sec­ EFFECTIVE DATE OF 1974 AMENDMENT 

tion 1602 of this title], section 127(1) of the Truth in For effective date of amendment by sections 304 and Lending Act [15 U.S.C. 1637(1)], as added by this subsec­ 305 of Pub. L. 93-495, see section 308 of Pub. L. 93-495, set tion, shall become effective 90 days after the date of en­ out as an Effective Date note under section 1666 of this actment of this Act [May 22, 2009]." title. 

For effective date of amendment by section 411 of Pub . . EFFECTIVE DATE OF 2005 AMENDMENT 

L. 93-495, see section 416 of Pub. L. 93-495, set out as an Pub. L. 109--8, title XIII, § 1301(b)(2), Apr. 20, 2005, 119 Effective Date note under section 1665a of this title. 

Stat. 207, provided that: "Section 127(b)(ll) of the Truth Amendment by section 415 of Pub. L. 93-495 effective 

in Lending Act [subsec. (b)(ll) of this section], as added Oct. 28, 1974, see section 416 of Pub. L. 93-495, set out as by subsection (a) of this section, and the regulations is­ an Effective Date note under section 1665a of this title. 

sued under paragraph (1) of this subsection [set out as a 

note under this section] shall not take effect until the REGULATIONS 

later ofPub. L. 111-24, title II, §201(c), May 22, 2009, 123 Stat. "(A) 18 months after the date of enactment of this 

Act 1745, provided that: [Apr. 20, 2005]; or 

"(B) 12 months after the publication of such final "(1) IN GENERAL.-Not later than 6 months after the 

regulations by the Board [of Governors of the Federal date of enactment of this Act [May 22, 2009], the Board 

Reserve System] [Jan. 29, 2009, see 74 F.R. 5244]." [of Governors of the Federal Reserve System] shall issue 

Pub. L. guidelines, by rule, in consultation with the Secretary of 109--8, title XIII, § 1303(b)(2), Apr. 20, 2005, 119 

Stat. the Treasury, for the establishment and maintenance by 211, provided that: "Section 127(c)(6) of the Truth 

creditors of a toll-free telephone number for purposes of in Lending Act [subsec. (c)(6) of this section], as added 

providing information about accessing credit counseling by this section, and regulations issued under paragraph and debt management services, as required under section (1) of this subsection [set out as a note under this sec­ 127(b)(ll)(B)(iv) of the Truth in Lending Act [15 U.S.C. tion] shall not take effect until the later of1637(b)(ll)(B)(iv)], as added by this section. "(A) 12 months after the date of enactment of this 

Act [Apr. 20, 2005]; or · "(2) APPROVED AGENCIES.-Guidelines issued under this 

"(B) 12 months after the date of publication of such subsection shall ensure that referrals provided by the 

final regulations by the Board [of Governors of the toll-free number referred to in paragraph (1) include only 

Federal Reserve System] [Jan. 29, 2009, see 74 F.R. 5244]." those nonprofit budget and credit counseling agencies 

approved by a United States bankruptcy trustee pursu­ Pub. L. 109--8, title XIII, § 1304(b)(2), Apr. 20, 2005, 119 ant to section lll(a) of title 11, United States Code." Stat. 212, provided that: "The amendment made by subsection (a) [amending this section] and the regulations ·pub. L. 109-8, title XIII, § 1301(b)(l), Apr. 20, 2005, 119 

issued under paragraph (1) of this subsection [set out as Stat. 207, provided that: "The Board of Governors of the 

a note under this section] shall not take effect until the Federal Reserve System (hereafter in this title [amendlater of- ing this section and sections 1637a, 1638, 1664, and 1665b 

"(A) 12 months after the date of enactment of this of this title and enacting provisions set out as notes unAct [Apr. 20, 2005]; or der this section and section 1637a of this title] referred 

"(B) 12 months after the date of publication of such to as the 'Board') shall promulgate regulations implefinal regulations by the Board [of Governors of the menting the requirements of section 127(b)(ll) of the Truth 

Federal Reserve System] [Jan. 29, 2009, see 74 F.R. 5244]." in Lending Act [subsec. (b)(ll) of this section], as added 

by subsection (a) of this section." Pub. L. 109--8, title XIII, § 1305(b)(2), Apr. 20, 2005, 119 

Stat. 212, provided that: "The amendment made by sub­ Pub. L. 109--8, title XIII, § 1303(b)(l), Apr. 20, 2005, 119 

section (a) [amending this section] and regulations is­ Stat. 211, provided that: "The Board [of Governors of the 

sued under paragraph (1) of this subsection [set out as a Federal Reserve System] shall promulgate regulations 

implementing the requirements of section 127(c)(6) of the note under this section] shall not take effect until the 

Truth in Lending Act [subsec. (c)(6) of this section], as later of-

"(A) added by this section." 12 months after the date of enactment of this 

Act [Apr. 20, 2005]; or · Pub. L. 109--8, title XIII, § 1304(b)(l), Apr. 20, 2005, 119 

"(B) 12 months after the date of publication of such Stat. 211, provided that: "The Board [of Governors of the 

final regulations by the Board [of Governors of the Federal Reserve System] shall promulgate regulations 

Federal Reserve System] [Jan. 29, 2009, see 74 F.R. 5244]." implementing the requirements of section 127(c)(7) of the 

Pub. L. 109--8, title XIII, § 1306(b)(2), Apr. 20, 2005, 119 Truth in Lending Act [subsec. (c)(7) of this section], as 

Stat. added by this section." 212, provided that: "The amendment made by subsection (a) [amending this section] and regulations is­ Pub. L. 109--8, title XIII, § 1305(b)(l), Apr. 20, 2005, 119 

sued under paragraph (1) of this subsection [set out as a Stat. 212, provided that: "The Board [of Governors of the 

note under this section] shall not take effect until the Federal Reserve System] shall promulgate regulations 

later of- implementing the requirements of section 127(b)(12) of 

"(A) 12 months after the date of enactment of this the Truth in Lending Act [subsec. (b)(12) of this section], 

Act [Apr. 20, 2005]; or as added by this section." 

"(B) 12 months after the date of publication of such Pub. L. 109--8, title XIII, § 1306(b)(l), Apr. 20, 2005, 119 

final regulations by the Board [of Governors of the Stat. 212, provided that: "The Board [of Governors of the 

Federal Reserve System] [Jan. 29, 2009, see 74 F.R. 5244)." Federal Reserve System] shall promulgate regulations 

implementing the requirements of section 127(h) of the 

EFFECTIVE DATE OF 1988 AMENDMENT Truth in Lending Act [subsec. (h) of this section], as 

added by this section." 

For effective date of amendments by Pub. L. 100-709, Pub. L. 109--8, title XIII, § 1309, Apr. 20, 2005, 119 Stat. see Regulations; Effective Date note below. 213, provided that: 

"(a) REGULATIONs.-Not later than 6 months after the EFFECTIVE DATE OF 1980 AMENDMENT date of enactment of this Act [Apr. 20, 2005], the Board 

Amendment by Pub. L. 96-221 effective on expiration of [of Governors of the Federal Reserve System], in contwo years and six months after Mar. 31, 1980, with all sultation with the other Federal banking agencies (as 

regulations, forms, and clauses required to be prescribed defined in section 3 of the Federal Deposit Insurance Act 

to be promulgated at least one year prior to such effec­ [12 U.S.C. 1813]), the National Credit Union Administrative date, and allowing any creditor to comply with any tion Board, and the Federal Trade Commission, shall 

amendments, in accordance with the regulations, forms, promulgate regulations to provide guidance regarding 

and clauses prescribed by the Board prior to such effec­ the meaning of the term 'clear and conspicuous', as used 

tive date, see section 625 of Pub. L. 96-221, set out as a in subparagraphs (A), (B), and (C) of section 127(b)(ll) 

note under section 1602 of this title. and clauses (ii) and (iii) of section 127(c)(6)(A) of the 

Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 39 of 92 PageID #: 154 
§ 1637a TITLE 15-COMMERCE AND TRADE Page 42 

Truth in Lending Act [subsecs. (b)(ll) and (c)(6)(A) of § 1637a. Disclosure requh-ements for open end 

this section]. consumer credit plans secured by consUD1er's 

"(b) EXAMPLES.-Regulations promulgated under sub­ principal dwelling 

section (a) shall include examples of clear and conspicu­ (a) Application disclosures ous model disclosures for the purposes of disclosures required by the provisions of the Truth in Lending Act [15 In the case of any open end consumer credit 

U.S.O. 1601 et seq.] referred to in subsection (a). plan which provides for any extension of credit 

"(c) STANDARDS.-In promulgating regulations under which is secured by the consumer's principal dwellthis section, the Board [of Governors of the Federal Re­ ing, the creditor shall make the following disclo­ serve System] shall ensure that the clear and conspicu­ sures in accordance with subsection (b): ous standard required for disclosures made under the 

provisions of the Truth in Lending Act referred to in (1) Fixed annual percentage rate 

subsection (a) can be implemented in a manner which re­ Each annual percentage rate imposed in con­ sults in disclosures which are reasonably understandable nection with extensions of credit under the plan and designed to call attention to the nature and signifi­ not include cance information the notice." and a statement that such rate does of the in 

costs other than interest. 

REGULATIONS; EFFECTIVE DATE (2) Variable percentage rate 

For provisions relating to promulgation of regulations In the case of a plan which provides for vari­ to implement amendment by Pub. L. 100-709, and effective date of such amendment in connection with those able rates of interest on credit extended under 

regulations, see section 7 of Pub. L. 100-709, set out as a the plannote under section 1637a of this title. (A) a description of the manner in which 

Pub. L. 100-583, §7, Nov. 3, 1988, 102 Stat. 2968, provided such rate will be computed and a statement 

that: "Any regulation required to be prescribed by the that such rate does not include costs other 

Board under the amendments made by section 2 [amend­ than interest; 

ing this section and section 1632 of this title] shall- (B) a description of the manner in which 

"(l) take effect not later than the end of the 150-day any changes in the annual percentage rate 

period beginning on the date of the enactment of this will be made, including- Act [Nov. 3, 1988]; and 

(i) any negative amortization and interest "(2) apply only with respect to applications, solicitarate carryover; tions, and other material distributed after the end of 

the 150-day period beginning after the end of the pe­ (ii) the timing of any such changes; 

riod refeITed to in paragraph (1), except that- (iii) any index or margin to which such 

"(A) in the case of applications and solicitations changes in the rate are related; and 

subject to paragraph (3) or (4)(0) of section 127(c) of (iv) a source of information about any such 

the Truth in Lending Act (15 U.S.O. 1637(c)(3), (4)(0)] index; 

(as added by section 2), such period shall be 240 days; (C) if an initial annual percentage rate is and offered which is not based on an index- "(B) any card issuer may, at its option, comply (i) a statement of such rate and the pe­ with the requirements of the amendments made by riod of time such initial rate will be in ef­ this Act [see Short Title of 1988 Amendment note un­ fect; and der section 1601 of this title] prior to the applicable 

effective date, in which case the amendments made by (ii) a statement that such rate does not 

this Act shall be fully applicable to such card issuer." include costs other than interest; 

(D) a statement that the consumer should 

REPORTS TO CONGRESS ask about the current index value and interPub. L. 111-24, title III, § 305(b), May 22, 2009, 123 Stat. est rate; 

1750, provided that: · (E) a statement of the maximum amount by 

"(1) STUDY.-The Comptroller General of the United which the annual percentage rate may change 

States shall, from time to time, review the reports sub­ in any I-year period or a statement that no mitted by creditors under section 127(r) of the Truth in such limit exists; 

Lending Act [15 U.S.O. 1637(r)J, as added by this section, (F) a statement of the maximum annual perand the marketing practices of creditors to determine centage rate that may be imposed at any time 

the impact that college affinity card agreements and under the plan; college student card agreements have on credit card debt. (G) subject to subsection (b)(3), a table, based 

"(2) REPORT.-Upon completion of any study under para­ on a $10,000 extension of credit, showing how 

graph (1), the Comptroller General shall periodically sub­ the annual percentage rate and the minimum 

mit a report to the Congress on the findings and conclu­ periodic payment amount under each repay­ sions of the study, together with such recommendations ment option of the plan would have been affor administrative or legislative action as the Comptrol­ fected during the preceding 15-year period by ler General determines to be appropriate." changes in any index used to compute such 

Pub. L. 100-583, §8, Nov. 3, 1988, 102 Stat. 2969, provided rate; that: "Not later than 1 year after the regulations pre­ (H) a statement of- scribed under section 7 of this Act [set out as a note (i) the maximum annual percentage rate above] become effective and annually thereafter, the Board which may be imposed under each repay­ of Governors of the Federal Reserve System shall transmit ment option of the plan; to the Congress a report containing an assessment 

by the Board of the profitability of credit card oper­ (ii) the minimum amount of any periodic 

ations of depository institutions, including an analysis payment which may be required, based on a 

of any impact of the amendments made by this Act [see $10,000 outstanding balance, under each such 

Short Title of 1988 Amendment note under section 1601 of option when such maximum annual percentthis title] on such profitability." age rate is in effect; and 

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Page 43 TITLE 15--COMMERCE AND TRADE § 1637a 

the earliest date by which such max­ (A) under certain conditions, the creditor 

imum annual interest rate may be imposed; may terminate any account under the plan 

and and require immediate repayment of any outstanding balance, prohibit any additional ex­ (I) a statement that interest rate informa­ tension of credit to the account, or reduce the tion will be provided on or with each periodic credit limit applicable to the account; and statement. (B) the consumer may receive, upon request, (3) Other fees imposed by the creditor more specific information about the conditions 

An itemization of any fees imposed by the under which the creditor may take any action 

creditor in connection with the availability or described in subparagraph (A). 

use of credit under such plan, including annual (8) Repayment options and minimum periodic fees, application fees, transaction fees, and clos­ payments ing costs (including costs commonly described The repayment options under the plan, as "points"), and the time when such fees are including- payable. (A) if applicable, any differences in repay­ (4) Estimates of fees which may be imposed by ment options with regard tothird parties (i) any period during which additional ex­

(A) Aggregate amount tensions of credit may be obtained; and 

(ii) any period during which repayment is An estimate, based on the creditor's experi­ required to be made and no additional ex­ ence with such plans and stated as a single tensions of credit may be obtained; amount or as a reasonable range, of the aggregate amount of additional fees that may (B) the length of any repayment period, inbe imposed by third parties (such as govern­ cluding any differences in the length of any 

mental authorities, appraisers, and attorneys) repayment period with regard to the periods 

in connection with opening an account under described in clauses (i) and (ii) of subparathe plan. graph (A); and 

(C) an explanation of how the amount of (B) Statement of availability any minimum monthly or periodic payment A statement that the consumer may ask will be determined under each such option, the creditor for a good faith estimate by the including any differences in the determina­ creditor of the fees that may be imposed by tion of any such amount with regard to the third parties. periods described in clauses (i) and (ii) of sub­

(5) Statement of risk of loss of dwelling paragraph (A). 

A statement that- (9) Example of minimum payments and max• 

(A) any extension of credit under the plan imum repayment period 

is secured by the consumer's dwelling; and An example, based on a $10,000 outstanding (B) in the event of any default, the consum­ balance and the interest rate (other than a rate er risks the loss of the dwelling. not based on the index under the plan) which is, 

(6) Conditions to which disclosed terms are or was recently, in effect under such plan, showsubject ing the minimum monthly or periodic payment, 

and the time it would take to repay the entire (A) Period during which such terms are $10,000 if the consumer paid only the minimum available periodic payments and obtained no additional A clear and conspicuous statement- extensions of credit. (i) of the time by which an application (10) Statement concerning balloon payments must be submitted to obtain the terms disclosed; or If, under any repayment option of the plan, 

(ii) if applicable, that the terms are sub­ the payment of not more than the minimum 

ject to change. periodic payments required under such option over the length of the repayment period- (B) Right of refusal if certain terms change (A) would not repay any of the principal A statement that- balance; or (i) the consumer may elect not to enter (B) would repay less than the outstanding into an agreement to open an account un­ balance by the end of such period, der the plan if any term changes ( other than as the case may be, a statement of such fact, a change contemplated by a variable feaincluding an explicit statement that at the end ture of the plan) before any such agreement of such repayment period a balloon payment (as is final; and defined in section 1665b(f) of" this title) would (ii) if the consumer makes an election deresult which would be required to be paid in scribed in clause (i), the consumer is entifull at that time. tled to a refund of all fees paid in connec­ tion with the application. (11) Negative amortization 

(C) Retention of information If applicable, a statement that--

(A) any limitation in the plan on the amount A statement that the consumer should make of any increase in the minimum payments or otherwise retain a copy of information dismay result in negative amortization; closed under this subparagraph. (B) negative amortization increases the out­

(7) Rights of creditor with respect to exten• standing principal balance of the account; and 

sions of credit (C) negative amortization reduces the conA statement that- sumer's equity in the consumer's dwelling. 
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§ 1687a TITLE 15-COMMERCE AND TRADE Page 44 

(12) Limitations and minimum amount require­ (B) Segregation of required disclosures from 

ments on extensions of credit other information 

(A) Number and dollar amount limitations The disclosures required under subsection 

Any (a) limitation shall be contained in conspicuously the plan on segregated from the all 

number of extensions of credit and other the terms, amount data, or additional information 

of credit which may be obtained provided during in any connection with the application, 

month either or by other grouping defined the time period. disclosures separately 

on the application form or by providing the (B) Minimum balance and other transaction disclosures on a separate form, in accordance amount requirements with regulations of the Bureau. 

Any requirement which establishes a min­ (C) Precedence of certain information imum amount for-

(i) The the initial disclosures extension of required credit by to an ac­ paragraphs (5), 

count (6), and under of the plan; (7) subsection (a) shall precede all 

(ii) of the any other subsequent required extension of disclosures. credit to 

an account under the plan; or (D) Special provision relating to variable in­

(iii) any outstanding balance of an ac­ terest rate information 

count under the plan. Whether or not the disclosures required un­

(18) Statement regarding tax deductibility der subsection (a) are provided on the applicaA tion form, the variable rate information de­ statement that- scribed in subsection (a)(2) may be provided (A) the consumer should consult a tax ad­ separately from the other information required visor regarding the deductibility of interest 

to be disclosed. and charges under the plan; and 

(B) in any case in which the extension of (3) Requirement for historical table 

credit exceeds the fair market value (as de­ In preparing the table required under subsec­ fined under title 26) of the dwelling, the in­ tion (a)(2)(G), the creditor shall consistently se­ terest on the portion of the credit extension lect one rate of interest for each year and the that is greater than the fair market value of manner of selecting the rate from year to year the dwelling is not tax deductible for Federal shall be consistent with the plan. income tax purposes. 

(c) Third party applications (14) Disclosure requirements established by Bureau In the case of an application to open an account under any open end consumer credit plan Any other term which the Bureau requires, in described in subsection (a) which is provided to a regulations, to be disclosed. consumer by any person other than the creditor-

(b) Time and form of disclosures (1) such person shall provide such consumer with- (1) Time of disclosure (A) the disclosures required under subsec­

(A) In general tion (a) with respect to such plan, in accordThe disclosures required under subsection ance with subsection (b); and 

(a) with respect to any open end consumer (B) the pamphlet required under subsection 

credit plan which provides for any extension (e); or 

of credit which is secured by the consumer's (2) if such person cannot provide specific terms principal dwelling and the pamphlet required about the plan because specific information about under subsection (e) shall be provided to any the plan terms is not available, no nonrefund­ consumer at the time the creditor distributes able fee may be imposed in connection with such an application to establish an account under application before the end of the 3-day period such plan to such consumer. beginning on the date the consumer receives 

(B) Telephone, publications, and third party the disclosures required under subsection (a) with 

applications respect to the application. 

In the case of telephone applications, appli­ (d) "Principal dwelling" defined cations contained in magazines or other pub­ For purposes of this section and sections 1647 lications, or applications provided by a third and 1665b of this title, the term "principal dwell­ party, the disclosures required under subsec­ ing" includes any second or vacation home of the tion (a) and the pamphlet required under sub­ consumer. section (e) shall be provided by the creditor 

before the end of the 3-day period beginning (e) Pamphlet on the date the creditor receives a completed In addition to the disclosures required under application from a consumer. subsection (a) with respect to an application to 

(2) Form open an account under any open end consumer 

credit plan described in such subsection, the cred­ (A) In general itor or other person providing such disclosures to Except as provided in paragraph (l)(B), the the consumer shall provide- disclosures required under subsection (a) shall (1) a pamphlet published by the Bureau pur­ be provided on or with any application to es­ suant to section 4 of the Home Equity 1 Con­ tablish an account under an open end consum­ sumer Protection Act of 1988; or er credit plan which provides for any extension of credit which is secured by the consumer'.s principal dwelling. 1 So in original. ProbablY should be followed by "Loan". 
Page 45 TITLE 15-COMMERCE AND TRADE § 1638 

(2) any pamphlet which provides substantial­ ing which is entered into after the end of the 5-month 

ly similar information to the information de­ period beginning on the date on which the regulations 

scribed in such section, as determined by the prescribed under subsection (a) become final; and 

Bureau. "(2) any application to open such an account which 

is distributed by, or received by a creditor, after the 

(Pub. L. 90-321, title I, § 127A, as added Pub. L. end of such 5-month period. 

100-709, § 2(a), Nov. 23, 1988, 102 Stat. 4725; amend­ "(c) VOLUNTARY COMPLIANCE.-Notwithstanding subseced Pub. L. 109-8, title XIII, § 1302(a)(l), Apr. 20, tion (b), any creditor may comply with the amendments 

2005, 119 Stat. 208; Pub. L. 111-203, title X, § 1100A(2), made by this Act, in accordance with the regulations 

July 21, 2010, 124 Stat. 2107.) prescribed by the Board, before the effective date established under such subsection." 

REFERENCES IN TEXT 

CONSUMER EDUCATION 

Section 4 of the Home Equity Loan Consumer Protection Act of 1988, referred to in subsec. (e)(l), is section 4 Pub. L. 100--709, § 4, Nov. 23, 1988, 102 Stat. 4733, proof Pub. L. 100-709, which is set out as a note below. vided that: "The Board of Governors of the Federal Re­ serve System shall develop and prepare a pamphlet for 

AMENDMENTS distribution to consumers which contains-

"(1) a general description of open end consumer cred­ 2010-Subsecs. (a)(14), (b)(2)(B), (e). Pub. L. 111-203 sub­ it plans secured by the consumer's principal dwelling stituted "Bureau" for "Board" wherever appearing. and the terms and conditions under which such loans 2005-Subsec. (a)(l3). Pub. L. 109-8 substituted "tax de­ are generally extended; and ductibility" for "consultation of tax advisor" in heading, "(2) a discussion of the potential advantages and dis­ designated existing provisions as introductory provisions advantages of such plans, including how to compare and subpar. (A), inserted dash, substituted "; and" for 

among home equity plans and between home equity period at end of subpar. (A), and added subpar. (B). and closed end credit plans." 

EFFECTIVE DATE OF 2010 AMENDMENT 

§ 1638. Transactions other than under an open Amendment by Pub. L. 111-203 effective on the desig1100H of Pub. L. 111-203, end credit plan nated transfer date, see section 

set out as a note under section 552a of Title 5, Govern­ (a) Required disclosures by creditor 

ment Organization and Employees. For each consumer credit transaction other than 

EFFECTIVE DATE OF 2005 AMENDMENT under an open end credit plan, the creditor shall 

disclose each of the following items, to the extent Amendment by Pub. L. 109-8 effective 180 days after 

Apr. 20, 2005, and not applicable with respect to cases applicable: 

commenced under Title 11, Bankruptcy, before such ef­ (1) The identity of the creditor required to 

fective date, except as otherwise provided, see section make disclosure. 

1501 of Pub. L. 109-8, set out as a note under section 101 (2)(A) The "amount financed", using that term, 

of Title 11. which shall be the amount of credit of which 

the consumer has actual use. This amount shall EFFECTIVE DATE be computed as follows, but the computations 

For effective date of section, see Regulations; Effective need not be disclosed and shall not be disclosed 

Date note below. with the disclosures conspicuously segregated 

in accordance with subsection (b)(l): REGULATIONS (i) take the principal amount of the loan or Pub. L. 109-8, title XIII, §1302(c), Apr. 20, 2005, 119 Stat. the cash price less downpayment and trade­ 209, provided that: in; "(1) IN GENERAL.-The Board [of Governors of the Fedim­ (ii) add any charges which are not part of eral Reserve System] shall promulgate regulations 

plementing the amendments made by this section [amend­ the finance charge or of the principal amount 

ing this section and sections 1638, 1664, and 1665b of this of the loan and which are financed by the 

title]. consumer, including the cost of any items ex­ "(2) EFFECTIVE DATE.-Regulations issued under para­ cluded from the finance charge pursuant to 

graph (1) shall not take effect until the later of- section 1605 of this title; and 

"(A) 12 months after the date of enactment of this (iii) subtract any charges which are part of Act [Apr. 20, 2005]; or the finance charge but which will be paid by "(B) 12 months after the date of publication of such the consumer before or at the time of the con­ final regulations by the Board." 

summation of the transaction, or have been 

REGULATIONS; EFFECTIVE DATE withheld from the proceeds of the credit. 

Pub. L. 100-709, §7, Nov. 23, 1988, 102 Stat. 4734, pro­ (B) In conjunction with the disclosure of the 

vided that: amount financed, a creditor shall provide a state­

"(a) REGULATIONS.-Before the end of the 60-day pe­ ment of the consumer's right to obtain, upon a riod beginning on the date of the enactment of this Act written request, a written itemization of the [Nov. 23, 1988], the Board of Governors of the Federal Reamount statement shall include serve System shall prescribe such regulations as may be financed. The 

necessary to carry out the proposes [sic] of the amend­ spaces for a "yes" and "no" indication to be 

ments made by this Act [enacting this section and sec­ initialed by the consumer to indicate whether 

tions 1647 and 1665b of this title, amending sections 1632 the consumer wants a written itemization of 

and 1637 of this title, and enacting provisions set out as the amount financed. Upon receiving an affirmnotes under this section and section 1601 of this title]. ative indication, the creditor shall provide, at 

"(b) EFFECTIVE DATE.-The amendments made by this the time other disclosures are required to be Act, and the regulations prescribed pursuant to subsec• furnished, a written itemization of the amount tion (a) with respect to such amendments, shall apply For to- financed. the purposes of this subparagraph, 

"(1) any agreement to open an account under an "itemization of the amount financed" means a 

open end consumer credit plan under which extensions disclosure of the following items, to the extent 

of credit are secured by a consumer's principal dwell- applicable: 

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§ 1638 TITLE 15--COMMERCE AND TRADE Page 46 

(i) the amount that is or will be paid direct­ the debt obligation on its original terms and 

ly to the consumer; conditions. 

(ii) the amount that is or will be credited to (14) In the case of any variable interest rate 

the consumer's account to discharge obliga,.. residential mortgage transaction, in disclosures 

tions owed to the creditor; provided at application as prescribed by the Bu­

(iii) each amount that is or will be paid to reau for a variable rate transaction secured by 

third persons by the creditor on the consum­ the consumer's principal dwelling, at the option 

er's behalf, together with an identification of of the creditor, a statement that the periodic 

payments may increase or decrease substantial­ or reference to the third person; and 

ly, and the maximum interest rate and pay­ (iv) the total amount of any charges dement for a $10,000 loan originated at a recent scribed in the preceding subparagraph (A)(iii). interest rate, as determined by the Bureau, as­ (3) The "finance charge", not itemized, using suming the maximum periodic increases in rates 

that term. and payments under the program, or a histor­

(4) The finance charge expressed as an "an­ ical example illustrating the effects of interest 

nual percentage rate", using that term. This rate changes implemented according to the loan 

shall not be required if the amount financed program. 

does not exceed $75 and the finance charge does (15) In the case of a consumer credit transnot exceed $5, or if the amount financed ex­ action that is secured by the principal dwelling 

of the consumer, in which the extension of cred­ ceeds $75 and the finance charge does not ex­ it may exceed the fair market value of the dwell­ ceed $7.50. ing, a clear and conspicuous statement that-- (5) The sum of the amount financed and the (A) the interest on the portion of the credit finance charge, which shall be termed the "to­ extension that is greater than the fair mar­ tal of payments". ket value of the dwelling is not tax deductible (6) The number, amount, and due dates or pe­ for Federal income tax purposes; and riod of payments scheduled to repay the total (B) the consumer should consult a tax ad­ of payments. viser for further information regarding the de­

(7) In a sale of property or services in which ductibility of interest and charges. the seller is the creditor required to disclose (16) In the case of a variable rate residential pursuant to section 1631(b) of this title, the "tomortgage loan for which an escrow or impound tal sale price", using that term, which shall be account will be established for the payment of the total of the cash price of the property or all applicable taxes, insurance, and assessments-- services, additional charges, and the finance (A) the amount of initial monthly payment charge. due under the loan for the payment of prin­ (8) Descriptive explanations of the terms cipal and interest, and the amount of such "amount financed", "finance charge", "annual initial monthly payment including the month­ percentage rate", "total of payments", and "to­ ly payment deposited in the account for the tal sale price" as specified by the Bureau. The payment of all applicable taxes, insurance, and descriptive explanation of "total sale price" shall assessments; and include reference to the amount of the downpay­ (B) the amount of the fully indexed month­ ment. ly payment due under the loan for the pay­ (9) Where the credit is secured, a statement ment of principal and interest, and the amount that a security interest has been taken in (A) of such fully indexed monthly payment includ­ the property which is purchased as part of the ing the monthly payment deposited in the ac­ credit transaction, or (B) property not purchased count for the payment of all applicable taxes, as part of the credit transaction identified by insurance, and assessments. item or type. 

(10) Any dollar charge or percentage amount (17) In the case of a residential mortgage loan, 

which may be imposed by a creditor solely on the aggregate amount of settlement charges for 

account of a late payment, other than a defer­ all settlement services provided in connection 

ral or extension charge. with the loan, the amount of charges that are 

(11) A statement indicating whether or not the included in the loan and the amount of such 

consumer is entitled to a rebate of any finance charges the borrower must pay at closing, the 

charge upon refinancing or prepayment in full approximate amount of the wholesale rate of 

pursuant to acceleration or otherwise, if the ob­ funds in connection with the loan, and the agligation involves a precomputed finance charge. gregate amount of other fees or required payA statement indicating whether or not a penal­ ments in connection with the loan. 

ty will be imposed in those same circumstances (18) In the case of a residential mortgage loan, 

if the obligation involves a finance charge com­ the aggregate amount of fees paid to the mortputed from time to time by application of a gage originator in connection with the loan, the 

rate to the unpaid principal balance. amount of such fees paid directly by the con­

(12) A statement that the consumer should re­ sumer, and any additional amount received by 

fer to the appropriate contract document for any the originator from the creditor. 

information such document provides about non­ (19) In the case of a residential mortgage loan, 

payment, default, the right to accelerate the ma­ the total amount of interest that the consumer 

turity of the debt, and prepayment rebates and will pay over the life of the loan as a percentpenalties. age of the principal of the loan. Such amount 

(13) In any residential mortgage transaction, shall be computed assuming the consumer makes 

a statement indicating whether a subsequent pur­ each monthly payment in full and on-time, and 

chaser or assignee of the consumer may assume does not make any over-payments. 
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Page 47 TITLE 15-COMMERCE AND TRADE § 1638 

(b) Form and timing of disclosures; residential fact that the initial regular payments are for a mortgage transaction requirements specific time period that will end on a certain 

(1) Except as otherwise provided in this part, date, that payments will adjust afterwards pothe disclosures required under subsection (a) shall tentially to a higher amount, and that there is 

be made before the credit is extended. Except for no guarantee that the borrower will be able to 

the disclosures required by subsection (a)(l) of refinance to a lower amount. 

this section, all disclosures required under sub­ (D) In any case in which the disclosure state­ section (a) and any disclosure provided for in subsection (b), (c), or (d) of section 1605 of this title ment under subparagraph (A) contains an annual 

shall be conspicuously segregated from all other percentage rate of interest that is no longer acterms, data, or information provided in connec­ curate, as determined under section 1606(c) of this 

tion with a transaction, including any computa­ title, the creditor shall furnish an additional, cortions or itemization. rected statement to the borrower, not later than 3 

(2)(A) Except as provided in subparagraph (G), business days before the date of consummation of 

in the case of any extension of credit that is se­ the transaction. 

cured by the dwelling of a consumer, which is (E) The consumer shall receive the disclosures 

also subject to the Real Estate Settlement Proce­ required under this paragraph before paying any dures Act [12 U.S.C. 2601 et seq.), good faith esti­ fee to the creditor or other person in connection 

mates of the disclosures required under subsec­ with the consumer's application for an extension 

tion (a) shall be made in accordance with regula­ of credit that is secured by the dwelling of a con­ tions of the Bureau under section 1631(c) of this sumer. If the disclosures are mailed to the con­ title and shall be delivered or placed in the mail sumer, the consumer is considered to have received not later than three business days after the cred­ them 3 business days after they are mailed. A itor receives the consumer's written application, creditor or other person may impose a fee for ob­ which shall be at least 7 business days before con­ taining the consumer's credit report before the summation of the transaction. consumer has received the disclosures under this (B) In the case of an extension of credit that is 

paragraph, provided the fee is bona fide and rea­ secured by the dwelling of a consumer, the disclo­ sures provided under subparagraph (A),1 shall be sonable in amount. 

in addition to the other disclosures required by (F) WAIVER OF TIMELINESS OF DISCLOSURES.­

subsection (a), and shall- To expedite consummation of a transaction, if 

(i) state in conspicuous type size and format, the consumer determines that the extension of 

the following: "You are not required to com­ credit is needed to meet a bona fide personal fiplete this agreement merely because you have nancial emergency, the consumer may waive or 

received these disclosures or signed a loan ap­ modify the timing requirements for disclosures 

plication."; and under subparagraph (A), provided that-

(ii) be provided in the form of final disclo­ (i) the term "bona fide personal emergency" 

sures at the time of consummation of the trans­ may be further defined in regulations issued by 

action, in the form and manner prescribed by the Bureau; 

this section. (ii) the consumer provides to the creditor a dated, written statement describing the emer­ (C) In the case of an extension of credit that is 

gency and specifically waiving or modifying those secured by the dwelling of a consumer, under which timing requirements, which statement shall bear the annual rate of interest is variable, or with re­ the signature of all consumers entitled to re­ spect to which the regular payments may other­ ceive the disclosures required by this paragraph; wise be variable, in addition to the other disclo­ and sures required by subsection (a), the disclosures (iii) the creditor provides to the consumers at provided under this subsection shall do the fol­ or before the time of such waiver or modifica­ lowing: tion, the final disclosures required by paragraph (i) Label the payment schedule as follows: ''Pay­ (1). ment Schedule: Payments Will Vary Based on Interest Rate Changes". (G)(i) In the case of an extension of credit re­

(ii) State in conspicuous type size and format lating to a plan described in section 101(53D) of 

examples of adjustments to the regular required title 11-

payment on the extension of credit based on (I) the requirements of subparagrapJ:is (A) 

the change in the interest rates specified by through (E) shall not apply; and 

the contract for such extension of credit. Among (II) a good faith estimate of the disclosures 

the examples required to be provided under this required under subsection (a) shall be made in 

clause is an example that reflects the maxi­ accordance with regulations of the Bureau unmum payment amount of the regular required der section 163l(c) of this title before such credpayments on the extension of credit, based on it is extended, or shall be delivered or placed in 

the maximum interest rate allowed under the the mail not later than 3 business days after 

contract, in accordance with the rules of the the date on which the creditor receives the writBureau. Prior to issuing any rules pursuant to ten application of the consumer for such credit, 

this clause, the Bureau shall conduct consumer whichever is earlier. 

testing to determine the appropriate format for (ii) If a disclosure statement furnished within 3 providing the disclosures required under this business days of the written application (as pro­ subparagraph to consumers so that such disclo­ vided under clause (i)(Il)) contains an annual per­ sures can be easily understood, including the centage rate which is subsequently rendered inaccurate, within the meaning of section 1606(c) of 1 So in orlgina.L The comma probably should not appear. this title, the creditor shall furnish another dis-
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§'1638 TITLE 15-COMMERCE AND TRADE Page 48 

closure statement at the time of settlement or ant to an agreement providing for the addition of 

consummation of the transaction . the deferred payment price of that sale to an ex­

. (3) In the case of a credit transaction described isting outstanding balance, and the person to whom 

in paragraph (15) of subsection (a), disclosures re­ the credit is extended has approved in writing 

quired by that paragraph shall be made to the both the annual percentage rate or rates and the 

consumer at the time of application for such ex­ method of computing the finance charge or charges, 

tension of credit. and the creditor retains no security interest in 

.(4) REPAYMENT ANALYSIS REQUIRED TO INCLUDE any property as to which he has received payESCROW PAYMENTS.- ments aggregating the amount of the sales price 

(A) IN GENERAL.-In the case of any consum­ including any finance charges attributable thereer credit transaction secured by a first mort­ to, then the disclosure required under subsection 

gage or lien on the principal dwelling of the (a) for the particular sale may be made at any 

consumer, other than a consumer credit trans­ time not later than the date the first payment for 

action under an open end credit plan or a re­ that sale is due. For the purposes of this subsec­ verse mortgage, for which an impound, trust, or tion, in the case of items purchased on different 

other type of account has been or will be estab­ dates, the first purchased shall be deemed first 

lished in connection with the transaction for paid for, and in the case of items purchased on 

the payment of property taxes, hazard and flood the same date, the lowest price shall be deemed 

(if any) insurance premiums, or other periodic first paid for. 

payments or premiums with respect to the property, the information required to be provided (e) Terms and disclosure with respect to private 

under subsection (a) with respect to the num­ education loans 

ber, amount, and due dates or period of pay­ (1) Disclosures required in private education 

ments scheduled to repay the total of payments loan applications and solicitations 

shall take into account the amount of any month­ In any application for a private education loan, ly payment to such account for each such re­ or a solicitation for a private education loan payment in accordance with section 10(a)(2) of without requiring an application, the private edu­ the Real Estate Settlement Procedures Act of cational lender shall disclose to the borrower, 1974 [12 U.S.C. 2609(a)(2)]. clearly and conspicuously- (B) ASSESSMENT VALUE.--The amount taken (A) the potential range of rates of interest into account under subparagraph (A) for the pay­ applicable to the private education loan; ment of property taxes, hazard and flood (if (B) whether the rate of interest applicable any) insurance premiums, or other periodic pay­ to the private education loan is fixed or vari­ ments or premiums with respect to the proper­ able; ty shall reflect the taxable assessed value of (C) limitations on interest rate adjustments, the real property securing the transaction af­ both in terms of frequency and amount, or ter the consummation of the transaction, in­ the lack thereof, if applicable; cluding the value of any improvements on the (D) requirements for a co-borrower, includ­ property or to be constructed on the property ing any changes in the applicable interest rates (whether or not such construction will be fi­ without a co-borrower; nanced from the proceeds of the transaction), (E) potential finance charges, late fees, pen­ if known, and the replacement costs of the prop­ alties, and adjustments to principal, based on erty for hazard insurance, in the initial year af­ defaults or late payments of the borrower; ter the transaction. (F) fees or range of fees applicable to the 

(c) Timing of disclosures on unsolicited mailed or private education loan; telephone purchase orders or loan requests (G) the term of the private education loan; 

(1) If a creditor receives a purchase order by (H) whether interest will accrue while the 

mail or telephone without personal solicitation, student to whom the private education loan 

and the cash price and the total sale price and relates is enrolled at a covered educational inthe terms of financing, including the annual per­ stitution; 

centage rate, are set forth in the creditor's cata­ (I) payment deferral options; 

log or other printed material distributed to the (J) general eligibility criteria for the pripublic, then the disclosures required under sub­ vate education loan; 

section (a) may be made at any time not later (K) an example of the total cost of the prithan the date the first payment is due. vate education loan over the life of the loan-

(2) If a creditor receives a request for a loan by (i) which shall be calculated using the prinmail or telephone without personal solicitation and cipal amount and the maximum rate of inthe terms of financing, including the annual per­ terest actually offered by the private educentage rate for representative amounts of credit, cational lender; and 

are set forth in the creditor's printed material (ii) calculated both with and without capdistributed to the public, or in the contract of italization of interest, if an option exists 

loan or other printed material delivered to the for postponing interest payments; 

obligor, then the disclosures required under sub­ (L) that a covered educational institution section (a) may be made at any time not later may have school-specific education loan bene­ than the date the first payment is due. fits and terms not detailed on the disclosure 

(d) Timing of disclosure in cases of an addition of form; a deferred payment price to an existing out­ (M) that the borrower may qualify for Fedstanding balance eral student financial assistance through a 

If a consumer credit sale is one of a series of program under title IV of the Higher Educaconsumer credit sales transactions made pursu- tion Act of 1965 (20 U.S.C. 1070 et seq.), in lieu 
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Page 49 TITLE lr-GOMMERCE AND TRADE § 1638 

of, or in addition to, a loan from a non-Fed­ (I) any principal and interest payments re­ eral source; quired while the student for whom the private 

(N) the interest rates available with respect education loan is intended is enrolled at a cov­ to such Federal student financial assistance ered educational institution and unpaid interthrough a program under title IV of the High­ est that will accrue during such enrollment; er Education Act of 1965 (20 U.S.C. 1070 et seq.); (J) payment deferral options applicable to 

(0) that, as provided in paragraph (6}- the borrower; (i) the borrower shall have the right to (K) whether monthly payments are graduat­ accept the terms of the loan and consum­ ed; mate the transaction at any time within 30 (L) that, as provided in paragraph (6}- calendar days (or such longer period as the 

(i) the borrower shall have the right to private educational lender may provide) folaccept the terms of the loan and consum­ lowing the date on which the application for 

mate the transaction at any time within 30 the private education loan is approved and 

the borrower receives the disclosure docu­ calendar days ( or such longer period as the 

ments required under this subsection for the private educational lender may provide) fol­

· 1oan; and lowing the date on which the application for 

(ii) except for changes based on adjust­ the private education loan is approved and 

ments to the index used for a loan, the rates the borrower receives the disclosure docuand terms of the loan may not be changed ments required under this subsection for the 

by the private educational lender during the loan; and 

period described in clause (i); (ii) except for changes based on adjust­

(P) that, before a private education loan may ments to the index used for a loan, the rates 

be consummated, the borrower must obtain and terms of the loan may not be changed 

from the relevant institution of higher educa­ by the private educational lender during the 

tion the form required under paragraph (3), period described in clause (i); 

and complete, sign, and return such form to (M) that the borrowerthe private educational lender; (i) may qualify for Federal financial as­ (Q) that the consumer may obtain addition­ sistance through a program under title IV 

al information concerning such Federal stu­ of the Higher Education Act of 1965 (20 U.S.C. 

dent financial assistance from their institu­ 1070 et seq.), in lieu of, or in addition to, a tion of higher education, or at the website of loan from a non-Federal source; and 

the Department of Education; and (ii) may obtain additional information con­ (R) such other information as the Bureau cerning such assistance from their institushall prescribe, by rule, as necessary or ap­ tion of higher education or the website of 

propriate for consumers to make informed bor­ the Department of Education; rowing decisions. (N) the interest rates available with respect (2) Disclosures at the time of private educa­ to such Federal financial assistance through tion loan approval a program under title IV of the Higher EduContemporaneously with the approval of a pri­ cation Act of 1965 (20 U.S.C. 1070 et seq.); 

vate education loan application, and before the (0) the maximum monthly payment, calculoan transaction is consummated, the priv_ate lated using the maximum rate of interest ac­ educational lender shall disclose to the borrow­ tually offered by the private educational lender, clearly and conspicuously- er and applicable to the borrower, to the ex­ (A) the applicable rate of interest in effect tent that such maximum rate may be deter­ on the date of approval; mined, -or if not, a good faith estimate there­

(B) whether the rate of interest applicable of; and 

to the private education loan is fixed or vari­ (P) such other information as the Bureau 

able; shall prescribe, by rule, as necessary or ap­

(C) limitations on interest rate adjustments, propriate for consumers to make informed borboth in terms of frequency and amount, or rowing decisions. · 

the lack thereof, if applicable; (3) Self-certification of information (D) the initial approved principal amount; 

(E) applicable finance charges, late fees, pen­ (A) In general 

alties, and adjustments to principal, based on Before a private educational lender may con­ borrower defaults or late payments, including summate a private education loan with re­ limitations on the discharge of a private edu­ spect to a student attending an institution of 

cation loan in bankruptcy; higher education, the lender shall obtain from 

(F) fees or range of fees applicable to the the applicant for the private education loan 

private education loan; the form developed by the Secretary of Edu­

(G) the maximum term under the private cation under section 155 of the Higher Educa­ education loan program; tion Act of 1965 [20 U.S.C. 1019d], signed by (H) an estimate of the total amount for re­ the applicant, in written or electronic form. 

payment, at both the interest rate in effect on (B) Rule of construction the date· of approval and at the maximum 

possible rate of interest offered by the private No other provision of this subsection shall 

educational lender and applicable to the bor­ be construed to require a private educational 

rower, to the extent that such maximum rate lender to perform any additional duty under 

may be determined, or if not, a good faith es­ this paragraph, other than collecting the form 

timate thereof; required under subparagraph (A). 
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§ 1638 TITLE 15--COMMERCE AND TRADE Page 50 

(4) Disclosures at the time of private educa­ (ii) the expiration of the period described 

tion loan consummation in subparagraph (A). 

Contemporaneously with the consummation of (7) Right to cancel a private education loan, a private educational With respect to a private education loan, the lender shall make to the borrower each of the borrower may cancel the loan, without penalty disclosures described into the borrower, at any time within 3 business (A) paragraph (2)(A) (adjusted, as necessary, days of the date on which the loan is consum­ for the rate of interest in effect on the date of mated, and the private educational lender shall consummation, based on the index used for disclose such right to the borrower in accord­ the loan); ance with paragraph (4). (B) subparagraphs (B) through (K) and (M) 

through (P) of paragraph (2); and (8) Prohibition on disbursement 

(C) paragraph (7). No funds may be disbursed with respect to a (5) Format of disclosures private education loan until the expiration of 

(A) Model form the 3-day period described in paragraph (7). 

Not later than 2 years after August 14, 2008, (9) Bureau regulations 

the Bureau shall, based on consumer testing, In issuing regulations under this subsection, and in consultation with the Secretary of Edu­ the Bureau shall prevent, to the extent possible, cation, develop and issue model forms that may duplicative disclosure requirements for private be used, at the option of the private educa­ educational lenders that are otherwise required tional lender, for the provision of disclosures to make disclosures under this subchapter, ex­ required under this subsection. cept that in any case in which the disclosure 

(B) Format requirements of this subsection differ or conunder this paragraph Model flict with the disclosure requirements of any forms developed other provision of this subchapter, the require­ shall-

(i) be comprehensible to borrowers, with a ments of this subsection shall be controlling. 

clear format and design; (10) Definitions 

(ii) provide for clear and conspicuous dis­ For purposes of this subsection, the terms ''cov­ closures; ered educational institution", "private educa­ (iii) enable borrowers easily to identify ma­ tional lender", and "private education loan" have terial terms of the loan and to compare the same meanings as in section 1650 of this such terms among private education loans; title. and 

(iv) be succinct, and use an easily read­ (11) Duties of lenders participating in preferred 

able type font. lender arrangements 

(C) Safe harbor Each private educational lender that has a 

Any private educational lender that elects preferred lender arrangement with a covered eduto provide a model form developed under this cational institution shall annually, by a date 

subsection that accurately reflects the prac­ determined by the Bureau, in consultation with 

tices of the private educational lender shall the Secretary of Education, provide to the covbe deemed to be in compliance with the dis­ ered educational institution such information 

closures required under this subsection. as the Bureau determines to include in the model form developed under paragraph (5) for each (6) Effective period of approved rate of inter­ type of private education loan that the lender est and loan terms plans to offer to students attending the covered 

(A) In general educational institution, or to the families of 

With respect to a private education loan, such students, for the next award year (as that 

the borrower shall have the right to accept term is defined in section 481 of the Higher Eduthe terms of the loan and consummate the cation Act of 1965 [20 U.S.C. 1088]). 

transaction at any time within 30 calendar 

edu­ (f) Periodic statements for residential mortgage days (or such longer period as the private 

cational lender may provide) following the date loans 

on which the application for the private edu­ (1) In general cation loan is approved and the borrower re­ The creditor, assignee, or servicer with respect ceives the disclosure documents required under 

to any residential mortgage loan shall trans­ this subsection for the loan, and the rates and mit to the obligor, for each billing cycle, a state­ terms of the loan may not be changed by the 

ment setting forth each of the following items, private educational lender during that period. to the extent applicable, in a conspicuous and 

(B) Prohibition on changes prominent manner: 

Except for changes based on adjustments to (A) The amount of the principal obligation 

the index used for a loan, the rates and terms under the mortgage. 

of the loan may not be changed by the pri­ (B) The current interest rate in effect for 

vate educational lender prior to the earlier the loan. 

of- (C) The date on which the interest rate may 

(i) the date of acceptance of the terms of next reset or adjust. 

the loan and consummation of the transac­ (D) The amount of any prepayment fee to 

tion by the borrower, as described in sub­ be charged, if any. 

paragraph (A); or (E) A description of any late payment fees. 
Page 51 TITLE 15-COMMERCE AND TRADE § 1638 

(F) A telephone number and electronic mail Pub. L. 110-289, § 2502(a)(5), (6), struck out ", whichever 

address that may be used by the obligor to is earlier" after "consummation of the transaction" and 

obtain information regarding the mortgage. "If the disclosure statement furnished within three days 

of the written application contains an annual percentage (G) The names, addresses, telephone num­ rate which is subsequently rendered inaccurate within bers, and Internet addresses of counseling agen­ the meaning of section 1606(c) of this title, the creditor cies or programs reasonably available to the shall furnish another statement at the time of settle­ consumer that have been certified or approved ment or consummation." at the end. 

and made publicly available by the Secretary Pub. L. 110-289, §2502(a)(4), which directed insertion of 

of Housing and Urban Development or a State ", which shall be at least 7 business days before consumhousing finance authority (as defined in sec­ mation of the transaction" after "written application", 

tion 144la-1 of title 12). was executed by making the insertion after "written ap­

(H) Such other information as the Board 2 plication" the first place appearing. 

Pub. L. 110-289, §2502(a)(2), (3), substituted "any exten­ may prescribe in regulations. sion of credit that is secured by the dwelling of a consumer" for "a residential mortgage transaction, as de­ (2) Development and use of standard form fined in section 1602(w) of this title" and "and" for "beThe Board 2 shall develop and prescribe a stand­ fore the credit is extended, or". 

ard form for the disclosure required under this Subsec. (b)(2)(B) to (F). Pub. L. 110-289, §2502(a)(6), addsubsection, taking into account that the state­ ed subpars. (B) to (F). 

ments required may be transmitted in writing Subsec. (b)(2)(G). Pub. L. 110-343, § 130(a)(2), amended 

subpar. (G) generally. Prior to amendment, subpar. (G) or electronically. read as follows: "The requirements of subparagraphs (B), 

(3) Exception (C), (D) and (E) shall not apply to extensions of credit relating to plans described in section 101(53D) of title 11." 

Paragraph (1) shall not apply to any fixed Pub. L. 110-289, § 2502(a)(6), added subpar. (G). 

rate residential mortgage loan where the cred­ Subsec. (e). Pub. L. 110-315 added subsec. (e). 

itor, assignee, or servicer provides the obligor 2005-Subsec. (a)(l5). Pub. L. 109-8, § 1302(b)(l)(A), addwith a coupon book that provides the obligor ed par. (15). · 

with substantially the same information as re­ Subsec. (b)(3). Pub. L. 109-8, § 1302(b)(l)(B), added par. 

quired in paragraph (1). (3). 

1996-Subsec. (a)(14). Pub. L. 104-208 added par. (14). 

(Pub. L. 90-321, title I, § 128, May 29, 1968, 82 Stat. 1980-Subsec. (a). Pub. L. 96-221, §614(a), substituted 

155; Pub. L. 96--221, title VI, §614(a)-(c), Mar. 31, provisions setting forth required disclosures by the cred1980, 94 Stat. 178, 179; Pub. L. 104-208, div. A, title itor for transactions other than under an open end credit 

II, Sept. 30, 1996, 110 Stat. 3009-402; Pub. L. plan, for provisions setting forth required § 2105, disclosures by 

the creditor for sales not under open end credit plans. 109-S, title XIII, § 1302(b)(l), Apr. 20, 2005, 119 Stat. Subsec. (b). Pub. L. 96-221, §614(b), designated existing 208; Pub. L. 110-289, div. B, title V, § 2502(a), July provisions as par. (1), inserted provisions relating to the 

30, 2008, 122 Stat. 2855; Pub. L. 110-315, title X, conspicuous segregation of required disclosures, and struck 

§ 1021(a), Aug. 14, 2008, 122 Stat. 3483; Pub. L. 110-343, out provisions authorizing the required information to 

div. A, title I, § 130(a), Oct. 3, 2008, 122 Stat. 3797; be disclosed in the signed evidence of indebtedness, and 

Pub. L. 111-203, title X, § 1100A(2), title XIV, §§ 1419, added par. (2). 

1420, 1465, July 21, 2010, 124 Stat. 2107, 2154, 2155, Subsec. (c). Pub. L. 96-221, §614(c), designated existing 

provisions as par. (1), substituted "total sale" for "de­ 2185.) ferred payment", and added par. (2). 

REFERENCES IN TEXT EFFECTIVE DATE OF 2010 A.7'1:ENDMENT 

The Real Estate Settlement Procedures Act, referred 

Amendment by section 1100A(2) of Pub. L. 111-203 ef­ to in subsec. (b)(2)(A), probably refers to the Real Estate 

fective on the designated transfer date, see section 1100H Settlement Procedures Act of 1974, Pub. L. 93-533, Dec. 

of Pub. L. 111-203, set out as a note under section 552a of 22, 1974, 88 Stat. 1724, which is classified principally to Title 5, Government Organization and Employees. chapter 27 (§2601 et seq.) of Title 12, Banks and Banking. Amendment by sections 1419, 1420, and 1465 of Pub. L. For complete classification of this Act to the Code, see 111-203 effective on the date on which final regulations Short Title note set out under section 2601 of Title 12 and implementing that amendment take effect, or on the date Tables. that is 18 months after the designated transfer date if The Higher Education Act of 1965, referred to in sub­ such regulations have not been issued by that date, see sec. (e)(l)(M), (N), (2)(M)(i), (N), is Pub. L. 89-329, Nov. 8, section 1400(c) of Pub. L. 111-203, set out as a note under 1965, 79 Stat. 1219. Title IV of the Act is classified gen­ section 1601 of this title. erally to subchapter IV (§ 1070 et seq.) of chapter 28 of 

Title 20, Education. For complete classification of this EFFECTIVE DATE OF 2008 AMENDMENT Act to the Code, see Short Title note set out under section 1001 of Title 20 and Tables. Pub. L. 110-343, div. A, title I, § 130(b), Oct. 3, 2008, 122 

Stat. 3797, provided that: "The amendments made by subAMENDMENTS section (a) [amending this section] shall take effect as if 

included in the amendments made by section 2502 of the 2010-Pub. L. 111-203, § 1100A(2), substituted "Bureau" Mortgage Disclosure Improvement Act of 2008 (Public for "Board" wherever appearing. Law 110-289) [amending this section and section 1640 of Subsec. (a)(16) to (19). Pub. L. 111-203, § 1419, added this title]." pars. (16) to (19). Pub. L. 110-315, title X, § 1003, Aug. 14, 2008, 122 Stat. Subsec. (b)(4). Pub. L. 111-203, §1465, added par. (4). 3478, provided that: Subsec. (f). Pub. L. 111-203, § 1420, added subsec. (f). "(a) IN GENERAL.-Except as provided in subsection 

2008-Subsec. (b)(2). Pub. L. 110-289, § 2502(a)(l), desig- (b) and as otherwise provided in this title [see Short 

nated existing provisions as subpar. (A). Title of 2008 Amendment note set out under section 1601 

Subsec. (b)(2)(A). Pub. L. 110-343, §130(a)(l), substitut­ of this title], this title and the amendments made by ed "Except as provided in subparagraph (G), in the case" this title shall become effective on the date of enact­ for "In the case". ment of this Act [Aug. 14, 2008]. 

"(b) EFFECT NOTWITHSTANDING REGULATIONS.-Paragraphs (1), (2), (3), (4), (6), (7), and (8) of section 128(e) [15 2 So 1n original. Probably should be "Bureau". U.S.C. 1638(e)] and section 140(c) of the Truth in Lending 

Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 49 of 92 PageID #: 164 
§ 1638a TITLE 15-COMMERCE AND TRADE Page 52 

Act [15 U.S.C. 1650(c)], as added by this title, shall be­ (1) Any index or formula used in making ad­ come effective on the earlier of the date on which regu­ justments to or resetting the interest rate and 

lations issued under section 1002 [set out as a note below] a source of information about the index or for­ become effective [Such regulations were issued effective mula. Sept. 14, 2009, with compliance optional until Feb. (2) An explanation of how the new interest 2010. See 74 F.R. 41194.] or 18 months after the date 

enactment of this Act [Aug. 14, 2008]." rate and payment would be determined, includPub. L. 110-289, div. B, title V, § 2502(c), July 30, 2008, ing an explanation of how the index was adjust122 Stat. 2857, provided that: ed, such as by the addition of a margin. 

"(1) GENERAL DISCLOSURES.-Except as provided in para­ (3) A good faith estimate, based on accepted graph (2), the amendments made by subsection (a) [amend­ industry standards, of the creditor or servicer 

ing this section] shall become effective 12 months after of the amount of the monthly payment that the date of enactment of this Act [July 30, 2008]. will apply after the date of the adjustment or "(2) VARIABLE INTEREST RATES.-Subparagraph (C) of 

reset, and the assumptions on which this esti­ 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, mate is based. 

shall become effective on the earlier of- (4) A list of alternatives consumers may pur­

"(A) the compliance date established by the Board sue before the date of adjustment or reset, and 

for such purpose, by regulation; or descriptions of the actions consumers must take 

"(B) 30 months after the date of enactment of this to pursue these alternatives, including- Act [July 30, 2008]." (A) refinancing; 

(B) renegotiation of loan terms; EFFECTIVE DATE OF 2005 AMENDMENT 

(C) payment forbearances; and Amendment by Pub. L. 109--8 effective 180 days after (D) pre-foreclosure sales. Apr. 20, 2005, and not applicable with respect to cases 

commenced under Title 11, Bankruptcy, before such ef­ (5) The names, addresses, telephone numbers, 

fective date, except as otherwise provided, see section and Internet addresses of counseling agencies 1501 of Pub. L. 109-8, set out as a note under section 101 or programs reasonably available to the consum­ of Title 11. er that have been certified or approved and made 

EFFECTIVE DATE Oh' 1980 AMENDMENT publicly available by the Secretary of Housing 

and Urban Development or a State housing fi­ Amendment by Pub. L. 96-221 effective on expiration of nance authority (as defined in section 1441a-1 of two years and six months after Mar. 31, 1980, with all title 12). regulations, forms, and clauses required to be prescribed 

to be promulgated at least one year prior to such effec­ (6) The address, telephone number, and Intertive date, and allowing any creditor to comply with any net address for the State housing finance au­ amendments, in accordance with the regulations, forms, thority (as so defined) for the State in which 

and clauses prescribed by the Board prior to such effec­ the consumer resides. 

tive date, see section 625 of Pub. L. 96-221, set out as a 

note under section 1602 of this title. (c) Savings clause 

The Board may require the notice in paragraph REGULATIONS (b) or other notice consistent with this chapter Pub. L. 110-315, title X, § 1002, Aug. 14, 2008, 122 Stat. for adjustable rate mortgage loans that are not 

3478, provided that: "Not later than 365 days after the hybrid adjustable rate mortgage loans. date of enactment of this Act [Aug. 14, 2008], the Board 

of Governors of the Federal Reserve System shall issue (Pub. L. 90-321, title I, § 128A, as added Pub. L. 

regulations in final form to implement paragraphs (1), 111-203, title XIV, § 1418(a), July 21, 2010, 124 Stat. 

(2), (3), (4), (6), (7), and (8) of section 128(e) (15 U.S.C. 2153.) 1638(e)J and section 140(c) of the Truth in Lending Act 

(15 U.S.C. 1650(c)J, as added by this title, which regula­ REFERENCES IN TEXT 

tions shall become effective not later than 6 months af­ This chapter, referred to in subsec. (c), was in the ter their date of issuance." original "this Act" meaning Pub. L. 90-321, May 29, 1968, 

82 Stat. 146, which is classified principally to this chap­ § 1638a. Reset of hybrid adjustable rate mort- ter. For complete classification of this Act to the Code, 

gages · see Short Title note set out under section 1601 of this 

title and Tables. (a) Hybrid adjustable rate mortgages defined 

For purposes of this section, the term "hybrid EFFECTIVE DATE 

adjustable rate mortgage'' means a consumer cred­ Section effective on the date on which final regulations it transaction secured by the consumer's princi­ implementing such section take effect, or on the date that 

pal residence with a fixed interest rate for an in­ is 18 months after the designated transfer date, if such 

troductory period that adjusts or resets to a vari­ regulations have not been issued by that date, see section 

able interest rate after such period. 1400(c) of Pub. L. 111-203, set out as an Effective Date of 

2010 Amendment note under section 1601 of this title. 

(b) Notice of reset and alternatives § 1639. Requirements for certain mortgages During the 1-month period that ends 6 months 

(a) Disclosures before the date on which the interest rate in effect during the introductory period of a hybrid (1) Specific disclosures 

adjustable rate mortgage adjusts or resets to a In addition to other disclosures required un­ variable interest rate or, in the case of such an der this subchapter, for each mortgage referred adjustment or resetting that occurs within the to in section 1602(aa) 1 of this title, the creditor 

first 6 months after consummation of such loan, shall provide the following disclosures in con­ at consummation, the creditor or servicer of such spicuous type size: loan shall provide a written notice, separate and 

distinct from all other correspondence to the consumer, that includes the following: 1 See References in Text note below, 

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32·709_T_TF D Sig-4 

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Page 53 TITLE 15-COMMERCE AND TRADE § 1639 

(A) "You are not required to complete this (c) No prepayment penalty 

agreement merely because you have received (1) In general 2 

these disclosures or have signed a loan appli­ (A) Limitation on terms cation.". 

(B) "If you obtain this loan, the lender will A mortgage referred to in section 1602(aa) 3 

have a mortgage on your home. You could lose of this title may not contain terms under which 

your home, and any money you have put into a consumer must pay a prepayment penalty 

it, if you do not meet your obligations under for paying all or part of the principal before 

the loan.". the date on which the principal is due. 

(2) Annual percentage rate (B) Construction 

In addition to the disclosures required under For purposes of this subsection, any methparagraph (1), the creditor shall disclose- od of computing a refund of unearned schedin the case of a credit transaction with uled interest is a prepayment penalty if it is (A) 

a fixed rate of interest, the annual percent­ less favorable to the consumer than the acturate and the amount of the regular month­ arial method (as that term is defined in sec­ age or of ly tion 1615(d) this title). payment; 

(B) in the case of any other credit trans­ (d) Limitations after default action, the annual percentage rate of the loan, A mortgage referred to in section 1602(aa) 3 of the amount of the regular monthly payment, this title may not provide for an interest rate ap­ a statement that the interest rate and month­ plicable after default that is higher than the inter­ ly payment may increase, and the amount of 

est rate that applies before default. If the date of the maximum monthly payment, based on the maturity of a mortgage referred to in subsection 4 

maximum interest rate allowed pursuant to 1602(aa) 3 of this title is accelerated due to default section 3806 of title 12. and the consumer is entitled to a rebate of interest, 

any method that (b) Time of disclosures that rebate shall be computed by 

is not less favorable than the actuarial method (as (1) In general that term is defined in section 1615(d) of this title). 

The disclosures required by this section shall (e) No balloon payments be given not less than 3 business days prior to 

consummation of the transaction. No high-cost mortgage may contain a scheduled 

payment that is more than twice as as the 

(2) New disclosures required average of earlier scheduled payments. sub-

(A) In general section shall not apply when the payment schedAfter adjusted to the seasonal or providing disclosures required by ule is irregular in­ the come of the consumer. this section, a creditor may not change the 

terms of the extension of credit if such changes (f) No negative amortization 

make the disclosures inaccurate, unless new A mortgage referred to in section 1602(aa) 3 of disclosures are provided that meet the require­ this title may not include terms under which the ments of this section. outstanding principal balance will increase at any (B) Telephone disclosure time over the course of the loan because the regA creditor may provide new disclosures pur­ ular periodic payments do not cover the full amount 

suant to subparagraph (A) by telephone, if­ of interest due. 

(i) the change is initiated by the consum­ (g) No prepaid payments er; and 

(ii) at the consummation of the transac­ A mortgage referred to in section 1602(aa) 3 of 

tion under which the credit is extended­ this title may not include terms under which more 

(!) the creditor provides to the consum­ than 2 periodic payments required under the loan 

er the new disclosures, in writing; and are consolidated and paid in advance from the 

(II) the creditor and consumer certify loan proceeds provided to the consumer. 

in writing that the new disclosures were (h) Prohibition on extending credit without re­ provided by telephone, by not later than 3 glll"d to payment ability of consumer days prior to the date of consummation A creditor shall not engage in a pattern or prac­ of the transaction. tice of extending credit to consumers under mort­

(8) No wait for lower rate gages referred to in section 1602(aa) 3 of this title 

extends to a a on the consumers' collateral without re­ If a creditor consumer second based 

offer of credit with a lower annual percentage gard to the consumers' repayment ability, includexpected income, rate, the transaction may be consummated with­ ing the consumers' current and 

current obligations, and employment. out regard to the period specified in paragraph 

(1) with respect to the second offer. (i) Requirements for payments under home im­

(4) Modifications provement contracts 

A creditor shall not make a payment to a con­ The Bureau may, if it finds that such action 

tractor under a home improvement contract from is necessary to permit homeowners to meet bona 

amounts extended as credit under a mortgage re- fide personal financial emergencies, prescribe 

regulations authorizing the modification or waiver of rights created under this subsection, to 2 So in original. There is no par. (2). the extent and under the circumstances set forth 3 See References in Text note below. 

in those regulations. • So 1n original. Probably should be "section". 
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§ 1639 TITLE 15-COMMERCE AND TRADE Page 54 

ferred to in section 1602(aa) 5 of this title, other (I) Any prepayment fee or penalty payable by 

than- the consumer in a refinancing transaction if 

(1) in the form of an instrument that is pay­ the creditor or an affiliate of the creditor is the 

able to the consumer or jointly to the consumer noteholder of the note being refinanced. 

and the contractor; or (2) Any points or fees. 

(2) at the election of the consumer, by a third 

party escrow agent in accordance with terms (n) Consequence of failure to comply 

established in a written agreement signed by Any mortgage that contains a provision prohib­ the consumer, the creditor, and the contractor ited by this section shall be deemed a failure to 

before the date of payment. deliver the material disclosures required under 

(j) Recommended default this subchapter, for the purpose of section 1635 of 

this title. No creditor shall recommend or encourage default on an existing loan or other debt prior to (o) "Affiliate" defined and in connection with the closing or planned closing of a high-cost mortgage that refinances all or For purposes of this section, the term "affiliany portion of such existing loan or debt. ate" has the same meaning as in section 184l(k) 

of title 12. 

(k) Late fees 

(1) In general (p) Discretionary regulatory authority of Bureau 

No creditor may impose a late payment charge (1) Exemptions or fee in connection with a high-cost mortgage-­ The Bureau may, by regulation or order, ex­ (A) in an amount in excess of 4 percent of 

empt specific mortgage products or categories the amount of the payment past due; of mortgages from any or all of the prohibi­ (B) unless the loan documents specifically tions specified in subsections (c) through (i), if authorize the charge or fee; the Bureau finds that the exemption- (C) before the end of the 15-day period be­ (A) is in the interest of the borrowing pub­ ginning on the date the payment is due, or in lic; and the case of a loan on which interest on each (B) will apply only to products that main­ installment is paid in advance, before the end tain and strengthen home ownership and eq­ of the 30-day period beginning on the date uity protection. the payment is due; or 

(D) more than once with respect to a single (2) Prohibitions 

late payment. The Bureau, by regulation or order, shall pro­ (2) Coordination with subsequent late fees hibit acts or practices in connection withIf a payment is otherwise a full payment for (A) mortgage loans that the Bureau finds to 

the applicable period and is paid on its due date be unfair, deceptive, or designed to evade the 

or within an applicable grace period, and the provisions of this section; and 

only delinquency or insufficiency of payment is (B) refinancing of mortgage loans that the 

attributable to any late fee or delinquency charge Bureau finds to be associated with abusive 

assessed on any earlier payment, no late fee or lending practices, or that are otherwise not in 

delinquency charge may be imposed on such pay­ the interest of the borrower. 

ment. 

(q) Civil penalties in Federal Trade ComJDission (3) Failure to make installment payment enforcement actions 

If, in the case of a loan agreement the terms For purposes of enforcement by the Federal Trade of which provide that any payment shall first Commission, any violation of a regulation issued be applied to any past due principal balance, by the Bureau pursuant to subsection (l)(2) shall the consumer fails to make an installment pay­ be treated as a violation of a rule promulgated ment and the consumer subsequently resumes under section 57a of this title regarding unfair or making installment payments but has not paid deceptive acts or practices. all past due installments, the creditor may impose a separate late payment charge or fee for (r) Prohibitions on evasions, structuring of transany principal due (without deduction due to late actions, and reciprocal arrangements fees or related fees) until the default is cured. A creditor may not take any action in connec­ (l) Acceleration of debt tion with a high-cost mortgage--

No high-cost mortgage may contain a provision (1) to structure a loan transaction as an openwhich permits the creditor to accelerate the in­ end credit plan or another form of loan for the 

debtedness, except when repayment of the loan purpose and with the intent of evading the prohas been accelerated by default in payment, or visions of this subchapter; or 

pursuant to a due-on-sale provision, or pursuant (2) to divide any loan transaction into sepato a material violation of some other provision of rate parts for the purpose and with the intent 

the loan document unrelated to payment schedule. of evading provisions of this subchapter. 

(m) Restriction on financing points and fees (s) Modification and deferral fees prohibited No creditor· may directly or indirectly finance, A creditor, successor in interest, assignee, or in connection with any high-cost mortgage, any any agent of any of the above, may not charge a of the following: consumer any fee to modify, renew, extend, or 

amend a high-cost mortgage, or to defer any pay­ 6 See References in Text note below. ment due under the terms of such mortgage. 
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Page 55 TITLE 16-COMMERCE AND TRADE § 1639 

(t) Payoff statement (v) Corrections and unintentional violations 

(1) Fees A creditor or assignee in a high-cost mortgage 

when acting in good faith, fails to comply (A) In general who, 

with any requirement under this section will not Except as provided in subparagraph (B), no be deemed to have violated such requirement if creditor or servicer may charge a fee for in­ the creditor or assignee establishes that either- forming or transmitting to any person the (1) within 30 days of the loan closing and pri­ balance due to pay off the outstanding bal­ or to the institution of any action, the consum­ ance on a high-cost mortgage. er is notified of or discovers the violation, ap­

(B) Transaction fee propriate restitution is made, and whatever adWhen payoff information referred to in sub­ justments are necessary are made to the loan 

paragraph (A) is provided by facsimile trans­ to either, at the choice of the consumermission or by a courier service, a creditor or (A) make the loan satisfy the requirements 

servicer may charge a processing fee to cover of this part; or 

the cost of such transmission or service in an (B) in the case of a high-cost mortgage, 

amount not to exceed an amount that is com­ change the terms of the loan in a manner 

parable to fees imposed for similar services pro­ beneficial to the consumer so that the loan 

consumer credit trans­ will no longer be a high-cost mortgage; or vided in connection with 

actions that are secured by the consumer's prin­ (2) within 60 days of the creditor's discovery cipal dwelling and are not high-cost mortgages. or receipt of notification of an unintentional 

(C) Fee disclosure violation or bona fide error and prior to the institution of any action, the consumer is noti­ Prior to charging a transaction fee as pro­ fied of the compliance failure, appropriate res­ vided in subparagraph (B), a creditor or ser­ titution is made, and whatever adjustments are vicer shall disclose that payoff balances are necessary are made to the loan to either, at the available for free pursuant to subparagraph (A). choice of the consumer- (D) Multiple requests (A) make the loan satisfy the requirements 

If a creditor or servicer has provided payoff of this part; or 

information referred to in subparagraph (A) (B) in the case of a high-cost mortgage, 

without charge, other than the transaction fee change the terms of the loan in a manner allowed by subparagraph (B), on 4 occasions beneficial so that the loan will no longer be a during a calendar year, the creditor or ser­ high-cost mortgage. 

vicer may thereafter charge a reasonable fee (Pub. L. 90-321, title I, § 129, as added Pub. L. for providing such information during the re­ 103--325, title I, § 152(d), Sept. 23, 1994, 108 Stat. mainder of the calendar year. 2191; amended Pub. L. 111~, div. D, title VI, §626(c), 

(2) Prompt delivery Mar. 11, 2009, 123 Stat. 679; Pub. L. 111-203, title X, 

1432, 1433, July 21, 2010, Payoff balances shall be provided within 5 busi­ § 1100A(2), (9), title XIV, §§ 

a request by a con­ 124 Stat. 2107, 2109, 2160; Pub. L. 115-174, title I, ness days after receiving 109(a), person authorized by consumer May sumer or a the § 24, 2018, 132 Stat. 1305.) 

to obtain such information. REFERENCES IN TEXT 

(u) Pre-loan counseling Section 1602(aa) of this title, referred to in text, was 

(1) In general redesignat<Jd section 1602(bb) of this title by Pub. L. 111-203, 

title X, § llOOA(l)(A), July 21, 2010, 124 Stat. 2107. A creditor may not extend credit to a con­ The Real Estate Settlement Procedures Act of 1974, re­ sumer under a high-cost mortgage without first ferred to in subsec. (u)(2), is Pub. L. 93-533, Dec. 22, 1974, 

receiving certification from a counselor that is 88 Stat. 1724, which is classified principally to chapter 27 

approved by the Secretary of Housing and Ur­ (§2601 et seq.) of Title 12, Banks and Banking. For comban Development, or at the discretion of the plete classification of this Act to the Code, see Short 

Secretary, a State housing finance authority, that Title note set out under section 2601 of Title 12 and Tables. 

the consumer has received counseling on the ad­ PRIOR PROVISIONS 

visability of the mortgage. Such counselor shall A prior section 1639, Pub. L. 90-321, title I, § 129, May not be employed by the creditor or an affiliate of 29, 1968, 82 Stat. 156, related to consumer loans not under 

the creditor or be affiliated with the creditor. open end credit plans, prior to repeal by Pub. L. 96-221, 

required 31, 1980, 94 Stat. 180. ef- (2) Disclosures prior title to counseling VI, §614(d)(l), Mar. 

fective on expiration of two years and six after 

No counselor may certify that a consumer has Mar. 31, 1980, with all regulations, forms, and clauses re­ received counseling on the advisability of the quired to be prescribed to be promulgated at least one 

high-9ost mortgage unless the counselor can ver­ year prior to such effective date, and allowing any credify that the consumer has received each state­ itor to comply with any amendments, in accordance with 

ment required (in connection with such loan) by the regulations, forms, and clauses prescribed by the 

Board prior to such effective date, see section 625 of Pub. this section or the Real Estate Settlement Pro­ L. 96-221, set out as an Effective Date of 1980 Amendment cedures Act of 1974 [12 U.S.C. 2601 et seq.] with note under section 1602 of this title. 

respect to the transaction. AMENDMENTS (3) Regulations 2018-Subsec. (b)(3), (4). Pub. L. 115-174 added par. (3) 

The Board 6 may prescribe such regulations and redesignated former par. (3) as (4). 

as the Board determines to be appropriate to 2010-Pub. L. 111-203, § 1100A(2), substituted "Bureau" 

carry out the requirements of paragraph (1). for "Board" wherever appearing. 

Subsec. (c)(2). Pub. L. 111-203, § 1432(a), struck out par. 

(2) which related to exception to prepayment penalty 6 So in original. Probably should be "Bureau", prohibition. 
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§ 1639a TITLE 15--COMMERCE AND TRADE Page 56 

Subsec. (e). Pub. L. 111-203, § 1432(b), amended subsec. will likely provide an anticipated recovery on (e) generally. Prior to amendment, text read a.s follows: the outstanding principal mortgage debt that 

"A mortgage referred to in section 1602(a.a) of this title will exceed the anticipated recovery through having a term of less than 5 years may not include terms foreclosures. under which the aggregate amount of the regular periodic payments would not fully amortize the outstanding (b) No liability principal balance." 

Subsecs. (j) to (I). Pub. L. 111-203, § 1433(a)(2), added A servicer that is deemed to be acting in the 

subsecs. (j) to (1). Former subsecs. (j) to (l) redesignated best interests of all investors or other parties un­ (n) to (p), respectively. der this section shall not be liable to any party 

Subsec. (m). Pub. L. 111-203, § 1433(a)(2), added subsec. who is owed a duty under subsection (a)(l), and 

(m). Former subsec. (m) redesignated (q). shall not be subject to any injunction, stay, or Pub. L. 111-203, § 1100A(9), added subsec. (m) and struck other equitable relief to such party, based solely out former subsec. (m). Prior to amendment, text read as upon the implementation by the servicer of a quali­ follows: "For purposes of enforcement by the Federal Trade fied loss mitigation plan. Commission, any violation of a regulation issued by the 

Federal Reserve Board pursuant to subsection (l)(2) of (c) Standard industry practice this section shall be treated as a violation of a rule promulgated under section 57a of this title regarding unfair The qualified loss mitigation plan guidelines is­ or deceptive acts or practices." sued by the Secretary of the Treasury under the 

Subsecs. (n) to (q). Pub. L. 111-203, § 1433(a)(l), redesig­ Emergency Economic Stabilization Act of 2008 [12 

nated former subsecs. (j) to (m) as (n) to (q), respectively. U.S.C. 5201 et seq.] shall constitute standard inSubsecs. (r) to (v). Pub. L. 111-203, § 1433(b)--(f), added dustry practice for purposes of all Federal and subsecs. (r) to (v). State laws. 2009-Subsec. (m). Pub. L. 111--8 added subsec. (m). 

(d) Scope of safe harbor EFFECTIVE DATE OF 2010 AMENDMENT 

Any person, including a trustee, issuer, and loan 

Amendment by section 1100A(2), (9) of Pub. L. 111-203 originator, shall not be liable for monetary dam­ effective on the designated transfer date, see section 1100H 

ages or be subject to an injunction, stay, or other of Pub. L. 111-203, set out as a note under section 552a of 

Title 5, Government Organization and Employees. equitable relief, based solely upon the cooperation 

Amendment by sections 1432 and 1433 of Pub. L. 111-203 of such person with a servicer when such cooperaeffective on the date on which final regulations imple­ tion is necessary for the servicer to implement a menting that amendment take effect, or on the date that qualified loss mitigation plan that meets the re­ is 18 months aUer the designated transfer date if such quirements of subsection (a). regulations have not been issued by that date, see sec- . 

tion 1400(c) of Pub. L. 111-203, set out as a note under (e) Reporting 

section 1601 of this title. Each servicer that engages in qualified loss m.itigation plans under this section shall regularly § 1639a. Duty of servicers of residential mort­ report to the Secretary of the Treasury the ex­ gages tent, scope, and results of the servicer's modifica­

(a) In general tion activities. The Secretary of the Treasury shall 

prescribe regulations or guidance specifying the Notwithstanding any other provision of law, when­ form, content, and timing of such reports. ever a servicer of residential mortgages agrees to 

enter into a qualified loss mitigation plan with (f) Definitions 

respect to 1 or more residential mortgages origi­ As used in this section- nated before May 20, 2009, including mortgages the held in a securitization or other investment (1) term "qualified loss mitigation plan" vehicle- means-- (1) to the extent that the servicer owes a duty (A) a residential loan modification, work­ to investors or other parties to maximize the out, or other loss mitigation plan, including net present value of such mortgages, the duty to the extent that the Secretary of the Treas­ shall be construed to apply to all such invesury determines appropriate, a loan sale, real tors and parties, and not to any individual par­ property disposition, trial modification, pre­ ty or group of parties; and foreclosure sale, and deed in lieu of foreclo­ (2) the servicer shall be deemed to have satissure, that is described or authorized in guide­ fied the duty set forth in paragraph (1) if, be­ lines issued by the Secretary of the Treasury fore December 31, 2012, the servicer implements or his designee under the Emergency Econom­ a qualified loss mitigation plan that meets the ic Stabilization Act of 2008 [12 U.S.C. 5201 et following criteria: seq.]; and (A) Default on the payment of such mort­ under gage has occurred, is imminent, or reason­ (B) a refinancing of a mortgage the is Hope for Homeowners program; ably foreseeable, as such terms are defined by 

guidelines issued by the Secretary of the Treas­ (2) the term "servicer" means the person re­ ury or his designee under the Emergency Eco­ sponsible for the servicing for others of residennomic Stabilization Act of 2008 [12 U.S.C. 5201 tial mortgage loans (including of a pool of resiet seq.). dential mortgage loans); and 

(B) The mortgagor occupies the property se­ (3) the term "securitization vehicle" means a curing the mortgage as his or her principal trust, special purpose entity, or other legal strucresidence. ture that is used to facilitate the issuing of se­ (C) The servicer reasonably determined, con­ curities, participation certificates, or similar insistent with the guidelines issued by the Sec­ struments backed by or referring to a pool of 

retary of the Treasury or his designee, that assets that includes residential mortgages (or 

the application of such qualified loss mitiga­ instruments that are related to residential morttion plan to a mortgage or class of mortgages gages such as credit-linked notes). 
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Page 57 TITLE 15-COMMERCE AND TRADE § 1689b 

(g) Rule of construction (b) Duty of care 

No provision of subsection (b) or (d) shall be (1) Standard 

construed as affecting the liability of any ser­ Subject to regulations prescribed under this vicer or person as described in subsection (d) for subsection, each mortgage originator shall, in actual fraud in the origination or servicing of a addition to the duties imposed by otherwise ap­ loan or in the implementation of a qualified loss plicable provisions of State or Federal law- mitigation plan, or for the violation of a State or (A) be qualified and, when required, regis­ Federal law, including laws regulating the origi­ tered and licensed as a mortgage originator nation of mortgage loans, commonly referred to in accordance with applicable State or Feder­ as predatory lending laws. al law, including the Secure and Fair Enforce­

(Pub. L. 90-321, title I, § 129A, as added Pub. L. ment for Mortgage Licensing Act of 2008 [12 

110-289, div. A, title IV, § 1403, July 30, 2008, 122 U.S.C. 5101 et seq.]; and 

Stat. 2809; renumbered § 129 and amended Pub. L. (B) include on all loan documents any unique 

111-22, div. A, title II, §20l(b), May 20, 2009, 123 identifier of the mortgage originator provided 

Stat. 1638; renumbered § 129A, Pub. L. 111-203, title by the Nationwide Mortgage Licensing SysXIV, § 1402(a)(l), July 21, 2010, 124 Stat. 2138.) tem and Registry. 

REFERENCES IN TEXT (2) Compliance procedures required 

The Emergency Economic Stabilization Act of 2008, re­ The Bureau shall prescribe regulations requirferred to in subsecs. (a)(2)(A), (c), (f)(l)(A), is div. A of ing depository institutions to establish and mainPub. L. 110--343, Oct. 3, 2008, 122 Stat. 3765, which is clas­ tain procedures reasonably designed to assure sified principally to chapter 52 (§ 5201 et seq.) of Title 12, and monitor the compliance of such depository Banks and Banking. For complete clas.sification of this institutions, the subsidiaries of such institutions, Act to the Code, see Short Title note set out under sec­ and the employees of such institutions or subtion 5201 of Title 12 and Tables. sidiaries with the requirements of this section 

AMENDMENTS and the registration procedures established un­ der section 1507 of the Secure and Fair Enforce­ 2009-Pub. L. 111-22 amended section generally. Prior ment for Mortgage Licensing Act of 2008 [12 U.S.C. to amendment, section related to fiduciary duty of servicers of pooled residential mortgages without providing 5106]. 

for date limitation for implementing modifications or work­ (c) Prohibition on steering incentives 

out plans. (1) In general 

FINDINGS For any residential mortgage loan, no mortPub. L. 111-22, div. A, title II, § 201(a), May 20, 2009, 123 gage originator shall receive from any person 

Stat. 1638, provided that: "Congress finds the following: and no person shall pay to a mortgage origina­ "(1) Increasing numbers of mortgage foreclosures are tor, directly or indirectly, compensation that 

not only depriving many Americalli! of their homes, varies based on the terms of the loan ( other but are also destabilizing property values and nega­ than the amount of the principal). tively affecting State and local economies as well as 

the national economy. (2) Restructuring of financing origination fee 

"(2) In order to reduce the number of foreclosures (A) In general and to stabilize property values, local economies, and 

the national economy, servicers must be given- For any mortgage loan, a mortgage origina­ "(A) authorization to--- tor may not receive from any person other 

"(i) modify mortgage loans and engage in other than the consumer and no person, other than loss mitigation activities consistent with applica­ the consumer, who knows or has reason to ble guidelines issued by the Secretary of the Treas­ know that a consumer has directly compen­ ury or his designee under the Emergency Economic 

Stabilization Act of 2008 [12 U.S.C. 5201 et seq.]; and sated or will directly compensate a mortgage 

"(ii) refinance mortgage loans under the Hope for originator may pay a mortgage originator any 

Homeowners program; and origination :fl;'le or charge except bona fide third 

"(B) a safe harbor to enable such servicers to exer­ party charges not retained by the creditor, 

cise these authorities." mortgage originator, or an affiliate of the creditor or mortgage originator. § 1689b. Residential mortgage loan origination (B) Exception (a) Finding and purpose Notwithstanding subparagraph (A), a mort­

(1) Finding gage originator may receive from a person 

The Congress finds that economic stabiliza­ other than the consumer an origination fee or 

tion would .be enhanced by the protection, lim­ charge, and a person other than the consumer 

itation, and regulation of the terms of residen­ may pay a mortgage originator an originatial mortgage credit and the practices related tion fee or charge, ifto such credit, while ensuring that responsible, (i) the mortgage originator does not reaffordable mortgage credit remains available to ceive any compensation directly from the 

consumers. consumer; and 

(ii) the consumer does not make an up­ (2) Purpose front payment of discount points, originaIt is the purpose of this section and section tion points, or fees, however denominated 

1639c·of this title to assure that consumers are (other than bona fide third party charges 

offered and receive residential mortgage loans not retained by the mortgage originator, credon terms that reasonably reflect their ability itor, or an .affiliate of the creditor or origito repay the loans and that are understandable nator), except that the Bureau may, by rule, 

and not unfair, deceptive or abusive. waive or provide exemptions to this clause 
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§ 1639b TITLE 15--COMMERCE AND TRADE Page 58 

if the Bureau determines that such waiver (d) Liability for violations 

or exemption is in the interest of consum­ (1) In general ers and in the public interest. For purposes of providing a cause of action 

(3) Regulations for any failure by a mortgage originator, other 

than a creditor, to comply with any require­ The Bureau shall prescribe regulations to 

ment imposed under this section and any regu­ prohibit--

CA) originators from steering any mortgage lation prescribed under this section, section 1640 

of this title shall be applied with respect to any consumer to a residential mortgage loan thatby substituting "mortgage origina­ (i) the consumer lacks a reasonable abil­ such failure 

ity to repay (in accordance with regulations tor" for "creditor" each place such term apprescribed under section 1639c(a) of this title); pears in each such subsection. 1 

or (2) Maximum. 

(ii) has predatory characteristics or ef­ The maximum amount of any liability of a fects (such as equity stripping, excessive fees, mortgage originator under paragraph (1) to a or abusive terms); consumer for any violation of this section shall 

(B) mortgage originators from steering any not exceed the greater of actual damages or an 

consumer from a residential mortgage loan amount equal to 3 times the total amount of difor which the consumer is qualified that is a rect and indirect compensation or gain accruqualified mortgage (as defined in section ing to the mortgage originator in connection 

1639c(b)(2) of this title) to a residential mort­ with the residential mortgage loan involved in 

gage loan that is not a qualified mortgage; the violation, plus the costs to the consumer of 

(C) abusive or unfair lending practices that the action, including a reasonable attorney's fee. 

promote disparities among consumers of equal (e) Discretionary regulatory authority credit worthiness but of different race, eth­ (1) In general nicity, gender, or age; and 

(D) mortgage originators from- The Bureau shall, by regulations, prohibit or 

(i) mischaracterizing the credit history of condition terms, acts or practices relating to 

a consumer or the residential mortgage loans residential mortgage loans that the Bureau finds 

available to a consumer; to be abusive, unfair, deceptive, predatory, nec­

(ii) mischaracterizing or suborning the mis­ essary or proper to ensure that responsible, afcharacterization of the appraised value of fordable mortgage credit remains available to 

the property securing the extension of cred­ consumers in a manner consistent with the purit; or poses of this section and section 1639c of this 

(iii) if unable to suggest, offer, or recom­ title, necessary or proper to effectuate the purmend to a consumer a loan that is not more poses of this section and section 1639c of this 

expensive than a loan for which the consum­ title, to prevent circumvention or evasion thereer qualifies, discouraging a consumer from of, or to facilitate compliance with such secseeking a residential mortgage loan secured tions, or are not in the interest of the borrower. 

by a consumer's principal dwelling from an­ (2) Application 

other mortgage originator. The regulations prescribed under paragraph 

(4) Rules of construction (1) shall be applicable to all residential mortgage loans and shall be applied in the same No provision of this subsection shall be con­ manner as regulations prescribed under section strued as- 1604 of this title. (A) permitting any yield spread premium or 

other similar compensation that would, for any (f) Timeshare plans 

residential mortgage loan, permit the total This section and any regulations promulgated 

amount of direct and indirect compensation thereunder do not apply to an extension of credit 

from all sources permitted to a mortgage origi­ relating to a plan described in section 101(53D) of 

nator to vary based on the terms of the loan title 11. 

(other than the amount of the principal); (Pub. L. 90-321, title I, § 129B, as added and amend­ (B) limiting or affecting the amount of com­ ed Pub. L. 111-203, title X, creditor sale § 1100A(2), title XIV, pensation received by a upon the 

§§ 1402(a)(2), 1403-1405(a), July 21, 2010, 124 Stat. of a consummated loan to a subsequent pur­ 2107, 2139--2141.) chaser; 

(C) restricting a consumer's ability to fi­ REFERENCES IN TEXT 

nance, at the option of the consumer, includ­ The Secure and Fair Enforcement for Mortgage Licens­ ing through principal or rate, any origination ing Act of 2008, referred to in subsec. (b)(l)(A), is title V fees or costs permitted under this subsection, of div. A of Pub. L. 110--289, July 30, 2008, 122 Stat. 2810, or the mortgage originator's right to receive also known as the S.A.F.E. Mortgage Licensing Act of 

such fees or costs (including compensation) 2008, which is classified generally to chapter 51 (§ 5101 et 

from any person, subject to paragraph (2)(B), seq.) of Title 12, Banks and Banking. For complete classo long as such fees or costs do not vary based sification of this Act to the Code, see Short Title note 

on the terms of the loan ( other than the amount set out under section 5101 of Title 12 and Tables. 

of the principal) or the consumer's decision about AMENDMENTS 

whether to finance such fees or costs; or 

prohibiting incentive payments to a mort­ 2010-Pub. L. 111-203, § 1100A(2), substituted "Bureau" (D) for "Board" wherever appearing. gage originator based on the number of residential mortgage loans originated within a 

specified period of time. 1 So in original. Probably should be "in such section." 
Page 59 TITLE 15---COMMERCE AND TRADE § 1639c 

Subsec. (c). Pub. L. 111-203, § 1403, added subsec. (c). ed income the consumer is reasonably assured 

Subsec. (d). Pub. L. 111-203, § 1404, added subsec. (d). of receiving, current obligations, debt-to-income 

Subsecs. (e), (f). Pub. L. 111-203, § 1405(a), added sub- ratio or the residual income the consumer will secs. (e) and (f). have after paying non-mortgage debt and mortEFFECTIVE DATE OF 2010 AMENDMENT gage-related obligations, employment status, and 

other financial resources other than the con­ Amendment by section 1100A(2) of Pub. L. 111-203 ef­ sumer's equity in the dwelling or real property fective on the designated transfer date, see section 1100H that secures repayment of the loan. A creditor of Pub. L. 111-203, set out as a note under section 552a of 

Title 5, Government Organization and Employees. shall determine the ability of the consumer to 

Amendment by sections 1403-1405(a) of Pub. L. 111-203 repay using a payment schedule that fully ameffective on the date on which final regulations imple­ ortizes the loan over the term of the loan. 

menting that amendment take effect, or on the date that (4) Income verification is 18 months after the designated transfer date if such 

regulations have not been issued by that date, see sec­ A creditor making a residential mortgage loan 

tion 1400(c) of Pub. L. 111-203, set out as a note under shall verify amounts of income or assets that 

section 1601 of this title. · such creditor relies on to determine repayment 

ability, including expected income or assets, by EFFECTIVE DATE reviewing the consumer's Internal Revenue ServSection effective on the date on which final regula­ ice Form W-2, tax returns, payroll receipts, fitions implementing such section take effect, or on the nancial institution records, or other third-party date that is 18 months after the designated transfer date if documents that provide reasonably reliable evi­ such regulations have not been issued by that date, see section 1400(c) of Pub. L. 111-203, set out as an Effective Date dence of the consumer's income or assets. In orof 2010 Amendment note under section 1601 of this title. der to safeguard against fraudulent reporting, 

any consideration of a consumer's income hisRULE OF CONSTRUCTION tory in making a determination under this subPub. L. 111-203, title XIV, § 1415, July 21, 2010, 124 Stat. section shall include the verification of such in2153, provided that: "Except as otherwise expressly pro­ come by the use ofvided in section 129B or 1290 of the Truth in Lending Act (A) Internal Revenue Service transcripts of 

[15 U.S.C. 1639b, 1639c] (as added by this title), no provi­ tax returns; or sion of such section 129B or 1290 shall be construed as (B) a method that quickly and effectively superseding, repealing, or affecting any duty, right, obli­ verifies income documentation by a third par­ gation, privilege, or remedy of any person under any 

other provision of the Truth in Lending Act [15 U.S.C. ty subject to rules prescribed by the Bureau. 

1601 et seq.] or any other provision of Federal or State (5) Exemption law." 

[For definition of "State" as used in section 1415 of With respect to loans made, guaranteed, or 

Pub. L. 111-203, set out above, see section 5301 of Title 12, insured by Federal departments or agencies idenBanks and Banking.] tified in subsection (b)(3)(B)(ii), such departments 

or agencies may exempt refinancings under a § 1639c. Minimum standards for residential mort­ streamlined refinancing from this income ver­ gage loans ification requirement as long as the following 

conditions are met: (a) Ability to repay (A) The consumer is not 30 days or more (1) In general past due on the prior existing residential mortIn accordance with regulations prescribed by gage loan. 

the Bureau, no creditor may make a residential (B) The refinancing does not increase the 

mortgage loan unless the creditor makes a rea­ principal balance outstanding on the prior exsonable and good faith determination based on isting residential mortgage loan, except to the 

verified and documented information that, at extent of fees and charges allowed by the dethe time the loan is consummated, the consum­ partment or agency making, guaranteeing, or 

er has a reasonable ability to repay the loan, insuring the refinancing. 

according to its terms, and all applicable taxes, (C) Total points and fees (as defined in secinsurance (including mortgage guarantee insur­ tion 1602(aa)(4) 1 of this title, other than bona 

ance), and assessments. fide third party charges not retained by the 

mortgage originator, creditor, or an affiliate (2) Multiple loans of the creditor or mortgage originator) pay­ If the creditor knows, or has reason to know, able in connection with the refinancing do not 

that 1 or more residential mortgage loans se­ exceed 3 percent of the total new loan amount. 

cured by the same dwelling will be made to the (D) The interest rate on the refinanced loan same consumer, the creditor shall make a rea­ is lower than the interest rate of the original sonable and good faith determination, based on loan, unless the borrower is refinancing from 

verified and documented information, that the an adjustable rate to a fixed-rate loan, under consumer has a reasonable ability to repay the guidelines that the department or agency shall 

combined payments of all loans on the same establish for loans they make, guarantee, or dwelling according to the terms of those loans issue. 

and all applicable taxes, insurance (including (E) The refinancing is subject to a payment 

mortgage guarantee insurance), and assessments. schedule that will fully amortize the refinanc­

(3) Basis for determination ing in accordance with the regulations prescribed by the department or agency making, A determination under this subsection of a guaranteeing, or insuring the refinancing. consumer's ability to repay a residential mortgage loan shall include consideration of the consumer's credit history, current income, expect- 1 See References in Text note below. 

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§ 1639c TITLE 15-COMMERCE AND TRADE Page 60 

(F) The terms of the refinancing do not re­ (E) Refinance of hybrid loans with current 

sult in a balloon payment, as defined in sub­ lender 

section (b)(2)(A)(ii). In considering any application for refinanc­

(G) Both the residential mortgage loan being ing an existing hybrid loan by the creditor 

refinanced and the refinancing satisfy all re­ into a standard loan to be made by the same quirements of the department or agency mak­ creditor in any case in which there would be 

ing, guaranteeing, or insuring the refinancing. a reduction in monthly payment and the mortgagor has not been delinquent on any pay­ (6) Nonstandard loans ment on the existing hybrid loan, the creditor 

(A} Variable rate loans that defer repayment mayof any principal or interest (i) consider the mortgagor's good standing on the existing mortgage; For purposes of determining, under this sub­ (ii) consider if the extension of new credit section, a consumer's ability to repay a vari­ would prevent a likely default should the able rate residential mortgage loan that al­ original mortgage reset and give such con­ lows or requires the consumer to defer the re­ cerns a higher priority as. an acceptable un­ payment of any principal or interest, the cred­ derwriting practice; and 

itor shall use a fully amortizing repayment (iii) offer rate discounts and other favorschedule. able terms to such mortgagor that would be 

(B) Interest-only loans available to new customers with high credit 

ratings based on such underwriting practice. For purposes of determining, under this subsection, a consumer's ability to repay a resi­ (7) Fully-indexed rate defined 

dential mortgage loan that permits or requires For purposes of this subsection, the term ''fulthe payment of interest only, the creditor shall ly indexed rate" means the index rate prevail­ use the payment amount required to amortize ing on a residential mortgage loan at the time 

the loan by its final maturity. the loan is made plus the margin that will ap­

(C) Calculation for negative amortization ply after the expiration of any introductory interest rates. In making any determination under this subsection, a creditor shall also take into consid­ (8) Reverse mortgages and bridge loans 

eration any balance increase that may accrue This subsection shall not apply with respect from any negative amortization provision. to any reverse mortgage or temporary or bridge 

(D) Calculation process loan with a term of 12 months or less, including 

to any loan to purchase a new dwelling where For purposes of making any determination the consumer plans to sell a different dwelling under this subsection, a creditor shall calcu­ within 12 months. late the monthly payment amount for principal and inter.est on any residential mortgage (9) Seasonal income 

loan by assuming- If documented income, including income from 

(i) the loan proceeds are fully disbursed a small business, is a repayment source for a on the date of the consummation of the loan; residential mortgage loan, a creditor may con­ (ii) the loan is to be repaid in substantial­ sider the seasonality and irregularity of such 

ly equal monthly amortizing payments for income in the underwriting of and scheduling of 

principal and interest over the entire term payments for such credit. 

of the loan with no balloon payment, unless 

(b) Presumption of ability to repay the loan contract requires more rapid repayment (including balloon payment), in which (1) In general 

case the calculation shall be made (I) in ac­ Any creditor with respect to any residential 

cordance with regulations prescribed by the mortgage loan, and any assignee of such loan 

Bureau, with respect to any loan which has subject to liability under this subchapter, may an annual percentage rate that does not presume that the loan has met the requirements exceed the average prime offer rate for a of subsection (a), if the loan is a qualified mortcomparable transaction, as of the date the gage. interest rate is set, by 1.5 or more percent­ (2) Definitions age points for a first lien residential mortgage loan; and by 3.5 or more percentage For purposes of this subsection, the following 

points for a subordinate lien residential mort­ definitions shall apply: 

gage loan; or (II) using the contract's re­ (A) Qualified mortgage payment schedule, with respect to a loan The term "qualified mortgage" means any which has an annual percentage rate, as of residential mortgage loan- the date the interest rate is set, that is at (i) for which the regular periodic payments least 1.5 percentage points above the aver­ for the loan may not-- age prime offer rate for a first lien residen­ (!) result in an increase of the principal tial mortgage loan; and 3.5 percentage points balance; or above the average prime offer rate for a (II) except as provided in subparagraph subordinate lien residential mortgage loan; (E), allow the consumer to defer repay­ and ment of principal; (iii) the interest rate over the entire term 

of the loan is a fixed rate equal to the fully (ii) except as provided in subparagraph (E), 

indexed rate at the time of the loan closing, the terms of which do not result in a balwithout considering the introductory rate. loon payment, where a "balloon payment" 
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Page 61 TITLE 15----COMMERCE AND TRADE § 1639c 

is a scheduled payment that is more than amounts described in the following subclaustwice as large as the average of earlier sched­ es, but not both: 

uled payments; (l) Up to and including 2 bona fide dis­

(iii) for which the income and financial count points payable by the consumer in 

resources relied upon to qualify the obligors connection with the mortgage, but only if 

on the loan are verified and documented; the interest rate from which the mort­

(iv) in the case of a fixed rate loan, for gage's interest rate will be discounted does 

which the underwriting process is based on not exceed by more than 1 percentage point 

a payment schedule that fully amortizes the the average prime offer rate. 

loan over the loan term and takes into ac­ (II) Unless 2 bona fide discount points 

count all applicable taxes, insurance, and have been excluded under subclause (I), up 

assessments; to and including 1 bona fide discount point 

(v) in the case of an adjustable rate loan, payable by the consumer in connection with 

for which the underwriting is based on the the mortgage, but only if the interest rate 

maximum rate permitted under the loan dur­ from which the mortgage's interest rate 

ing the first 5 years, and a payment sched­ will be discounted does not exceed by more 

ule that fully amortizes the loan over the than 2 percentage points the average prime 

loan term and takes into account all appli­ offer rate. 

cable taxes, insurance, and assessments; (iii) Bona fide discount points defined 

(vi) that complies with any guidelines or For purposes of clause (ii), the term "bona regulations established by the Bureau relatfide discount points'' means loan discount ing to ratios of total monthly debt to monthly income or alternative measures of ability points which are knowingly paid by the conto pay regular expenses after payment of sumer for the purpose of reducing, and which 

total monthly debt, taking into account the in fact result in a bona fide reduction of, 

income levels of the borrower and such other the interest rate or time-price differential 

factors as the Bureau may determine rele­ applicable to the mortgage. 

vant and consistent with the purposes de­ (iv) Interest rate reduction scribed in paragraph (3)(B)(i); Subclauses (I) and (II) of clause (ii) shall (vii) for which the total points and fees 

(as defined in subparagraph (C)) payable in not apply to discount points used to purconnection with the loan do not exceed 3 chase an interest rate reduction unless the 

percent of the total loan amount; amount of the interest rate reduction pur­

(viii) for which the term of the loan does chased is reasonably consistent with established industry norms and practices for sec­ not exceed 30 years, except as such term 

may be extended under paragraph (3), such ondary mortgage market transactions. 

as in high-cost areas; and (D) Smaller loans 

(ix) in the case of a reverse mortgage (ex­ The Bureau shall prescribe rules adjusting cept for the purposes of subsection (a) of the criteria under subparagraph (A)(vii) in or­ this section, to the extent that such mort­ der to permit lenders that extend smaller loans 

gages are exempt altogether from those re­ to meet the requirements of the presumption quirements), a reverse mortgage which meets of compliance under paragraph (1). In prescrib­ the standards for a qualified mortgage, as ing such rules, the Bureau shall consider the 

set by the Bureau in rules that are consist­ potential impact of such rules on rural areas ent with the purposes of this subsection. and other areas where home values are lower. 

(B} Average pri.Jne offer rate (E) Balloon loans 

The term "average prime offer rate" means The Bureau may, by regulation, provide that the average prime offer rate for a comparable the term "qualified mortgage" includes a bal­ transaction as of the date on which the in­ loon loanterest rate for the transaction is set, as published by the Bureau .. 2 (i) that meets all of the criteria for a qualified mortgage under subparagraph (A) (ex­

(C) Points and fees cept clauses (i)(II), (ii), (iv), and (v) of such 

(i) subparagraph); In general (ii) for which the creditor makes a deter­ For purposes of subparagraph (A), the term mination that the consumer is able to make "points and fees" means points and fees as scheduled by section 1602(aa)(4) 3 all payments, except the balloon defined of this title payment, out of income or assets other than (other than bona fide third party charges the collateral; not retained by the mortgage originator, cred­ (iii) for which the underwriting is based itor, or an affiliate of the creditor or mort­ on a payment schedule that fully amortizes 

gage originator). the loan over a period of not more than 30 

(ii) Computation years and takes into account all applicable 

For purposes of computing the total points taxes, insurance, and assessments; and 

and fees under this subparagraph, the total (iv) that is extended by a creditor thatpoints and fees shall exclude either of the (!) operates in rural or underserved areas; 

(II) together with all affiliates, has total annual residential mortgage loan origi­ 2 So in original. nations that do not exceed a limit set by 3 See References in Text note below. the Bureau; 
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§ 1639c TITLE 15-COMMERCE AND TRADE Page 62 

(III) retains the balloon loans in port­ (III) pursuant to a merger .of a covered 

folio; and institution with another person or the ac­ (IV) meets any asset size threshold and quisition of a covered institution by an­ any other criteria as the Bureau may es­ other person or of another person by a tablish, consistent with the purposes of covered institution, so long as the loan is 

this part. retained in portfolio by the person to whom 

(F) Safe harbor the loan is sold, assigned, or otherwise 

transferred; or (i) Definitions (IV) to a wholly owned subsidiary of a In this subparagraph- covered institution, provided that, after 

(!) the term "covered institution" means the sale, assignment, or transfer, the resi­ an insured depository institution or an in­ dential mortgage loan is considered to be 

sured credit union that, together with its an asset of the covered institution for reg­ affiliates, has less than $10,000,000,000 in ulatory accounting purposes. total consolidated assets; (iv) Consideration and documentation re­ (II) the term "insured credit union" has quirements the meaning given the term in section 1752 

of title 12; The consideration and documentation re­

(III) the term "insured depository insti­ quirements described in clause (ii)(I)(ee) 

tution" has the meaning given the term shallin section 1813 of title 12; (!) not be construed to require compli­

(IV) the term "interest-only" means that, ance with, or documentation in accordance 

under the terms of the legal obligation, with, appendix Q to part 1026 of title 12, 

one or more of the periodic payments may Code of Federal Regulations, or any sucbe applied solely to accrued interest and cessor regulation; and 

not to loan principal; and (II) be construed to permit multiple meth­

(V) the term "negative amortization" ods of documentation. 

means payment of periodic payments that (3) Regulations will result in an increase in the principal 

balance under the terms of the legal obli­ (A) In general 

gation. The Bureau shall prescribe regulations to 

(ii) Safe harbor carry out the purposes of this subsection. 

In this section- (B) Revision of safe harbor criteria 

(!) the term ''qualified mortgage'' includes (i) In general any residential mortgage loan-

(aa) that is originated and retained in The Bureau may prescribe regulations that 

portfolio by a covered institution; revise, add to, or subtract from the criteria 

(bb) that is in compliance with the that define a qualified mortgage upon a findlimitations with respect to prepayment ing that such regulations are necessary or 

penalties described in subsections (c)(l) proper to ensure that responsible, affordable 

and (c)(3); mortgage credit remains available to con­ (cc) that is in compliance with the re­ sumers in a manner consistent with the purquirements of clause (vii) of subpara­ poses of this section, necessary and appro­ graph (A); priate to effectuate the purposes of this sec­ (dd) that does not have negative amor­ tion and section 1639b of this title, to pre­ tization or interest-only features; and vent circumvention or evasion thereof, or to 

(ee) for which the covered institution facilitate compliance with such sections. considers and documents the debt, inLoan definition come, and financial resources of the con­ (ii) 

sumer in accordance with clause (iv); and The following agencies shall, in consultation with the Bureau, prescribe rules defin­ (II) a residential mortgage loan described ing the types of loans they insure, guaran­ in subclause (I) shall be deemed to meet 

tee, or administer, as the case may be, that the requirements of subsection (a). are qualified mortgages for purposes of para­ (iii) Exception for certain transfers graph (2)(A), and such rules may revise, add 

A residential mortgage loan described in to, or subtract from the criteria used to declause (ii)(!) shall not qualify for the safe fine a qualified mortgage under paragraph 

harbor under clause (ii) if the legal title to (2)(A), upon a finding that such rules are 

the residential mortgage loan is sold, as­ consistent with the purposes of this section 

signed, or otherwise transferred to another and section 1639b of this title, to prevent 

person unless the residential mortgage loan circumvention or evasion thereof, or to fais sold, assigned, or otherwise transferred- cilitate compliance with such sections: 

(!) to another person by reason of the (I) The Department of Housing and Urbankruptcy or failure of a covered insti­ ban Development, with regard to mortgages 

tution; insured under the National Housing Act 

(II) to a covered institution so long as [12 U.S.C. 1701 et seq.]. 

the loan is retained in portfolio by the (II) The Department of Veterans Affairs, 

covered institution to which the loan is with regard to a loan made or guaranteed 

sold, assigned, or otherwise transferred; by the Secretary of Veterans Affairs. 
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Page 63 TITLE 15--COMMERCE AND TRADE § 1639c 

(III) The Department of Agriculture, with gage loan having a original principal obliregard 4 loans guaranteed by the Secre­ gation amount that is more than the amount 

tary of Agriculture pursuant to section of the maximum limitation on the origi1472(h) of title 42. nal principal obligation of mortgage in ef­

(TV) The Rural Housing Service, with re­ fect for a residence of the applicable size, 

gard to loans insured by the Rural Hous­ as of the date of such interest rate set, 

ing Service. pursuant to the 6th sentence of section 

1454(a)(2) of title 12; and (C) Consideration of underwriting require­ (III) by 3.5 or more percentage points, in ments for Property Assessed Clean Ener­ the case of a subordinate lien residential gy financing mortgage loan. 

(i) Definition (2) Publication of average prime offer rate and 

In this subparagraph, the term "Property APR thresholds Assessed Clean Energy financing" means fiThe Bureau- nancing to cover the costs of home improve­ (A) shall publish, and update at least week­ ments that results in a tax assessment on ly, average prime offer rates; the real property of the consumer. (B) may publish multiple rates based on vary­ (ii) Regulations ing types of mortgage transactions; and 

The Bureau shall prescribe regulations that (C) shall adjust the thresholds established 

carry out the purposes of subsection (a) and under subclause (I), (II), and (III) of paragraph 

apply section 1640 of this title with respect (l)(B)(ii) as necessary to reflect significant 

to violations under subsection (a) of this changes in market conditions and to effectusection with respect to Property Assessed ate the purposes of the Mortgage Reform and 

Clean Energy financing, which shall account Anti-Predatory Lending Act. 

for the unique nature of Property Assessed (3) Phased-out penalties on qualified mortgages Clean Energy financing. A qualified mortgage (as defined in subsec­

(iii) Collection of information and consul­ tion (b)(2)) may not contain terms under which tation a consumer must pay a prepayment penalty for 

In prescribing the regulations under this paying all or part of the principal after the 

subparagraph, the Bureau- loan is consummated in excess of the following 

(!) may collect such information and data limitations: 

that the Bureau determines is necessary; (A) During the 1-year period beginning on and the date the loan is consummated, the pre­

(II) shall consult with State and local payment penalty shall not exceed an amount 

governments and bond-issuing authorities. equal to 3 percent of the outstanding balance 

on the loan. (c) Prohibition on certain prepayment penalties (B) During the 1-year period beginning af­

(1) Prohibited on certain loans ter the period described in subparagraph (A), 

(A) In general the prepayment penalty shall not exceed an 

amount equal to 2 percent of the outstanding A residential mortgage loan that is not a balance on the loan. "qualified mortgage", as defined under sub­ (C) During the 1-year period beginning af­ section (b)(2), may not contain terms under 

ter the 1-year period described in subparagraph which a consumer must pay a prepayment pen­ (B), the prepayment penalty shall not exceed alty for paying all or part of the principal af­ an amount equal to 1 percent of the outstand­ ter the loan is consummated. ing balance on the loan. 

(B) Exclusions (D) After the end of the 3-year period beginFor purposes of this subsection, a "quali­ ning on the date the loan is consummated, no fied mortgage'• may not include a residential prepayment penalty may be imposed on a qualimortgage loan that- fied mortgage. · (i) has an adjustable rate; or (4) Option for no prepayment penalty required (ii) has an annual percentage rate that 

rate for a A creditor may not offer a consumer a resi­ exceeds the average prime offer 

date the dential mortgage loan product that has a pre­ comparable transaction, as of the 

payment penalty for paying all or part of the interest rate is set- as a (I) by 1.5 or more percentage points, in principal after the loan is consummated 

of a first lien residential mort­ of the loan without offering the consumer the case term 

gage loan having a original principal obli­ a residential mortgage loan product that does 

than not have a prepayment penalty as a term of the gation amount that is equal to or less 

the amount of the maximum limitation loan. 

on the original principal obligation of mort­ (d) Single premium credit insurance prohibited 

gage in effect for a residence of the ap­ No creditor may finance, directly or indirectly, plicable size, as of the date of such inter­ in connection with any residential mortgage loan est rate set, pursuant to the 6th sentence or with any extension of credit under an open end of section 1454(a)(2) of title 12; consumer credit plan secured by the principal dwell­ (II) by 2.5 or more percentage points, in ing of the consumer, any credit life, credit dis­ the case of a first lien residential mort- ability, credit unemployment, or credit property 

insurance, or any other accident, loss-of-income, 4 So in original, Probably should be followed by "to". life, or health insurance, or any payments direct-
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§ 1639c TITLE 15-COMMERCE AND TRADE Page 64 

ly or indirectly for any debt cancellation or sus­ (D) negative amortization reduces the con­ pension agreement or contract, except that- sumer's equity in the dwelling or real prop­

(1) insurance premiums or debt cancellation erty; and or suspension fees calculated and paid in full on (2) in the case of a first-time borrower with a monthly basis shall not be considered financed respect to a residential mortgage loan that is by the creditor; and not a qualified mortgage, the first-time borrow­ (2) this subsection shall not apply to credit er provides the creditor with sufficient documen­ unemployment insurance for which the unem­ tation to demonstrate that the consumer re­ ployment insurance premiums are reasonable, ceived homeownership counseling from organi­ the creditor receives no direct or indirect com­ zations or counselors certified by the Secretary pensation in connection with the unemployment of Housing and Urban Development as compe­ insurance premiums, and the unemployment in­ tent to provide such counseling. surance premiums are paid pursuant to another 

insurance contract and not paid to an affiliate (g) Protection against loss of anti-deficiency proof the creditor. tection 

(e) Arbitration (1) Definition 

(1) In general For purposes of this subsection, the term "antiNo deficiency the law of any residential mortgage loan and no exten­ law" means State which 

under an open end consumer cred­ provides that, in the event of foreclosure on the sion of credit 

dwelling of the residential property of a consumer securing a it plan secured by the principal 

may accord­ include terms which require ar­ mortgage, the consumer is not liable, in consumer 

bitration or any other nonjudicial procedure as ance with the terms and limitations of such 

controversy or set­ State law, for any deficiency between the sale the method for resolving any 

arising out of the transaction. price obtained on such property through fore­ tling any claims 

closure and the outstanding balance of the mort­ (2) Post-controversy agreements gage. 

Subject to paragraph (3), paragraph (1) shall (2) Notice at time of consummation not be construed as limiting the right of the 

consumer and the creditor or any assignee to In the case of any residential mortgage loan 

agree to arbitration or any other nonjudicial that is, or upon consummation will be, subject 

procedure as the method for resolving any con­ to protection under an anti-deficiency law, the 

troversy at any time after a dispute or claim creditor or mortgage originator shall provide a under the transaction arises. written notice to the consumer describing the 

protection provided by the anti-deficiency law (3) No waiver of statutory cause of action and the significance for the consumer of the 

No provision of any residential mortgage loan loss of such protection before such loan is con­ or of any extension of credit under an open end summated. 

consumer credit plan secured by the principal (3) Notice before refinancing that would cause dwelling of the consumer, and no other agree­ loss of protection ment between the consumer and the creditor 

relating to the residential mortgage loan or ex­ In the case of any residential mortgage loan 

tension of credit referred to in paragraph (1), that is subject to protection under an anti-defishall be applied or interpreted so as to bar a ciency law, if a creditor or mortgage originator 

consumer from bringing an action in an appro­ provides an application to a consumer, or re­ priate district court of the United States, or ceives an application from a consumer, for any 

competent jurisdiction, pur­ type of refinancing for such loan that would any other court of 

suant to section 1640 of this title or any other cause the loan to lose the protection of such 

provision of law, for damages or other relief in anti-deficiency law, the creditor or mortgage origiconnection with any alleged violation of this nator shall provide a written notice to the con­ section, any other provision of this subchapter, sumer describing the protection provided by the or any other Federal law. anti-deficiency law and the significance for the 

consumer of the loss of such protection before 

(f) Mortgages with negative amortization any agreement for any such refinancing is con­ No creditor may extend credit to a borrower in summated. 

connection with a consumer credit transaction un­ pay• der an open or closed end consumer credit plan (b) Policy regarding acceptance of partial 

secured by a dwelling or residential real property ment 

that includes a dwelling, other than a reverse mort­ In the case of any residential mortgage loan, a gage, that provides or permits a payment plan creditor shall disclose prior to settlement or, in 

that may, at any time over the term of the exten­ the case of a person becoming a creditor with re­ sion of credit, result in negative amortization un­ spect to an existing residential mortgage loan, at 

less, before such transaction is consummated- the time such person becomes a creditor-

(1) the creditor provides the consumer with a (!) the creditor's policy regarding the acceptstatement that- ance of partial payments; and 

(A) the pending transaction will or may, as (2) if partial payments are accepted, how such 

the case may be, result in negative amortiza­ payments will be applied to such mortgage and 

tion; if such payments will be placed in escrow. 

(B) describes negative amortization in such 

manner Timeshare plans as the Bureau shall prescribe; (i) 

(C) negative amortization increases the out­ This section and any regulations promulgated 

standing principal balance of the account; and under this section do not apply to an extension of 
Page 65 TITLE 15--COMMERCE AND TRADE § 1639d 

credit relating to a plan described in section 101(53D) tory institution to apply mortgage underwriting standof title 11. ards that do not meet the minimum underwriting standards required by the appropriate prudential regulator of (Pub. L. 90-321, title I, § 129C, as added and amend­ the depository institution." ed Pub. L. 111-203, title X, § 1100A(2), title XIV, 

§§ 1411(a)(2), 1412, 1414(a), (c), (d), July 21, 2010, 124 [For definitions of "Bureau" and "depository instituStat. 2107, 2142, 2145, 2149, 2152; Pub. L. 114-94, div. tion" as used in section 14ll(a)(l) of Pub. L. 111-203, set 

G, title LXXXIX, § 89003(1), Dec. 4, 2015, 129 Stat. out above, see section 5301 of Title 12, Banks and Bank1800; Pub. L. 115-174, title I, §101, title III, §307, ing.) 

May 24, 2018, 132 Stat. 1297, 1347.) 

§ 1639d. Escrow or impound accounts relating to 

REFERENCES lN TEXT certain consumer credit transactions 

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) (a) In general 

of this title by Pub. L. 111-203, title X, § llOOA(l)(A), July Except as provided in subsection (b), (c), (d), or 21, 2010, 124 Stat. 2107. (e), a creditor, in connection with the consumma­ This referred to in subsec. (b)(2)(E)(iv)(IV), was 

in the un,n,,uu "this subtitle", and was translated as tion of a consumer credit transaction secured by 

reading chapter", meaning chapter 2 of title I of a first lien on the principal dwelling of the con­ Pub. L. 90-321, to reflect the probable intent of Congress. sumer, other than a consumer credit transaction 

Title I of Pub. L. 90-321 does not contain subtitles. under an open end credit plan or a reverse mort­ The National Housing Act, referred to in subsec. (b)(3)(B) gage, shall establish, before the consummation of (ii)(I), is act June 'l:l, 1934, ch. 847, 48 Stat. 1246, which is 

classified principally to chapter 13 (§ 1701 et seq.) of Title such transaction, an escrow or impound account 

12, Banks and Banking. For complete classification of for the payment of taxes and hazard insurance, 

this Act to the Code, see section 1701 of Title 12 and and, if applicable, flood insurance, mortgage inTables. surance, ground rents, and any other required peri­ The Mortgage Reform and Anti-Predatory Lending Act, odic payments or premiums with respect to the referred to in subsec. (c)(2)(C), is title XlV of Pub. L. property or the loan terms, as provided in, and in 111-203, July 21, 2010, 124 Stat. 2136. For complete classification of this Act to the Code, see Short Title of 2010 accordance with, this section. 

Amendment note set out under section 1601 of this title 

and Tables. (b) When required 

No impound, trust, or other type of account for AMENDMENTS 

the payment of property taxes, insurance premi­ 2018-Subsec. (b)(2)(F). Pub. L. 115-174, § 101, added subums, or other purposes relating to the property par. (F). 

Subsec. (b)(3)(C). Pub. L. 115-174, §307, added subpar. may be required as a condition of a real property 

(C). sale contract or a loan secured by a first deed of 

201&-Subsec. (b)(2)(E)(iv)(I). Pub. L. 114-94 struck out trust or mortgage on the principal dwelling of 

"predominantly" after "operates". the consumer, other than a consumer credit trans2010-Pub. L. 111-203, § 1100A(2), substituted "Bureau" action under an open end credit plan or a reverse for "Board" wherever appearing. mortgage, except when- Subsec. (b). Pub. L. 111-203, § 1412, added subsec. (b). 

Subsecs. (c) to (f). Pub. L. 111-203, § 1414(a), added sub­ (1) any such impound, trust, or other type of 

secs. ( c) to (f). escrow or impound account for such purposes is 

Subsec. (g). Pub. L. 111-203, § 1414(c), added subsec. (g). required by Federal or State law; Subsecs. (h), (i). Pub. L. 111-203, § 1414(d), added sub­ (2) a loan is made, guaranteed, or insured by secs. (h) and (i). a State or Federal governmental lending or inEFFECTlVE DATE OF 2010 AMENDMENT suring agency; 

(3) the transaction is secured by a first mort­ Amendment by section 1100A(2) of Pub. L. 111-203 effective on the designated transfer date, see section 1100H gage or lien on the consumer's principal dwellof Pub. L. 111-203, set out as a note under section 552a of ing having an original principal obligation amount 

Title 5, Government Organization and Employees. thatAmendment by sections 1412 and 1414(a), (c), (d) of Pub. (A) does not exceed the amount of the max­ L. 111-203 effective on the date on which final regula­ imum limitation on the original principal ob­ tions implementing that amendment take effect, or on ligation of mortgage in effect for a residence the date that is 18 months after the designated transfer 

date, if such regulations have not been issued by that of the applicable size, as of the date such indate, see section 1400(c) of Pub. L. 111-203, set out as a terest rate set, pursuant to the sixth sentence 

note under section 1601 of this title. of section 1454(a)(2) of title 12, and the annual 

percentage rate will exceed the average prime EFFECTlVE DATE offer rate as defined in section 1639c of this 

Section effective on the date on which final regula­ title by 1.5 or more percentage points; or tions implementing such section take effect, or on the (B) exceeds the amount of the maximum date that is 18 months after the designated transfer date limitation on the original principal obligation if such regulations have not been issued by that date, see 

section 1400(c) of Pub. L. 111-203, set out as an Effective of mortgage in effect for a residence of the 

Date of 2010 Amendment note under section 1601 of this applicable size, as of the date such interest 

title. rate set, pursuant to the sixth sentence of 

section 1454(a)(2) of title 12, and the annual 

RULE OF CONSTRUCTION percentage rate will exceed the average prime 

Pub. L. 111-203, title XIV; § 1411(a)(l), July 21, 2010, 124 offer rate as defined in section 1639c of this 

Stat. 2142, provided that: "No regulation, order, or guid­ title by 2.5 or more percentage points; or ance issued by the Bureau under this title [see Tables for 

classification] shall be construed as requiring a deposi- ( 4) so required pursuant to regulation. 

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§ 1689d TITLE 15--COMMERCE AND TRADE Page 66 

(c) Exemptions the payment of property taxes, insurance premi­

(1) In general ums, or other purposes relating to the property­

(1) on terms mutually agreeable to the par­ The Bureau may, by regulation, exempt from ties to the loan; the requirements of subsection (a) a creditor (2) at the discretion of the lender or servicer that- as provided by the contract between the lende; (A) operates in rural or underserved areas; or servicer and the borrower; or (B) together with all affiliates, has total (3) pursuant to the requirements for the es­ annual mortgage loan originations that do not crowing of flood insurance payments for regu­ exceed a limit set by the Bureau; lated lending institutions in section 102(d) of (C) retains its mortgage loan originations the Flood Disaster Protection Act of 1973 [42 in portfolio; and U.S.C. 4012a(d)). (D) meets any asset size threshold and any 

other criteria the Bureau may establish, con­ (g) Administration of mandatory escrow or imsistent with the purposes of this part. pound accounts 

(2) Treatment of loans held by smaller institu­ (1) In general 

tions Except as may otherwise be provided for in 

The Bureau shall, by regulation, exempt from this subchapter or in regulations prescribed by 

the requirements of subsection (a) any loan made the Bureau, escrow or impound accounts estabby an insured depository institution or an in­ lished pursuant to subsection (b) shall be es­ sured credit union secured by a first lien on the tablished in a federally insured depository inprincipal dwelling of a consumer if- stitution or credit union. 

(A) the insured depository institution or in­ (2) Administration sured credit union has assets of $10,000,000,000 Except as provided in this section or regula­ or less; 

(B) during the preceding calendar year, the tions prescribed under this section, an escrow 

institution or insured cred­ or impound account subject to this section shall insured depository be administered in accordance with- it union and its affiliates originated 1,000 or prin­ (A) the Real Estate Settlement Procedures fewer loans secured by a first lien on a Act of 1974 [12 U.S.C. 2601 et seq.] and regula­ cipal dwelling; and tions prescribed under such Act; (C) the transaction satisfies the criteria in 

(B) Act of 1973 sections 1026.35(b)(2)(iii)(D), the Flood Disaster Protection 1026.35(b)(2)(iii)(A), and regulations prescribed under such Act; and and 1026.35(b)(2)(v) of title 12, Code of Federal 

(C) the law of the State, if applicable, where Regulations, or any successor regulation. the real property securing the consumer cred­

(d) Duration of mandatory escrow or impound it transaction is located. 

account (3) Applicability of payment of interest An escrow or impound account established pur­ or Federal suant to subsection (b) shall remain in existence If prescribed by applicable State 

law, each creditor shall pay interest to the con~ for a minimum period of 5 years, beginning with 

loan, unless sumer on the amount held in any impound, trust, the date of the consummation of the or escrow account that is subject to this sec­ and until- tion in the manner as prescribed by that appli­ (1) such borrower has sufficient equity in the 

cable State or Federal law. dwelling securing the consumer credit transaction so as to no longer be required to maintain (4) Penalty coordination with RESPA 

private mortgage insurance; Any action or omission on the part of any (2) such borrower is delinquent; person which constitutes a violation of the Real (3) such borrower otherwise has not complied Estate Settlement Procedures Act of 1974 or any with the legal obligation, as established by rule; regulation prescribed under such Act for which or the person has paid any fine, civil money pen­ (4) the underlying mortgage establishing the alty, or other damages shall not give rise to 

account is terminated. any additional fine, civil money penalty, or other 

(e) Limited exemptions for loans secured by damages under this se_ction, unless the action 

shares in a cooperative or in which an asso­ or omission also constitutes a direct violation 

ciation must maintain a master insurance of this section. 

policy (h) Disclosures relating to mandatory escrow or Escrow accounts need not be established for loans impound account secured by shares in a cooperative. Insurance pre­ In the case of any impound, trust, or escrow ac­ miums need not be included in escrow accounts 

count that is required under subsection (b), the for loans secured by dwellings or units, where the creditor shall disclose by written notice to the borrower must join an association as a condition consumer at least 3 business days before the con­ of ownership, and that association has an obliga­ summation of the consumer credit transaction tion to the dwelling or unit owners to maintain a giving rise to such account or in accordance with master policy insuring the dwellings or units. timeframes established in prescribed regulations 

(f) Clarification on escrow accounts for loans not the following information: 

meeting statutory test (1) The fact that an escrow or impound acFor mortgages not covered by the requirements count will be established at consummation of 

of subsection (b), no provision of this section shall the transaction. 

be construed as precluding the establishment of (2) The amount required at closing to initialan impound, trust, or other type of account for l_y fund the escrow or impound account. 
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Page 67 TITLE 15-COMMERCE AND TRADE § 1639d 

(3) The amount, in the initial year after the regulation, or contractual agreement, to close 

consummation of the transaction, of the esti­ such account, 

mated taxes and hazard insurance, including flood the creditor or servicer shall provide a timely insurance, if applicable, and any other required and clearly written disclosure to the consumer periodic payments or premiums that reflects, that advises the consumer of the responsibil­ as appropriate, either the taxable assessed val­ ities of the consumer and implications for the ue of the real property securing the transac­ consumer in the absence of any such account. tion, including the value of any improvements 

on the property or to be constructed on the (2) Disclosure requirements 

property (whether or not such construction will Any disclosure provided to a consumer under be financed from the proceeds of the transac­ paragraph (1) shall include the following: tion) or the replacement costs of the property. (A) Information concerning any applicable (4) The estimated monthly amount payable to fees or costs associated with either the non­ be escrowed for taxes, hazard insurance (includ­ establishment of any such account at the time ing flood insurance, if applicable) and any other of the transaction, or any subsequent closure required periodic payments or premiums. of any such account. (5) The fact that, if the consumer chooses to (B) A clear and prominent statement that terminate the account in the future, the con­ the consumer is responsible for personally and sumer will become responsible for the payment directly paying the non-escrowed items, in ad­ of all taxes, hazard insurance, and flood insur­ dition to paying the mortgage loan payment, ance, if applicable, as well as any other required in the absence of any such account, and the periodic payments or premiums on the property fact that the costs for taxes, insurance, and unless a new escrow or impound account is es­ related fees can be substantial. tablished. (C) A clear explanation of the consequences (6) Such other information as the Bureau de­ of any failure to pay non-escrowed items, in­ termines necessary for the protection of the con­ cluding the possible requirement for the forced sumer. placement of insurance by the creditor or servicer and the potentially higher cost (includ­ (i) Definitions ing any potential commission payments to the For purposes of this section, the following defi­ servicer) or reduced coverage for the consum­ nitions shall apply: er in the event of any such creditor-placed in­

(1) Flood insurance surance. 

(D) Such other information as the Bureau The term "flood insurance" means flood in­ determines necessary for the protection of the surance coverage provided under the national consumer. flood insurance program pursuant to the National Flood Insurance Act of 1968 [42 U.S.C. (Pub. L. 90--321, title I, § 129D, as added and amend4001 et seq.]. ed Pub. L. 111-203, title X, § 1100A(2), title XIV, 

§§ 1461(a), 1462, July 21, 2010, 124 Stat. 2107, 2178, (2) Hazard insurance 2181; Pub. L. 114-94, div. G, title LXXXIX, § 89003(2), 

The term "hazard insurance" shall have the Dec. 4, 2015, 129 Stat. 1801; Pub. L. 115-174, title I, same meaning as provided for "hazard insur­ § 108, May 24, 2018, 132 Stat. 1304.) 

ance", "casualty insurance", "homeowner's insurance", or other similar term under the law REFERENCES IN TEXT 

of the State where the real property securing This part, referred to in subsec. (c)(l)(D), was in the 

the consumer credit transaction is located. original "this subtitle", and was translated as reading 

"this chapter", meaning chapter 2 of title I of Pub. L. 

(3) Insured credit union 90--321, to reflect the probable intent of Congress. Title I 

The term "insured credit union" has the mean­ of Pub. L. 90-321 does not contain subtitles. 

ing given the term in section 1752 of title 12. The Real Estate Settlement Procedures Act of 1974, referred to in subsec. (g)(2)(A), (4), is Pub. L. 93-533, Dec. 

(4) Insured depository institution 22, 1974, 88 Stat. 1724, which is classified principally to 

chapter 27 (§ 2601 et seq.) of Title 12, Banks and Banking. The term "insured depository institution" has For complete classification of this Act to the Code, see the meaning given the term in section 1813 of Short Title note set out under section 2601 of Title 12 and 

title 12. Tables. 

The Flood Disaster Protection Act of 1973, referred to 

(j) Disclosure notice required for consumers who in subsec. (g)(2)(B), is Pub. L. 93-234, Dec. 31, 1973, 87 

waive escrow services Stat. 975. For complete classification of this Act to the 

Code, see Short Title of 1973 Amendment note set out un­ (1) In general der section 4001 of Title 42, The Public Health and WelIf- far:e, and Tables. 

(A) an impound, trust, or other type of ac­ The National Flood Insurance Act of 1968, referred to 

count for the payment of property taxes, in­ in subsec. (i)(l), is title XIII of Pub. L. 90-448, Aug. 1, 

1968, 82 Stat. 572, which is classified principally to chap­ surance premiums, or other purposes relating ter 50 (§ 4001 et seq.) of Title 42, The Public Health and 

to real property securing a consumer credit Welfare. For complete classification of this Act to the 

transaction is not established in connection Code, see Short Title note set out under section 4001 of 

with the transaction; or Title 42 and Tables. 

(B) a consumer chooses, and provides written notice to the creditor or servicer of such AMENDMENTS 

choice, at any time after such an account is 2018---Subsec. (c). Pub. L. 115-174, § 108(1)(A), (B), (D), 

established in connection with any such trans­ designated existing provisions as par. (1) and inserted 

action and in accordance with any statute, heading, redesignated former pars. (1) to (4) as subpars. 
§ 1639e TITLE 15-COMMERCE AND TRADE Page 68 

(A) to (D), respectively, of par. (1) and realigned mar­ factor other than the independent judgment of 

gins, and added par. (2). the appraiser; Subsec. (c)(l). Pub. L. 115--174, §108(1)(B), (C), which di­ (2) mischaracterizing, or suborning any mis­ rected substitution of "The Bureau" for "The Board" in characterization of, the appraised value of the introductory provisions, and "the Bureau" for "the Board" property securing the extension of the credit; wherever appearing, duplicated the amendment made by 

Pub. L. 111-203, §1100A(2), which had already been exe­ (3) seeking to influence an appraiser or othercuted. See 2010 Amendment note below. wise to encourage a targeted value in order to 

Subsec. (1)(3), (4). Pub. L. 115--174, § 108(2), added pars. facilitate the making or pricing of the trans­

(3) and (4). action; and 

2015-Subsec. (c)(l). Pub. L. 114--94 struck out "predomi­ ( 4) withholding or threatening to withhold timenantly" after "operates". ly payment for an appraisal report or for ap­ 2010-Pub. L. 111-203, § 1100A(2), which directed substi­ praisal services rendered when the appraisal re­ tution of "Bureau" for "Board" wherever appearing in port or services are provided for in accordance Pub. L. 90-321, was executed to this section, which was 

added to Pub. L. 90-321 by section 1461(a) of Pub. L. with the contract between the parties. 

111-203. 

Subsec. (j). Pub. L. 111-203, §1462, added subsec. (j). (c) Exceptions 

The requirements of subsection (b) shall not be EFFECTIVE DATE OF 2010 AMENDMENT construed as prohibiting a mortgage lender, mortAmendment by section 1100A(2) of Pub. L. 111-203 ef­ gage broker, mortgage banker, real estate broker, 

fective on the designated transfer date, see section 1100H appraisal management company, employee of an of Pub. L. 111-203, set out as a note under section 552a of appraisal management company, consumer, or any Title 5, Government Organization and Employees. other person with an interest in a real estate 

Amendment by section 1462 of Pub. L. 111-203 effective transaction from asking an appraiser to under­ on the date on which final regulations implementing that take 1 or more of the following: amendment take effect, or on the date that is 18 months 

after the designated transfer date if such regulations (1) Consider additional, appropriate property 

have not been issued by that date, see section 1400(c) of information, including the consideration of adPub. L. 111-203, set out as a note under section 1601 of ditional comparable properties to make or supthis title. port an appraisal. 

(2) Provide further detail, substantiation, or EFFECTIVE DATE explanation for the appraiser's value conclusion. 

Section effective on the date on which final regula­ (3) Correct errors in the appraisal report. 

tions implementing such section take effect, or on the 

date that is 18 months after the designated transfer date (d) Prohibitions on conflicts of interest 

if such regulations have not been issued by that date, see No certified or licensed appraiser conducting, section 1400(c) of Pub. L. 111-203, set out as an Effective and no appraisal management company procur­ Date of 2010 Amendment note under section 1601 of this ing or facilitating, an appraisal in connection with title. a consumer credit transaction secured by the prinEXEMPTIONS AND MODIFICATIONS cipal dwelling of a consumer may have a direct or 

indirect interest, financial or otherwise, in the Pub. L. 111-203, title XIV, §146l(b), July 21, 2010, 124 property or transaction involving the appraisal. Stat. 2181, provided that: "The Board may prescribe rules 

that revise, add to, or subtract from the criteria of sec­ (e) Mandatory reporting tion 129D(b) of the Truth in Lending Act [15 U.S.C. 1639d(b)] 

if the Board determines that such rules are in the in­ Any mortgage lender, mortgage broker, mortterest of consumers and in the public interest." gage banker, real estate broker, appraisal management company, employee of an appraisal man­

§ 1639e, Appraisal independence requirements agement company, or any other person involved 

in a real estate transaction involving an apprais­ (a) In general al in connection with a consumer credit transacIt shall be unlawful, in extending credit or in tion secured by the principal dwelling of a con­ · providing any services for a consumer credit trans­ sumer who has a reasonable basis to believe an action secured by the principal dwelling of the con­ appraiser is failing to comply with the Uniform 

sumer, to engage in any act or practice that vio­ Standards of Professional Appraisal Practice, is lates appraisal independence as described in or pur-­ violating applicable laws, or is otherwise engag­ suant to regulations prescribed under this section. ing in unethical or unprofessional conduct, shall 

refer the matter to the applicable State appraiser (b) Appraisal independence certifying and licensing agency. For purposes of subsection (a), acts or practices 

that violate appraisal independence shall include- (f) No extension of credit 

(1) any appraisal of a property offered as se­ In connection with a consumer credit transaccurity for repayment of the consumer credit trans­ tion secured by a consumer's principal dwelling, a action that is conducted in connection with such creditor who knows, at or before loan consumma­ transaction in which a person with an interest tion, of a violation of the appraisal independence in the underlying transaction compensates, co­ standards established in subsections 1 (b) or (d) 

erces, extorts, colludes, instructs, induces, bribes, shall not extend credit based on such appraisal or intimidates a person, appraisal management unless the creditor documents that the creditor 

company, firm, or other entity conducting or in­ has acted with reasonable diligence to determine 

volved in an appraisal, or attempts, to compen­ that the appraisal does not materially misstate 

sate, coerce, extort, collude, instruct, induce, bribe, or misrepresent the value of such dwelling. · 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 1 So in original. Probably should be "subsection". 

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Page 69 TITLE 15-COMMERCE AND TRADE § 1639e 

(g) Rules and interpretive guidelines Standards of Professional Appraisal Prac­

(1) In general tice; or 

(ii) a company not subject to the require­ Except as provided under paragraph (2), the ments of section 3353 of title 12 that utilizes Board, the Comptroller of the Currency, the Fed­ the services of State licensed or certified ap­ eral Deposit Insurance Corporation, the Nation­ praisers and receives a fee for performing ap­ al Credit Union Administration Board, the Fed­ praisals in accordance with the Uniform Stand­ eral Housing Finance Agency, and the Bureau ards of Professional Appraisal Practice. 

may jointly issue rules, interpretive guidelines, 

and general statements of policy with respect (B) Rule of construction related to appraisal 

to acts or practices that violate appraisal inde­ donations 

pendence in the provision of mortgage lending If a fee appraiser voluntarily donates apprais­ services for a consumer credit transaction se­ al services to an organization eligible to re­ cured by the principal dwelling of the consumer ceive tax-deductible charitable contributions, 

and mortgage brokerage services for such a trans­ such voluntary donation shall be considered 

action, within the meaning of subsections (a), customary and reasonable for the purposes of 

(b), (c), (d), (e), (f), (h), and (i). paragraph (1). 

(2) Interim f"mal regulations (3) Exception for complex assignments 

The Board shall, for purposes of this section, In the case of an appraisal involving a com­ prescribe interim final regulations no later than plex assignment, the customary and reasonable 

90 days after July 21, 2010, defining with speci­ fee may reflect the increased time, difficulty, ficity acts or practices that violate appraisal and scope of the work required for such an ap­ independence in the provision of mortg_age lend­ praisal and include an amount over and above 

ing services for a consumer credit transaction the customary and reasonable fee for non-com­ secured by the principal dwelling of the con­ plex assignments. sumer or mortgage brokerage services for such Sunset a transaction and defining any terms (j) in this 

section or such regulations. Rules prescribed by Effective on the date the interim final regulathe Board under this paragraph shall be deemed tions are promulgated pursuant to subsection (g), 

to be rules prescribed by the agencies jointly the Home Valuation Code of Conduct announced 

under paragraph (1). by the Federal Housing Finance Agency on December 23, 2008, shall have no force or effect. (h) Appraisal report portability 

Consistent with Penalties the requirements of this sec­ (k) 

tion, the Board, the Comptroller of the Currency, (1) First violation 

the Federal Deposit Insurance Corporation, the In addition to the enforcement provisions re­ National Credit Union Administration Board, the ferred to in section 1640 of this title, each per­ Federal Housing Finance Agency, and the Bureau son who violates this section shall forfeit and 

may jointly issue regulations that address the is­ pay a civil penalty of not more than $10,000 for sue of appraisal report portability, including reg­ each day any such violation continues. ulations that ensure the portability of the appraisal report between (2) Subsequent lenders for violations a consumer credit 

transaction secured by a 1-4 unit single family In the case of any person on whom a civil 

residence that is the principal dwelling of the con­ penalty has been imposed under paragraph (1), 

sumer, or mortgage brokerage services for such a paragraph (1) shall be applied by substituting 

transaction. "$20,000" for "$10,000" with respect to all subsequent violations. (i) Customary and reasonable fee 

(3) Assessment (1) In general 

Lenders The agency referred to in and subsection their (a) or agents (c) shall compensate fee of section 1607 of this appraisers title with at a respect rate to any that is customary and rea­ person described in sonable paragraph for (1) appraisal shall assess services performed in the 

market any penalty under this subsection area to of which the such property being appraised. person is subject. Evidence for such fees may be established by 

objective third-party information, such as gov­ (Pub. L. 90-321, title I, § 129E, as added Pub. L. 

ernment agency fee schedules, academic stud­ 111.:.203, title XIV, § 1472(a), July 21, 2010, 124 Stat. 

ies, and independent private sector surveys. Fee 2187; amended Pub. L. 115--174, title I, § 102, May studies shall exclude assignments ordered by 24, 2018, 132 Stat. 1299.) known appraisal management companies. AMENDMENTS (2) Fee appraiser definition 2018-Subsec. (1)(2). Pub. L. 115-174 designated existing (A) In general provisions as subpar. (A) and inserted heading, redesigF'or purposes of this section, the term "fee nated former subpars. (A) and (B) as els. (1) and (ii), reappraiser" means spectively, of subpar. a person (A) and who realigned is not margins, an em­ and added subpar. (B). ployee of the mortgage loan originator or appraisal management company engaging the EFFECTIVE DATE 

appraiser and is-- Section effective on the date on which final regula­ (i) a State licensed or certified appraiser tions implementing such section take effect, or on the who receives a fee for performing an apprais­ date that is 18 months after the designated transfer date 

al and certifies that the appraisal has been if such regulations have not been issued by that date, see 

prepared in accordance with the Uniform section 1400(c) of Pub. L. 111-203, set out as an Effective 

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§ 1639f TITLE 15-COMMERCE AND TRADE Page 70 

Date of 2010 Amendment note under section 1601 of this (2) Second appraisal under certain circumstances 

title. (A) In general 

§ 1639f. Requirements for prompt crediting of U the purpose of a higher-risk mortgage is 

home loan payments to finance the purchase or acquisition of the 

mortgaged property from a person within 180 (a) In general days of the purchase or acquisition of such 

In connection with a consumer credit transac­ property by that person at a price that was tion secured by a consumer's principal dwelling, lower than the current sale price of the prop­ no servicer shall fail to credit a payment to the erty, the creditor shall obtain a second ap­ consumer's loan account as of the date of receipt, praisal from a different certified or licensed 

except when a delay in crediting does not result appraiser. The second appraisal shall include 

in any charge to the consumer or in the report­ an analysis of the difference in sale prices, ing of negative information to a consumer report­ changes in market conditions; and any iming agency, except as required in subsection (b). provements made to the property between the 

(b) Exception date of the previous sale and the current sale. 

If a servicer specifies in writing requirements (B) No cost to applicant 

for the consumer to follow in making payments, The cost of any second appraisal required but accepts a payment that does not conform to under subparagraph (A) may not be charged the requirements, the servicer shall credit the pay­ to the· applicant. ment as of 5 days after receipt. (3) Certified or licensed appraiser defined 

(Pub. L. 90-321, title I, § 129F, as added Pub. L. For purposes of this section, the term "cer­ 111-203, title XIV, § 1464(a), July 21, 2010, 124 Stat. tified or licensed appraiser'' means a person who­ 2184.) (A) is, at a minimum, certified or licensed 

EFFECTIVE DATE by the State in which the property to be appraised is located; and Section effective on the date on which final regulasuch section take effect, or on the (B) performs each appraisal in conformity tions implementing 

date that is 18 months after the designated transfer date with the Uniform Standards of Professional 

if such regulations have not been issued by that date, see Appraisal Practice and title XI of the Finansection 1400(c) of Pub. L. 111-203, set out as an Effective cial Institutions Reform, Recovery, and EnDate of 2010 Amendment note under section 1601 of this forcement Act of 1989 [12 U.S.C. 3331 et seq.], title. and the regulations prescribed under such title, as in effect on the date of the appraisal. § 1639g. Requests for payoff amounts of home 

loan (4) Regulations 

A creditor or servicer of a home loan shall send (A) In general 

an accurate payoff balance within a reasonable The Board, the Comptroller of the Currentime, but in no case more than 7 business days, cy, the Federal Deposit Insurance Corporation, 

after the receipt of a written request for such bal­ the National Credit Union Administration Board, ance from or on behalf of the borrower. the Federal Housing Finance Agency, and the 

Bureau shall jointly prescribe regulations to (Pub. L. 90-321, title I, § 129G, as added Pub. L. implement this section. 111-203, title XIV, § 1464(b), July 21, 2010, 124 Stat. 

2184.) (B) Exemption 

The agencies listed in subparagraph (A) may EFFECTIVE DATE jointly exempt, by rule, a class of loans from 

Section effective on the date on which final regula­ the requirements of this subsection or subsections implementing such section take effect, or on the tion (a) if the agencies determine that the ex­ date that is 18 months after the designated transfer date emption is in the public interest and promotes if such regulations have not been issued by that date, see 

section 1400(c) of Pub. L. 111-203, set out as an Effective the safety and soundness of creditors. 

Date of 2010 Amendment note under section 1601 of this (c) Free copy of appraisal title. 

A creditor shall provide 1 copy of each apprais­

§ 1639h. Property appraisal requirements al conducted in accordance with this section in 

connection with a higher-risk mortgage to the (a) In general applicant without charge, and at least 3 days pri­ A creditor may not extend credit in the form of or to the transaction closing date. a higher-risk mortgage to any consumer without 

first obtaining a written appraisal of the proper­ (d) Consumer notification 

ty to be mortgaged prepared in accordance with At the time of the initial mortgage application, 

the requirements of this section. the applicant shall be provided with a statement 

by the creditor that any appraisal prepared for {b) Appraisal requirements the mortgage is for the sole use of the creditor, (1) Physical property visit and that the applicant may choose to have a sepSubject to the rules prescribed under para­ arate appraisal conducted at the expense of the 

graph (4), an appraisal of property to be se­ applicant. 

cured by a higher-risk mortgage does not meet 

(e) Violations the requirement of this section unless it is performed by a certified or licensed appraiser who In addition to any other liability to any person 

conducts a physical property visit of the inte­ under this subchapter, a creditor found to have 

rior of the mortgaged property. willfully failed to obtain an appraisal as required 
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Page 71 TITLE 15-COMMERCE AND TRADE § 1640 

in this section shall be liable to the applicant or (1) any actual damage sustained by such perborrower for the sum of $2,000. son as a result of the failure; 

(2)(A)(i) in the case of an individual action 

(t) Higher-risk mortgage defined twice the amount of any finance charge in conFor purposes of this section, the term "higher­ nection with the transaction, (ii) in the case of 

risk mortgage" means a residential mortgage loan, an individual action relating to a consumer lease 

other than a reverse mortgage loan that is a quali­ under part E of this subchapter, 25 per centum 

fied mortgage, as defined in section 1639c of this of the total amount of monthly payments under 

title, secured by a principal dwelling- the lease, except that the liability under this 

(1) that is not a qualified mortgage, as de­ subparagraph shall not be less than $200 nor 

fined in section 1639c of this title; and greater than $2,000, (iii) in the case of an indi­

(2) with an annual percentage rate that ex­ vidual action relating to an open end consumer 

ceeds the average prime offer rate for a com­ credit plan that is not secured by real property 

parable transaction, as defined in section 1639c or a dwelling, twice the amount of any finance 

of this title, as of the date the interest rate is charge in connection with the transaction, with 

set-- a minimum of $500 and a maximum of $5,000, or 

(A) by 1.5 or more percentage points, in the such higher amount as may be appropriate in 

case of a first lien residential mortgage loan the case of an established pattern or practice of 

having an original principal obligation amount such failures; 1 or (iv) in the case of an individthat does not exceed the amount of the max­ ual action relating to a credit transaction not 

imum limitation on the original principal ob­ under an open end credit plan that is secured 

ligation of mortgage in effect for a residence by real property or a dwelling, not less than 

of the applicable size, as of the date of such $400 or greater than $4,000; or 

interest rate set, pursuant to the sixth sen­ (B) in the case of a class action, such amount 

tence of section 1454(a)(2) of title 12; as the court may allow, except that as to each 

(B) by 2.5 or more percentage points, in member of the class no minimum recovery shall 

the case of a first lien residential mortgage be applicable, and the total recovery under this 

loan having an original principal obligation subparagraph in any class action or series of 

amount that exceeds the amount of the max­ class actions arising out of the same failure to 

imum limitation on the original principal comply by the same creditor shall not be more 

obligation of mortgage in effect for a resi­ than the lesser of $1,000,000 or 1 per centum of 

dence of the applicable size, as of the date the net worth of the creditor; 

of such interest rate set, pursuant to the (3) in the case of any successful action to ensixth sentence of section 1454(a)(2) of title force the foregoing liability or in any action in 

12; and which a person is determined to have a right of 

(C) by 3.5 or more percentage points for a rescission under section 1635 or 1638(e)(7) of this 

subordinate lien residential mortgage loan. title, the costs of the action, together with a 

reasonable attorney's fee as determined by the (Pub. L. 90-321, title I, § 129H, as added Pub. L. court; and 111-203, title XIV, § 1471, July 21, 2010, 124 Stat. ( 4) in the case of a failure to comply with any 2185.) requirement under section 1639 of this title, paragraph (1) or (2) of section 1639b(c) of this title, REFERENCES IN TEXT or section 1639c(a) of this title, an amount equal The Financial Institutions Reform, Recovery, and En­ to the sum of all finance charges and fees paid forcement Act of 1989, referred to in subsec. (b)(3)(B), is by the consumer, unless the creditor demonstrates Pub. L. 101-73, Aug. 9, 1989, 103 Stat. 183. Title XI of the 

Act is classified principally to chapter 34A (§ 3331 et seq.) that the failure to comply is not material. 

of Title 12, Banks and Banking. For complete classifica­ In determining the amount of award in any class tion of this Act to the Code, see Short Title of 1989 action, the court shall consider, among other rel­ Amendment note set out under section 1811 of Title 12 evant factors, the amount of any actual damages and Tables. awarded, the frequency and persistence of failEFFECTIVE DATE ures of compliance by the creditor, the resources 

of the creditor, the number of persons adversely Section effective on the date on which final regula­ affected, and the extent to which the creditor's tions implementing such section take effect, or on the 

date that transfer date failure of compliance was In is 18 months after the designated intentional. connecif such regulations have not been issued by that date, see tion with the disclosures referred to in subsecsection 1400(c) of Pub. L. 111-203, set out as an Effective tions (a) and (b) of section 1637 of this title, a Date of 2010 Amendment note under section 1601 of this creditor shall have a liability determined under 

title. paragraph (2) only for failing to comply with the 

requirements of section 1635 of this title, 1637(a) 2 

§ 1640. Civil liability of this title, or any of paragraphs (4) through (13) 

of section 1637(b) of this title, or for failing to (a) Individual or class action for damages; amount comply with disclosure requirements under State of award; factors determining amount of award law for any term or item that the Bureau has de­ Except as otherwise provided in this section, termined to be substantially the same in mean­ any creditor who fails to comply with any require­ ing under section 1610(a)(2) of this title as any of 

ment imposed under this part, including any re­ the terms or items referred to in section 1637(a) quirement under section 1635 of this title, subsec­ of this title, or any of paragraphs (4) through (13) tion (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 1 So in original. The semicolon probably should be a comma. 

the sum of- 2 So in original. Probably should be preceded by "section". 
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§1640 TITLE 15-COMMERCE AND TRADE Page 72 

of section 1637(b) of this title. In connection with be no more than one recovery of damages under 

the disclosures referred to in subsection (c) or (d) subsection (a)(2) for a violation of this subchapter. 

of section 1637 of this title, a card issuer shall (e) Jurisdiction of courts; limitations on actions; have a liability under this section only to a card­ State attorney general enforcement holder who pays a fee described in section 

1637(c)(l)(A)(ii)(I) or section 1637(c)(4)(A)(i) of this Except as provided in the subsequent sentence, 

title or who uses the credit card or charge card. any action under this section may be brought in 

In connection with the disclosures referred to in any United States district court, or in any other 

section 1638 of this title, a creditor shall have a court of competent jurisdiction, within one year 

liability determined under paragraph (2) only for from the date of the occurrence of the violation 

failing to comply with the requirements of sec­ or, in the case of a violation involving a private 

tion 1635 of this title, of paragraph (2) (insofar as education loan (as that term is defined in section 

it requires a disclosure of the "amount financed"), 1650(a) of this title), 1 year from the date on which 

(3), (4), (5), (6), or (9) of section 1638(a) of this the first regular payment of principal is due untitle, or section 1638(b)(2)(C)(ii) of this title, of der the loan. Any action under this section with 

subparagraphs (A), (B), (D), (F), or (J) of section respect to any violation of section 1639, 1639b, or 

1638(e)(2) of this title (for purposes of paragraph 1639c of this title may be brought in any United 

(2) or (4) of section 1638(e) of this title), or para­ States district court, or in any other court of 

graph (4)(C), (6), (7), or (8) of section 1638(e) of competent jurisdiction, before the end of the 3-year 

this title, or for failing to comply with disclosure period beginning on the date of the occurrence of 

requirements under State law for any term which the violation. This subsection does not bar a perthe Bureau has determined to be substantially son from asserting a violation of this subchapter 

the same in meaning under section 1610(a)(2) of in an action to collect the debt which was brought 

this title as any of the terms referred to in any more than one year from the date of the occurof those paragraphs of section 1638(a) of this title rence of the violation as a matter of defense by 

or section 1638(b)(2)(C)(ii) of this title. With re­ recoupment or set-off in such action, except as 

spect to any failure to make disclosures required otherwise provided by State law. An action to enunder this part or part D or E of this subchapter, force a violation of section 1639, 1639b, 1639c, 1639d, 

liability shall be imposed only upon the creditor 1639e, 1639f, 1639g, or 1639h of this title may also 

required to make disclosure, except as provided be brought by the appropriate State attorney genin section 1641 of this title. eral in any appropriate United States district court, or any other court of competent jurisdiction, not 

(b) Correction of errors later than 3 years after the date on which the 

A creditor or assignee has no liability under violation occurs. The State attorney general shall 

this section or section 1607 of this title or section provide prior written notice of any such civil ac­ 1611 of this title for any failure to comply with tion to the Federal agency responsible for enforce­ · any requirement imposed under this part or part ment under section 1607 of this title and shall 

E, if within sixty days after discovering an error, provide the agency with a copy of the complaint. whether pursuant to a final written examination If prior notice is not feasible, the State attorney 

report or notice issued under section 1607(e)(l) of general shall provide notice to such agency imthis title or through the creditor's or assignee's mediately upon instituting the action. The Fed­ own procedures, and prior to the institution of an eral agency may- action under this section or the receipt of written (1) intervene in the action; 

notice of the error from the obligor, the creditor (2) upon intervening- or assignee notifies the person concerned of the (A) remove the action to the appropriate error and makes whatever adjustments in the ap­ United States district court, if it was not origi­ propriate account are necessary to assure that nally brought there; and 

the person will not be required to pay an amount (B) be heard on all matters arising in the 

in excess of the charge actually disclosed, or the action; and 

dollar equivalent of the annual percentage rate (3) file a petition for appeal. actually disclosed, whichever is lower. 

(f) Good faith compliance with rule, regulation, (c) Unintentional violations; bona fide errors or interpretation of Bureau or with interpre­ A creditor or assignee may not be held liable in tation or approval of duly authorized official 

any action brought under this section or section or employee of Federal Reserve System 1635 of this title for a violation of this subchapter No provision of this section, section 1607(b) of if the creditor or assignee shows by a preponder­ this title, section 1607(c) of this title, section 1607(e) ance of evidence that the violation was not intenof this title, or section 1611 of this title imposing tional and resulted from a bona fide error notwithstanding any liability shall apply to any act done or omit­ the maintenance of procedures rea­ ted in good faith in conformity with any rule, sonably adapted to avoid any such error. Examregulation, or interpretation thereof by the Bu­ ples of a bona fide error include, but are not lim­ reau or in conformity with any interpretation or ited to, clerical, calculation, computer malfunc­ approval by an official or employee of the Federal tion and programing, and printing errors, except Reserve System duly authorized by the Bureau to that an error of legal judgment with respect to a issue such interpretations or approvals under such person's obligations under this subchapter is not a procedures as the Bureau may prescribe therefor, bona fide error. notwithstanding that after such act or omission 

(d) Liability in transaction or lease involving has occurred, such rule, regulation, interpreta­ multiple obligors tion, or approval is amended, rescinded, or deterWhen there are multiple obligors in a consumer mined by judicial or other authority to be invalid 

credit transaction or consumer lease, there shall for any reason. · 
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Page 73 TITLE 15----COMMERCE AND TRADE §1640 

(g) Recovery for multiple failures to disclose (ii) proper notice was not provided for any 

The multiple failure to disclose to any person reason other than the reason described in 

any information required under this part or part such paragraph. 

D or E of this subchapter to be disclosed in con­ (j) Private educational lender 

nection with a single account under an open end A private educational lender (as that term is consumer credit plan, other single consumer cred­ defined in section 1650(a) of this title) has no li­ it sale, consumer loan, consumer lease, or other ability under this section for failure to comply extension of consumer credit, shall entitle the per­ with section 1638(e)(3) of this title).3 son to a single recovery under this section but 

continued failure to disclose after a recovery has (k) Defense to foreclosure 

been granted shall give rise to rights to addition­ (1) In general al recoveries. This subsection does not bar any Notwithstanding any other provision of law, remedy permitted by section 1635 of this title. when a creditor, assignee, or other holder of a (h) Offset from amount owed to creditor or as- residential mortgage loan or anyone acting on signee; rights of defaulting consumer behalf of such creditor, assignee, or holder, iniA person may not take any action to offset any tiates a judicial or nonjudicial foreclosure of 

amount for which a creditor or assignee is poten­ the residential mortgage loan, or any other actially liable to such person under subsection (a)(2) tion to collect the debt in connection with such 

against any amount owed by such person, unless loan, a consumer may assert a violation by a 

the amount of the creditor's or assignee's liability creditor of paragraph (1) or (2) of section 1639b(c) 

under this subchapter has been determined by judg­ of this title, or of section 1639c(a) of this title, 

ment of a court of competent jurisdiction in an as a matter of defense by recoupment or set off 

action of which such person was a party. This without regard for the time limit on a private 

subsection does not bar a consumer then in de­ action for damages under subsection (e). 

fault on the obligation from asserting a violation (2) Amount of recoupment or setoff of this subchapter as an original action, or as a (A) In general defense or counterclaim to an action to collect 

amounts owed by the consumer brought by a per­ The amount of recoupment or set-off under 

son liable under this subchapter. paragraph (1) shall equal the amount to which 

the consumer would be entitled under subsec­ (i) Class action moratorium tion (a) for damages for a valid claim brought (1) In general in an original action against the creditor, plus During the period beginning on May 18, 1995, the costs to the consumer of the action, inand ending on October 1, 1995, no court may en­ cluding a reasonable attorney's fee. 

ter any order certifying any class in any action (B) Special rule under this subchapter-

(A) which is brought in connection with any Where such judgment is rendered after the 

credit transaction not under an open end cred­ expiration of the applicable time limit on a 

it plan which is secured by a first lien on real private action for damages under subsection 

property or a dwelling and constitutes a refi­ (e), the amount of recoupment or set-off unnancing or consolidation of an existing exten­ der paragraph (1) derived from damages unsion of credit; and der subsection (a)(4) shall not exceed the amount 

(B) which is based on the alleged failure of to which the consumer would have been entia creditor- tled under subsection (a)(4) for damages com­

(i) to include a charge actually incurred puted up to the day preceding the expiration 

(in connection with the transaction) in the of the applicable time limit. 

finance charge disclosed pursuant to sec­ (l) Exemption from liability and rescission in tion 1638 of this title; case of borrower fraud or deception (ii) to properly make any other disclosure In addition to any other remedy available by required under section 1638 of this title as a law or contract, no creditor or assignee shall be result of the failure described in clause (i); liable to an obligor under this section, if such ob­ or ligor, or co-obligor has been convicted of obtain­ (iii) to provide proper notice of rescission by actual fraud such residential mortgage loan. rights under section 1635(a) of this title due ing 

to the selection by the creditor of the incor­ (Pub. L. 90-321, title I, § 130, May 29, 1968, 82 Stat. 

rect form from among the model forms pre­ 157; Pub. L. 93-495, title IV, §§ 406, 407, 408(a}-(d), 

scribed by the Bureau or from among forms Oct. 28, 1974, 88 Stat. 1518; Pub. L. 94-222, § 3(b), 

based on such model forms. Feb. 27, 1976, 90 Stat. 197; Pub. L. 94-240, §4, Mar. 

(2) Exceptions for certain alleged violations 23, 1976, 90 Stat. 260; Pub. L. 96-221, title VI, § 615, 

Mar. 31, 1980, 94 Stat. 180; Pub. L. 100-583, § 3, Nov. Paragraph (1) shall not apply with respect to 3, 1988, 102 Stat. 2966; Pub. L. 103--325, title I, § 153(a), any action- (b), Sept. 23, 1994, 108 Stat. 2195; Pub. L. 104-12, §2, (A) described in clause (i) or (ii) of para­ May 18, 1995, 109 Stat. 161; Pub. L. 104-29, § 6, Sept. graph (l)(B), if the amount disclosed as the 30, 1995, 109 Stat. 274; Pub. L. 110-289, div. B, title finance charge results in an annual percent­ V, § 2502(b), July 30, 2008, 122 Stat. 2857; Pub. L. 

age rate that exceeds the tolerance provided 110-315, title X, § 1012(a), Aug. 14, 2008, 122 Stat. in section 1606(c) of this title; or 3482; Pub. L. 111-22, div. A, title IV, § 404(b), May (B) described in paragraph (l)(B)(iii), if­

(i) no notice relating to rescission rights 

under section 1635(a) of this title was pro­ 3 So in originaJ. The closing parenthesis probably should not apvided in any form; or pear. 
§ 1640 TITLE 15-COMMERCE AND TRADE Page 74 

20, 2009, 123 Stat. 1658; Pub. L. 111-24, title I, § 107, Subsec. (a)(3). Pub. L. 110--315, § 1012(a)(l)(A), inserted 

title II, §20l(b), May 22, 2009, 123 Stat. 1743, 1745; "or 1638(e)(7)" after "section 1635". 

Pub. L. 111-203, title X, § 1100A(2), title XIV,§§ 1413, Subsec. (e). Pub. L. 110--315, § 1012(a)(2), inserted before 

1416, 1417, 1422, July 21, 2010, 124 Stat. 2107, 2148, period at end of first sentence "or, in the case of a violation involving a private education loan (as that term is 2153, 2157.) defined in section 1650(a) of this title), 1 from the 

date on which the first regular payment principal is AMENDMENTS due under the loan". 

2010-Pub. L. 111-203, § 1100A(2), substituted "Bureau" Subsec. (j). Pub. L. 110--315, § 1012(a)(3), added subsec. 

for "Board" wherever appearing. (j). 

Subsec. (a)(2)(A)(ii). Pub. L. 111-203, § 1416(a)(l), substi­ 1995-Subsec. (a)(2)(A)(iii). Pub. L. 104-29 added cl. (iii). 

tuted "$200" for "$100" and "$2,000" for "$1,000". Subsec. (i). Pub. L. 104-12 added subsec, (i). 

Subsec. (a)(2)(B). Pub. L. 111-203, § 1416(a)(2), substitut­ 1994-Subsec. (a)( 4). Pub. L. 103--325, § 153(a), added par. 

ed "$1,000,000" for "$500,000". (4). 

Subsec. (a)(4). Pub. L. 111-203, §1416(a)(3), inserted", para­ Subsec. (e). Pub. L. 103--325, § 153(b), inserted at end 

graph (1) or (2) of section 1639b(c) of this title, or section "An action to enforce a violation of section 1639 of this 

l639c(a) of this title" after "section 1639 of this title". title may also be brought by the appropriate State atSubsec. (e). Pub. L. 111-203, § 1422, substituted "section torney general in any appropriate United States district 

1639, 1639b, 1639c, 1639d, 1639e, 1639f, 1639g, or 1639h of court, or any other court of competent jurisdiction, not 

this title may also" for "section 1639 of this title may later than 3 years aner the date on which the violation 

also''. occurs. The State attorney general shall provide prior 

Pub. L. 111-203, § 1416(b), in first sentence substituted written notice of any such civil action to the Federal 

"Except as provided in the subsequent sentence, any ac­ agency responsible for enforcement under section 1607 of 

tion" for "Any action" and inserted after first sentence this title and shall provide the agency with a copy of the 

''Any action under this section with respect to any vio­ complaint. If prior notice is not feasible, the State atlation of section 1639, 1639b, or 1639c of this title may be torney general shall provide notice to such agency imbrought in any United States district court, or 1n any mediately upon instituting the action. The Federal agency 

other court of competent jurisdiction, before the end of maythe 3-year period beginning on the date of the occur­ "(1) intervene in the action; 

rence of the violation." "(2) upon interveningSubsec. (k). Pub. L. 111-203, § 1413, added subsec. (k). "(A) remove the action to the appropriate United 

brought Subsec. (l). originally Pub. L. 111-203, § 1417, added subsec. (1). States district court, if it was not 

there; and 2009-Subsec. (a). Pub. L. 111-24, §20l(b), in concluding "(B) be heard on all matters arising in the action; provisions, substituted "In connection with the disclo­ and sures referred to in subsections (a) and (b) of section 

"(3) file a petition for appeal." 1637 of this title, a creditor shall have a liability determined (a). Pub. L. 100--583 substituted "in sub­ under paragraph (2) only for failing to comply 1988-Subsec. 

with sections (a) and (b) of section 1637" for "in section 1637" the requirements of section 1635 of this title, 1637(a) provisions of this title, or of sec­ in third sentence and inserted limiting liabil­ any of paragraphs (4) through (13) ity of card issuer under this section to cardholders who tion 1637(b) of this title, or for failing to comply with 

pay fee or use credit card or charge card. disclosure requirements under State law for any term or 

determined to be substantially 1980-Subsec. (a). Pub. L. 96--221, §615(b), in introduc­ item that the Board has 

applicability of the same in meaning under section 1610(a)(2) of this title tory text inserted provisions respecting 

terms or items referred to in section 1637(a) section 1635 of this title, and in text following numbered as any of the 

pars. relating to disclosures required of this title, or any of paragraphs (4) through (13) of sec­ inserted provisions 

of this title. tion 1637(b) of this title." for "In connection with the under sections 1637 and 1638 

disclosures referred to in subsections (a) and (b) of sec­ Subsec. (a)(2)(B). Pub. L. 96--221, § 615(a)(l), substituted 

tion 1637 of this title, a creditor shall have a liability provisions respecting recovery under this subparagraph 

determined under paragraph (2) only for failing to com­ in any class action or series of class actions, for proviply with the requirements of section 1635 of this title, sions respecting recovery in a class action. 

section 1637(a) of this title, or of paragraph (4), (5), (6), Subsec. (a)(3). Pub. L. 96--221, § 615(a)(2), inserted provi­

(7), (8), (9), or (10) of section 1637(b) of this title or for sions relating to right of rescission under section 1635 of 

failing to comply with disclosure requirements under State this title. 

law for any term or item which the Board has deter­ Subsec. (b ). Pub. L. 96--221, § 615(a)(3), substituted promined to be substantially the same in meaning under visions relating to correction of errors within sixty days 

section 1610(a)(2) of this title as any of the terms or by a creditor or assignee, for provisions relating to coritems referred to in section 1637(a) of this title or any of rection of errors within fifteen days by a creditor. 

those paragraphs of section 1637(b) of this title." Subsec. (c). Pub. L. 96--221, § 615(a)(3), substituted proviPub. L. 111-22, §404(b), which directed insertion of "sub­ sions relating to liability of a creditor or assignee in 

section (f) or (g) of section 1641 of this title," after "sec­ any action brought under this section or section 1635 of 

tion 1635 of this title,", was executed by making the in­ this title, for provisions relating to liability of a creditor 

sertion only in the introductory provisions to reflect the in any action brought under this section. 

probable intent of Congress. Subsec. (d). Pub. L. 96--221, §615(a)(3), substituted proSubsec. (a)(2)(A)(iii), (iv). Pub. L. 111-24, § 107, added cl. visions relating to liability in transaction or lease in­

(iii) and redesignated former cl. (iii) as (iv). volving multiple obligors, for provisions relating to liabil2008-Subsec. (a). Pub. L. 110--315, § 1012(a)(l)(B), in fourth ity of subsequent assignees original creditor. 

sentence of concluding provisions, substituted "1635 of Subsec. (e). Pub. L. 96--221, § 615(a)(4), inserted provithis title," for "1635 of this title or" and inserted "of sions relating to limitations on actions. 

subparagraphs (A), (B), (D), (F), or (J) of section 1638(0)(2) Subsec. (f). Pub. L. 96--221, § 615(a)(5), inserted referof this title (for purposes of paragraph (2) or (4) of sec­ ences to section 1607(b), (c), and (e) of this title. 

tion 1638(e) of this title), or paragraph (4)(C), (6), (7), or Subsec. (g). Pub. L. 96--221, §615(a)(6), inserted provi­

(8) of section 1638(e) of this title," before "or for failing". sions relating to remedy under section 1635 of this title. 

Pub. L. 110--289, § 2502(b)(2), in concluding provisions, Subsec. (h). Pub. L. 96--221, § 615(a)(7), substituted proinserted "or section 1638(b)(2)(C)(ii) of this title," before visions relating to offset from amounts owed to the cred­

"or for failing to comply" and "or section 1638(b)(2)(C)(ii) itor or assignee, and rights of defaulting consumer, for 

of this title" before ". With respect to". provisions relating to offset from amounts owed to the 

Subsec. (a)(2)(A)(iii). Pub. L. 110--289, § 2502(b)(l), sub­ creditor. 

stituted "not less than $400 or greater than $4,000" for 1976-Subsec. (a). Pub. L. 94-240, §4(1), inserted "or E" 

"not less than $200 or greater than $2,000". after "part D". 

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Page 75 TITLE 15----COMMERCE AND TRADE § 1641 

Subsec. (a)(2)(A). Pub. L. 94-240, § 4(2), designated ex­ EFFECTIVE DATE OF 1974 AMENDMENT 

isting provision as cl. (i) and added cl. (ii). Amendment by Pub. L. 93--495 effective Oct. 28, 1974, see Subsec. (a)(2)(B). Pub. L. 94-240, § 4(3), substituted "less­ section 416 of Pub. L. 93--495, set out as an Effective Date er of $500,000" for "lesser of $100,000". note under section 1665a of this title. Subsec. (b). Pub. L. 94-240, § 4(4), inserted "or part E of 

this subchapter" after "this part" and struck out "fi­ DETERMINATION OF LIABILITY PRIOR TO OCTOBER 28, 

nance" after "required to pay a". 1974 

Subsec. (f). Pub. L. 94-222 inserted "or in conformity 

with Pub. L. 93-495, title IV, § 408(e), Oct. 28, 1974, 88 Stat. any interpretation or approval by an official or em­ 1519, provided that: "The amendments made by sections ployee of the Federal Reserve System duly authorized by 406, 407, and 408 [amending this section] shall apply in the Board to issue such interpretations or approvals un­ determining the liability of any person under chapter 2 der such procedures as the Board may prescribe there­ or 4 of the Truth in Lending Act [this part or part D of for" after "by the Board", and substituted "interpreta­ this subchapter], unless prior to the date of enactment tion, or approval" for "or interpretation" before "is amendof this Act [Oct. 28, 1974] such liability has been deter­ ed". mined by final judgment of a court of competent juris­ Subsec. (g). Pub. L. 94-240, § 4(5), inserted "or part D or diction and no further review of such judgment may be E of this subchapter" after "this part", and "consumer 

had by appeal or otherwise." lease" after "consumer loan". 

1974-Subsec. (a). Pub. L. 93--495, § 408(a), substituted 

§ 1641. Liability of assignees provisions setting forth determination of amount of liability of any creditor failing to comply with any re­ (a) Prerequisites quirement imposed under part D of this subchapter or Except as otherwise specifically provided in this this part, for provisions setting forth determination of 

amount of liability of any creditor failing to disclose in subchapter, any civil action for a violation of this 

connection with any consumer credit transaction any subchapter or proceeding under section 1607 of 

information required under this part to be disclos·ed to this title which may be brought against a credspecified persons. itor may be maintained against any assignee of 

Subsec. (b). Pub. L. 93--495, § 408(b), inserted "for any such creditor only if the violation for which such 

failure to comply with any requirement imposed under action or proceeding is brought is apparent on this part," before "if within". the face of the disclosure statement, except where Subsec. (c). Pub. L. 93--495, § 408(c), substituted "sub- the assignment was involuntary. For the purpose chapter" for "part". 

Subsec. (f). Pub. L. 93--495, § 406, added subsec. (f). of this section, a violation apparent on the face of 

Subsec. (g). Pub. L. 93--495, § 407, added subsec. (g). the disclosure statement includes, but is not limSubsec. (h). Pub. L. 93--495, § 408(d), added subsec. (h). ited to (1) a disclosure which can be determined 

to be incomplete or inaccurate from the face of 

EFFECTIVE DATE OF 2010 AMENDMENT the disclosure statement or other documents as­ Amendment by section 1100A(2) of Pub. L. 111-203 ef­ signed, or (2) a disclosure which does not use the 

fective on the designated transfer date, see section 1100H terms required to be used by this subchapter. of Pub. L. 111-203, set out as a note under section 552a of 

Title 5, Government Organization and Employees. (b) Proof of compliance with statutory provisions 

Amendment by sections 1413, 1416, 1417, and 1422 of Except as provided in section 1635(c) of this 

Pub. L. 111-203 effective on the date on which final regu­ title, in any action or proceeding by or against lations implementing that amendment take effect, or on any subsequent assignee of the original creditor the date that is 18 months after the designated transfer without knowledge to the contrary by the assign­ date, if such regulations have not been issued by that ee when he acquires the obligation, written ac­ date, see section 1400(c) of Pub. L. 111-203, set out as a 

note under section 1601 of this title. knowledgement of receipt by a- person to whom a 

statement is required to be given pursuant to this 

EFFECTIVE DATE OF 2009 AMENDMENT subchapter shall be conclusive proof of the delivAmendment by Pub. L. 111-24 effective 9 months after ery thereof and, except as provided in subsection 

May 22, 2009, except as otherwise specifically provided, (a), of compliance with this part. This section see section 3 of Pub. L. 111-24, set out as a note under does not affect the rights of the obligor in any 

section 1602 of this title. · action against the original creditor. 

EFFECTIVE DATE OF 2008 AMENDMENT (c) Right of rescission by consumer unaffected 

Pub. L. 110--315, title X, § 1012(b), Aug. 14, 2008, 122 Stat. Any consumer who has the right to rescind a 

3482, provided that: "The amendments made by this sec­ transaction under section 1635 of this title may 

tion [amending this section] shall have the same effec­ rescind the transaction as against any assignee 

tive date as provisions referred to in section 1003(b) [set of the obligation. out as a note under section 1638 of this title]." (d) Rights upon assignment of certain mortgages 

EFFECTIVE DATE OF 1980 AMENDMENT (1) In general 

Amendment by Pub. L. 96--221 effective on expiration of Any person who purchases or is otherwise as­ two years and six months after Mar. 31, 1980, with all signed a mortgage referred to in section 

regulations, forms, and clauses required to be prescribed 1602(aa) 1 of this title shall be subject to all to be promulgated at least one year prior to such effec­ claims and defenses with respect to that mort­ tive date, and allowing any creditor to comply with any 

amendments, in accordance with the regulations, ·forms, gage that the consumer could assert against 

and clauses prescribed by the Board prior to such effec­ the creditor of the mortgage, unless the purtive date, see section 625 of Pub. L. 96-221, set out as a chaser or assignee demonstrates, by a prepon­ note under section 1602 of this title. derance of the evidence, that a reasonable person exercising ordinary due diligence, could not 

EFFECTIVE DATE OF 1976 AMENDMENT determine, based on the documentation required 

Amendment by Pub. L. 94-240 effective on expiration of by this subchapter, the itemization of the amount 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. 1 See References in Text note below. 

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§ 1641 TITLE 15-COMMERCE AND TRADE Page 76 

financed, and other disclosure of disbursements (0 Treatment of servicer 

that the mortgage was a mortgage referred to (1) In general in section 1602(aa) 2 of this title. The preceding A servicer of a consumer obligation arising sentence does not affect rights of a consumer from a consumer credit transaction shall not be under subsection (a), (b), or (c) of this section treated as an assignee of such obligation for or any other provision of this subchapter. purposes of this section unless the servicer is 

(2) Limitation on damages or was the owner of the obligation. 

Notwithstanding any other provision of law, (2) Servicer not treated as owner on basis of 

relief provided as a result of any action made assignment for administrative convenience 

permissible by paragraph (1) may not exceed­ A servicer of a consumer obligation arising (A) with respect to actions based upon a from a consumer credit transaction shall not be 

violation of this subchapter, the amount spec­ treated as the owner of the obligation for purified in section 1640 of this title; and poses of this section on the basis of an assign­

(B) with respect to all other causes of ac­ ment of the obligation from the creditor or an­ tion, the sum of- other assignee to the servicer solely for the ad­

(i) the amount of all remaining indebted­ ministrative convenience of the servicer in serv­ ness; and icing the obligation. Upon written request by (ii) the total amount paid by the consum­ the obligor, the servicer shall provide the obli­ er in connection with the transaction. gor, to the best knowledge of the servicer, with 

the name, address, and telephone number of the 

(3) Offset owner of the obligation or the master servicer 

The amount of damages that may be awarded of the obligation. 

under paragraph (2)(B) shall be reduced by the (3) "Servicer" defined amount of any damages awarded under paragraph (2)(A). For purposes of this subsection, the term "servicer'' has the same meaning as in section 

(4) Notice 2605(i)(2) of title 12. 

Any person who sells or otherwise assigns a (4) Applicability 

mortgage referred to in section 1602(aa) 2 of this This subsection shall apply to all consumer title shall include a prominent notice of the po­ credit transactions in existence or consummat­ tential liability under this subsection as deter­ ed on or after September 30, 1995. mined by the Bureau. 

(g) Notice of new creditor 

(e) Liability of assignee for consumer credit (1) In general 

transactions secured by real property In addition to other disclosures required by 

this subchapter, not later than 30 days after the (1) In general date on which a mortgage loan is sold or otherExcept as otherwise specifically provided in wise transferred or assigned to a third party, this subchapter, any civil action against a cred­ the creditor that is the new owner or itor for a violation of this subchapter, and any of the debt shall notify the borrower in proceeding under section 1607 of this title against of such transfer, including- a creditor, with respect to a consumer credit (A) the identity, address, telephone number transaction secured by real property may be of the new creditor; maintained against any assignee of such cred­ (B) the date of transfer; itor only if- (C) how to reach an agent or party having (A) the violation for which such action or authority to act on behalf of the new creditor; proceeding is brought is apparent on the face (D) the location of the place where transfer of the disclosure statement provided in con­ of ownership of the debt is recorded; and nection with such transaction pursuant to this (E) any other relevant information regard­ subchapter; and ing the new creditor. (B) the assignment to the assignee was voluntary. (2) Definition 

As used in this subsection, the term "mort-

(2) Violation apparent on the face of the dis­ gage loan'' means consumer credit transclosure described action that is by the principal dwelling 

For the purpose of this section, a violation is of a consumer. apparent on the face of the disclosure state­ (Pub. L. 90-321, title I, § 131, May 29, 1968, 82 Stat. 

ment if- 157; Pub. L. 96-221, title VI, § 616(a), Mar. 31, 1980, (A) the disclosure can be determined to be 94 Stat. 182; Pub. L. 103-325, title I, § 153(c), Sept. incomplete or inaccurate by a comparison among 23, 1994, 108 Stat. 2195; Pub. L. 104-29, § 7, Sept. 30, the disclosure statement, any itemization of 1995, 109 Stat. 274; Pub. L. 111-22, div. A, title IV, the amount financed, the note, or any other § 404(a), May 20, 2009, 123 Stat. 1658; Pub. L. 111-203, disclosure of disbursement; or title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.) (B) the disclosure statement does not use 

the terms or format required to be used by REFERENCES IN TEXT 

this subchapter. Section 1602(aa) of this title, referred to in subsec. 

(d)(l), (4), was redesignated section 1602(bb) of this title 

by Pub. L. 111-203, title X, § llOOA(l)(A), July 21, 2010, 124 2 See References in Text note below. Stat. 2107. 
Page 77 TITLE 16-COMMERCE AND TRADE § 1644 

AMENDMENTS information have been taken, whether or not any 

2010-Subsec. (d)(4). Pub. L. 111-203 substituted "Bu- particular officer, employee, or agent of the card 

reaut' for ''Board1'. issuer does in fact receive such information. 

2009-Subsec. (g). Pub. L. 111-22 added subsec. (g). (b) Burden of proof 199&-Subsec. (e). Pub. L. 104-29, §7(a), added subsec. (e). 

Subsec. (f). Pub. L. 104-29, § 7(b ), added subsec. (f). In any action by a card issuer to enforce liabil1994-Subsec. (d). Pub. L. 103-325 added subsec. (d). ity for the use of a credit card, the burden of 

1980-Pub. L. 96-221 added subsecs. (a) and (c), desig- proof is upon the card issuer to show that the use nated existing provisions as subsec. (b), substituted "ex­ was authorized or, if the use was unauthorized, cepted as provided in subsection (a)" for "unless the vio­ then the burden of proof is upon the card issuer lation is apparent on the face of the statement", and to show that the conditions of liability for the un­ struck out exception for actions under section l640(d) of authorized use of a credit card, as set forth in this title. subsection (a), have been met. 

EFFECTIVE DATE OF 2010 AMENDMENT (c) Liability imposed by other laws or by agree­ Amendment by Pub. L. 111-203 effective on the desig­ ment with issuer nated transfer date, see section 1100H of Pub. L. 111-203, 

set out as a note under section 552a of Title 5, Govern­ Nothing in this section imposes liability upon a 

ment Organization and Employees. cardholder for the unauthorized use of a credit 

card in excess of his liability for such use under 

EFFECTIVE DATE OF 1980 AMENDMENT other applicable law or under any agreement with 

Amendment by Pub. L. 96-221 effective on expiration of the card issuer. 

two years and six months after Mar. 31, 1980, with all (d) Exclusiveness of liability regulations, forms, and clauses required to be prescribed 

to be promulgated at least one year prior to such effec­ Except as provided in this section, a cardholder 

tive date, and allowing any creditor to comply with any incurs no liability from the unauthorized use of a amendments, in accordance with the regulations, forms, credit card. 

and clauses prescribed by the Board prior to such effective date, see section 625 of Pub. L. 96-221, set out as a (Pub. L. 90-321, title I, § 133, as added Pub. L. 

note under section 1602 of this title. 91-508, title V, § 502(a), Oct. 26, 1970, 84 Stat. 1126; 

amended Pub. L. 96-221, title VI, §617, Mar. 31, 

§ 1642. Issuance of credit cards 1980, 94 Stat. 182.) . 

No credit card shall be issued except in response AMENDMENTS 

to a request or application therefor. This prohibi­ 1980-Subsec. (a). Pub. L. 96-221 revised existing proVi~ tion does not apply to the issuance of a credit sions into pars. (1) and (2) and, as so revised, in par. (1) card in renewal of, or in substitution for, an ac­ made changes in structure and phraseology and revised 

cepted credit card. means of notice and verification, and in par. (2) made 

(Pub. L. 90-321, title I, § 132, as added Pub. changes in phraseology. L. 

91-508, title V, § 502(a), Oct. 26, 1970, 84 Stat. 1126.) EFFECTIVE DATE OF 1980 AMENDMENT 

EFFECTIVE DATE Amendment Pub. L. 96-221 effective on expiration of 

two years and months after Mar. 31, 1980, with all Pub. L. 91-508, title V, §503(1), Oct. 26, 1970, 84 Stat. regulations, forms, and clauses required to be prescribed 1127, provided that: "Section 132 of such Act [this sec­ to be promulgated at least one year prior to such effec­ tion] takes effect on date of enactment of this title [Oct. tive date, and allowing any creditor to comply with any 26, 1970)." amendments, in accordance with the regulations, forms, 

and clauses prescribed by the Board prior to such effec­

§ 1643. Liability of holder of credit card tive date, see section 625 of Pub. L. 96-221, set out as a 

(a) Limits on liability note under section 1602 of this title. 

(1) A cardholder shall be liable for the unauthor- EFFECTIVE DATE 

ized use of a credit card only if- Pub. L. 91-508, title V, § 503(2), Oct. 26, 1970, 84 Stat. (A) the card is an accepted credit card; 1127, provided that: "Section 133 of such Act [this sec­ (B) the liability is not in excess of $50; tion] takes effect upon the expiration of 90 days after 

(C) the card issuer gives adequate notice to such date of enactment [Oct. 26, 1970]." 

the cardholder of the potential liability; 

(D) the card issuer has provided the cardhold­ § 1644. Fraudulent use of credit cards; penalties 

er with a description of a means by which the (a) Use, attempt or conspiracy to use card in card issuer may be notified of loss or theft of transaction affecting interstate or foreign the card, which description may be provided on commerce the face or reverse side of the statement re­ Whoever knowingly in a transaction affecting quired by section 1637(b) of this title or on a interstate or foreign commerce, uses or attempts separate notice accompanying such statement; or conspires to use any counterfeit, fictitious, al­ (E) the unauthorized use occurs before the card tered, forged, lost, stolen, or fraudulently obtained issuer has been notified that an unauthorized credit card to obtain money, goods, services, or use of the credit card has occurred or may oc­ anything else of value which within any one-year cur as the result of loss, theft, or otherwise; and period has a value aggregating $1,000 or more; or (F) the card issuer has provided a method whereby the user of such card can be identified as the (h) Transporting, attempting or conspiring to 

person authorized to use it. transport card in interstate commerce 

(2) For purposes of this section, a card issuer Whoever, with unlawful or fraudulent intent, transhas been notified when such steps as may be rea­ ports or attempts or conspires to transport in 

sonably required in the ordinary course of busi­ interstate or foreign commerce a counterfeit, ficness to provide the card issuer with the pertinent titious, altered, forged, lost, stolen, or fraudulentCase 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 75 of 92 PageID #: 190 
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§ 1645 TITLE 15-COMMERCE AND TRADE Page 78 

ly obtained credit card knowing the same to be EFFECTIVE DATE 

counterfeit, fictitious, altered, forged, lost, stolen, Pub. L. 91-508, title V, § 503(3), Oct. 26, 1970, 84 Stat. or fraudulently obtained; or 1127, provided that: "Section 134 of such Act [thls section] applies to offenses committed on or after such date 

(c) Use of interstate commerce to sell or trans­ of enactment [Oct. 26, 1970]." 

port card 

§ 1645. Business credit cards; limits on liability of Whoever, with unlawful or fraudulent intent, uses e:mployees any instrumentality of interstate or foreign com­ merce to sell or transport a counterfeit, fictitious, The exemption provided by section 1603(1) of this 

altered, forged, lost, stolen, or fraudulently ob­ title does not apply to the provisions of sections 

tained credit card knowing the same to be coun­ 1642, 1643, and 1644 of this title, except that a card 

terfeit, fictitious, altered, forged, lost, stolen, or issuer and a business or other organization which 

fraudulently obtained; or provides credit cards issued by the same card issuer to ten or more of its employees may by con­ (d) Receipt, concealment, etc., of goods obtained tract agree as to liability of the business or other 

by use of card organization with respect to unauthorized use of 

Whoever knowingly receives, conceals, uses, or such credit cards without regard to the provitransports money, goods, anything else sions of section 1643 of this title, but in no case services, or 

interstate or foreign may such business or other organization or card of value (except tickets for 

transportation) which (1) one-year peri­ within issuer impose liability upon any employee with any 

od has a value aggregating $1,000 or more, (2) has respect to unauthorized use of such a credit card 

moved is part of, or which constitutes inter­ except in accordance with and subject to the lim­ in or this title. state or foreign commerce, and (3) has been obtained itations of section 1643 of 

with a counterfeit, fictitious, altered, forged, lost, (Pub. L. 90-321, title I, § 135, as added Pub. L. 

stolen, or fraudulently obtained credit card; or 93-495, title IV, § 410(a), Oct. 28, 1974, 88 Stat. 1519.) 

(e) Receipt, concealment, etc., of tickets for inter­ EFFECTIVE DATE 

state or foreign transportation obtained by Section effective Oct. 28, 1974, see section 416 of Pub. use of card L. 93-495, set out as a note under section 1665a of this 

Whoever knowingly receives, conceals, uses, sells, title. 

or transports in interstate or foreign commerce § 1646. Dissemination of annual percentage rates; one or more tickets for interstate or foreign trans­ i:mplementation, etc. portation, which (1) within any one-year period 

have a value aggregating $500 or more, and (2) (a) Annual percentage rates 

have been purchased or obtained with one or more The Bureau shall collect, publish, and dissemicounterfeit, fictitious, altered, forged, lost, stolen, nate to the public, on a demonstration basis in a or fraudulently obtained credit cards; or number of standard metropolitan statistical areas to be determined by the Bureau, the annual per­

(f) Furnishing of :money, etc., through use of card centage rates charged for representative types of 

Whoever in a transaction affecting interstate nonsale credit by creditors in such areas. For the 

or foreign commerce furnishes money, property, purpose of this section, the Bureau is authorized 

services, or anything else of value, which within to require creditors in such areas to furnish inany one-year period has a value aggregating $1,000 formation necessary for the Bureau to collect, pubor more, through the use of any counterfeit, ficti­ lish, and disseminate such information. 

tious, altered, forged, lost, stolen, or fraudulently (b) Credit card price and availability information 

obtained credit card knowing the same to be coun­ terfeit, fictitious, altered, forged, lost, stolen, or (1) Collection required 

fraudulently obtained- The Bureau shall collect, on a semiannual basis, credit card price and availability informashall be fined not more than $10,000 or imprisoned tion, including the information required to be 

not more than ten years, or both. disclosed under section 1637(c) of this title, from 

(Pub. L. 90-321, title I, § 134, as added Pub. L. a broad sample of financial institutions which 

91-508, title V, § 502(a), Oct. 26, 1970, 84 Stat. 1127; offer credit card services. 

amended Pub. L. 93-495, title IV, § 414, Oct. 28, (2) Sa:mple requirements 1974, 88 Stat. 1520.) The broad sample of financial institutions reAMENDMENTS quired under paragraph (1) shall include-

(A) the 25 largest issuers of credit cards; 

1974-Pub. L. 93-495 generally reorganized provisions and 

by designating former unlettered paragraph els. (a) to (B) not less than 125 additional financial in­

(f), and as so designated, expanded prohlbitions relating stitutions selected by the Bureau in a manner to fraudulent use of credit cards, decreased amount required for fraudulent use from a retail value aggregating that ensures--

$5,000, or more, to enumerated amounts for particular ac­ Ci) an equitable geographical distribution 

tivities, and increased the punishment from a sentence within the sample; and 

of not more than five years to a sentence of not more (ii) the representation of a wide spectrum 

than ten years. of institutions within the sample. 

EFFECTIVE DATE OF 1974 AMENDMENT (3) Report of information from sample 

in broad sam­ Amendment by Pub. L. 93-495 effective Oct. 28, 1974, see Each financial institution the 

section 416 of Pub. L. 93-495, set out as an Effective Date ple established pursuant to paragraph (2) shall 

note under section 1665a of this title. report the information to the Bureau in accord-
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Page 79 TITLE 15-COMMERCE AND TRADE § 1647 

ance with such regulations or orders as the Bu­ (3) any other action or failure to act by the reau may prescribe. consumer which adversely affects the creditor's 

(4) Public security for the account or any right of the availability of collected information; 

to creditor in such security. report Congress 

The Bureau shall- This subsection does not apply to reverse mort­

(A) make the information collected pursu­ gage transactions. 

ant to this subsection available to the public (c) Change in terms 

upon request; and (1) In general (B) report such information semiannually 

to Congress. No open end consumer credit plan under which 

extensions of credit are secured by a consum­ (c) Implementation er's principal dwelling may contain a provision The Bureau is authorized to enter into contracts which permits a creditor to change unilaterally or other arrangements with appropriate persons, any term required to be disclosed under section 

organizations, or State agencies to carry out its 1637a(a) of this title or any other term, except a functions under subsections (a) and (b) and to fur­ change in insignificant terms such as the adnish financial assistance in support thereof. dress of the creditor for billing purposes. 

(Pub. L. 90-321, title I, § 136, as added Pub. L. (2) Certain changes not precluded 96-221, title VJ, § 618(a), Mar. 31, 1980, 94 Stat. 183; Notwithstanding the provisions of subsec­ amended Pub. L. 100-583, § 5, Nov. 3, 1988, 102 Stat. tion 1 (1), a creditor may make any of the fol­ 2967; Pub. L. 111-203, title X, § 1100A(2), July 21, lowing changes: 2010, 124 Stat. 2107.) (A) Change the index and margin applicable 

AMENDMENTS to extensions of credit under such plan if the 

index used by the creditor is no longer avail­ 2010-Pub. L. 111-203 substituted "Bureau" for "Board" 

wherever appearing. able and the substitute index and margin would 

1988--Subsecs. (b), (c). Pub. L. 100-583 added subsec. result in a substantially similar interest rate. 

(b), redesignated former subsec. (b) as (c), and substitut­ (B) Prohibit additional extensions of credit 

ed "subsections (a) and (b)" for "subsection (a)". or reduce the credit limit applicable to an ac­ count under the plan during any period in EFFECTIVE DATE OF 2010 AMENDMENT which the value of the consumer's principal 

Amendment by Pub. L. 111-203 effective on the desig­ dwelling which secures any outstanding balnated transfer date, see section 1100H of Pub. L. 111-203, ance is significantly less than the original set out as a note under section 552a of Title 5, Govern­ appraisal value of the dwelling. ment Organization and Employees. (C) Prohibit additional extensions of credit 

EFFECTIVE DATE or reduce the credit limit applicable to the 

account during any period in which the cred­ Section effective on expiration of two years and six 

months itor has reason to believe that the consumer after Mar. 31, 1980, with all regulations, forms, 

and clauses required to be prescribed to be promulgated will be unable to comply with the repayment 

at least one year prior to such effective date, and allow­ requirements of the account due to a mateing any creditor to comply with any amendments, in ac­ rial change in the consumer's financial circordance with the regulations, forms, and clauses pre­ cumstances. 

scribed by the Board prior to such effective date, see (D) Prohibit additional extensions of credit 

section 625 of Pub. L. 96-221, set out as an Effective Date or reduce the credit limit applicable to the of 1980 Amendment note under section 1602 of this title. account during any period in which the con­

§ sumer is in default with respect to any mate­ 1647. Home equity plans rial obligation of the consumer under the agree­

(a) Index requirement ment. 

In the case of extensions of credit under an (E) Prohibit additional extensions of credit 

open end consumer credit plan which are subject or reduce the credit limit applicable to the 

to a variable rate and are secured by a consum­ account during any period in whicher's principal dwelling, the index or other rate of (i) the creditor is precluded by government 

interest to which changes in the annual percent­ action from imposing the annual percentage rate are related shall be based on an index or age rate provided for in the account agreerate of interest which is publicly available and is ment; or 

not under the control of the creditor. (ii) any government action is in effect which 

adversely affects the priority of the credi­ (b) Grounds for acceleration of outstanding bal­ tor's security interest in the account to the ance extent that the value of the creditor's se­ A creditor may not unilaterally terminate any cured interest in the property is less than 

account under an open end consumer credit plan 120 percent of the amount of the credit limunder which extensions of credit are secured by a it applicable to the account. 

consumer's principal dwelling and require the immediate (F) Any change that will benefit the con­ repayment of any outstanding balance sumer. at such time, except in the case of-

(1} fraud or material misrepresentation on the (8) Material obligations 

part of the consumer in connection with the ac­ Upon the request of the consumer and at the count; time an agreement is entered into by a consum- (2) failure by the consumer to meet the repayment terms of the agreement for any outstanding balance; or 1 So in original. Probably should be "paragraph" 
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§ 1648 TITLE 15--COMMERCE AND TRADE Page 80 

er to open an account under an open end con­ set out as a note under section 552a of Title 5, Governsumer credit plan under which extensions of cred­ ment Organization and Employees. 

it are secured by the consumer's principal dwelling, the consumer shall be given a list of the EFFECTIVE DATE 

categories of contract obligations which are For effective date of section, see Regulations; Effective 

deemed by the creditor to be material obliga­ Date note below. 

tions of the consumer under the agreement for REGULATIONS; EFFECTIVE DATE purposes of paragraph (2)(D). For provisions relating to promulgation of regulations (4) Consumer benefit to implement amendment by Pub. L. 100-709 [enacting 

(A) In general this section], and effective date of such amendment in 

connection with those regulations, see section 7 of Pub. For purposes of paragraph (2)(F), a change L. 100-709, set out as a note under section 1637a of this 

shall be deemed to benefit the consumer if title. 

the change is unequivocally beneficial to the 

borrower and the change is beneficial through § 1648. Reverse mortgages 

the entire term of the agreement. (a) In general 

(B) Bureau categorization In addition to the disclosures required under 

The Bureau may, by regulation, determine cat­ this subchapter, for each reverse mortgage, the 

egories of changes that benefit the consumer. creditor shall, not less than 3 days prior to consummation of the transaction, disclose to the con­ (d) Terms changed after application sumer in conspicuous type a good faith estimate 

If any term or condition described in section of the projected total cost of the mortgage to the 1637a(a) of this title which is disclosed to a con­ consumer expressed as a table of annual interest sumer in connection with an application to open rates. Each annual interest rate shall be based on an account under an open end consumer credit a projected total future credit extension balance plan described in such section (other than a vari­ under a projected appreciation rate for the dwell­ able feature of the plan) changes before the ac­ ing and a term for the mortgage. The disclosure 

count is opened, and if, as a result of such change, shall include- the consumer elects not to enter into the plan agree­ (1) statements of the annual interest rates for 

ment, the creditor shall refund all fees paid by the not less than 3 projected appreciation rates and consumer in connection with such application. not less than 3 credit transaction periods, as (e) Additional requirements relating to refunds determined by the Bureau, includingand imposition of nonrefundable fees (A) a short-term reverse mortgage; 

(1) In general (B) a term equaling the actuarial life ex­ pectancy of the consumer; and No nonrefundable fee may be imposed by a (C) such longer term as the Bureau deems creditor or any other person in connection with appropriate; and any application by a consumer to establish an 

account under any open end consumer credit (2) a statement that the consumer is not obliplan which provides for extensions of credit which gated to complete the reverse mortgage transare secured by a consumer's principal dwelling action merely because the consumer has received 

before the end of the 3-day period beginning on the disclosure required under this section or 

the date such consumer receives the disclosure has signed an application for the reverse mortrequired under section 1637a(a) of this title and gage. 

the pamphlet required under section 1637a(e) of (b) Projected total cost this title with respect to such application. In determining the projected total cost of the (2) Constructive receipt mortgage to be disclosed to the consumer under 

For purposes of determining when a nonrefund­ subsection (a), the creditor shall take into account-­

able fee may be imposed in accordance with Cl) any shared appreciation or equity that the 

this subsection if the disclosures and pamphlet lender will, by contract, be entitled to receive; referred to in paragraph (1) are mailed to the (2) all costs and charges to the consumer, inconsumer, the date of the receipt of the disclo­ cluding the costs of any associated annuity that sures by such consumer shall be deemed to be 3 the consumer elects or is required to purchase business days after the date of mailing by the as part of the reverse mortgage transaction; 

creditor. (3) all payments to and for the benefit of the 

(Pub. L. 90-321, title I, § 137, as added Pub. L. consumer, including, in the case in which an as100-709, §3, Nov. 23, 1988, 102 Stat. 4731; amended sociated annuity is purchased (whether or not 

Pub. L. 103--325, title I, § 154(c), Sept. 23, 1994, 108 required by the lender as a condition of making 

Stat. 2197; Pub. L. 111-203, title X, § 1100A(2), July the reverse mortgage), the annuity payments 

21, 2010, 124 Stat. 2107.) received by the consumer and financed from the 

proceeds of the loan, instead of the proceeds AMENDMENTS used to finance the annuity; and 

2010-Subsec. (c)(4)(B). Pub. L. 111-203 substituted "Bu­ (4) any limitation on the liability of the conreau" for "Board" in heading and text. sumer under reverse mortgage transactions (such 

1994-Subsec. (b). Pub. L. 103-325 inserted at end "This as nonrecourse limits and equity conservation 

subsection does not apply to reverse mortgage transac­ agreements). tions.'' 

(Pub. L. 90-321, title I, § 138, as added Pub. L. EFFECTIVE DATE OF 2010 AMENDMENT 103--325, title I, § 154(b), Sept. 23, 1994, 108 Stat. 

Amendment by Pub. L. 111-203 effective on the desig­ 2196; amended Pub. L. 111-203, title X, § 1100A(2), 

nated transfer date, see section 1100H of Pub. L. 111-203, July 21, 2010, 124 Stat. 2107.) 
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Page 81 TITLE l~OMMERCE AND TRADE § 1650 

AMENDMENTS 1996, 110 Stat. 3009-402; Pub. L. 111-203, title X, 

§ 2010-Subsec. (a)(l). Pub. L. 111-203 substituted "Bu­ 1100A(2), July 21, 2010, 124 Stat. 2107 .) 

reau" for "Board" in two places. AMENDMENTS 

EFFE=IVE DATE OF 2010-Subsec. (a)(2). Pub. L. 111-203 substituted "Bu­ 2010 AMENDMENT 

reau" for "Board". 

Amendment by Pub. L. 111-203 effective on the desig­ 199~ubsec. (a). Pub. L. 104-208 substituted "For any nated transfer date, see section 1100H of Pub. L. 111-203, closed end consumer credit transaction that is secured set out as a note under section 552a of Title 5, Govern­ by real property or a dwelling, that is subject to this ment Organization and Employees. subchapter, and" for "For any consumer credit transaction subject to this subchapter". 

§ 1649. Certain limitations on liability EFFE=1VE DATE OF 2010 AMENDMENT 

(a) Limitations on liability Amendment by Pub. L. 111-203 effective on the desigFor any closed end consumer credit transaction nated transfer date, see section 1100H of Pub. L. 111-203, 

that is secured by real property or a dwelling, set out as a note under section 552a of Title 5, Governthat is subject to this subchapter, and that is ment Organization and Employees. 

consummated before September 30, 1995, a cred­ EFFE=1VE DATE OF 1996 AMENDMENT 

itor or any assignee of a creditor shall have no Pub. L. 104-208, div. A, title II, § 2107(b), Sept. 30, 1996, 

civil, administrative, or criminal liability under 110 Stat. 3009--402, provided that: "The amendment made 

this subchapter for, and a consumer shall have no by subsection (a) [amending this section] shall be effecextended rescission rights under section 1635(0 of tive as of .September 30, 1995." 

this title with respect to- § 1650. Preventing unfair and deceptive private (1) the creditor's treatment, for disclosure pur­ educational lending practices and eliminatposes, of- ing conflicts of interest 

(A) taxes described in section 1605(d)(3) of (a) Definitions this title; 

(B) fees described in section 1605(e)(2) and As used in this section­

(5) of this title; (!) the term "cosigner"-

(C) fees and amounts referred to in the 3rd (A) means any individual who is liable for 

sentence of section 1605(a) of this title; or the obligation of another without compensa­

(D) borrower-paid mortgage broker fees re­ ti on, regardless of how designated in the conferred to in section 1605(a)(6) of this title; tract or instrument with respect to that obligation, other than an obligation under a pri­ (2) the form of written notice used by the vate education loan extended to_ consolidate a creditor to inform the obligor of the rights of consumer's pre-existing private education loans; the obligor under section 1635 of this title if the (B) includes any person the signature of which creditor provided the obligor with a properly is requested as condition to grant credit or to dated form of written notice published and adopt­ forbear on collection; and ed by the Bureau or a comparable written no­ (C) does not include a spouse of an individ­ tice, and otherwise complied with all the require­ ual described in subparagraph (A), the signa­ ments of this section regarding notice; or ture of whom is needed to perfect the secu­ (3) any disclosure relating to the finance charge rity interest in ·a loan. imposed with respect to the transaction if the 

amount or percentage actually disclosed- (2) the term "covered educational institution" -

(A) may be treated as accurate for purposes (A) means any educational institution that 

of this subchapter if the amount disclosed as offers a postsecondary educational degree, certhe finance charge does not vary from the ac­ tificate, or program of study (including any 

tual finance charge by more than $200; institution of higher education); and 

(B) may, under section 1605(f)(2) of this title, (B) includes an agent, officer, or employee of 

be treated as accurate for purposes of section the educational institution; 

1635 of this title; or (3) the term "gift"- (C) is greater than the amount or percent­ (A)(i) means any gratuity, favor, discount, 

age required to be disclosed under this sub­ entertainment, hospitality, loan, or other item 

chapter. having more than a de minimis monetary value, including services, transportation, lodging, (b) Exceptions or meals, whether provided in kind, by pur­ Subsection (a) shall not apply to- chase of a ticket, payment in advance, or re­ (1) any individual action or counterclaim imbursement after the expense has been in­ brought under this subchapter which was filed curred; and before June 1, 1995; (ii) includes an item described in clause (i) (2) any class action brought under this sub­ provided to a family member of an officer, chapter for which a final order certifying a class employee, or agent of a covered educational was entered before January 1, 1995; institution, or to any other individual based (3) the named individual plaintiffs in any class on that individual's relationship with the of­ action brought under this subchapter which was ficer, employee, or agent, if- filed before June 1, 1995; or (!) the item is provided with the knowl­ ( 4) any consumer credit transaction with re­ edge and acquiescence of the officer, em­ spect to which a timely notice of rescission was ployee, or agent; and 

sent to the creditor before June 1, 1995. (II) the officer, employee, or agent has rea­

(Pub. L. 90-321, title I, § 139, as added Pub. L. son to believe the item was provided be104-29, § 4(a), Sept. 30, 1995, 109 Stat. 273; amended cause of the official position of the officer, 

Pub. L. 104-208, div. A, title II, § 2107(a), Sept. 30, employee, or agent; and 
Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 80 of 92 PageID #: 195 

§ 1650 TITLE 15-COMMERCE AND TRADE Page 82 

(B) does not include- (8) the term "private education loan" -

(i) standard informational material relat­ (A) means a loan provided by a private edued to a loan, default aversion, default pre­ cational lender that--

vention, or financial literacy; (i) is not made, insured, or guaranteed un­

(ii) food, refreshments, training, 1 

or der infor­ of title IV of the Higher Education Act 

mational material of 1965 (20 U.S.C. 1070 et seq.); and furnished to an officer, 

covered educational (ii) is issued expressly for postsecondary employee, or agent of a educational expenses to a borrower, regard­ institution, as an integral part of a train­ less of whether the loan is provided through ing session or through participation in an the educational institution that the subject advisory council that is designed to improve student attends or directly to the borrower the service of the private educational lender from the private educational lender; and 

to the covered educational institution, if such 

training or participation contributes to (B) does the not include an extension of credit 

under an open end consumer credit plan, a re­ professional development of the officer, em­ verse mortgage transaction, a residential mort­ ployee, or agent of the covered educational 

gage transaction, or any other loan that is institution; secured by real property or a dwelling; and (iii) favorable terms, conditions, and borrower benefits on a private education loan (9) the term "revenue sharing" means an arprovided to a student employed by the cov­ rangement between a covered educational instiered educational institution, if such terms, tution and a private educational lender under 

conditions, or benefits are not provided which- be­ cause of (A) the a student's private educational employment with lender the provides or 

covered issues educational private institution; education loans with respect to 

(iv) the students provision of attending financial the covered literacy coun- educational inor services, including counseling stitution; or !'(A·ruii0.As provided in coordination with a cov­ (B) the covered educational institution recered educational ommends to institution, students or to the others extent the private 

that such educational counseling lender or or services the are private not un­ education loans 

of the private educational lender; and dertaken to secure- (!) applications (C) the for private private educational education lender loans pays a fee 

or or provides other material private benefits, education including loan volume; 

(II) profit sharing, to the covered applications educational in­ or loan volume for any stitution in connection loan made, with the private insured, edu­ or guaranteed under cation loans provided to students attending title IV of the Higher Education Act of the covered educational institution or a bor­ 1965 (20 U.S.C. 1070 et seq.); or (III) rower acting on behalf of a the student. purchase of a product or serv­ ice of a specific private educational lend­ (b) Prohibition on certain gifts and arrangeer; ments 

(v) philanthropic contributions to a cov­ A private educational lender may not, directly 

ered educational institution from a private or indirectlyeducational lender that are unrelated to pri­ (1) offer or provide any gift to a covered eduvate education loans and are not made in cational institution in exchange for any advanexchange for any advantage related to pri­ tage or consideration provided to such private 

vate education loans; or educational lender related to its private educa­

(vi) State education grants, scholarships, tion loan activities; or 

or financial aid funds administered by or on (2) engage in revenue sharing with a covered 

behalf of a State; educational institution. 

( 4) the term "institution of higher education" (c) Prohibition on co-branding has the same meaning as in section 102 of the A private educational lender may not use the Higher Education Act of 1965 (20 U.S.C. 1002); name, emblem, mascot, or logo of the covered edu­ (5) the term "postsecondary educational ex­ cational institution, or other words, pictures, or penses'' means any of the expenses that are in­ symbols readily identified with the covered edu­ cluded as part of the cost of attendance of a cational institution, in the marketing of private student, as defined under section 472 of the Hlgh­ education loans in any way that implies that the er Education Act of 1965 (20 U.S.C. 1087ll); covered educational institution endorses the pri­ (6) the term "preferred lender arrangement" vate education loans offered by the private edu­ has the same meaning as in section 151 of the cational lender. Higher Education Act of 1965 (20 U.S.C. 1019]; 

(7) the term "private educational lender" (d) Advisory Board compensation 

means- Any person who is employed in the financial aid 

(A) a financial institution, as defined in sec­ office of a covered educational institution, or who 

tion 1813 of title 12 that solicits, makes, or ex­ otherwise has responsibilities with respect to pri­ tends private education loans; vate education loans or other financial aid of the 

(B) a Federal credit union, as defined in sec­ institution, and who serves on an advisory board, tion 1752 of title 12 that solicits, makes, or ex­ commission, or group established by a private edutends private education loans; and cational lender or group of such lenders shall be 

(C) any other person engaged in the busi­ ness of soliciting, making, or extending private education loans; 1 So in original. The word "of" probably should not appear. 
Page 83 TITLE 15-COMMERCE AND TRADE § 1660 

prohibited from receiving anything of value from signer from the obligations of the cosigner 

the private educational lender or group of lenders. under the private education loan. 

Nothing in this subsection prohibits the reimburse­ (B) Notification of release 

ment of reasonable expenses incurred by an em­ A holder or servicer of a private education ployee of a covered educational institution as part loan, as applicable, shall within a reasonable of their service on an advisory board, commis­ time-frame notify any cosigners for the pri• sion, or group described in this subsection. 

vate education loan if a cosigner is released 

(e) Prohibition on prepayment or repayment fees from the obligations of the cosigner for the or penalty private education loan under this paragraph. 

It shall be unlawful for any private educational (C) Designation of individual to act on behalf 

lender to impose a fee or penalty on a borrower of the borrower 

for early repayment or prepayment of any private Any lender that extends a private education education loan. loan shall provide the student obligor an option 

.(f) Credit card protections for college students to designate an individual to have the legal au­

(1) Disclosure required thority to act on behalf of the student obligor 

with respect to the private education loan in An institution of higher education shall pub­ the event of the death of the student obligor. licly disclose any contract or other agreement 

made with a card issuer or creditor for the pur­ (Pub. L. 90-321, title I, § 140, as added Pub. L. 

pose of marketing a credit card. 110-315, title X, § lOll(a), Aug. 14, 2008, 122 Stat. 

3479; amended Pub. L. 111-24, title III, § 304, May (2) Inducements prohibited 22, 2009, 123 Stat. 1749; Pub. L. 111-203, title X, No card issuer or creditor may offer to a stu­ § 1100A(2), July 21, 2010, 124 Stat. 2107; Pub. L. dent at an institution of higher education any 115-174, title VI, §60l(a), May 24, 2018, 132 Stat. tangible item to induce such student to apply 1365.) for or participate in an open end consumer credit plan offered by such card issuer or creditor, if REFERENCES IN TEXT 

such offer is made- The Higher Education Act of 1965, referred to in sub­

(A) on the campus of an institution of high­ sec. (a)(3)(B)(iv)(II), (8)(A)(i), is Pub. L. 89-329, Nov. 8, er education; 1965, 79 Stat. 1219. Title IV of the Act is classified gen­

(B) near the campus of an institution of erally to subchapter IV (§ 1070 et seq.) of chapter 28 of 

higher education, as determined by rule of the Title 20, Education. For complete classification of this 

Bureau; or Act to the Code, see Short Title note set out under sec­

(C) at an event sponsored by or related to tion 1001 of Title 20 and Tables. 

an institution of higher education. AMENDMENTS 

(3) Sense of the Congress 2018-Subsec. (a). Pub. L. llfr.174, §601(a)(l), added par. 

It is the sense of the Congress that each in­ (1) and redesignated former pars. (1) to (8) as (2) to (9), 

stitution of higher education should consider respectively. 

adopting the following policies relating to cred­ Subsec. (g). Pub. L. 116--174, §601(a)(2), added subsec. (g). 

2010-Subsec. (f)(2)(B). Pub. L. 111-203 substituted "Bu­ it cards: reau" for "Board" (A) That any card issuer that markets a 2009-Subsec. (f). Pub. L. 111-24 added subsec. (f). credit card on the campus of such institution 

notify the institution of the location at which EFFECTIVE DATE OF 2018 AMENDMENT 

such marketing will take place. Pub. L. llfr.174, title VI, § 601(b), May 24, 2018, 132 Stat. 

(B) That the number of locations on the cam­ 1365, provided that: "The amendments made by subsecpus of such institution at which the market­ tion (a) [amending this section] shall only apply to priing of credit cards takes place be limited. vate education loan agreements entered into on or after 

(C) That credit card and debt education and the date that is 180 days after the date of enactment of 

counseling sessions be offered as a regular this Act [May 24, 2018]." 

part of any orientation program for new stu­ EFFECTIVE DATE OF 2010 AMENDMENT dents of such institution. 

Amendment by Pub. L. 111-203 effective on the desig­ (g) Additional protections relating to borrower nated transfer date, see section 1100H of Pub. L. 111-203, 

or cosigner of a private education loan set out as a note under section 552a of Title 5, Govern­

(1) Prohibition on automatic default ment Employees. in case of Organization and 

death or bankruptcy of non-student obli• EFFECTIVE DATE OF 2009 AMENDMENT 

gor Amendment by Pub. L. 111-24 effective 9 montbB after 

With respect to a private education loan in­ May 22, 2009, except as otherwise specifically provided, volving a student obligor and 1 or more cosign­ see section 3 of Pub. L. 111-24, set out as a note under 

ers, the creditor shall not declare a default or section 1602 of this title. 

accelerate the debt against the student obligor EFFECTIVE DATE on the sole basis of a bankruptcy or death of a cosigner. Subsec. (c) of this section effective on the earlier of 

the date on which regulations issued under section 1002 (2) Cosigner release in case of death of bor­ of Pub. L. 110-315 (set out as a Regulations note under rower section 1638 of this title) become effective or 18 montbB 

(A) Release of cosigner after Aug. 14, 2008, see section 1003(b) of Pub. L. 110-315, 

set out as an Effective Date of 2008 Amendment note un­ The holder of a private education loan, when der section 1638 of this title. Such regulations were isnotified of the death of a student obligor, shall sued effective Sept. 14, 2009, with compliance optional 

release within a reasonable timeframe any co- until Feb. 14, 2010. 

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§ 1651 TITLE 15-COMMERCE AND TRADE Page 84 

§ 1651. Procedure for timely settlement of estates (Pub. L. 90-321, title I, § 142, May 29, 1968, 82 Stat. 

of decedent obligors 158.) 

The Bureau, in consultation with the Bureau 1 

plans and each other referred to in section 1607(a) § 1663. Advertising of open end credit agency 

of this title, shall prescribe regulations to re­ No advertisement to aid, promote, or assist diquire any creditor, with respect to any credit card rectly or indirectly the extension of consumer account under an open end consumer credit plan, credit under an open end credit plan may set forth 

to establish procedures to ensure that any ad­ any of the specific terms of that plan unless it 

ministrator of an estate of any deceased obligor also clearly and conspicuously sets forth all of 

with respect to such account can resolve outstand­ the following items: 

ing credit balances in a timely manner. (1) Any minimum or fixed amount which could 

be imposed. (Pub. L. 90-321, title I, § 140A, as added Pub. L. (2) In any case in which periodic rates may 111-24, title V, § 504(a), May 22, 2009, 123 Stat. 1756; be used to compute the finance charge, the peri­ amended Pub. L. 111-203, title X, § 1100A(2), (3), odic rates expressed as annual percentage rates. July 21, 2010, 124 Stat. 2107.) (3) Any other term that the Bureau may by 

AMENDMENTS regulation require to be disclosed. 

2010-Pub. L. 111-203, § 1100A(3), substituted "the Bu­ (Pub. L. 90-321, title I, § 143, May 29, 1968, 82 Stat. 

reau" for "the Federal Trade Commission". 158; Pub. L. 96-221, title VI, §§ 613(f), 619(a), Mar. 

Pub. L. 111-203, § 1100A(2), substituted "The Bureau" 31, 1980, 94 Stat. 177, 183; Pub. L. 111-203, title X, for "The Board". § 1100A(2), July 21, 2010, 124 Stat. 2107.) 

EFFECTIVE DATE OF 2010 AMENDMENT AMENDMENTS 

Amendment by Pub. L. 111-203 effective on the desig­ 2010-Par. (3). Pub. L. 111-203 substituted "Bureau" for nated transfer date, see section 1100H of Pub. L. 111-203, "Board". 

set out as a note under section 552a of Title 5, Govern­ 1980-Pub. L. 96-221 in existing introductory text struck 

ment Organization and Employees. out applicability of rate determined under section 1637(a)(5) 

of this title, and amended section generally EFFE=IVE DATE items setting forth minimum or fixed amount, etc., 

Section effective 9 months after May 22, 2009, except as out in pars. (1) to (3), for items time period, etc., set out 

otherwise specifically provided, see section 3 of Pub. L. in pars. (1) to (5). 

111-24, set out as an Effective Date of 2009 Amendment 

note under section 1602 of this title. EFFECTIVE DATE OF 2010 AMENDMENT 

Amendment by Pub. L. 111-203 effective on the 

PART 0--CREDIT ADVERTISING AND LIMITS ON nated transfer date, see section 1100H of Pub. L. 

CREDIT CARD FEES set out as a note under section 552a of Title 5, Government Organization and Employees. 

§ 1661. Catalogs and multiple-page advertisements EFFE=IVE DATE OF 1980 AMENDMENT 

For the purposes of this part, a catalog or other Amendment Pub. L. 96-221 effective on expiration of 

multiple-page advertisement shall be considered a two years and months after Mar. 31, 1980, with all 

single advertisement if it clearly and conspicuous­ regulations, forms, and clauses required to be prescribed 

ly· displays a credit terms table on which the in­ to be promulgated at least one year prior to such effecformation required to be stated under this part is tive date, and allowing any creditor to comply with any 

amendments, in accordance with the regulations, forms, clearly set forth. and clauses prescribed by the Board prior to such effec­

{Pub. L. 90--321, title I, § 141, May 29, 1968, 82 Stat. tive date, see section 625 of Pub. L. 96-221, set out as a 

158.) note under section 1602 of this title. 

EFFECTIVE DATE § 1664. Advertising of credit other than open end 

Pub. L. 90-321, title V, § 504(b), May 29, 1968, 82 Stat. plans 

167, provided that chapter 3 of title I, which enacted (a) Exclusion of open end credit plans sections 1661 to 1665 of this title, is effective July 1, 

1969. Except as provided in subsection (b), this section applies to any advertisement to aid, promote, 

§ 1662. Advertising of downpayments and install­ or assist directly or indirectly any consumer credments it sale, loan, or other extension of credit subject 

to the provisions of this subchapter, other than No advertisement to aid, promote, or assist di­ an open end credit plan. rectly or indirectly any extension of consumer 

credit may state (b) Advertisements of residential real estate (1) that a specific periodic consumer credit The provisions of this section do not apply to amount or installment amount can be arranged, advertisements of residential real estate except unless the creditor usually and customarily ar­ to the extent that the Bureau may by regulation ranges credit payments or installments for that require. period and in that amount. 

(2) that a specified downpayment is required (c) Rate of finance charge expressed as annual in connection with any extension of consumer percentage rate credit, unless the creditor usually and customarily arranges downpayments in that amount. If any advertisement to which this section applies states the rate of a finance charge, the advertisement shall state the rate of that charge 1 So i.n original. expressed as an annual percentage rate. 

Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 82 of 92 PageID #: 197 
Page 85 TITLE 15-COMMERCE AND TRADE § 1665b 

(d) Requisite disclosures in advertisement dium in which an advertisement appears or through 

If any advertisement to which this section ap­ which it is disseminated. 

plies states the amount of the downpayment, if (Pub. L. 90-321, title I, § 145, May 29, 1968, 82 Stat. 

any, the amount of any installment payment, the 159.) dollar amount of any finance charge, or the number of installments or the period of repayment, § 1665a. Use of annual percentage rate in oral 

then the advertisement shall state all of the fol­ disclosures; exceptions lowing items: 

(1) The downpayment, if any. In responding orally to any inquiry about the 

of repayment. cost of credit, a creditor, regardless of the meth­ (2) The terms 

rate of the finance charge expressed od used to compute finance charges, shall state (3) The 

the annual percentage rate, rate. rates only in terms of as an annual percentage except that in the case of an open end credit (e} Credit transaction secured by principal dwell­ plan, the periodic rate also may be stated and, in ing of consumer the case of an other than open end credit plan Each advertisement to which this section ap­ where a major component of the finance charge plies that relates to a consumer credit transac­ consists of interest computed at a simple annual 

tion that is secured by the principal dwelling of a rate, the simple annual rate also may be stated. consumer in which the extension of credit may The Bureau may, by regulation, modify the re­ exceed the fair market value of the dwelling, and quirements of this section or provide an excep­ which advertisement is disseminated in paper form tion from this section for a transaction or class 

to the public or through the Internet, as opposed of transactions for which the creditor cannot deto by radio or television, shall clearly and con­ termine in advance the applicable annual percent­ spicuously state that- age rate. 

(1) the interest on the portion of the credit 

(Pub. L. 90-321, title I, 146, as added Pub. L. extension that is greater than the fair market § 

93-495, title IV, § 401(a), Oct. 28, 1974, 88 Stat. 1517; value of the dwelling is not tax deductible for 

amended Pub. L. 96-221, title VI, Federal income tax purposes; and § 623(a), Mar. 31, 

1980, 94 Stat. 185; Pub. L. 111-203, title X, (2) the consumer should consult a tax adviser § 1100A(2), 

July 21, 2010, 124 Stat. 2107.) for further information regarding the deductibility of interest and charges. AMENDMENTS 

(Pub. L. 90-321, title I, § 144, May 29, 1968, 82 Stat. 2010-Pub. L. 111-203 substituted "Bureau'' for "Board". 

158; Pub. L. 96-221, title VI, § 619(b), Mar. 31, 1980, 1980-Pub. L. 96-221 substituted provisions relating to 

94 Stat. 183; Pub. L. 109-8, title XIII, § 1302(b)(2), use of annual percentage rate in oral disclosures by crediApr. 20, 2005, 119 Stat. 209; Pub. L. 111-203, title X, tors, for provisions setting forth requirements for adver­

§ 1100A(2), July 21, 2010, 124 Stat. 2107 .) tisements concerning consumer credit repayable in more than four installments. 

AMENDMENTS EFFECTIVE DATE OF 2010 AMENDMENT 

2010-Subsec. (b). Pub. L. 111-203 substituted "Bureau" 

Amendment by Pub. L. 111-203 effective on the desig­ for "Board". 

subsec. (e). nated transfer date, see section 1100H of Pub. L. 111-203, 2005--Subsec. (e). Pub. L. 109-8 added 

1980-Subsec. (d). Pub. L. 97-221 substituted items set­ set out as a note under section 552a of Title 5, Governting forth downpayment, etc., set out in and Employees. pars. (1) to (3), ment Organization 

for items setting forth cash price or amount of loan, etc., EFFECTIVE DATE OF 1980 AMENDMENT set out in pars. (1) to ( 4). 

Amendment by Pub. L. 96--221 effective on expiration of 

EFFECTIVE DATE OF 2010 AMENDMENT two years and six months after Mar. 31, 1980, with all 

Amendment regulations, forms, and clauses required to be prescribed by Pub. L. 111-203 effective on the desig­ least one year prior to such effec­ nated transfer date, see section 1100H of Pub. L. 111-203, to be promulgated at 

date, and allowing any creditor to comply with any set out as a note under section 552a of Title 5, Govern­ tive 

ment Organization and Employees. amendments, in accordance with the regulations, forms, 

and clauses prescribed by the Board prior to such effecEFFECTIVE DATE OF 2005 AMENDMENT tive date, see section 625 of Pub. L. 96--221, set out as a 

note under section 1602 of this title. Amendment by Pub. L. 109-8 effective 180 days after 

Apr. 20, 2005, and not applicable with respect to cases EFFECTIVE DATE 

commenced under Title 11, Bankruptcy, before such efotherwise provided, see section Pub. L. 93-495, title IV, 416, Oct. 1974, 88 as § 28, Stat. 1521, fective date, except 

section 101 provided that: "This title [enacting this section and sec­ 1501 of Pub. L. 109----8, set out as a note under 

and 1645 of this title, amending sections 1603, of Title 11. tions 1614 

1607, 1635, 1637, 1640, and 1644 of this title, and enacting 

EFFECTIVE DATE OF 1980 A..'11:ENDMENT provision set out as a note under section 1640 of this 

title] takes effect upon the date of its enactment [Oct. Amendment by Pub. L. 96--221 effective on expiration of 28, 1974], except that sections 409 [amending section 1631 two years and six months after Mar. 31, 1980, with all of this title] and 411 [amending section 1637 of this title] regulations, forms, and clauses required to be prescribed take effect upon the expiration of one year after the date to be promulgated at least one year prior to such effec­ of its enactment [Oct. 28, 1974]." tive 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 effec­ § 1665b. Advertising of open end consumer credit 

tive date, see section 625 of Pub. L. 96--221, set out as a plans secured by consumer's principal dwellnote under section 1602 of this title. ing 

§ 1665. Nonliability of advertising media (a) In general 

There is no liability under this part on the part If any advertisement to aid, promote, or assist, 

of any owner or personnel, as such, of any me- directly or indirectly, the extension of consumer 

32•709_T_TF D Sig-5 

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§ 1665b TITLE 15----COMMERCE AND TRADE Page 86 

credit through an open end consumer credit plan (2) Quoted rate must be reasonably current 

under which extensions of credit are secured by The annual percentage rate required to be dis­ the consumer's principal dwelling states, affirma­ closed under the paragraph (1) rate must be cur­ tively or negatively, any of the specific terms of rent as of a reasonable time given the media in­ the plan, including any periodic payment amount volved. 

required under such plan, such advertisement shall 

also clearly and conspicuously set forth the fol­ (3) Period during which initial rate is in effect 

lowing information, in such form and manner as Any advertisement to which paragraph (1) apthe Bureau may require: plies shall also state the period of time during 

(1) Loan fees and opening cost estimates which the initial annual percentage rate referred 

to in such paragraph will be in effect. Any loan fee the amount of which is determined as a percentage of the credit limit ap­ (e) Balloon payment plicable to an account under the plan and an es­ If any advertisement described in subsection (a) timate of the aggregate amount of other fees contains a statement regarding the minimum for opening the account, based on the creditor's monthly payment under the plan, the advertise­ experience with the plan and stated as a single ment shall also disclose, if applicable, the fact 

amount or as a reasonable range. that the plan includes a balloon payment. 

(2) Periodic rates 

(f) "Balloon payment" defined In any case in which periodic rates may be 

For purposes of this section and section 1637a used to compute the finance charge, the periodic of this title, the term "balloon payment" means, rates expressed as an annual percentage rate. with respect to any open end consumer credit plan (3) Highest annual percentage rate under which extensions of credit are secured by 

The highest annual percentage rate which may the consumer's principal dwelling, any repayment 

be imposed under the plan. option under which-

(4) Other information (1) the account holder is required to repay the 

entire amount of any outstanding balance as of Any other information the Bureau may by a specified date or at the end of a specified pe­ regulation require. riod of time, as determined in accordance with 

(b) Tax deductibility the terms of the agreement pursuant to which 

(1) In such credit is extended; and general (2) the aggregate amount of the minimum peri­ If any advertisement described in subsection odic payments required would not fully amor­ (a) contains a statement that any interest expense tize such outstanding balance by such date or incurred with respect to the plan is or may be at the end of such period. tax deductible, the advertisement shall not be 

misleading with respect to such deductibility. (Pub. L. 90-321, title I, § 147, as added Pub. L. 

100-709, §2(c), Nov. 23, 1988, 102 Stat. 4730; amend­ (2) Credit in excess of fair market value ed Pub. L. 109--8, title XIII, § 1302(a)(2), Apr. 20, 

Each advertisement described in subsection 2005, 119 Stat. 208; Pub. L. 111-203, title X, § 1100A(2), 

(a) that relates to an extension of credit that July 21, 2010, 124 Stat. 2107.) 

may exceed the fair market value of the dwelling, and which advertisement is disseminated AMENDMENTS 

in paper form to the public or through the Inter­ 2010---Subsecs. (a), (c). Pub. L. 111-203 substituted "Bunet, as opposed to by radio or television, shall reau" for "Board" wherever appearing. 

include a clear and conspicuous statement that-- 2005-Subsec. (b). Pub. L. 109----8 designated existing provi­

(A) the interest on the portion of the credit sions as par. (1), inserted par. heading, and added par. (2). 

extension that is greater than the fair mar­ EFFE=IVE DATE OF 2010 AMENDMENT ket value of the dwelling is not tax deductible 

Amendment by Pub. L. 111-203 effective on the desig­ for Federal income tax purposes; and nated transfer date, see section 1100H of Pub. L. 111-203, (B) the consumer should consult a tax ad­ set out as a note under section 552a of Title 5, Govern­ viser for further information regarding the de­ ment Organization and Employees. ductibility of interest and charges. 

EFFECTIVE DATE OF 2005 AMENDMENT (c) Certain terms prohibited Amendment by Pub. L. 109--8 effective 180 days after No advertisement described in subsection (a) with Apr. 20, 2005, and not applicable with respect to cases respect to any home equity account may refer to commenced under Title 11, Bankruptcy, before such efsuch loan as ''free money' ' or use other terms de­ fective date, except as otherwise provided, see section 

termined by the Bureau by regulation to be mis­ 1501 of Pub. L. 109--8, set out as a note under section 101 

leading. of Title 11. 

(d) Discounted initial rate EFFECTIVE DATE 

(1) In general For effective date of section, see Regulations; Effective 

advertisement described in Date note below. If any subsection 

(a) includes an initial annual percentage rate REGULATIONS; EFFECTIVE DATE 

that is not determined by the index or formula For provisions relating to promulgation of regulations used to make later interest rate adjustments, to implement amendment by Pub. L. 100-709 [enacting the advertisement shall also state with equal prom­ this section], and effective date of such amendment in 

inence the current annual percentage rate that connection with those regulations, see section 7 of Pub. 

would have been applied using the index or for­ L. 100-709, set out as a note under section 1637a of this 

mula if such initial rate had not been offered. title. 
Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 85 of 92 PageID #: 200 

Page 87 TITLE 15--COMMERCE AND TRADE § 1665d 

§ 1665c. Interest rate reduction on open end con­ spect to, or violation of, the cardholder agree­ sumer credit plans ment, including any late payment fee, over-thelimit fee, or any other penalty fee or charge, shall (a) In general be reasonable and proportional to such omission 

If a creditor increases the annual percentage or violation. 

rate applicable to a credit card account under an 

open end consumer credit plan, based on factors (b) Rulemaking required 

including the credit risk of the obliger, market The Bureau, in consultation with the Comptrol­ conditions, or other factors,. the creditor shall con­ ler of the Currency, the Board of Directors of the sider changes in such factors in subsequently de­ Federal Deposit Insurance Corporation, the Direc­ termining whether to reduce the annual percent­ tor of the Office of Thrift Supervision, and the 

age rate for such obligor. National Credit Union Administration Board, shall 

(b) Requirements issue final rules not later than 9 months after 

With May 22, 2009, to establish standards for assessing respect to any credit card account under 

of any penalty fee or charge an open end consumer credit plan, the creditor whether the amount 

subsection (a) is reasonable and shall- described under 

(1) maintain reasonable methodologies for as­ proportional to the omission or violation to which 

(a) shall be­ sessing the factors described in subsection (a); the fee or charge relates. Subsection 

(2) not less frequently than once every 6 months, come effective 15 months after May 22, 2009. 

review accounts as to which the annual percent,.. (c) Considerations 

age rate has been increased since January 1, 

2009, to assess whether such factors have changed In issuing rules required by this section, the 

(including whether any risk has declined); Bureau shall considerthe by (3) reduce the annual percentage rate previ­ (1) cost incurred the creditor from such 

ously increased when a reduction is indicated omission or violation; 

by the review; and (2) the deterrence of such omission or viola­

(4) in the event of an increase in the annual tion by the cardholder; 

and percentage rate, provide in the written notice (3) the conduct of the cardholder; 

required under section 1637(i) of this title a state­ (4) such other factors as the Bureau may deem 

ment of the reasons increase. appropriate. for the necessary or 

(c) Rule of construction (d) Differentiation permitted 

This section shall not be construed to require a In issuing rules required by this subsection, the 

reduction in any specific amount. Bureau may establish different standards for different types of fees and charges, as appropriate. (d) Rulemaking 

The Bureau 1 shall issue final rules not later (e) Safe harbor rule authorized 

than 9 months after May 22, 2009, to implement The Bureau, in consultation with the Comptrol­ the requirements of and evaluate compliance with ler of the Currency, the Board of Directors of the this section, and subsections (a), (b), and (c) shall Federal Deposit Insurance Corporation, the Direc­ become effective 15 months after May 22, 2009. tor of the Office of Thrift Supervision, and the 

(Pub. L. 90--321, title I, § 148, as added Pub. L. National Credit Union Administration Board, may 

111-24, title I, § IOI(c), May 22, 2009, 123 Stat. 1737; issue rules to provide an amount for any penalty 

amended Pub. L. 111-203, title X, § 1100A(2), July fee or charge described under subsection (a) that 

21, 2010, 124 Stat. 2107.) is presumed to be reasonable and proportional to 

the omission or violation to which the fee or charge AMENDMENTS relates. 

2010---Subsec. (d). Pub. L. 111-203 substituted "Bureau" 

for "Board". (Pub. L. 90--321, title I, § 149, as added Pub. L. 

111-24, title I, § 102(b)(l), May 22, 2009, 123 Stat. EFFECTIVE DATE OF 2010 AMENDMENT 1740; amended Pub. L. 111-203, title X, § 1100A(2), 

Amendment by Pub. L. 111-203 effective on the desig­ July 21, 2010, 124 Stat. 2107.) 

nated transfer date, see section 1100H of Pub. L. 111-203, 

set out as a note under section 552a of Title 5, Govern­ AMENDMENTS 

ment Organization and Employees. 2010-Subsecs. (b) to (e). Pub. L. 111-203, §1100A(2), which 

directed amendment of this section by substituting "Bu­ EFFECTIVE DATE reau" for "Board" wherever appearing, was executed by 

Section effective 9 months after May 22, 2009, except as making the substitution for "Board" the first time apotherwise specifically provided, see section 3 of Pub. L. pearing in subsecs. (b) and (e), and wherever appearing 

an of in (c) and (d), to reflect the probable intent of 111-24, set out as Effective Date 2009 Amendment subsecs. 

note under section 1602 of this title. Congress. 

§ 1665d. Reasonable penalty fees on open end EFFECTIVE DATE OF 2010 AMENDMENT 

consumer credit plans Amendment by Pub. L. 111-203 effective on the designated transfer date, see section UOOH of Pub. L. 111-203, (a) In general set out as a note under section 552a of Title 5, GovernThe amount of any penalty fee or charge that a ment Organization and Employees. 

card issuer may impose with respect to a credit 

card account under an open end consumer credit EFFECTIVE DATE 

plan in connection with any omission with re- 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 1 So in original. Probably should be "Board". note under section 1602 of this title. 
Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 86 of 92 PageID #: 201 

§ 1665e TITLE 15-COMMERCE AND TRADE Page 88 

§ 1665e. Consideration of ability to repay plicable the reasons why the creditor believes 

the account of the obligor was correctly shown A card issuer may not open any credit card ac­ in the statement and, upon request of the ob­ count for any consumer under an open end consum­ ligor, provide copies of documentary evidence er credit plan, or increase any credit limit applica­ of the obligor's indebtedness. In the case of a ble to such account, unless the card issuer considers billing error where the obliger alleges that the ability of the consumer to make the reqUired the creditor's billing statement reflects goods payments under the terms of such account. not delivered to the obligor or his designee in 

(Pub. L. 90-321, title I, § 150, as added Pub. L. accordance with the agreement made at the 

111-24, title I, § 109(a), May 22, 2009, 123 Stat. 1743.) time of the transaction, a creditor may not 

construe such amount to be correctly shown EFFECTIVE DATE unless he determines that such goods were ac­ Section effective 9 months after May 22, 2009, except as tually delivered, mailed, or otherwise sent to 

otherwise specifically provided, see section 3 of Pub. L. the obligor and provides the obligor with a 111-24, set out as an Effective Date of 2009 Amendment statement of such determination. 

note under section 1602 of this title. 

After complying with the provisions of this subPART D--CREDIT BILLING section with respect to an alleged billing error, a creditor has no further responsibility under this sec­ tion if the obligor continues to make substantially § 1666. Correction of billing errors the same allegation with respect to such error. (a) Written notice by obligor to creditor; time for 

and contents of notice; procedure upon re­ (b) Billing error 

ceipt of notice by creditor For the purpose of this section, a "billing er­ If a creditor, within sixty days after having trans­ ror" consists of any of the following: 

mitted to an obligor a statement of the ohligor's (1) A reflection on a statement of an extenaccount in connection with an extension of con­ sion of credit which was not made to the ob­ sumer credit, receives at the address disclosed un­ liger or, if made, was not in the amount reflectder section 1637(b)(10) of this title a written no­ ed on such statement. 

tice (other than notice on a payment stub or other (2) A reflection on a statement of an extenpayment medium supplied by the creditor if the sion of credit for which the obligor requests adcreditor so stipulates with the disclosure required ditional clarification including documentary eviunder section 1637(a)(7) of this title) from the ob­ dence thereof. 

ligor in which the obligor- (3) A reflection on a statement of goods or (1) sets forth or otherwise enables the creditor services not accepted by the obligor or his desto identify the name and account number (if ignee or not delivered to the obliger or his desany) of the obligor, ignee in accordance with the agreement made 

(2) indicates the obligor's belief that the state­ at the time of a transaction. 

ment contains a billing error and the amount of · ( 4) The creditor's failure to reflect properly 

such billing error, and on a statement a payment made by the obligor 

(3) sets forth the reasons for the obligor's be­ or a credit issued to the obliger. 

lief (to the extent applicable) that the state­ (5) A computation error or similar error of an 

ment contains a billing error, accounting nature of the creditor on a statement. 

(6) Failure to transmit the statement required the creditor shall, unless the obliger has, after under section 1637(b) of this title to the last ad­ giving such written notice and before the expira­ dress of the obligor which has been disclosed to tion of the time limits herein specified, agreed the creditor, unless that address was furnished that the statement was correct- less than twenty days before the end of the bill­ (A) not later than thirty days after the re­ ing cycle for which the statement is required. ceipt of the notice, send a written acknowledg­ (7) Any other error described in regulations of ment thereof to the obligor, unless the action the Bureau. required in subparagraph (B) is taken within 

such thirty-day period, and (c) Action by creditor to collect amount or any (B) not later than two complete billing cycles part thereof regarded by obligor to be a bill­ of the creditor (in no event later than ninety ing error days) after the receipt of the notice and prior For the purposes of this section, • 'action to col­ to taking any action to collect the amount, or lect the amount, or any part thereof, indicated by any part thereof, indicated by the obliger under an obligor under paragraph (2)" does not include paragraph (2) either- the sending of statements of .account, which may (i) make appropriate corrections in the ac­ include finance charges on amounts in dispute, to count of the obligor, including the crediting of the obligor following written notice from the ob­ any finance charges on amounts erroneously ligor as specified under subsection (a), if- billed, and transmit to the obliger a notifica­ (1) the obliger's account is not restricted or tion of such corrections and the creditor's ex­ closed because of the failure of the obligor to planation of any change in the amount indipay the amount indicated under paragraph (2) cated by the obligor under paragraph (2) and, of subsection (a), and if any such change is made and the obligor so (2) the creditor indicates the payment of such requests, copies of documentary evidence of amount is not required pending the creditor's the obligor's indebtedness; or compliance with this section. (ii) send a written explanation or clarification to the obligor, after having conducted an Nothing in this section shall be construed to proinvestigation, setting forth to the extent ap- hibit any action by a creditor to collect any amount 
Page 89 TITLE 15--COMMERCE AND TRADE § 1666b 

which has not been indicated by the obligor to tions 1666a to 1666j of this title, amending sections 1601, 

contain a billing error. 1602, 1610, 1631, 1632, and 1637 of this title, and enacting 

provision set out as a note under section 1601 of this 

(d) Restricting or closing by creditor of account title] takes effect upon the expiration of one year· after 

regarded by obligor to contain a billing error the date of its enactment [Oct. 28, 1974]." 

Pursuant to regulations of the Bureau, a cred­ SHORT TITLE 

itor operating an open end consumer credit plan Title III of Pub. L. 93-495, which is classified princi­ may not, prior to the sending of the written ex­ pally to this part, is known as the "Fair Credit Billing planation or clarification required under paragraph Act''. For complete classification of Title III to the Code, (B)(ii), restrict or close an account with respect see Short Title of 1974 Amendment note set out under 

to which the obligor has indicated pursuant to section 1601 of this title and Tables. 

subsection (a) that he believes such account to 

contain a billing error solely because of the ob­ § 1666a. Regulation of credit reports 

ligor's failure to pay the amount indicated to be (a) Reports by creditor on obligor's failure to pay in error. Nothing in this subsection shall be deemed amount regarded as billing error to prohibit a creditor from applying against the After receiving a notice from an obligor as pro­ credit limit on the obligor's account the amount vided in section 1666(a) of this title, a creditor or indicated to be in error. his agent may not directly or indirectly threaten 

(e) Effect of noncompliance with requirements to report to any person adversely on the obligor's 

by creditor credit rating or credit standing because of the 

obligor's failure to pay the amount indicated by Any creditor who fails to comply with the re­ the obligor under section 1666(a)(2) of this title, quirements of this section or section 1666a of this and such amount may not be reported as delin­ title forfeits any right to collect from the obligor quent to any third party until the creditor has the amount indicated by the obligor under para­ met the requirements of section 1666 of this title graph (2) of subsection (a) of this section, and and has allowed the obligor the same number of any finance charges thereon, except that the amount days (not less than ten) thereafter to make pay­ required to be forfeited under this subsection may ment as is provided under the credit agreement with not exceed $50. the obligor for the payment of undisputed amounts. 

(Pub. L. 90-321, title I, § 161, as added Pub. L. 

93-495, title III, § 306, Oct. 28, 1974, 88 Stat. 1512; (b) Reports by creditor on delinquent amounts in 

amended Pub. L. 96--221, title VI §§ 613(g), 620, Mar. dispute; notification of obligor of parties no31, 1980, 94 Stat. 177, 184; Pub. L. 111-203, title X, tified of delinquency 

§§ 1087, 1100A(2), July 21, 2010, 124 Stat. 2086, 2107 .) If a creditor receives a further written notice 

from an obligor that an amount is still in dispute CODIFICATION within the time allowed for payment under subPub L. 111-203, § 1100A(2), which directed the substitu­ section (a) of this section, a creditor may not re­ tion of "Bureau" for "Board" wherever appearing in title port to any third party that the amount of the 

I of Pub. L. 90--321, was executed to this section, which is obligor is ·delinquent because the obligor has failed section 161 of title I of Pub. L. 90-321. Section 1087 of Pub. to pay an amount which he has indicated under L. 111-203, which directed the making of an identical amendment in title III of Pub. L. 93-495, which added this sec­ section 1666(a)(2) of this title, unless the creditor 

tion to title I of Pub. L. 90-321, has not been executed. also reports that the amount is in dispute and, at 

the same time, notifies the obligor of the name AMENDMENTS and address of each party to whom the creditor is 

2010---Subsecs. (b)(7), (d). Pub. L. 111-203, § 1100A(2), sub­ reporting information concerning the delinquency. 

stituted "Bureau" for "Board". See Codification note above. 

1980---Subsec. (a). Pub. L. 96-221, § 613(g), substituted (c) Reports by creditor of subsequent resolution 

"(b)(l0)" for "(b)(ll)" and "(a)(7)" for "(a)(8)". of delinquent amounts 

Subsec. (b)(6), (7). Pub. L. 96-221, § 620(a), added par. (6) A creditor shall report any subsequent resoluand redesignated former par. (6) as (7). tion of any delinquencies reported pursuant to Subsec. (c). Pub. L. 96-221, § 620(b), inserted provisions subsection (b) to the parties to whom such delin­ respecting finance charges on amounts in dispute. quencies were initially reported. 

EFFECTIVE DATE OF 2010 AMENDMENT (Pub. L. 90-321, title I, § 162, as added Pub. L. 

Amendment by Pub. L. 111-203 effective on the desig­ 93-495, title III, § 306, Oct. 28, 1974, 88 Stat. 1513.) 

nated transfer date, see section 1100H of Pub. L. 111-203, 

set out as a note under section 552a of Title 5, Govern­ § 1666b. Timing of payments ment Organization and Employees. (a) Time to make payments 

EFFE=IVE DATE OF 1980 AMENDMENT A creditor may not treat a payment on a credit 

Amendment by Pub. L. 96-221 effective on expiration of card account under an open end consumer credit two years and six months after Mar. 31, 1980, with all plan as late for any purpose, unless the creditor 

regulations, forms, and clauses required to be prescribed has adopted reasonable procedures designed to en­ to be promulgated at least one year prior to such effec­ sure that each periodic statement including the tive date, and allowing any creditor to comply with any information required by section 1637(b) of this amendments, in accordance with the regulations, forms, title is mailed or delivered to the consumer not and clauses prescribed by the Board prior to such effective date, see section 625 of Pub. L. 96-221, set out as a later than 21 days before the payment due date. 

note under section 1602 of this title. (b) Grace period 

EFFECTIVE DATE If an open end consumer credit plan provides a 

Pub. L. 93-495, title III,§ 308, Oct. 28, 1974, 88 Stat. 1517, time period within which an obligor may repay 

provided that: "This title [enacting this section and sec- any portion of the credit extended without incurCase 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 87 of 92 PageID #: 202 
§ 1666c TITLE 15-COMMERCE AND TRADE Page 90 

ring an additional finance charge, such additional cardholder payments, and such change causes a 

finance charge may not be imposed with respect material delay in the crediting of a cardholder 

to such portion of the credit extended for the bill­ payment made during the 60-day period following 

ing cycle of which such period is a part, unless a the date on which such change took effect, the 

statement which includes the amount upon which card issuer may not impose any late fee or finance 

the finance charge for the period is based was charge for a late payment on the credit card acmailed or delivered to the consumer not later than count to which such payment was credited. 

21 days before the date specified in the statement (Pub. L. 90--321, title I, § 164, as added Pub. L. by which payment must be made in order to avoid 93-495, title III, § 306, Oct. 28, 1974, 88 Stat. 1514; imposition of that finance charge. amended Pub. L. 111-24, title I, § 104, May 22, 2009, 

(Pub. L. 90-321, titie I, § 163, as added Pub. L. 123 Stat. 1741; Pub. L. 111-203, title X, §§1087, 1100A(2), 

93-495, title III, § 306, Oct. 28, 1974, 88 Stat. 1514; July 21, 2010, 124 Stat. 2086, 2107.) 

amended Pub. L. 111-24, title I, § 106(b)(l), May 22, 

2009, 123 Stat. 1742; Pub. L. 111-93, § 2, Nov. 6, 2009, CODIFICATION 

123 Stat. 2998.) Pub L. 111-203, § 1100A(2), which directed the substitution of "Bureau" for "Board" wherever appearing in title 

AMENDMENTS I of Pub. L. 90--321, was executed to this section, which is 

2009--Pub. L. 111-24 amended section generally, adding section 164 of title I of Pub. L. 90--321. Section 1087 of 

provisions relating to late payments and delivery of peri­ Pub. L. 111-203, which directed the making of an idenodic statements, substituting provisions requiring a 21- tical amendment in title III of Pub. L. 93-495, which addday statement delivery period for provisions requiring a ed this section to title I of Pub. L. 90--321, has not been 

14-day period before the imposition of additional finance executed. 

charges, and striking provisions relating to excusable 

cause for creditor's failure to make timely mailing or AMENDMENTS 

delivery of periodic statements. 2010--Subsec. (a). Pub. L. 111-203, § 1100A(2), substitutSubsec. (a). Pub. L. 111-93 inserted "a credit card ac­ ed "Bureau" for "Board". See Codification note above. count under" after "payment on". .2009--Pub. L. 111-24, § 104(1), substituted "Prompt and 

fair crediting of payments" for "Prompt crediting of pay­ EFFECTIVE DATE ments" in section catchline, designated existing proviPub. L. 111-24, title I, § 106(b)(2), May 22, 2009, 123 Stat. sions as subsec. (a), and inserted subsec. (a) heading. 

1742, provided that: "Notwithstanding section 3 [see Ef­ Subsec. (a). Pub. L. 111-24, § 104(2), (3), inserted ", by 

fective Date of 2009 Amendment note set out under sec­ 5:00 p.m. on the date on which such payment is due," aftion 1602 of this title], section 163 of the Truth in Lend­ ter "in readily identifiable form" and substituted "maning Act [15 U.S.C. 1666b], as amended by this subsection, ner, and location" for "manner, location, and time". 

shall become effective 90 days after the date of enact­ Subsecs. (b), (c). Pub. L. 111-24, § 104(4), added subsecs. ment of this Act [May 22, 2009]." (b) and (c). 

§ 1666c. Prompt and fair crediting of paym.ents EFFECTIVE DATE OF 2010 AMENDMENT 

(a) In general Amendment by Pub. L. 111-203 effective on the desigPayments received from an obligor under an open nated transfer date, see section 1100H of Pub. L. 111-203, 

end consumer credit plan by the creditor shall be set out as a note under section 552a of Title 5, Governposted promptly to the obligor's account as speci­ ment Organization and Employees. 

fied in regulations of the Bureau. Such regula­ EFFECTIVE DATE OF 2009 AMENDMENT tions shall prevent a finance charge from being 

imposed on any obligor if the creditor has re­ Amendment by Pub. L. 111-24 effective 9 months after 

ceived the obligor's payment in· readily identifia­ May 22, 2009, except as otherwise specifically provided, 

see section 3 of Pub. L. 111-24, set out as a note under ble form, by 5:00 p.m. on the date on which such section 1602 of this title. payment is due, in the amount, manner, and location indicated by the creditor to avoid the imposi­ § 1666d. Treatment of credit balances tion thereof. 

Whenever a credit balance in excess of $1 is cre­ (b) Application of paym.ents ated in connection with a consumer credit trans­

(1) In general action through (1) transmittal of funds to a credUpon receipt of a payment from a cardholder, itor in excess of the total balance due on an ac­ the card issuer shall apply amounts in excess of count, (2) rebates of unearned finance charges or 

the minimum payment amount first to the card insurance premiums, or (3) amounts otherwise owed 

balance bearing the highest rate of interest, to or held for the benefit of an obligor, the credand then to each successive balance bearing the itor shallnext highest rate of interest, until the payment (A) credit the amount of the credit balance to 

is exhausted. the consumer's account; 

(B) refund any part of the amount of the re­ (2) Clarification relating to certain deferred maining credit balance, upon request of the con­ interest arrangements 

sumer; and A creditor shall allocate the entire amount (C) make a good faith effort to refund to the paid by the consumer in excess of the minimum consumer by cash, check, or money order any payment amount to a balance on which interest part of the amount of the credit balance re­ is deferred during the last 2 billing cycles im­ maining in the account for more than six months, mediately preceding the expiration of the pe­ except that no further action is required in any riod during which interest is deferred. case in which the consumer's current location 

(c) Changes by card issuer is not known by the creditor and cannot be traced 

If a card issuer makes a material change in the through the consumer's last known address or 

mailing address, office, or procedures for handling telephone number. 

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Page 91 TITLE 15-COMMERCE AND TRADE § 1666h 

(Pub. L. 90-321, title I, § 165, as added Pub. L. Stat. 197; Pub. L. 97-25, title I, § 101, July 27, 1981, 

93--495, title III, § 306, Oct. 28, 1974, 88 Stat. 1514; 95 Stat. 144.) 

amended Pub. L. 96-221, title VI, § 621(a), Mar. 31, AMENDMENTS 1980, 94 Stat. 184.) 

1981-Subsec. (b). Pub. L. 97-25 substituted "With re­ AMENDMENTS spect to any sales transaction, any discount from the 

regular price offered by the seller for the purpose of in­ 1980--Pub. L. 96-221 substituted provisions relating to ducing payment by cash, checks, or other means not in­ duties of creditor whenever a credit balance in excess of 

volving the use of an open-end credit plan or a credit $1 is created in connection with a consumer credit trans­ card shall not constitute a finance charge as determined action, for provisions relating to duties of creditor whenunder section 1605 of this title if such discount is offered ever an obliger transmits funds to creditor in excess of to all prospective buyers and its availability is disclosed the total balance due on an open end consumer credit 

clearly and conspicuously" for "With respect to any sales account. transaction, any discount not in excess of 5 per centum 

EFFECTIVE DATE OF 1980 AMENDMENT offered by the seller for the purpose of inducing payment 

by cash, check, or other means not involving the use of a Amendment by Pub. L. 96-221 effective on expiration of credit card shall not constitute a finance charge as de­ two years and six months after Mar. 31, 1980, with all termined under section 1605 of this title, if such discount regulations, forms, and clauses required to be prescribed is offered to all prospective buyers and its availability is to be promulgated at least one year prior to such effec­ disclosed to all prospective buyers clearly and conspicu­ tive date, and allowing any creditor to comply with any ously in accordance with regulations of the Board''. amendments, in accordance with the regulations, forms, 1976---Subsec. (a). Pub. L. 94-222 temporarily designat­ and clauses prescribed by the Board prior to such effec­ ed existing provisions as par. (1) and added par. (2). See tive date, see section 625 of Pub. L. 96-221, set out as a Termination Date of 1976 Amendment note below. note under section 1602 of this title. 

TERMINATION DATE OF 1976 AMENDMENT 

§ 1666e. Notification of credit card issuer by sell­ Section 3(c)(2) of Pub. L. 94-222, as amended by Pub. L. er of return of goods, etc., by obligor; credit 95---630, title XV, § 1501, Nov. 10, 1978, 92 Stat. 3713; Pub. L. 

for account of obligor 97-25, title II, § 201, July 27, 1981, 95 Stat. 44, provided 

With respect to any sales transaction where a that: "The amendments made by paragraph (1) [amending this section] shall cease to be effective on February credit card has been used to obtain credit, where 27, 1984." the seller is a person other than the card issuer, 

and where the seller accepts or allows a return of NULLIFICATION OF BOARD RULES AND REGULATIONS UNthe goods or forgiveness of a debit for services DER SUBSECTION (b) OF THIS SECTION IN EFFECT ON 

which were the subject of such sale, the seller JULY 26, 1981 

shall promptly transmit to the credit card issuer, Pub. L. 97-25, title I, § 103, July 'l:/, 1981, 95 Stat. 144, 

a credit statement with respect thereto and the provided that: "Any rule or regulation of the Board of 

credit card issuer shall credit the account of the Governors of the Federal Reserve System pursuant to 

obligor for the amount of the transaction. section 167(b) of the Truth in Lending Act [subsec. (b) of 

this section], as such section was in effect on the day (Pub. L. 90-321, title I, § 166, as added Pub. L. before the date of enactment of this Act [July 'l:I, 1981], 

93--495, title III, § 306, Oct. 28, 1974, 88 Stat. 1514.) is null and void." 

§ 1666g. Tie-in services prohibited for issuance of § 1666f. Inducements to cardholders by sellers of 

credit card cash discounts for payments by cash, check 

or similar means; finance charge for sales Notwithstanding any agreement to the contrary, transactions involving cash discounts a card issuer may not require a seller, as a condi­

(a) Cash discounts tion to participating in a credit card plan, to 

With 1 open an account with or procure any other serv­ respect to credit card which may be used ice from the card issuer or its subsidiary or agent. for extensions of credit in sales transactions in 

which the seller is a person other than the card (Pub. L. 90-321, title I, § 168, as added Pub. L. 

issuer, the card issuer may not, by contract or 93-495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515.) 

otherwise, prohibit any such seller from offering a 

discount to a cardholder to induce the cardholder § 1666h. Offset of card.holder's indebtedness by issuer of credit card with funds deposited with to pay by cash, check, or similar means rather issuer by card.holder; remedies of creditors than use a credit card. under State law not affected 

(b) Finance charge (a) Offset against consumer's funds 

With respect to any sales transaction, any dis­ A card issuer may not take any action to offset 

count from the regular price offered by the seller a cardholder's indebtedness arising in connection 

for the purpose of inducing payment by cash, checks, with a consumer credit transaction under the rel­ or other means not involving the use of an open­ evant credit card plan against funds of the cardend credit plan or a credit card shall not consti­ holder held on deposit with the card issuer unlesstute a finance charge as determined under sec­ (1) such action was previously authorized in 

tion 1605 of this title if such discount is offered to writing by the cardholder in accordance with a all prospective buyers and its availability is dis­ credit plan whereby the cardholder agrees peri­ closed clearly and conspicuously. odically to pay debts incurred in his open end 

(Pub. L. 90-321, title I, § 167, as added Pub. L. credit account by permitting the card issuer 

93--495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515; periodically to deduct all or a portion of such 

amended Pub. L. 94--222, § 3(c)(l), Feb. 27, 1976, 90 debt from the cardholder's deposit account, and 

(2) such action with respect to any outstanding disputed amount not be taken by the card 1 So in original. Probably should be preceded by "a". issuer upon request of the cardholder. 

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Case 2:22-cv-04260 Document 2-1 Filed 07/20/22 Page 90 of 92 PageID #: 205 

§ 1666i TITLE 15----COMMERCE AND TRADE Page 92 

In the case of any credit card account in exist­ issuer or the person honoring the credit card of 

ence on the effective date of this section, the pre­ such claim or defense. For the purpose of detervious written authorization referred to in clause mining the amount of credit outstanding in the 

(1) shall not be required until the date (after such preceding sentence, payments and credits to the 

effective date) when such account is renewed, but cardholder's account are deemed to have been apin no case later than one year after such effective plied, in the order indicated, to the payment of: 

date. Such written authorization shall be deemed (1) late charges in the order of their entry to the 

to exist if the card issuer has previously notified account; (2) finance charges in order of their enthe cardholder that the use of his credit card ac­ try to the account; and (3) debits to the account 

count will subject any funds which the card is­ other than those set forth above, in the order in 

suer holds in deposit accounts of such cardholder which each debit entry to the account was made. 

to offset against any amounts due and payable on (Pub. L. 90-321, title I, § 170, as added Pub. L. his credit card account which have not been paid 93--495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515.) in accordance with the terms of the agreement 

between the card issuer and the cardholder. § 1666i-1. Limits on interest rate, fee, and finance 

(b) Attachments and levies charge increases applicable to outstanding 

This section does not alter or affect the right balances 

under State law of a card issuer to attach or oth­ (a) In general 

erwise leVY upon funds of a cardholder held on de­ In the case of any credit card account under an posit with the card issuer if that remedy is con­ open end consumer credit plan, no creditor may stitutionally available to creditors generally. increase any annual percentage rate, fee, or fi­

(Pub. L. 90--321, title I, § 169, as added Pub. L. nance charge applicable to any outstanding bal93--495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515.) ance, except as permitted under subsection (b). 

REFERENCES IN TEXT (b) Exceptions 

For effective date of this section, referred to in subsec. The prohibition under subsection (a) shall not 

(a), see Effective Date note set out under section 1666 of apply to--

this title. (1) an increase in an annual percentage rate 

upon the expiration of a specified period of time, § 1666i. Assertion by cardholder against card is­ provided that-- suer of claims and defenses arising out of CA) prior to commencement of that period, credit card transaction; prerequisites; limita­ the creditor disclosed to the consumer, in a tion on amount of claims or defenses clear and conspicuous manner, the length of 

(a) Claims and defenses assertible the period and the annual percentage rate that 

Subject to the limitation contained in subsec­ would apply after expiration of the period; 

tion (b), a card issuer who has issued a credit (B) the increased annual percentage rate does 

card to a cardholder pursuant to an open end con­ not exceed the rate disclosed pursuant to subsumer credit plan shall be subject to all claims paragraph (A); and 

(other than tort claims) and defenses arising out (C) the increased annual percentage rate is 

· of any transaction in which the credit card is not applied to transactions that occurred priused as a method of payment or extension of cred­ or to commencement of the period; 

it if (1) the obligor has made a good faith attempt (2) an increase in a variable annual percent­ to obtain satisfactory resolution of a disagree­ age rate in accordance with a credit card agree­ ment or problem relative to the transaction from ment that provides for changes in the rate ac­ the person honoring the credit card; (2) the amount cording to operation of an index that is not un­ of the initial transaction exceeds $50; and (3) the der the control of the creditor and is available 

place where the initial transaction occurred was to the general public; in the same State as the mailing address previ­ (3) an increase due to the completion of a ously provided by the cardholder or was within workout or temporary hardship arrangement by 100 miles from such address, except that the lim­ the obligor or the failure of the obligor to com­ itations set forth in clauses (2) and (3) with re­ ply with the terms of a workout or temporary spect to an obligor's right to assert claims and hardship arrangement, provided that--

defenses against a card issuer shall not be appli­ (A) the annual percentage rate, fee, or ficable to any transaction in which the person hon­ nance charge applicable to a category of transoring the credit card (A) is the same person as actions following any such increase does not 

the card issuer, (B) is controlled by the card is­ exceed the rate, fee, or finance charge that 

suer, (C) is under direct or indirect common con­ applied to that category of transactions prior trol with the card issuer, (D) is a franchised deal­ to commencement of the arrangement; and er in the card issuer's products or services, or (E) (B) the creditor has provided the obligor, has obtained the order for such transaction through prior to the commencement of such arrange­ a mail solicitation made by or participated in by ment, with clear and conspicuous disclosure 

the card issuer in which the cardholder is solic­ of the terms of the arrangement (including ited to enter into such transaction by using the any increases due to such completion or failcredit card issued by the card issuer. ure); or 

(b) Amount of claims and defenses assertible (4) an increase due solely to the fact that a 

The amount of claims or defenses asserted by minimum payment by the obligor has not been 

the cardholder may not exceed the amount of cred­ received by the creditor within 60 days after 

it outstanding with respect to such transaction the due date for such payment, provided that 

at the time the cardholder first notifies the card the creditor shall-
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Page 93 TITLE 15---COMMERCE AND TRADE § 1666j 

(A) include, together with the notice of such (b) Promotional rate minimum term 

increase required under section 1637(i) of this No increase in any annual percentage rate ap­ title, a clear and conspicuous written state­ plicable to a credit card account under an open 

ment of the reason for the increase and that end consumer credit plan that is a promotional the increase will terminate not later than 6 rate (as that term is defined by the Bureau) shall 

months after the date on which it is imposed, be effective before the end of the 6-month period if the creditor receives the required minimum beginning on the date on which the promotional 

payments on time from the obligor during that rate takes effect, subject to such reasonable ex­ period; and ceptions as the Bureau may establish, by rule. 

(B) terminate such increase not later than 6 (Pub. L. 90-321, title I, § 172, as added Pub. L. months after the date on which it is imposed, 111-24, title I, § l0l(d), May 22, 2009, 123 Stat. 1738; if the creditor receives the required minimum amended Pub. L. 111-203, title X, § 1100A(2), July payments on time during that period. 21, 2010, 124 Stat. 2107.) 

(c) Repaynient of outstanding balance 

(1) In general AMENDMENTS 

2010-Subsec. (b). Pub. L. 111-203 substituted "Bureau" The creditor shall not change the terms gov­ for "Board" in two places. erning the repayment of any outstanding balance, except that the creditor may provide the EFFECTIVE DATE OF 2010 AMENDMENT 

obligor with one of the methods described in Amendment by Pub. L. 111-203 effective on the desig­ paragraph (2) of repaying any outstanding bal­ nated transfer date, see section 1100H of Pub. L. 111-203, 

ance, or a method that is no less beneficial to set out as a note under section 552a of Title 5, Governthe obligor than one of those methods. ment Organization and Employees. 

(2) Methods EFFECTIVE DATE 

The methods described in this paragraph are- Section effective 9 months after May 22, 2009, except as (A) an amortization period of not less than otherwise specifically provided, see section 3 of Pub. L. 

5 years, beginning on the effective date of the 111-24, set out as an Effective Date of 2009 Amendment 

increase set forth in the notice required under note under section 1602 of this title. 

section 1637(i) of this title; or (B) a required minimum periodic payment § 1666j. Applicability of State laws 

that includes a percentage of the outstanding (a) Consistency of provisions balance that is equal to not more than twice 

the percentage required before the effective This part does not annul, alter, or affect, or exdate of the increase set forth in the notice re­ empt any person subject to the provisions of this 

quired under section 1637(i) of this title. part from complying with, the laws of any State 

with respect to credit billing practices, except to 

(d) Outstanding balance defined the extent that those laws are inconsistent with 

For purposes of this section, the term "outstand­ any provision of this part, and then only to the 

ing balance'' means the amount owed on a credit extent of the inconsistency. The Bureau is authorcard account under an open end consumer credit ized to determine whether such inconsistencies 

plan as of the end of the 14th day after the date exist. The Bureau may not determine that any 

on which the creditor provides notice of an in­ State law is inconsistent with any provision of 

crease in the annual percentage rate, fee, or fi­ this part if the Bureau determines that such law 

nance charge in accordance with section 1637(i) of gives greater protection to the consumer. 

this title. 

(b) Exemptions by Bureau from credit billing re­ (Pub. L. 90-321, title I, § 171, as added Pub. L. quirements 111-24, title I, § 101(b)(2), May 22, 2009, 123 Stat. 

1736.) The Bureau shall by regulation exempt from 

the requirements of this part any class of credit PRIOR PROVISIONS transactions within any State if it determines 

A prior section 171 of Pub. L. 90-321 was renumbered that under the law of that State that class of 

section 173 and is classified to section 1666j of this title. transactions is subject to requirements substantially similar to those imposed under this part or EFFECTIVE DATE that such law gives greater protection to the con­ Section effective 9 months after May 22, 2009, except as sumer, and that there is adequate provision for 

otherwise specifically provided, see section 3 of Pub. L. enforcement. 

111-24, set out as an Effective Date of 2009 Amendment 

note under section 1602 of this title. (c) Finance charge or other charge for credit for 

sales transactions involving cash discounts § 1666i-2. Additional limits on interest rate in­ Notwithstanding any other provisions of this creases subchapter, any discount offered under section 

(a) Limitation on increases within first year 1666f(b) of this title shall not be considered a fiExcept in the case of an increase described in nance charge or other charge for credit under the 

paragraph (1), (2), (3), or (4) of section 1666i-l(b) usury laws of any State or under the laws of any 

of this title, no increase in any annual percent­ State relating to disclosure of information in conage rate, fee, or finance charge on any credit card nection with credit transactions, or relating to 

account under an open end consumer credit plan the types, amounts or rates of charges, or to any 

shall be effective before the end of the 1-year pe­ element or elements of cllarges permissible under 

riod beginning on the date on which the account such laws in connection with the extension or use 

is opened. of credit. 
§ 1667 TITLE 15-COMMERCE AND TRADE Page 94 

(Pub. L. 90-321, title I, § 173, formerly § 171, as add­ AMENDMENTS 

ed Pub. L. 93-495, title III, § 306, Oct. 28, 1974, 88 201{}-Par. (1). Pub. L. 111-203 substituted "$50,000" for 

Stat. 1516; amended Pub. L. 94-222, § 3(d), Feb. 27, "$25,000". 

1976, 90 Stat. 198; renumbered§ 173, Pub. L. 111-24, EFFECTIVE DATE OF 2010 AMENDMENT title I, § lOl(b)(l), May 22, 2009, 123 Stat. 1736; Pub. 

L. 111-203, title X, §§ 1087, 1100A(2), July 21, 2010, Amendment by Pub. L. 111-203 effective on the designated transfer date, see section 1100H of Pub. L. 111-203, 124 Stat. 2086, 2107.) set out as a note under section 552a of Title 5, GovernCODIFICATION ment Organization and Employees. 

Pub L. 111-203, § 1100A(2), which directed the substitu­ EFFECTIVE DATE 

tion of "Bureau" for "Board" wherever appearing in title Pub. L. 94-240, § 6, Mar. 23, 1976, 90 Stat. 261, provided 

I of Pub. L. 90-321, was executed to this section, which is that: "This Act [enacting this section and sections 1667a 

section 173 of title I of Pub. L. 90-321. Section 1087 of to 1667e of this title, amending sections 1601 and 1640 of 

Pub. L. 111-203, which directed the making of an iden­ this title, and enacting provisions set out as a note under 

tical amendment in title III of Pub. L. 93-495, which add­ section 1601 of this title] takes effect one year after the 

ed this section to title I of Pub. L. 90-321, has not been date of its enactment [Mar. 23, 1976]." 

executed. ADJUSTMENTS FOR INFLATION 

AMENDMENTS On and after Dec. 31, 2011, dollar amount described in 

§ par. (1) of this section to be adjusted annually by the 201{}-Subsecs. (a), (b). Pub. L. 111-203, 1100A(2), subannual percentage increase in the Consumer Price Index stituted "Bureau" for "Board" wherever appearing. See 

Codification for Urban Wage Earners and Clerical Workers, see sec­ note above. 

tion llOOE(b) of Pub. L. 111-203, set out as a note under 1976-Subsec. (c). Pub. L. 94-222 added subsec. (c). section 1603 of this title. 

EFFECTIVE DATE OF 2010 AMENDMENT § 1667a. Consumer lease disclosures 

Amendment by Pub. L. 111-203 effective on the desig­ Each lessor shall give a lessee prior to the con­ nated transfer date, see section 1100H of Pub. L. 111-203, 

set out as a note under section 552a of Title 5, Govern­ summation of the lease a dated written statement Organization and Employees. ment on which the lessor and lessee are identified 

setting out accurately and in a clear and conspic­ PART E-CONSUMER LEASES uous manner the following information with re­

§ 1667. Definitions spect to that lease, as applicable: 

(1) A brief description or identification of the For purposes of this part-- leased property; (1) The term "consumer lease" means a con­ (2) The amount of any payment by the lessee 

tract in the form of a lease or bailment for the required at the inception of the lease; use of personal property by a natural person for (3) The amount paid or payable by the lessee a period of time exceeding four months, and for for official fees, registration, certificate of title, a total contractual obligation not exceeding 1 or license fees or taxes; $50,000, primarily for personal, family, or house­ (4) The amount of other charges payable by hold purposes, whether or not the lessee has the the lessee not included in the periodic payments, option to purchase or otherwise become the owner a description of the charges and that the lessee of the property at the expiration of the lease, shall be liable for the differential, if any, beexcept that such term shall not include any cred­ 2 tween the anticipated fair market value of the it sale as defined in section 1602(g) of this title. leased property and its appraised actual value Such term does not include a lease for agricul­ at the termination of the lease, if the lessee tural, business, or commercial purposes, or to a has such liability; government or governmental agency or instru­ (5) A statement of the amount or method of mentality, or to an organization. determining the amount of any liabilities the (2) The term "lessee" means a natural person lease imposes upon the lessee at the end of the who leases or is offered a consumer lease. term and whether or not the lessee has the op­ (3) The term "lessor" means a person who is tion to purchase the leased property and at what regularly engaged in leasing, offering to lease, price and time; or arranging to lease under a consumer lease. (6) A statement identifying all express war­ (4) The term "personal property" means any ranties and guarantees made by the manufacproperty which is not real property under the turer or lessor with respect to the leased prop­ laws of the State where situated at the time of­ erty, and identifying the party responsible for fered or otherwise made available for lease. maintaimng or servicing the leased property to­ (5) The terms "security" and "security inter­ gether with a description of the responsibility; est" mean any interest in property which se­ (7) A brief description of insurance provided cures payment or performance of an obligation. or paid for by the lessor or required of the les­

(Pub. L. 90-321, title I, § 181, as added Pub. L. see, including the types and amounts of the cov94-240, § 3, Mar. 23, 1976, 90 Stat. 257; amended erages and costs; 

Pub. L. 111-203, title X, § 1100E(a)(2), July 21, 2010, (8) A description of any security interest held 

124 Stat. 2111.) or to be retained by the lessor in connection 

with the lease and a clear identification of the 

REFERENCES IN TEXT property to which the security interest relates; 

Section 1602(g) of this title, referred to in par. (1), was (9) The number, amount, and due dates or peredesignated section 1602(h) of this title by Pub. L. 111-203, riods of payments under the lease and the total 

title X, § llOOA(l)(A), July 21, 2010, 124 Stat. 2107. amount of such periodic payments; 

(10) Where the lease provides that the lessee 1 See Adjustments for Inflation note below. shall be liable for the anticipated fair market 2 See References in Text note below. value of the property on expiration of the lease, 

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