H. R. 2399
One Hundred Fourth Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Wednesday,
the fourth day of January, one thousand nine hundred and ninety-five
An Act
To amend the Truth in Lending Act to clarify the intent of such Act and to
reduce burdensome regulatory requirements on creditors.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Truth in Lending Act Amend-
ments of 1995’’.
SEC. 2. CERTAIN CHARGES.
(a) THIRD PARTY FEES.—Section 106(a) of the Truth in Lending
Act (15 U.S.C. 1605(a)) is amended by adding after the 2d sentence
the following new sentence: ‘‘The finance charge shall not include
fees and amounts imposed by third party closing agents (including
settlement agents, attorneys, and escrow and title companies) if
the creditor does not require the imposition of the charges or
the services provided and does not retain the charges.’’.
(b) BORROWER-PAID MORTGAGE BROKER FEES.—
(1) INCLUSION IN FINANCE CHARGE.—Section 106(a) of the
Truth in Lending Act (15 U.S.C. 1605(a)) is amended by adding
at the end the following new paragraph:
‘‘(6) Borrower-paid mortgage broker fees, including fees
paid directly to the broker or the lender (for delivery to the
broker) whether such fees are paid in cash or financed.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect on the earlier of—
(A) 60 days after the date on which the Board of
Governors of the Federal Reserve System issues final regu-
lations 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 Governors of the Federal Reserve
System shall promulgate regulations implementing the amend-
ment made by paragraph (1) by no later than 6 months after
the date of the enactment of this Act.
(c) TAXES ON SECURITY INSTRUMENTS OR EVIDENCES OF INDEBT-
EDNESS.—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 para-
graph:
‘‘(3) Any tax levied on security instruments or on documents
evidencing indebtedness if the payment of such taxes is a
precondition for recording the instrument securing the evidence
of indebtedness.’’.
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(d) PREPARATION OF LOAN DOCUMENTS.—Section 106(e)(2) of
the Truth in Lending Act (15 U.S.C. 1605(e)(2)) is amended to
read as follows:
‘‘(2) Fees for preparation of loan-related documents.’’.
(e) FEES RELATING TO PEST INFESTATIONS, INSPECTIONS, AND
HAZARDS.—Section 106(e)(5) of the Truth in Lending Act (15 U.S.C.
1605(e)(5)) is amended by inserting ‘‘, including fees related to
any pest infestation or flood hazard inspections conducted prior
to closing’’ before the period.
(f) ENSURING FINANCE CHARGES REFLECT COST OF CREDIT.—
(1) REPORT.—
(A) IN GENERAL.—Not later than 6 months after the
date of the enactment of this Act, the Board of Governors
of the Federal Reserve System shall submit to the Congress
a report containing recommendations on any regulatory
or statutory changes necessary—
(i) to ensure that finance charges imposed in
connection with consumer credit transactions more
accurately reflect the cost of providing credit; and
(ii) to address abusive refinancing practices
engaged in for the purpose of avoiding rescission.
(B) REPORT REQUIREMENTS.—In preparing the report
under this paragraph, the Board shall—
(i) consider the extent to which it is feasible to
include in finance charges all charges payable directly
or indirectly by the consumer to whom credit is
extended, and imposed directly or indirectly by the
creditor as an incident to the extension of credit (espe-
cially those charges excluded from finance charges
under section 106 of the Truth in Lending Act as
of the date of the enactment of this Act), excepting
only those charges which are payable in a comparable
cash transaction; and
(ii) consult with and consider the views of affected
industries and consumer groups.
(2) REGULATIONS.—The Board of Governors of the Federal
Reserve System shall prescribe any appropriate regulation in
order to effect any change included in the report under para-
graph (1), and shall publish the regulation in the Federal
Register before the end of the 1-year period beginning on the
date of enactment of this Act.
SEC. 3. TOLERANCES; BASIS OF DISCLOSURES.
(a) TOLERANCES FOR ACCURACY.—Section 106 of the Truth in
Lending Act (15 U.S.C. 1605) is amended by adding at the end
the following new subsection:
‘‘(f) TOLERANCES
FOR ACCURACY.—In connection with credit
transactions not under an open end credit plan that are secured
by real property or a dwelling, the disclosure of the finance charge
and other disclosures affected by any finance charge—
‘‘(1) shall be treated as being accurate for purposes of
this title if the amount disclosed as the finance charge—
‘‘(A) does not vary from the actual finance charge by
more than $100; or
‘‘(B) is greater than the amount required to be disclosed
under this title; and
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‘‘(2) shall be treated as being accurate for purposes of
section 125 if—
‘‘(A) except as provided in subparagraph (B), the
amount disclosed as the finance charge does not vary from
the actual finance charge by more than an amount equal
to one-half of one percent of the total amount of credit
extended; or
‘‘(B) in the case of a transaction, other than a mortgage
referred to in section 103(aa), which—
‘‘(i) is a refinancing of the principal balance then
due and any accrued and unpaid finance charges of
a residential mortgage transaction as defined in section
103(w), or is any subsequent refinancing of such a
transaction; and
‘‘(ii) does not provide any new consolidation or
new advance;
if the amount disclosed as the finance charge does not
vary from the actual finance charge by more than an
amount equal to one percent of the total amount of credit
extended.’’.
(b) BASIS OF DISCLOSURE FOR PER DIEM INTEREST.—Section
121(c) of the Truth in Lending Act (15 U.S.C. 1631(c)) is amended
by adding at the end the following new sentence: ‘‘In the case
of any consumer credit transaction a portion of the interest on
which is determined on a per diem basis and is to be collected
upon the consummation of such transaction, any disclosure with
respect to such portion of interest shall be deemed to be accurate
for purposes of this title if the disclosure is based on information
actually known to the creditor at the time that the disclosure
documents are being prepared for the consummation of the trans-
action.’’.
SEC. 4. LIMITATION ON LIABILITY.
(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by adding at the end the following
new section:
‘‘SEC. 139. CERTAIN LIMITATIONS ON LIABILITY.
‘‘(a) LIMITATIONS ON LIABILITY.—For any consumer credit trans-
action subject to this title that is consummated before the date
of the enactment of the Truth in Lending Act Amendments of
1995, a creditor or any assignee of a creditor shall have no civil,
administrative, or criminal liability under this title for, and a
consumer shall have no extended rescission rights under section
125(f) with respect to—
‘‘(1) the creditor’s treatment, for disclosure purposes, of—
‘‘(A) taxes described in section 106(d)(3);
‘‘(B) fees described in section 106(e)(2) and (5);
‘‘(C) fees and amounts referred to in the 3rd sentence
of section 106(a); or
‘‘(D) borrower-paid mortgage broker fees referred to
in section 106(a)(6);
‘‘(2) the form of written notice used by the creditor to
inform the obligor of the rights of the obligor under section
125 if the creditor provided the obligor with a properly dated
form of written notice published and adopted by the Board
or a comparable written notice, and otherwise complied with
all the requirements of this section regarding notice; or
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‘‘(3) any disclosure relating to the finance charge imposed
with respect to the transaction if the amount or percentage
actually disclosed—
‘‘(A) may be treated as accurate for purposes of this
title if the amount disclosed as the finance charge does
not vary from the actual finance charge by more than
$200;
‘‘(B) may, under section 106(f)(2), be treated as accurate
for purposes of section 125; or
‘‘(C) is greater than the amount or percentage required
to be disclosed under this title.
‘‘(b) EXCEPTIONS.—Subsection (a) shall not apply to—
‘‘(1) any individual action or counterclaim brought under
this title which was filed before June 1, 1995;
‘‘(2) any class action brought under this title for which
a final order certifying a class was entered before January
1, 1995;
‘‘(3) the named individual plaintiffs in any class action
brought under this title which was filed before June 1, 1995;
or
‘‘(4) any consumer credit transaction with respect to which
a timely notice of rescission was sent to the creditor before
June 1, 1995.’’.
(b) CLERICAL AMENDMENT.—The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 138 the following new item:
‘‘139. Certain limitations on liability.’’.
SEC. 5. LIMITATION ON RESCISSION LIABILITY.
Section 125 of the Truth in Lending Act (15 U.S.C. 1635)
is further amended by adding at the end the following new sub-
section:
‘‘(h) LIMITATION
ON RESCISSION.—An obligor shall have no
rescission rights arising solely from the form of written notice
used by the creditor to inform the obligor of the rights of the
obligor under this section, if the creditor provided the obligor the
appropriate form of written notice published and adopted by the
Board, or a comparable written notice of the rights of the obligor,
that was properly completed by the creditor, and otherwise complied
with all other requirements of this section regarding notice.’’.
SEC. 6. CALCULATION OF DAMAGES.
Section 130(a)(2)(A) of the Truth in Lending Act (15 U.S.C.
1640(a)(2)(A)) is amended—
(1) by striking ‘‘or (ii)’’ and inserting ‘‘(ii)’’; and
(2) by inserting before the semicolon at the end the follow-
ing: ‘‘, or (iii) in the case of an individual action relating
to a credit transaction not under an open end credit plan
that is secured by real property or a dwelling, not less than
$200 or greater than $2,000’’.
SEC. 7. ASSIGNEE LIABILITY.
(a) VIOLATIONS APPARENT ON THE FACE OF TRANSACTION DOCU-
MENTS.—Section 131 of the Truth in Lending Act (15 U.S.C. 1641)
is amended by adding at the end the following new subsection:
‘‘(e) LIABILITY
OF ASSIGNEE
FOR CONSUMER CREDIT TRANS-
ACTIONS SECURED BY REAL PROPERTY.—