I
104TH CONGRESS
1ST SESSION
H. R. 1184
To amend the Truth in Lending Act to clarify the intent of such Act
and to reduce burdensome regulatory requirements on creditors.
IN THE HOUSE OF REPRESENTATIVES
MARCH 9, 1995
Mr. MCCOLLUM (for himself, Mr. LEACH, Mrs. ROUKEMA, Mr. BEREUTER,
Mr. ROTH, Mr. BAKER of Louisiana, Mr. LAZIO of New York, Mr.
BACHUS, Mr. CASTLE, Mr. KING, Mr. ROYCE, Mr. WELLER, Mr. EHR-
LICH, Mr. CHRYSLER, Mr. CREMEANS, Mr. HEINEMAN, and Mr.
LOBIONDO) introduced the following bill; which was referred to the Com-
mittee on Banking and Financial Services
A BILL
To amend the Truth in Lending Act to clarify the intent
of such Act and to reduce burdensome regulatory re-
quirements on creditors.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Truth in Lending Act
Amendments of 1995’’.
SEC. 2. TREATMENT OF CERTAIN CHARGES.
(a) THIRD PARTY FEES.—Section 106(a) of the
Truth in Lending Act (15 U.S.C. 1605(a)) is amended
by adding after the second sentence the following new sen-
tence: ‘‘The finance charge shall not include fees and
amounts imposed by third parties not affiliated with the
creditor (including settlement agents, attorneys, and es-
crow and title companies) if the creditor does not expressly
require the imposition of the charges and does not retain
the charges.’’.
(b) TAXES
ON SECURITY INSTRUMENTS
OR EVI-
DENCES
OF
INDEBTEDNESS.—Section 106(d) of the
Truth in Lending Act (15 U.S.C. 1605(d)) is amended
by adding at the end the following new paragraph:
‘‘(3) Any tax levied on security instruments or
on documents evidencing indebtedness if the pay-
ment of such taxes is a precondition for recording
the instrument securing the evidence of indebted-
ness.’’.
(c) PREPARATION OF LOAN DOCUMENTS.—Section
106(e)(2) of the Truth in Lending Act (15 U.S.C.
1605(e)(2)) is amended to read as follows:
‘‘(2) Fees for preparation of loan-related docu-
ments and attending or conducting settlement.’’.
(d) FEES RELATING TO PEST INFESTATIONS, IN-
SPECTIONS, AND HAZARDS.—Section 106(e)(5) of the
Truth in Lending Act (15 U.S.C. 1605(e)(5)) is amended
by inserting ‘‘, including fees related to pest infestations,
premises and structural inspections, and flood hazards’’
before the period.
SEC. 3. EXEMPTIONS FROM RESCISSION.
(a) CERTAIN REFINANCINGS.—Section 125(e) of the
Truth in Lending Act (15 U.S.C. 1635(e)) is amended—
(1) by striking ‘‘or’’ at the end of paragraph
(3);
(2) by striking the period at the end of para-
graph (4) and inserting ‘‘; or’’; and
(3) by adding at the end the following new
paragraph:
‘‘(5) a transaction, other than a mortgage re-
ferred to in section 103(aa), which—
‘‘(A) is secured by a first lien, in any
amount; and
‘‘(B) constitutes a refinancing or consoli-
dation of an existing extension of credit.’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—
Section 125(e)(2) of the Truth in Lending Act (15 U.S.C.
1635(e)(2)) is amended by inserting ‘‘, other than a trans-
action described in subsection (e)(5),’’ after ‘‘a refinancing
or consolidation (with no new advances)’’.
SEC. 4. TOLERANCES; BASIS OF DISCLOSURES.
(a) TOLERANCES FOR ACCURACY.—Section 106 of
the Truth in Lending Act (15 U.S.C. 1605) is amended
by adding at the end the following new subsection:
‘‘(f) TOLERANCE
FOR ACCURACY.—In connection
with credit transactions not under an open end credit plan
that are secured by real property or a dwelling, the disclo-
sure of the finance charge and other disclosures affected
by any finance charge shall be treated as being accurate
for purposes of this title if the amount disclosed as the
finance charge does not vary from the actual finance
charge by more than an amount equal to 1⁄2 of the numeri-
cal tolerance corresponding to, and generated by, the toler-
ance provided by section 107(c) with respect to the annual
percentage rate.’’.
(b) BASIS OF DISCLOSURE FOR PER DIEM INTER-
EST.—Section 121(c) of the Truth in Lending Act (15
U.S.C. 1631(c)) is amended by adding at the end the fol-
lowing new sentence: ‘‘In the case of any consumer credit
transaction a portion of the interest on which is deter-
mined on a per diem basis and is to be collected upon
the consummation of such transaction, any disclosure with
respect to such portion of interest shall be deemed to be
accurate for purposes of this title if the disclosure is based
on information actually known to the creditor at the time
that the disclosure documents are being prepared for the
consummation of the transaction.’’.
SEC. 5. LIMITATION ON LIABILITY.
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended by adding
at the end the following new section:
‘‘SEC. 139. CERTAIN LIMITATIONS ON LIABILITY.
‘‘(a) LIMITATIONS ON LIABILITY FOR DISCLOSURES
RELATING
TO CERTAIN FEES
AND CHARGES OTHER
THAN FINANCE CHARGES.—
‘‘(1) IN
GENERAL.—For transactions con-
summated before the date of the enactment of the
Truth in Lending Act Amendments of 1995, a credi-
tor or any assignee of a creditor shall have no civil,
administrative, or criminal liability under this title
for, and a consumer shall have no extended rescis-
sion rights under section 125(f) with respect to, the
creditor’s treatment, for disclosure purposes, of—
‘‘(A) taxes described in section 106(d)(3);
‘‘(B) fees and amounts described in section
106(e) (2) and (5) and third party fees and
amounts described in section 106(a); and
‘‘(C) delivery charges imposed by a credi-
tor.
‘‘(2) EXCEPTIONS.—Subsection (a) shall not
apply to—
‘‘(A) any individual action or counterclaim
brought under this title—
‘‘(i) which was filed before October 1,
1994; and
‘‘(ii) the pleadings in which (as filed
before such date) allege improper disclo-
sure of charges described in paragraph (1),
(2), or (3) of subsection (a);
‘‘(B) any class action brought under this
title—
‘‘(i) for which a class was certified be-
fore October 1, 1994; and
‘‘(ii) the pleadings in which (as filed
before such date) allege improper disclo-
sure of charges described in paragraph (1),
(2), or (3) of subsection (a);
‘‘(C) the named individual plaintiffs in any
class action brought under this title—
‘‘(i) which was filed before October 1,
1994; and
‘‘(ii) the pleadings in which (as filed
before such date) allege improper disclo-
sure of charges described in paragraph (1),
(2), or (3) of subsection (a); or
‘‘(D) any consumer credit transaction with
respect to which a timely notice of rescission
was sent to the creditor before October 1, 1994.
‘‘(b) EXEMPTION FROM LIABILITY
FOR FINANCE
CHARGE DISCLOSURES WITHIN TOLERANCE LIMITS.—
‘‘(1) IN
GENERAL.—In the case of any
consumer credit transaction subject to this title, in-
cluding a transaction consummated before the date
of the enactment of the Truth in Lending Act
Amendments of 1995, no creditor or assignee with
respect to such transaction shall have any civil, ad-
ministrative, or criminal liability under this title for,
and no consumer shall have extended rescission
rights under section 125 by reason of, any disclosure
relating to the finance charge imposed with respect
to such transaction if the amount or percentage ac-
tually disclosed—
‘‘(A) may be treated as accurate pursuant
to section 106(f), or
‘‘(B) is greater than the amount or per-
centage required to be disclosed under this title.
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not
apply to—
‘‘(A) any individual action or counterclaim
brought under this title which was filed before
October 1, 1994;
‘‘(B) any class action brought under this
title for which a class was certified before Octo-
ber 1, 1994;
‘‘(C) the named individual plaintiffs in any
class action brought under this title which was
filed before October 1, 1994; or
‘‘(D) any consumer credit transaction with
respect to which a timely notice of rescission
was sent to the creditor before October 1,
1994.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 2 of the Truth in Lending Act is amended
by inserting after the item relating to section 138 the fol-
lowing new item:
‘‘Sec. 139. Certain limitations on liability.’’.
SEC. 6. APPLICABILITY.
Except as otherwise provided in section 5, the amend-
ments made by this Act shall apply to all consumer credit
transactions consummated on or after the date of enact-
ment of this Act, except that the amendments made by
subsections (a) and (b) of section 3 shall apply to all ex-
tensions of credit with respect to which rescission rights
have not been asserted as of January 1, 1995.
SEC. 7. LIMITATION ON RESCISSION PERIOD.
Section 125(f) of the Truth in Lending Act (15
U.S.C. 1635(f)) is amended by adding at the end the fol-
lowing sentences: ‘‘The expiration of the right of rescission
pursuant to this subsection shall be absolute and no
consumer may assert rescission, affirmatively or as a de-
fense, in any action in any State or Federal court after
the earlier of the end of the 3-year period beginning on
the date of the consummation of the transaction or the
sale of the property securing the loan or other extension
of credit, except as otherwise provided in the preceding
sentence. This subsection shall supersede any State law
which is inconsistent with any provision of this sub-
section.’’.
SEC. 8. CALCULATION OF ACTUAL DAMAGES.
Paragraph (1) of section 130(a) of the Truth in
Lending Act (15 U.S.C. 1640(a)) is amended to read as
follows:
‘‘(1) Any actual damages sustained by such
person as a result of the failure (to the extent the
person demonstrates reliance on the inaccurate dis-
closure which prevented the person from accepting
better credit terms actually available to the person
from another creditor) and the amount of such dam-
ages shall be the difference between the finance
charges actually paid and the finance charges that
would have been paid over the same period under
credit terms applicable with respect to credit actu-
ally available to the person from another creditor.’’.
SEC. 9. ASSIGNEE LIABILITY.
(a) VIOLATIONS APPARENT ON THE FACE OF TRANS-
ACTION DOCUMENTS.—Section 131(a) of the Truth in
Lending Act (15 U.S.C. 1641(a)) is amended to read as
follows:
‘‘(a) LIABILITY OF ASSIGNEE FOR APPARENT VIOLA-
TIONS.—
‘‘(1) IN GENERAL.—Except as otherwise specifi-
cally provided in this title, any civil action against
a creditor for a violation of this title, and any pro-
ceeding under section 108 against a creditor, with
respect to a consumer credit transaction may be
maintained against any assignee of such creditor
only if—
‘‘(A) the violation for which such action or
proceeding is brought is apparent on the face of
the disclosure statement provided in connection
with such transaction pursuant to this title; and
‘‘(B) the assignment to the assignee was
voluntary.
‘‘(2) VIOLATION APPARENT ON THE FACE OF
THE DISCLOSURE DESCRIBED.—For the purpose of
this section, a violation is apparent on the face of
the disclosure statement if—
‘‘(A) the disclosure can be determined to
be incomplete or inaccurate from the face of the
disclosure statement; or
‘‘(B) the disclosure does not use the terms
or format required to be used by this title.’’.
(b) SERVICER NOT TREATED AS ASSIGNEE.—Section
131 of the Truth in Lending Act (15 U.S.C. 1641) is
amended by adding at the end the following new sub-
section:
‘‘(d) TREATMENT OF SERVICER.—
‘‘(1) IN GENERAL.—A servicer of a consumer
obligation arising from a consumer credit trans-
action shall not be treated as an assignee of such ob-
ligation for purposes of this section unless the
servicer is the owner of the obligation.
‘‘(2) SERVICER NOT TREATED AS OWNER ON
BASIS OF ASSIGNMENT FOR ADMINISTRATIVE CON-
VENIENCE.—A servicer of a consumer obligation
arising from a consumer credit transaction shall not
be treated as the owner of the obligation for pur-
poses of this section on the basis of an assignment
of the obligation from the creditor or another as-
signee to the servicer solely for the administrative
convenience of the servicer in servicing the obliga-
tion.
‘‘(3) SERVICER DEFINED.—For purposes of this
subsection, the term ‘servicer’ has the same meaning
as in section 6(i)(2) of the Real Estate Settlement
Procedures Act of 1974.’’.
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