104TH CONGRESS
1ST SESSION
H.R. 2399
AN ACT
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. CERTAIN CHARGES.
(a) THIRD PARTY FEES.—Section 106(a) of the
Truth in Lending Act (15 U.S.C. 1605(a)) is amended
by adding after the 2d sentence the following new sen-
tence: ‘‘The finance charge shall not include fees and
amounts imposed by third party closing agents (including
settlement agents, attorneys, and escrow and title compa-
nies) if the creditor does not require the imposition of the
charges or the services provided and does not retain the
charges.’’.
(b) BORROWER-PAID MORTGAGE BROKER FEES.—
(1) INCLUSION IN FINANCE CHARGE.—Section
106(a) of the Truth in Lending Act (15 U.S.C.
1605(a)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(6) Borrower-paid mortgage broker fees, in-
cluding fees paid directly to the broker or the lender
(for delivery to the broker) whether such fees are
paid in cash or financed.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect on the earlier of—
(A) 60 days after the date on which the
Board of Governors of the Federal Reserve Sys-
tem issues final regulations under paragraph
(3); or
(B) the date that is 12 months after the
date of the enactment of this Act.
(3) REGULATIONS IMPLEMENTING BORROWER-
PAID MORTGAGE BROKER FEES.—The Board of Gov-
ernors of the Federal Reserve System shall promul-
gate regulations implementing the amendment made
by paragraph (1) by no later than 6 months after
the date of the enactment of this Act.
(c) TAXES
ON SECURITY INSTRUMENTS
OR 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.’’.
(d) PREPARATION OF LOAN DOCUMENTS.—Section
106(e)(2) of the Truth in Lending Act (15 U.S.C.
1605(e)(2)) is amended to read as follows:
‘‘(2) Fees for preparation of loan-related docu-
ments.’’.
(e) 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 any pest infesta-
tion or flood hazard inspections conducted prior to clos-
ing’’ before the period.
(f) ENSURING FINANCE CHARGES REFLECT COST OF
CREDIT.—
(1) REPORT.—
(A) IN
GENERAL.—Not later than 6
months after the date of the enactment of this
Act, the Board of Governors of the Federal Re-
serve System shall submit to the Congress a re-
port containing recommendations on any regu-
latory or statutory changes necessary—
(i) to ensure that finance charges im-
posed in connection with consumer credit
transactions more accurately reflect the
cost of providing credit; and
(ii) to address abusive refinancing
practices engaged in for the purpose of
avoiding rescission.
(B) REPORT REQUIREMENTS.—In prepar-
ing the report under this paragraph, the Board
shall—
(i) consider the extent to which it is
feasible to include in finance charges all
charges payable directly or indirectly by
the consumer to whom credit is extended,
and imposed directly or indirectly by the
creditor as an incident to the extension of
credit (especially those charges excluded
from finance charges under section 106 of
the Truth in Lending Act as of the date of
the enactment of this Act), excepting only
those charges which are payable in a com-
parable cash transaction; and
(ii) consult with and consider the
views of affected industries and consumer
groups.
(2) REGULATIONS.—The Board of Governors of
the Federal Reserve System shall prescribe any ap-
propriate regulation in order to effect any change in-
cluded in the report under paragraph (1), and shall
publish the regulation in the Federal Register before
the end of the 1-year period beginning on the date
of enactment of this Act.
SEC. 3. TOLERANCES; BASIS OF DISCLOSURES.
(a) TOLERANCES FOR ACCURACY.—Section 106 of
the Truth in Lending Act (15 U.S.C. 1605) is amended
by adding at the end the following new subsection:
‘‘(f) TOLERANCES FOR ACCURACY.—In connection
with credit transactions not under an open end credit plan
that are secured by real property or a dwelling, the disclo-
sure of the finance charge and other disclosures affected
by any finance charge—
‘‘(1) shall be treated as being accurate for pur-
poses of this title if the amount disclosed as the fi-
nance charge—
‘‘(A) does not vary from the actual finance
charge by more than $100; or
‘‘(B) is greater than the amount required
to be disclosed under this title; and
‘‘(2) shall be treated as being accurate for pur-
poses of section 125 if—
‘‘(A) except as provided in subparagraph
(B), the amount disclosed as the finance charge
does not vary from the actual finance charge by
more than an amount equal to one-half of one
percent of the total amount of credit extended;
or
‘‘(B) in the case of a transaction, other
than a mortgage referred to in section 103(aa),
which—
‘‘(i) is a refinancing of the principal
balance then due and any accrued and un-
paid finance charges of a residential mort-
gage transaction as defined in section
103(w), or is any subsequent refinancing
of such a transaction; and
‘‘(ii) does not provide any new consoli-
dation or new advance;
if the amount disclosed as the finance charge
does not vary from the actual finance charge by
more than an amount equal to one percent of
the total amount of credit extended.’’.
(b) BASIS OF DISCLOSURE FOR PER DIEM 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. 4. 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 
any
consumer credit transaction subject to this title that is
consummated before the date of the enactment of the
Truth in Lending Act Amendments of 1995, a creditor
or any assignee of a creditor shall have no civil, adminis-
trative, or criminal liability under this title for, and a
consumer shall have no extended rescission rights under
section 125(f) with respect to—
‘‘(1) the creditor’s treatment, for disclosure
purposes, of—
‘‘(A) taxes described in section 106(d)(3);
‘‘(B) fees described in section 106(e)(2)
and (5);
‘‘(C) fees and amounts referred to in the
3rd sentence of section 106(a); or
‘‘(D) borrower-paid mortgage broker fees
referred to in section 106(a)(6);
‘‘(2) the form of written notice used by the
creditor to inform the obligor of the rights of the ob-
ligor under section 125 if the creditor provided the
obligor with a properly dated form of written notice
published and adopted by the Board or a comparable
written notice, and otherwise complied with all the
requirements of this section regarding notice; or
‘‘(3) any disclosure relating to the finance
charge imposed with respect to the transaction if the
amount or percentage actually disclosed—
‘‘(A) may be treated as accurate for pur-
poses of this title if the amount disclosed as the
finance charge does not vary from the actual fi-
nance charge by more than $200;
‘‘(B) may, under section 106(f)(2), be
treated as accurate for purposes of section 125;
or
‘‘(C) is greater than the amount or per-
centage required to be disclosed under this title.
‘‘(b) EXCEPTIONS.—Subsection (a) shall not apply
to—
‘‘(1) any individual action or counterclaim
brought under this title which was filed before June
1, 1995;
‘‘(2) any class action brought under this title
for which a final order certifying a class was entered
before January 1, 1995;
‘‘(3) the named individual plaintiffs in any class
action brought under this title which was filed before
June 1, 1995; or
104TH CONGRESS
1ST SESSION
H. R. 2399
AN ACT
To amend the Truth in Lending Act to clarify the
intent of such Act and to reduce burdensome reg-
ulatory requirements on creditors.