Source: https://library.nclc.org/TIL
Timestamp: 2017-06-25 15:28:48
Document Index: 90289514

Matched Legal Cases: ['§ 1605', '§ 1026', '§ 1605', '§ 1026', '§ 1605', '§ 1026', '§ 1605', '§ 1026', '§ 1605', '§ 1026', '§ 1605', '§ 1026', 'art4', 'art5', '§ 16419', 'arty9', '§ 1632', '§ 1635', '§ 1638', '§ 1638', '§ 1637', '§ 1641', '§ 1641', '§ 1641', '§ 1640', '§ 164112', '§ 1013', '§ 1013', '§ 213', '§ 1601', '§ 102', '§ 1602', '§ 103', '§ 1602', '§ 1602', '§ 1602', '§ 1602', '§ 1602', '§ 1603', '§ 104', '§ 1604', '§ 105', '§ 1605', '§ 106', '§ 1606', '§ 107', '§ 1607', '§ 108', '§ 1608', '§ 109', '§ 1609', '§ 3', '§ 110', '§ 1610', '§ 111', '§ 1611', '§ 112', '§ 1612', '§ 113', '§ 1613', '§ 114', '§ 1614', '§ 115', '§ 1615', '§ 1616', '§ 1631', '§ 121', '§ 1632', '§ 122', '§ 1633', '§ 123', '§ 1634', '§ 124', '§ 1635', '§ 125', '§ 1636', '§ 614', '§ 126', '§ 1637', '§ 127', '§ 1637', '§ 127', '§ 1638', '§ 128', '§ 1638', '§ 128', '§ 1639', '§ 129', '§ 1639', '§ 129', '§ 1639', '§ 129', '§ 1639', '§ 129', '§ 1639', '§ 129', '§ 1639', '§ 129', '§ 1639', '§ 129', '§ 1639', '§ 129', '§ 1639', '§ 129', '§ 1640', '§ 130', '§ 1641', '§ 131', '§ 1642', '§ 132', '§ 1643', '§ 133', '§ 1644', '§ 134', '§ 1645', '§ 135', '§ 1646', '§ 136', '§ 1647', '§ 137', '§ 1648', '§ 138', '§ 1649', '§ 139', '§ 1650', '§ 140', '§ 1651', '§ 140', '§ 1661', '§ 141', '§ 1662', '§ 142', '§ 1663', '§ 143', '§ 1664', '§ 144', '§ 1665', '§ 145', '§ 1665', '§ 146', '§ 1665', '§ 147', '§ 1665', '§ 1665', '§ 1665', '§ 1666', '§ 161', '§ 1666', '§ 162', '§ 1666', '§ 163', '§ 1666', '§ 164', '§ 1666', '§ 165', '§ 1666', '§ 166', '§ 1666', '§ 167', '§ 1666', '§ 168', '§ 1666', '§ 169', '§ 1666', '§ 170', '§ 1666', '§ 171', '§ 1666', '§ 172', '§ 1666', '§ 173', '§ 3806', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 1026', '§ 226', '§ 1026', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 1026', '§ 1026', '§ 1026', '§ 1026', '§ 1026', '§ 1026', '§ 1026', '§ 1026', '§ 1026', '§ 1026', '§ 1026', '§ 1026', '§ 1026', '§ 1026', 'art 1026', 'art 1026', 'art 1026', 'art 1026', 'art 1026', 'art 1026', '§ 226', '§ 226', '§ 226', '§ 1026', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 1026', '§ 1026', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 1026', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 226', '§ 1667', '§ 1667', '§ 1667', '§ 1667', '§ 1667', '§ 1667', '§ 1667', 'art 1013', 'art 213', 'art 1013', 'art 213', 'art 1013', 'art 213']

Truth in Lending | NCLC Digital Library
Subscribe to Additional TreatisesShop Other NCLC BooksTruth in LendingTreatise OverviewSummary Front MatterAbout the AuthorsAcknowledgmentsCopyright, Citation, and Book InformationDisclaimerContents ChaptersChapter 1 Overview1.1 Introduction1.1.1 The Purpose of Truth in Lending1.1.2 The Role of Truth in Lending in Consumer Advocacy1.2 Legislative History1.2.1 Original Act1.2.2 Truth in Lending Simplification1.2.3 1988 Consumer Protection Amendments1.2.4 The Home Ownership and Equity Protection Act of 19941.2.5 Truth in Lending Act Amendments of 19951.2.6 The 2005 Bankruptcy Amendments Affecting TILA1.2.7 The Higher Education Opportunity Act of 2008 (HEOA)1.2.8 The Credit Card Accountability, Responsibility and Disclosures (CARD) Act1.2.9 The Mortgage Disclosure Improvement Act1.2.10 The Helping Families Save Their Homes Act of 20091.2.11 The Dodd-Frank Wall Street Reform and Consumer Protection Act1.2.11a Helping Expand Lending Practices in Rural Communities Title of the Fixing America’s Surface Transportation Act of 20151.3 Effective Dates of the Dodd-Frank TILA Amendments1.3.1 General1.3.2 Statutory Language Concerning Title XIV Effective Dates1.3.3 Effective Date of Title XIV Amendments That Require Implementing Regulations1.3.4 Effective Date of Title XIV Amendments That Do Not Require Implementing Regulations1.3.4.1 Statutory Language Is Ambiguous1.3.4.2 Most Court Decisions Use a January 21, 2013 Effective Date1.3.4.3 The Case for a July 22, 2010 Effective Date1.4 Outline of the Truth in Lending Act1.5 Sources of Law in Truth in Lending Cases1.5.1 Introduction1.5.2 The Statute1.5.2.1 General1.5.2.2 The Pre-Simplification Version of TILA1.5.2.3 Statutory Construction Principles: Liberal Construction and Strict Liability1.5.3 Regulation Z and the Official Interpretations1.5.3.1 History of Regulation Z and the FRB Interpretations1.5.3.2 Validity of Regulation Z and Official Interpretations1.5.3.3 The CFPB’s Authority to Implement Adjustments, Exceptions, Waivers, and Exemptions1.5.3.3.1 General authority1.5.3.3.2 Exemption authority for HOEPA loans1.5.3.3.3 Exemption authority for residential mortgage loan disclosures1.5.3.3.4 Waiver authority for trial disclosure programs1.5.3.4 Federal Reserve Board Review of Regulation Z 2004–20111.5.3.4.1 Introduction1.5.3.4.2 Open-end credit review1.5.3.4.3 Closed-end credit review1.5.3.4.4 Prohibitions of unfair and deceptive mortgage practices added in 2008 and 20101.5.3.4.4a CFPB adoption and renumbering of Regulation Z and Official Interpretations1.5.3.4.5 Rulemaking for mortgage loans under the Dodd-Frank Act1.5.3.4.6 Other post-2010 rulemaking1.5.4 Case Law1.5.5 Treatises1.6 About This Treatise1.6.0a Print and Online Versions1.6.1 Organization of This Treatise1.6.2 Additional Pleadings, Practice Tools, and Primary Source Materials Found Online1.7 Getting Started: Quick Reference Checklist (Closed-End)Chapter 2 Scope2.1 Introduction2.1.1 Overview2.1.2 Devices to Evade TILA: Substance of Transaction, Not Form, Dictates2.1.3 Opting In to TILA Coverage2.2 Consumer Credit2.2.1 General2.2.2 Consumer2.2.2.1 Defined2.2.2.2 Accommodation Parties2.2.2.3 Who Must Receive Disclosures2.2.3 Primarily for Personal, Family, or Household Purposes2.2.4 Credit2.2.4.1 What Is “Credit”2.2.4.1.1 Definition of credit2.2.4.1.2 Categories of credit2.2.4.2 Credit Sales and Leases2.2.4.2.1 General definition2.2.4.2.2 Terminable without a penalty: The rent-to-own loophole2.2.4.2.3 Transfer of ownership and balloon financing2.2.4.2.4 The economic realities: Distinguishing a lease and a sale2.3 Creditor2.3.1 Introduction2.3.2 Person2.3.2.1 General2.3.2.2 Attorneys and Trustees2.3.3 Regularly Extends Consumer Credit2.3.4 The Finance Charge or More Than Four Installment Requirement2.3.4.1 Introduction2.3.4.2 Finance Charge As a Trigger for TILA Coverage2.3.4.3 Payable by Written Agreement in More Than Four Installments2.3.5 To Whom the Obligation Is Initially Payable2.3.5.1 General2.3.5.2 Status and Liability of Assignees2.3.5.3 Status and Liability of Servicers2.3.5.4 Arrangers or Originators of Credit2.3.5.4.1 Overview2.3.5.4.2 Peer-to-peer lending programs2.3.5.5 Status and Liability of MERS2.3.6 HOEPA Mortgages: Special Definition of Creditor2.3.7 Credit Card Issuers: Special Definition of Creditor2.3.7a TILA/RESPA Combined Disclosures: Definition of Creditor2.4 Exempt Transactions2.4.1 Overview2.4.2 Business, Commercial, or Agricultural Credit2.4.2.1 Primary Purpose2.4.2.2 Business Credit2.4.2.2.1 Determining a business purpose2.4.2.2.2 Credit for purchase of specific property as a business or consumer purpose2.4.2.2.3 Credit to acquire, improve, or maintain rental property2.4.2.2.4 Losing exemptions through refinancing2.4.2.3 Telephone Credit Cards and Credit Cards for Business Use Are Only Partially Exempt2.4.2.4 Agricultural Purpose2.4.3 Extensions of Credit to Organizations2.4.4 Credit over $25,000 (or $50,000) Not Secured by Real Property or a Dwelling2.4.4.1 Scope of the Exemption Until July 21, 20112.4.4.2 Scope of the Exemption After July 20, 20112.4.4.3 Transactions Excluded by Exemption2.4.4.4 Credit Secured by Real Property or the Consumer’s Principal Dwelling Is Not Exempt2.4.4.5 Loss of Exemption Through Refinancing2.4.5 Student Loans Are Partially Exempt2.4.5.1 TILA Student Loan Disclosure Requirements2.4.5.1.1 General information2.4.5.1.2 Student loan exemptions for government loans2.4.5.1.3 Student loan disclosures for private education loans2.4.5.2 Non-TILA Student Loan Disclosure Requirements2.4.6 Public Utility Credit2.4.7 Securities or Commodities Accounts2.4.8 Home Fuel Budget Plans2.4.9 Official Interpretations Exemptions2.4.9.1 General2.4.9.2 Layaway Plans2.4.9.3 Tax Liens and Tax Assessments2.4.9.3.1 Exclusion history2.4.9.3.2 Transfers of tax liens and tax assessments2.4.9.3.3 Special case: PACE financing2.4.9.3.3.1 Introduction2.4.9.3.3.2 Example: HERO—a California PACE program2.4.9.3.3.3 Relevant contractual provisions2.4.9.3.3.4 TILA applicability to California HERO and similar transactions2.4.9.4 Court Judgments and Reaffirmations of Debts in Bankruptcy2.4.9.5 Insurance2.4.9.5.1 Insurance premium payment plans2.4.9.5.2 Insurance premium financing contracts2.4.9.5.3 Borrowing against insurance policies2.4.9.5.4 McCarran-Ferguson Act2.4.9.6 Home Improvement Progress Payment Transactions2.4.9.7 Mortgage Assistance Plans Subsidized by a Government Agency2.4.9.8 Borrowing Against a Pension Account2.4.9.9 Investments, Letters of Credit, and Option Contracts2.5 Disguised Credit and Credit Sales: Maybe; Maybe Not2.5.1 Introduction2.5.2 Pawn Transactions; Auto-Pawns2.5.3 Sale/Leaseback or Sale/Repurchase Agreements Involving Real Property2.5.3.1 Liability of the Buyer/Lender2.5.3.2 TILA’s Numerical Requirements2.5.3.3 Liability of Third-Party Lenders2.5.4 Rent to Own (RTO)2.5.5 Land Contracts2.5.6 Payday Loans, Check Advancement Loans2.5.7 Refund Anticipation Loans2.5.8 Bank Overdraft Loans2.5.8.1 What Is an Overdraft Loan?2.5.8.2 Overdraft Loans Are Credit2.5.8.3 Are Banks “Creditors” When They Make Overdraft Loans?2.5.8.4 Are ATM and Debit Cards That Access Overdraft Loans Credit Cards?2.6 State Disclosure Law2.6.1 Introduction2.6.2 Exemptions2.6.3 Preemption2.6.3.1 Overview of TILA Preemption Process2.6.3.2 Meaning of Inconsistency2.6.3.3 How Creditors and the CFPB Determine If a State Law Is Preempted2.6.3.4 Relationship Between State High Cost Loans Laws and HOEPA2.6.3.5 Relationship Between HOEPA and AMTPA2.6.4 Lack of Preemption for Claims Unrelated to TILA Subject Matter2.6.4.1 Generally2.6.4.2 Preemption Regarding Federally Chartered Financial Institutions2.6.4.3 Dodd-Frank’s Preemption StandardChapter 3 Finance Charge3.1 Introduction3.1.1 Overview; Purpose of the Finance Charge Disclosure3.1.2 Organization of Chapter3.2 A Primer on the Finance Charge3.2.1 The General Concepts Underlying TILA’s Definition3.2.2 Allocating the Components of the Debt: Finance Charge or Amount Financed?3.2.3 Distinctions: TILA Finance Charge and Interest; TILA APR and Interest Rate; TILA Amount Financed and Loan Principal3.2.4 A Regulatory Road Map: Outline of TILA’s Finance Charge Rules3.3 Finance Charge As a Trigger to Coverage Under TILA3.4 Statutory Construction of TILA’s Finance Charge Rules3.5 Basic Definition of the Finance Charge: 15 U.S.C. § 1605(a); Reg. Z § 1026.4(a)3.6 Elements of the Basic Definition3.6.1 Any Charge3.6.1.1 General Definition3.6.1.2 Treatment of a “Credit” from the Creditor to the Consumer3.6.1.3 Involuntary Debt Consolidation, Reaffirmation, and Purchases3.6.1.3.1 Generally3.6.1.3.2 Cases on forced payoffs not involving debts discharged in bankruptcy3.6.1.3.3 Bankruptcy Code and reaffirmed debts3.6.1.3.4 Collateral purchases3.6.1.4 Interest Forfeitures and Offsets May Be a Credit Charge3.6.2 Charges Payable Directly or Indirectly by the Consumer; Creditor’s Costs of Doing Business3.6.2.1 General3.6.2.2 Examples3.6.2.2.1 Selling consumer credit paper at a discount3.6.2.2.2 Intangible taxes3.6.2.2.3 Document preparation fees3.6.2.3 Payable by the Consumer3.6.3 Charge Imposed Directly or Indirectly by the Creditor3.6.3.1 Charges Need Not Be Retained by the Creditor to Be “Imposed by the Creditor”3.6.3.2 Taxes Imposed on the Creditor That Are Passed on to the Borrower; Intangible Taxes3.6.3.3 Charges Incurred by Settlement Agents3.6.3.4 Car Dealers—Packing in the Extras3.6.3.4.1 General3.6.3.4.2 Practice pointers3.6.3.4.3 Remedies3.6.4 Incident to or a Condition of the Extension of Credit3.6.4.1 Introduction3.6.4.2 Incident to the Extension of Credit3.6.4.3 Condition of the Extension of Credit3.6.4.4 The Role of Voluntariness3.6.4.5 Example of Fees Imposed “Incident to” the Extension of Credit3.6.4.6 Prepayment Charges3.6.5 Charges Payable in a Comparable Cash Transaction3.6.5.1 General3.6.5.2 “Cash Price”; Charges Buried in the Cash Price3.6.5.3 Comparable Cash Transaction Examples3.6.5.3.1 Car sales3.6.5.3.2 Refund anticipation loans3.6.5.3.3 Overdraft loans3.7 Examples of Finance Charges: 15 U.S.C. § 1605(a); Reg. Z § 1026.4(a) and (b)3.7.1 General3.7.2 Interest; the Time-Price Differential3.7.2.1 The Basic Interest Cost3.7.2.2 Calculating the Interest: Practice Pointers3.7.2.3 Failure to Rebate Unearned Charges: When Refinancing Creates a Finance Charge in the New Loan3.7.2.3.1 General3.7.2.3.2 Practical tips: Determining whether the payoff on a refinanced loan includes unearned charges3.7.2.3.3 Federal rebate law prescribes method of calculating unearned interest in long-term transactions3.7.3 Service, Transaction, Activity, and Carrying Charges3.7.3.1 General3.7.3.2 Checking Account Charges3.7.3.3 Membership or Participation Fees3.7.3.4 Courier and Express Delivery Fees3.7.4 Mortgage Broker Charges3.7.4.1 Generally3.7.4.2 General Rule3.7.4.3 Hidden Broker Fees3.7.4.4 Yield Spread Premiums3.7.5 Points, Loan Fees, Assumption Fees, and Finder’s Fees3.7.5.1 General3.7.5.2 Exception for Seller’s Points3.7.6 Appraisal, Investigation, and Credit Report Fees3.7.7 Default and Credit Loss Insurance; Residual Value Insurance3.7.8 Assignment Fee or Discount3.7.9 Credit Insurance—Unless Excluded3.7.10 Debt Cancellation Coverage; GAP Insurance3.7.11 Discounts and Surcharges3.7.11.1 General Rule3.7.11.2 Credit Cards3.8 Prepaid Finance Charges and the Amount Financed3.8.1 Overview3.8.2 Prepaid Finance Charges3.8.3 Relationship of Prepaid Finance Charge to the Amount Financed3.8.4 Calculating the Amount Financed3.8.5 Practice Tip: Working Examples3.9 TILA’s “Exclusionary” Rules: Taking Charges Out of the Finance Charge: 15 U.S.C. § 1605(a)–(e); Reg. Z § 1026.4(a)(1) and (2), (c)–(e)3.9.1 Overview3.9.2 Application Fees3.9.3 Late Charges, Over-the-Limit Fees, and Other Delinquency Charges3.9.3.1 General3.9.3.2 Over-the-Limit Fees3.9.3.3 Overdraft Loan Fees3.9.3.4 When Late Charges Are Finance Charges; Late Charges As a Finance Charge Triggering TILA Coverage3.9.4 Credit and Property Insurance; Loss-of-Income Coverage3.9.4.1 Overview3.9.4.2 Relationship of TILA to McCarran-Ferguson Act and to State Laws Regulating Insurance3.9.4.2.1 McCarran-Ferguson Act3.9.4.2.2 Relationship between TILA and state laws regulating insurance3.9.4.3 What Is Credit Insurance?3.9.4.3.1 General description3.9.4.3.2 Credit insurance typically benefits the creditor more than the borrower3.9.4.4 General Rules for Excluding the Cost of Credit Insurance and Loss-of-Income Coverage from the Finance Charge3.9.4.4.1 Overview3.9.4.4.2 Insurance “written in connection with a credit transaction”3.9.4.4.3 Coverage cannot be required3.9.4.4.3.1 Generally3.9.4.4.3.2 Voluntariness disclosure3.9.4.4.3.3 Affirmative written request for insurance3.9.4.4.3.4 Voluntariness is a factual issue3.9.4.4.3.5 Parol evidence3.9.4.4.3.6 Proof of coercion3.9.4.4.3.7 Other claims to challenge coercive insurance3.9.4.4.4 Timing and location of insurance disclosures3.9.4.4.5 Premium cost disclosures3.9.4.4.6 Term disclosures3.9.4.5 Additional Rules Governing Specific Types of Credit Insurance and Loss-of-Income Coverage3.9.4.5.1 Property insurance3.9.4.5.1.1 Generally3.9.4.5.1.2 Choice of provider disclosure3.9.4.5.1.3 “From or through” the creditor3.9.4.5.2 Single-interest insurance3.9.4.5.2.1 Excludable from finance charge under certain circumstances3.9.4.5.2.2 When the insurance consists of or includes non-VSI coverages3.9.4.5.3 Voluntary homeowners insurance, flood insurance, and wind insurance3.9.4.5.4 Force-placed insurance and other post-consummation insurance3.9.4.5.5 GAP insurance3.9.4.5.5.1 GAP insurance described3.9.4.5.5.2 TILA coverage of GAP insurance3.9.4.5.6 TILA coverage of debt cancellation and debt suspension agreements3.9.4.5.7 None of the above: Non-credit, non-property insurance3.9.4.5.8 Credit insurance and the Dodd-Frank Act3.9.4.5.9 Administrative enforcement of violations of the credit insurance rules3.9.5 Third-Party and Closing Agent Charges: 15 U.S.C. § 1605(a); Regulation Z § 1026.4(a)(1) and (2)3.9.6 Real Estate and Residential Mortgage Transaction Charges: 15 U.S.C. § 1605(e); Reg. Z § 1026.4(c)(7)3.9.6.1 General3.9.6.2 Classes of Real Estate Closing Charges: What Is Excludable; What Is Not3.9.6.2.1 Overview3.9.6.2.2 Real property, title-related fees3.9.6.2.3 Document fees3.9.6.2.4 Closing agent/attorney fees3.9.6.2.5 Notary, appraisal, and credit report fees3.9.6.2.6 Standard escrow costs3.9.6.2.7 Impound accounts3.9.6.2.8 Fees for post-consummation services3.9.6.3 The Charges Must Be Bona Fide and Reasonable3.9.6.3.1 Overview3.9.6.3.2 Definition of bona fide3.9.6.3.3 Definition of reasonable3.9.6.3.4 Determining if a fee is bona fide and reasonable3.9.6.3.5 Average cost pricing3.9.6.3.6 Investigating third-party fees3.9.6.3.7 How much of the fee is part of the finance charge?3.9.6.3.8 Other uses of bona fide and reasonable in Regulation Z3.9.6.4 Identifying Finance Charges from the Settlement Statement or the TILA/RESPA Closing Disclosure3.9.7 Security Interest Charges; Filing and Recording Fees: 15 U.S.C. § 1605(d); Reg. Z § 1026.4(e)3.9.7.1 Overview3.9.7.2 Taxes; Recording and Filing Fees Prescribed by Law3.9.7.3 Nonfiling Fees3.9a Creditor, Third-Party, and Seller Credits3.9a.1 Overview3.9a.2 Lender Credits3.9a.3 Seller Credits3.9a.4 Third-Party Credits3.10 Hidden Finance Charges in the Cash Price of Goods or Services3.10.1 Overview3.10.2 Proving the Credit Mark-Up3.11 Using This Chapter: Walking Through a Case3.11.1 Collecting the Papers3.11.2 Checking the Papers3.11.2.1 Level One3.11.2.2 Level Two3.11.3 Looking Behind the PapersChapter 4 General Rules for Closed-End Credit Disclosures4.1 Introduction4.1.1 The Scope of This Chapter and Sources of Law4.1.2 What Is Closed-End Credit?4.1.3 Who Is Required to Make Closed-End Disclosures?4.1.3.1 Multiple Creditors4.1.3.2 Brokers, Car Dealers, and Other Non-Creditors4.1.4 Who Must Receive Disclosures4.1.5 Determining Which Disclosures Are Required: Meaning of “As Applicable”4.2 Form of Disclosures4.2.1 General4.2.2 Model Forms and Clauses4.2.2.1 Listing of Model Forms4.2.2.2 Examining the Forms4.2.3 Meaningful Disclosures4.2.4 Clear and Conspicuous4.2.4.1 The Standard As Enunciated by the FRB and CFPB4.2.4.2 The Standard As Enunciated by the Courts4.2.4.3 Conspicuous4.2.4.4 Clear4.2.4.5 Contradictory Information4.2.4.5.1 Overview4.2.4.5.2 Contradictory information in the TILA disclosures4.2.4.5.3 Conflict between the TILA disclosure and the loan documents4.2.4.5.4 Inaccurate additional information4.2.4.6 More Conspicuous: Annual Percentage Rate and Finance Charge4.2.4.6.1 General4.2.4.6.2 How to make terms more conspicuous4.2.4.6.3 Exceptions to the more conspicuous standard4.2.5 Written Disclosures in a Form the Consumer May Keep4.2.5.1 General Standards4.2.5.2 Effect of Written Acknowledgment of Receipt4.2.5.2.1 Introduction4.2.5.2.2 Written acknowledgment and the right to rescind4.2.5.2.3 Written acknowledgment as to assignee liability4.2.6 Segregating the Disclosures: The Federal Box4.2.6.1 General4.2.6.2 How to Segregate the Disclosures4.2.6.3 Exceptions to the Segregation Rule4.3 Electronic Disclosures4.3.1 Overview4.3.2 Authority of the CFPB to Interpret Electronic Disclosure Standards and Establish Exceptions4.3.3 Interim Rule4.3.4 Differences Between Interim Rule and Final Rule4.3.5 Disclosures Exempted from E-Sign Requirements4.3.6 E-Sign’s Requirements for Consumer Consent to Receive Electronic Disclosures4.3.7 E-Sign’s Effect on TILA Requirement That Disclosures Be Made in a Form That the Consumer May Keep4.3.8 E-Sign’s Effect on TILA Timing Requirements4.3.9 E-Sign’s Effect on TILA Format Requirements4.3.10 Manner of Transmitting Electronic Notices4.3.11 Penalties for Violation of Electronic Disclosure Safeguards4.4 Timing of Disclosures4.4.1 Why Timing Matters4.4.2 When Must the Disclosures Be Made?4.4.3 Special Timing Rules4.4.4 Consummation Defined4.4.4.1 General4.4.4.2 Financial Investment May Not Be Enough for Consummation4.4.4.3 Does Consummation Depend on the Creditor’s Approval of the Contract?4.4.5 Exceptions to Timing Rule: Mail or Telephone Orders and Series of Sales4.4.5.1 Mail or Telephone Orders4.4.5.2 Series of Sales4.4.6 Timing Issues in Car Sales4.4.6.1 Car Dealer Practices4.4.6.2 Applicable Official Interpretations4.4.6.3 Court Cases4.4.6.4 Investigating Timing Violations in Car Cases4.4.7 Timing Rules for Residential Mortgage Transactions Subject to RESPA4.4.7.1 What Transactions the Timing Rules Cover4.4.7.1.1 Introduction4.4.7.1.2 Coverage until October 3, 2015 and for some mortgage loans thereafter4.4.7.1.3 Coverage beginning October 3, 2015 for loans subject to the TILA/RESPA integrated disclosure regime4.4.7.2 Early Disclosures4.4.7.2.1 Time when early disclosures must be provided4.4.7.2.2 Format of early disclosures4.4.7.2.3 Fees4.4.7.3 Redisclosure Before Closing4.4.7.4 TILA/RESPA Integrated Closing Disclosure4.4.7.4a TILA/RESPA Integrated Disclosure Timing Chart4.4.7.5 Waiver4.4.7.6 Remedies for Violations of the Early Disclosure Rules4.4.8 Timing Rules for Variable Rate Transactions Secured by the Consumer’s Principal Dwelling4.4.9 Timing Issues in Student Loans4.5 Basis of Disclosures4.5.1 Disclosures Reflect the Legal Obligation4.5.2 Effect of Unenforceable Term or Contract on the “Legal Obligation” Rule4.5.3 Effect of Changes in the Legal Obligation4.5.3.1 What Is a Change in the Legal Obligation?4.5.3.2 Must TILA Disclosures Reflect Subsequent Changes?4.5.4 Multiple Transactions and Advances4.5.5 Other Unusual Transactions4.5.6 “Yo-Yo” or “Spot Delivery” Car Sales4.5.6.1 Description4.5.6.2 Distinguishing a Condition Precedent and a Condition Subsequent4.5.6.3 TILA Consequences4.5.6.3.1 Overview4.5.6.3.2 Understated APR4.5.6.3.3 Overstated amount financed4.5.6.3.4 Failure to label disclosures as estimates4.5.6.4 Proving a TILA Violation and Other Claims4.5.7 Estimated Disclosures4.5.7.1 Estimated Disclosures: General Requirements4.5.7.2 Where More Than One Disclosure Is Uncertain4.5.7.3 Early Mortgage Disclosures: The Good Faith Estimates4.5.7.4 Estimates in Simple Interest Transactions4.5.7.5 Estimated Payment Start Date4.5.7.6 Per Diem Interest4.5.8 Effects of Minor Variations and Irregularities4.5.9 When Redisclosures Must Be Made Before Consummation4.5.10 Demand Obligations4.5.10.1 Special Demand Obligation Disclosures4.5.10.2 Tax Refund Loans As Demand Obligations4.5.11 OverdisclosureChapter 5 Specific Closed-End Disclosures5.1 Introduction5.2 Distinguishing Disclosures by Their Consequences5.3 The Amount Financed5.3.1 General5.3.2 Disclosures for Down Payments and Trade-Ins5.3.2.1 General5.3.2.2 Negative Equity5.3.2.3 Pickup Payments5.3.3 Other Amounts That Are Financed5.3.4 Premiums and Rebates5.3.5 Tolerances Affecting the Amount Financed5.4 Disclosure of the Finance Charge5.4.1 General Disclosure Rules5.4.2 More Conspicuous Than Other Disclosures5.4.3 Tolerance Levels for Amount Disclosed5.4.3.1 General5.4.3.2 Tolerances for Credit Other Than Mortgage Loans5.4.3.3 Tolerances for Mortgage Credit5.4.3.3.1 Tolerances for damages5.4.3.3.2 Tolerances for rescission outside of foreclosure5.4.3.3.3 Tolerance for rescission in foreclosure defense5.4.3.4 Effect of Finance Charge Tolerances on Related Disclosures5.4.3.5 Overdisclosures and Padded Fees5.4.3.5.1 General rules on overdisclosure5.4.3.5.2 Creditor’s inclusion of non-finance charges in disclosed finance charge5.4.3.5.3 Fee padding5.4.3.6 Tolerance Chart5.5 Annual Percentage Rate Disclosure5.5.1 The APR and Interest Rate Distinguished5.5.2 General Disclosure Rules5.5.3 More Conspicuous Than Other Disclosures5.5.4 Accuracy of the Annual Percentage Rate5.5.4.1 General Rules on Tolerance5.5.4.1.1 Regular transactions5.5.4.1.2 Irregular transactions5.5.4.1.3 Tolerance for APRs calculated using the annual percentage rate tables5.5.4.1.4 Where the misdisclosure of the APR is based on an inaccurate finance charge5.5.4.2 Overstated APR5.5.4.3 Other Accuracy Rules5.5.4.3.1 Errors attributable to a faulty calculation tool5.5.4.3.2 Accuracy rules for add-on rates5.5.4.3.3 Accuracy for fixed dollar finance charges5.5.5 Proving the Accurate APR in Litigation5.5.6 Calculation of the Annual Percentage Rate5.5.6.1 General5.5.6.2 Calculation of the Annual Percentage Rate for Fixed Rate Transactions5.5.6.2.1 Tables and other tools for calculating the APR5.5.6.2.2 Payment schedule and other irregularities in calculating the APR5.5.6.3 Calculation of the Annual Percentage Rate in Variable Rate Transactions5.5.6.3.1 Introduction5.5.6.3.2 Calculation of interest rate changes in variable rate transactions5.5.6.3.3 Rate at origination or the fully-indexed rate5.5.6.3.4 Calculation of APR in timely payments rewards programs5.5.6.3.5 Calculation of APR in construction loans5.5.6.3.6 Composite APR5.5.6.3.7 Tools for calculating the composite APR5.5.7 Calculation of the APR in Single-Advance Single-Payment Transactions and Demand Obligations5.6 Disclosure of the Payment Schedule5.6.1 General5.6.2 Number of Payments5.6.3 Amount of Payments5.6.3.1 What Is Included in the Payments?5.6.3.2 The Dollar Amount Must Be Disclosed5.6.3.3 When Payments Vary5.6.4 Timing of Payments5.6.5 Balloon Payments5.6.6 Payment Schedule for Variable Rate Transactions5.6.6.1 Variable Rate5.6.6.2 Variable Payments5.6.6.3 Are the Payment Schedules Reflective of Reality?5.6.6.4 Checking a Variable Rate Payment Schedule5.6.7 Demand Obligations5.6.8 Alternate Payment Schedules5.6.9 Disclosure of the Total of Payments5.6.9.1 General Disclosure Requirements5.6.9.1.1 Required disclosure5.6.9.1.2 When the total of payments does not add up: anomalous disclosure of the total of payments5.6.9.1.2a Pickup payments5.6.9.1.2b Finance charges paid in cash5.6.9.1.2c Monthly insurance payments not included in the amount financed or finance charge5.6.9.1.2d Irregular first payment period5.6.9.1.2e Integrated TILA/RESPA disclosures5.6.9.2 Exceptions to Disclosure of Total of Payments: Single-Payment and Demand Obligations5.7 Disclosure of Payment Schedule for Closed-End Mortgages5.7.1 General5.7.2 Taxes and Insurance5.7.3 Mortgage Insurance Premiums5.7.4 Construction Loans Secured by Real Property or a Dwelling5.8 Disclosure of Security Interests5.8.1 General Disclosure Requirements5.8.2 Definition of Security Interest5.8.2.1 General5.8.2.2 Exclusions from Security Interest Definition5.8.2.3 Setoff Rights and Cash Deposits5.8.2.4 What If the Creditor Is Unsure?5.8.3 Purchase Money Security Interests5.8.4 Non-Purchase Money Security Interests5.8.4.1 General5.8.4.2 Identification of the Collateral5.8.4.3 Overinclusive Description of Collateral5.8.4.4 Underinclusive Disclosure of Security Interests5.8.5 Mixed Purchase Money and Non-Purchase Money Collateral5.8.6 Property Already Secured: “Spreader Clauses”5.8.7 Disclosure of Interests in Property Not Owned by Debtor5.9 Disclosure Requirements Tied to Actual Damage Relief Only5.9.1 Overview5.9.2 Disclosure of the Creditor5.9.3 Itemization of the Amount Financed5.9.3.1 General5.9.3.2 Amount of Any Proceeds Distributed Directly to the Consumer5.9.3.3 Amount Credited to the Consumer’s Account with the Creditor5.9.3.4 Any Amounts Paid to Other Persons by the Creditor on the Consumer’s Behalf5.9.3.4.1 General5.9.3.4.2 Car dealer mark-ups and commissions5.9.3.5 Prepaid Finance Charge5.9.4 Disclosure of a Demand Feature5.9.5 Disclosure of the Total Sale Price5.9.5.1 General5.9.5.2 Treatment of Down Payments5.9.6 Prepayment Disclosures5.9.6.1 General5.9.6.2 Interest-Bearing Transactions5.9.6.3 Precomputed Transactions5.9.6.4 Prepaid Finance Charge5.9.6.5 Mixed Transactions5.9.7 Disclosure of Late Payment Charges5.9.8 Disclosure of Insurance Charges and Debt Cancellation Agreements5.9.9 Disclosure of Security Interest Charges5.9.10 Disclosure That Information Can Be Found Elsewhere in the Contract5.9.11 Disclosure of Mortgage Lenders’ Assumption Policy5.9.12 Disclosure of Required Deposits5.10 Advertising Rules for Closed-End Loans5.10.1 General Requirements5.10.1.1 What Must Be Disclosed5.10.1.2 Format Requirements5.10.1.3 Interest Rate or APR?5.10.1.4 Application of Advertising Rules to Mortgages5.10.2 Special Advertising Rules for Closed-End Credit Secured by a Dwelling5.10.2.1 Tax Deductibility Disclosures5.10.2.2 Payment Amount Disclosures5.10.2.3 Prohibited Misleading Acts or Practices in Advertising5.10.3 Remedies5.11 Disclosures for Residential Mortgage Loans5.11.1 Overview5.11.2 TILA/RESPA Integrated Disclosure Rules5.11.2.1 Overview and Coverage5.11.2.2 Persons Subject to the Rules5.11.2.3 CFPB Compliance Resources5.11.2.4 Early Disclosures: List of Settlement Service Providers and Special Information Booklet5.11.2.5 The Loan Estimate Form5.11.2.5.1 Introduction5.11.2.5.2 General information section5.11.2.5.3 “Loan Terms” section5.11.2.5.4 “Projected Payments” section5.11.2.5.5 “Costs at Closing” section5.11.2.5.6 “Closing Cost Details” section5.11.2.5.6.1 General5.11.2.5.6.2 “Loan Costs” subsection5.11.2.5.6.3 “Other Costs” subsection5.11.2.5.6.4 “Calculating Cash to Close” subsection5.11.2.5.6.5 “Adjustable Payment (AP) Table” subsection5.11.2.5.6.6 “Adjustable Interest Rate (AIR) Table” subsection5.11.2.5.7 “Additional Information About the Loan” section5.11.2.5.7.1 General; identification of creditor and broker5.11.2.5.7.2 “Comparisons” subsection5.11.2.5.7.3 “Other Considerations” subsection5.11.2.5.7.4 Signature statement5.11.2.5.8 Form of loan estimate5.11.2.6 The Closing Disclosure Form5.11.2.6.1 Overview; format requirements5.11.2.6.2 General information section5.11.2.6.3 “Loan Terms” section5.11.2.6.4 “Projected Payments” section5.11.2.6.5 “Costs at Closing” section5.11.2.6.6 “Closing Cost Details” section5.11.2.6.6.1 Relationship to loan estimate5.11.2.6.6.2 “Loan Costs” subsection5.11.2.6.6.3 “Other Costs” subsection5.11.2.6.6.4 Totals5.11.2.6.6.5 “Calculating Cash to Close” subsection5.11.2.6.6.6 “Summaries of Transactions” subsection5.11.2.6.7 “Additional Information About the Loan” section5.11.2.6.7.1 General5.11.2.6.7.2 “Loan Disclosures” subsection5.11.2.6.7.3 “Adjustable Payment (AP) Table” subsection5.11.2.6.7.4 “Adjustable Interest Rate (AIR) Table” subsection5.11.2.6.7.5 “Loan Calculations” subsection5.11.2.6.7.6 “Other Disclosures” subsection5.11.2.6.7.7 “Questions” subsection5.11.2.6.7.8 “Contact Information” subsection5.11.2.6.7.9 Signature statement5.11.2.6.7.10 Form of closing disclosure5.11.2.6.8 Remedies5.12 Special Disclosures for Variable Rate Loans5.12.1 Introduction5.12.1.1 Overview5.12.1.2 Definitions5.12.2 Variable Rate Disclosures That Are Not Subject to the ARM Rules5.12.2.1 Introduction5.12.2.2 When Must Variable Rate Disclosures Be Made5.12.2.3 Substitution of Other Federal Agencies’ Variable Rate Disclosures5.12.2.4 General Variable Rate Disclosure Rules5.12.2.5 Disclosure of Circumstances Under Which the Rate May Increase5.12.2.6 Disclosure of Any Limitations on the Increase5.12.2.7 Disclosure of the Effect of an Increase5.12.2.8 Disclosure of an Example of the Payment Terms That Would Result from an Increase5.13 Variable Rate Disclosures for Adjustable-Rate Mortgages (ARMs)5.13.1 Overview5.13.1.1 Purpose5.13.1.2 Disclosure in Note5.13.1.3 Remedies5.13.1.4 History5.13.1.5 Required Disclosures5.13.1.6 Illustrations5.13.2 Rate Cap Disclosure5.13.2.1 Coverage5.13.2.2 Maximum Interest Rate5.13.3 Interest Rate and Payment Change Notices5.13.3.1 Introduction5.13.3.2 Rules Pre-January 20145.13.3.2.1 Coverage5.13.3.2.2 Required Disclosures5.13.3.3 Rules Post-January 20145.13.3.3.1 Overview5.13.3.3.2 Content common to both the notice of initial rate change and the notice rate reset associated with a payment change5.13.3.3.3 Notice of initial rate change5.13.3.3.4 Notice of rate reset associated with a payment change5.13.3.4 Timing Rules5.13.3.4.1 Timing rules pre-January 10, 20145.13.3.4.2 Timing rules effective January 10, 20145.13.3.5 Remedies5.13.4 Early Disclosures for ARMs with Terms of More Than One Year Secured by the Consumer’s Principal Dwelling5.13.4.1 General5.13.4.2 ARM Brochure5.13.4.3 The Interest Rate Calculation: The Index, Margin, and Resulting Payment5.13.4.4 Disclosure of Negative Amortization5.13.4.4.0 For loans made prior to February 1, 20015.13.4.4.1 For loans made on or after February 1, 20015.13.4.4.2 Is negative amortization included in the finance charge?5.13.4.5 Worst Case Scenario on a $10,000 Loan5.13.4.5.1 Overview5.13.4.5.2 Historical loan payments example5.13.4.5.3 Maximum payment example5.13.4.6 Remedies5.13.4.6.1 General availability5.13.4.6.2 Specific ARM disclosure violations5.13.5 Maximum Payment Disclosures for Closed-End ARMs and Other Mortgages with Variable Payments5.13.6 Escrow Account Disclosures for Variable Rate Loans5.14 Special Disclosures for Private Student Loans5.14.1 Introduction5.14.1a Disclosures for Private Student Loans Entered into Before February 14, 20105.14.2 Form and Content of Disclosures Required As of February 14, 20105.14.2.1 Application Disclosures5.14.2.2 Approval Disclosures5.14.2.3 Final Disclosures5.14.2.4 Self-Certification5.14.3 Cancellation5.14.4 Remedies5.15 Disclosure Requirements for Subsequent Occurrences5.15.1 General Rule5.15.2 Mortgage Loan Transfer of Ownership Notices5.15.2.1 General5.15.2.2 Persons Subject to the Notice Requirement5.15.2.2.1 Who Is a Covered Person?5.15.2.2.2 What Does It Mean to Acquire the Legal Title?5.15.2.2.3 Owner of the Debt or Assignee of the Mortgage?5.15.2.2.4 The Special Case of MERS5.15.2.3 The Disclosure Requirement5.15.2.3.1 When Should the Notice Be Sent?5.15.2.3.2 To Whom Is the Notice Sent?5.15.2.4 Content of Required Disclosures5.15.2.4.1 Identification of the loan5.15.2.4.2 New owner’s identity, address, and telephone number5.15.2.4.3 Acquisition date5.15.2.4.4 Agent’s contact information5.15.2.4.5 Recording location5.15.2.4.6 Optional disclosures5.15.2.5 Remedies5.15.3 Refinancings5.15.3.1 Overview5.15.3.1.1 General requirements5.15.3.1.2 What is and is not a refinancing5.15.3.2 “Loan-Splitting” and Refinancing5.15.3.2.1 Loan-splitting distinguished from a refinancing5.15.3.2.2 Loan-splitting and 80/20 transactions5.15.4 Renewals: Single Payment Obligations and Payday Loans5.15.5 APR Reduction5.15.6 Court Agreements5.15.7 Workout Agreements5.15.8 Insurance Renewals5.15.9 Refinancing Disclosures; Unearned Finance Charge5.15.10 Disclosure Requirements for Assumptions5.15.10.1 General Rule5.15.10.2 “Existing” Residential Mortgage Transaction5.15.10.3 Creditor’s Express Acceptance of the Subsequent Consumer5.15.10.4 Assumption Disclosures5.15.10.5 Abbreviated Disclosures5.15.11 Requests to the Servicer to Identify the Owner or Master Servicer5.15.11.1 Nature of the Servicer’s Obligation5.15.11.2 When Must the Servicer Respond?5.15.11.3 Statute of Limitations5.15.11.4 Litigation and Remedies5.15.12 Periodic Statements5.15.12.1 Coverage5.15.12.2 Content of Periodic Statement5.15.12.3 Timing of Periodic Statements5.15.12.4 Form of Periodic Statements5.15.12.5 Remedies5.15.12.6 Electronic Delivery of Periodic Statements5.15.13 Payoff Statements5.15.13.1 Overview5.15.13.2 Payoff Statements Between October 1, 2009 and January 10, 20145.15.13.2.1 Payoff statements required for all consumer credit secured by principal dwellings5.15.13.2.2 Form of request5.15.13.2.3 What is a reasonable time?5.15.13.3 Payoff Statements As of January 10, 20145.15.13.3.1 Payoff statements required for all dwelling-secured consumer credit5.15.13.3.2 Form of request5.15.13.3.3 What is a reasonable time?5.15.13.3.4 Preemption and interaction with other laws governing payoff statements5.15.13.4 Payoff Statements for High-Cost Mortgages5.15.13.4.1 Special rules for high-cost mortgages5.15.13.4.2 Time to provide a payoff statement5.15.13.4.3 Fees prohibited for high-cost mortgages5.15.13.5 Remedies5.15.14 Disclosure of Policy on Partial Payments5.15.14.1 Overview5.15.14.2 Person Subject to the Notice Requirement5.15.14.3 Content5.15.14.4 Timing5.15.14.5 Remedies5.15.15 Escrow Cancellation Notice5.15.15.1 Overview5.15.15.2 Coverage5.15.15.3 Person Subject to the Notice Requirement5.15.15.4 Content5.15.15.5 Timing5.15.15.6 RemediesChapter 6 Disclosures for Credit Cards and Other Non-Home-Secured Open-End Credit6.1 Introduction6.1.1 Overview of TILA Requirements for Open-End Credit6.1.2 Major Changes to TILA Open-End Credit Provisions6.1.3 Organization of This Chapter6.1.4 Practical Advice About Credit Cards for Financially Distressed Consumers6.2 Definition of Open-End Credit Terms6.2.1 “Consumer,” “Credit,” and “Creditor”6.2.2 “Open-End Credit”6.2.2.1 Elements of the Definition6.2.2.2 “Reasonably Contemplates” Repeat Transactions6.2.2.3 Finance Charge on Unpaid Balance6.2.2.4 Reusable Credit Line6.2.3 “Spurious” Open-End Credit6.2.3.1 General6.2.3.2 Legislative History on Spurious Open-End Credit6.2.3.3 Regulatory History and Additional Factors That May Reveal Spurious Open-End Credit6.2.3.4 Case Law on Spurious Open-End Credit6.2.3.5 Assessing an Open-End Transaction6.2.3.6 Assignee Liability in Spurious Open-End Credit Cases6.2.3.7 Other Theories for Attacking Spurious Open-End Credit6.2.4 Special TILA Definitions for Credit Cards6.2.4.1 Credit Card6.2.4.1.1 General6.2.4.1.2 Whether cards that access overdraft credit can be considered “credit cards”6.2.4.1.3 Lines of credit accessed by account numbers6.2.4.1.4 Prepaid cards that are credit cards6.2.4.2 Credit Card Under an Open-End (Not Home-Secured) Consumer Credit Plan6.2.4.3 Charge Cards6.2.4.4 Special Definition of “Creditor”6.2.4.4.1 Credit cards for open-end plans6.2.4.4.2 Card accounts without a finance charge or installment payments6.2.4.4.3 Any card issuer extending closed-end credit6.2.4.4.4 Card issuer6.2.4.4.5 Visa and MasterCard not creditors6.2.4.4.6 Person who honors a card6.2.4.5 Purchasers of Defaulted Credit Card Debt6.2.4.6 Cardholder6.3 General Format for Open-End Disclosures6.3.1 Introduction6.3.2 Clear and Conspicuous6.3.2.1 General6.3.2.2 Clear6.3.2.3 Conspicuous6.3.2.3.1 Disclosures required in tabular or other special format6.3.2.3.2 Guidance from Uniform Commercial Code6.3.2.3.3 Additional materials6.3.3 Use of Certain Terms6.3.3.1 “Finance Charge” and “Annual Percentage Rate”6.3.3.2 “Penalty APR”6.3.3.3 “Fixed”6.3.3.4 Credit Insurance, Debt Cancellation, and Debt Suspension Coverage6.3.3.5 Other Terms6.3.4 Form of Disclosures6.3.4.1 Written Versus Oral Disclosures6.3.4.2 In Form That a Consumer May Keep6.3.4.3 Who Must Receive Disclosures6.3.4.4 Integrated Document6.3.5 Electronic Disclosures6.3.5.1 Introduction6.3.5.2 The E-Sign Act6.3.5.3 Assessing Compliance with the Electronic Disclosure Rules6.3.6 Model Forms and Clauses6.4 Credit Card and Open-End Credit Advertisements6.4.1 Overview6.4.2 “Triggered” Advertising Disclosures6.4.3 Special Disclosures Required for Credit Sales Advertising6.4.4 Disclosure of Credit Card Agreements on the Internet6.4.5 Disclosures for Promotional Rates6.4.5.1 Introduction6.4.5.2 Scope6.4.5.3 Required Disclosures6.4.6 Disclosures for Deferred Interest Programs6.4.6.1 Introduction6.4.6.2 Definitions of “Deferred Interest” and “Deferred Interest Period”6.4.6.3 Required Disclosures6.4.7 Liability for Violation of TILA Advertising Provisions6.5 Disclosures for Credit and Charge Card Applications and Solicitations6.5.1 Introduction6.5.2 When Required; Format6.5.2.1 When Required6.5.2.2 When Not Required6.5.2.3 Form of Disclosures6.5.2.3.1 Tabular format6.5.2.3.2 Location and prominence of table and required terms6.5.2.4 Electronic Disclosures6.5.2.4.1 Location and prominence of table6.5.2.4.2 Timing: when electronic disclosures are required to be made6.5.2.5 Disclosure of Fees Based on a Percentage6.5.2.6 Disclosure of Fees That Vary by State6.5.3 Required Disclosures6.5.3.1 General6.5.3.2 APR Disclosure6.5.3.2.1 General rule6.5.3.2.2 “Periodic rate” does not include fees6.5.3.2.3 Rates dependent on a consumer’s creditworthiness6.5.3.2.4 Rates that vary by state6.5.3.2.5 Variable rate disclosure6.5.3.2.6 Introductory rates6.5.3.2.7 Disclosures for deferred interest programs6.5.3.2.8 Higher introductory rates6.5.3.2.9 Penalty rates; general6.5.3.2.10 Penalty rates; loss of an introductory rate6.5.3.2.11 Penalty rate; loss of employee preferential rate6.5.3.3 Fees for the Issuance or Availability of a Card6.5.3.3.1 General6.5.3.3.2 Application fees6.5.3.3.3 Membership fees6.5.3.3.4 Fees for credit card “enhancements”6.5.3.4 Minimum Interest Charges6.5.3.5 Transaction Charge for Purchases6.5.3.5.1 General6.5.3.5.2 Foreign transaction fees6.5.3.6 Grace Period for Purchases6.5.3.7 Balance Computation Method for Purchases6.5.3.8 Due and Payable Statement6.5.3.9 Cash Advance Fees6.5.3.10 Late Payment, Over-the-Limit, and Returned-Payment Fees6.5.3.11 Balance Transfer Fees6.5.3.12 Required Credit Insurance, Debt Cancellation, or Debt Suspension Coverage6.5.3.13 Available Credit Disclosure for Subprime Cards6.5.3.14 Reference to CFPB Website6.5.4 Disclosure Rules for Specific Types of Applications and Solicitations6.5.4.1 Direct Mail Applications and Solicitations6.5.4.2 Electronic Applications and Solicitations6.5.4.3 Telephone Applications and Solicitations6.5.4.3.1 Coverage6.5.4.3.2 General disclosure rule6.5.4.3.3 Alternative disclosures6.5.4.4 Applications and Solicitations Made Available to General Public6.5.4.4.1 General6.5.4.4.2 Required credit disclosures6.5.4.4.3 Alternative to disclosures6.5.4.4.4 Prompt response6.5.4.5 In-Person Applications and Solicitations6.5.5 Special Charge Card Rule—Card Issuer and Person Extending Credit Not the Same Person6.5.6 Preemption of State Laws for Credit Card Applications and Solicitations6.5.7 Remedies for Credit and Charge Card Application and Solicitation Disclosure Violations6.6 TILA Open-End Account-Opening Disclosures6.6.1 General Rules6.6.1.1 Introduction6.6.1.2 Relationship to Early Credit Card and Home Equity Line Disclosures6.6.1.3 Disclosures for Multiple Cardholders6.6.1.4 New Account-Opening Disclosures When Reopening Closed or Suspended Accounts6.6.1.5 New Account-Opening Disclosures When Replacing or Substituting Accounts6.6.2 Timing of Account-Opening Disclosures6.6.2.1 Time When Account-Opening Disclosures Generally Required6.6.2.2 Delayed Disclosures for Balance Transfers and Cash Advance Checks6.6.2.3 Certain Fees and Charges Permitted to Be Disclosed After Account-Opening6.6.2.4 Timing of Disclosures When Membership and Application Fees Are Charged6.6.2.4.1 Fees charged prior to account-opening disclosures6.6.2.4.2 Rejecting a plan6.6.2.5 Timing Where Plan Opening Is Contemporaneous to First Purchase by Telephone6.6.3 Form of Disclosures6.6.3.1 Tabular Format6.6.3.2 Prominence of Table and Required Terms6.6.3.3 Required Terminology for Account-Opening Disclosures6.6.3.4 Fees Based on a Percentage6.6.3.5 Fees That Vary by State6.6.4 Overview As to Content of Account-Opening Disclosures6.6.4.1 Introduction6.6.4.2 TILA’s Statutory Requirements As to Content of Account-Opening Disclosures6.6.4.3 Disclosures Required in the Account-Opening Table6.6.4.4 Disclosures Outside of Account-Opening Table6.6.5 Annual Percentage Rate Disclosures6.6.5.1 General Rule for Account-Opening Table6.6.5.2 Requirements for Rate Disclosures Outside of the Account-Opening Table6.6.5.3 Point-of-Sale APRs That Vary by State6.6.5.4 Variable Rate Disclosure6.6.5.4.1 General6.6.5.4.2 Variable rate disclosure in the account-opening table6.6.5.4.3 Variable rate disclosure outside of the account-opening table6.6.5.4.4 Disclosure of rate change triggers6.6.5.4.5 Rate cap disclosures for non-home-secured plans6.6.5.4.6 Introductory rate disclosures in variable rate plans6.6.5.5 Introductory Rates6.6.5.5.1 Account-opening table disclosures6.6.5.5.2 Disclosures outside of the account-opening table6.6.5.5.3 Higher introductory rates6.6.5.6 Penalty Rates6.6.5.6.1 Disclosure in the account-opening table6.6.5.6.2 Disclosures outside of the account-opening table: penalty rates and risk-based pricing policies6.6.5.6.3 Penalties that revoke an introductory rate6.6.5.6.4 Loss of employee preferential rate6.6.6 Disclosure of Fees and Charges6.6.6.1 Comparison of Current and Post-July 2010 Scheme6.6.6.2 Fees and Charges Required in Account-Opening Table6.6.6.2.1 Summary of fees required to be disclosed in account-opening table6.6.6.2.2 Fees for the issuance or availability of a card6.6.6.2.3 Minimum finance charge6.6.6.2.4 Transaction charge for purchases6.6.6.2.5 Cash advance and balance transfer fees6.6.6.2.6 Late payment, over-the-limit, and returned-payment fees6.6.6.2.7 Required credit insurance, debt cancellation, or debt suspension coverage6.6.6.3 Fees and Charges Outside of the Account-Opening Table6.6.6.3.1 When and how disclosed6.6.6.3.2 Charges that are part of the plan6.6.6.3.3 Charges that are not part of the plan6.6.6.4 Determination of the Amount of Charges6.6.7 Disclosure of Grace Period6.6.7.1 Grace Period Disclosure Within the Table6.6.7.2 Grace Period Disclosure Outside of the Table6.6.8 Disclosure of the Balance Computation Method6.6.8.1 Balance Computation Method Directly Beneath the Table6.6.8.2 Balance Computation Disclosure in the Account Agreement or Other Disclosure6.6.9 Available Credit Disclosure for Subprime Cards6.6.10 Disclosure of Security Interests6.6.11 Disclosure of Billing Error Rights and Right to Withhold Payment for Credit Cards6.6.12 Voluntary Credit Insurance, Debt Cancellation, or Debt Suspension Disclosures6.6.13 Remedies for Account-Opening Disclosure Violations6.7 Periodic Statements6.7.1 General Issues6.7.1.1 Introduction6.7.1.2 When Required6.7.1.2.1 General6.7.1.2.2 Accounts in default6.7.1.3 Who Is Entitled to Periodic Statements6.7.1.4 Form of Delivery6.7.1.5 Summary of Required Terms for Credit Cards and Other Non-Home-Secured Open-End Credit6.7.1.6 Format Requirements6.7.2 Timing of Periodic Statements6.7.2.1 Twenty-One Day Requirement for Mailing Statements6.7.2.1.1 General6.7.2.1.2 Due date; grace period defined6.7.2.1.3 No late penalties or finance charges during twenty-one days after the statement is mailed or delivered6.7.2.1.4 Reasonable procedures, not proof of mailing or receipt required6.7.2.1.5 In-person pick-up6.7.2.1.6 Special rules for charge cards; charged-off accounts6.7.2.1.7 Enforcement of right6.7.2.2 “Billing Cycle”6.7.3 Disclosure of Beginning Balance6.7.4 Periodic Statement’s Identification of Each Credit Transaction6.7.4.1 General6.7.4.2 Sale Credit6.7.4.2.1 Sale credit described6.7.4.2.2 Amount and date of transaction6.7.4.2.3 Sale credit rules when creditor and seller are unrelated6.7.4.2.4 Sale credit rules where seller the same or “related” to creditor6.7.4.2.5 Sale credit rules where creditor provides copies of credit documents6.7.4.3 Nonsale Credit6.7.5 Disclosure of Credits6.7.6 Disclosure of Periodic Rates6.7.6.1 General6.7.6.2 Disclosure of Multiple Rates6.7.6.3 Deferred Interest Programs6.7.6.4 The Effective Annual Percentage Rate6.7.6.4.1 Elimination of the effective APR disclosures6.7.6.4.2 Calculation of the effective APR6.7.7 Disclosure of the Balance on Which Interest Is Computed6.7.7.1 General Rule6.7.7.2 Disclosures of the Balance When Payments and Credits Are Not Deducted6.7.7.3 Multi-Featured Plans; Split Rates6.7.7.4 Disclosure of Average Daily Balance and Daily Balance6.7.7.5 Deferred Interest Plan Balance6.7.8 The Billing Cycle’s Cost of Credit: Disclosure of the Amount of the Finance Charge or “Interest and Fees”6.7.8.1 Revisions to Regulation Z Replace Finance Charge with Interest and Fees Disclosure6.7.8.2 Formatting Requirements6.7.8.3 Disclosure of Interest6.7.8.3.1 General6.7.8.3.2 Deferred interest6.7.8.4 Disclosure of Fees6.7.8.5 Disclosure of Year-to-Date Totals at End of Calendar Year6.7.9 Summary of Changes-in-Terms and Penalty Rate Notices6.7.10 Disclosure of the Closing Date and Outstanding Balance at the End of the Period6.7.11 Terms for Repayment6.7.11.1 Disclosure of the Grace Period6.7.11.2 Amount of Minimum Payment6.7.11.3 Payment Deadlines; Late Payment Fees; Penalty Rates for Late Payment6.7.11.4 Minimum Payment Repayment Disclosures6.7.11.4.1 General requirements; overview6.7.11.4.2 Exemptions6.7.11.4.3 Formatting requirements6.7.11.4.4 Thirty-six months payoff disclosure6.7.11.4.5 Disclosures when there is negative amortization6.7.11.4.6 Credit counseling information6.7.12 The Billing Error Address6.7.13 Disclosure of Cardholder’s Liability for Unauthorized Use6.7.14 Disclosure of Due Date/End of Deferred Interest Period6.7.15 Remedies for Periodic Statement Violations6.8 Subsequent Disclosure Requirements6.8.1 Overview6.8.2 Periodic Statements of Customer’s Billing Error Rights6.8.3 Notice Requirements for the Addition of a New Credit Feature or Device6.8.3.1 General Rule6.8.3.2 Credit “Feature” or “Device”6.8.3.3 Special Disclosures for Convenience Checks6.8.3.3.1 When and where required6.8.3.3.2 Convenience check disclosures of promotional and nonpromotional annual percentage rates6.8.3.3.3 Convenience check disclosures of fees and grace periods6.8.4 Disclosure of Changes in Terms6.8.4.1 Introduction6.8.4.2 Credit CARD Act Provisions Regarding Changes-in-Terms6.8.4.3 Requirements of the Change-in-Terms Notice6.8.4.3.1 Format6.8.4.3.2 Overview of timing requirements: when the notice must be given6.8.4.4 Changes That Require a Change-in-Terms Notice Forty-Five Days in Advance6.8.4.4.1 Notice required for “significant changes in account terms”6.8.4.4.2 Changes in APRs6.8.4.5 Changes Where Notice Need Not Be Forty-Five Days in Advance6.8.4.5.1 Changes to terms not included in the account-opening table6.8.4.5.2 Changes agreed to by the consumer6.8.4.6 Changes That Do Not Require a Change-in-Terms Notice6.8.4.6.1 Changes disclosed in the account-opening agreement6.8.4.6.2 Termination of credit availability; reduction of credit limit6.8.4.6.3 Expiration of a promotional rate6.8.4.6.4 Operation of a variable rate6.8.4.6.5 Completion or failure to comply with a workout or temporary hardship arrangement6.8.4.6.6 Skip features; reduction of finance charges6.8.4.6.7 Change-in-terms for convenience checks and supplemental credit features6.8.4.6.8 Other types of changes that do not require a notice6.8.4.7 Contents of Notice6.8.4.7.1 General contents6.8.4.7.2 Summary of changes6.8.4.7.3 Notice of right to reject changes6.8.4.7.4 Statement of reasons for rate increase6.8.4.8 Substantive Limitations on Changes in Terms6.8.4.9 Delivery of Notice6.8.5 Notice of Penalty Rate Imposition6.8.5.1 General Requirements6.8.5.2 Timing of the Notice6.8.5.3 Format of the Notice6.8.5.4 Contents of the Notice6.8.5.4.1 General6.8.5.4.2 Penalty rates applied to an outstanding balance where no minimum payment made within sixty days6.8.5.5 Penalty Rate Notices for Over-the-Limit Transactions6.8.6 Disclosures upon Renewal of Credit or Charge Card6.8.6.1 When Required6.8.6.1.1 General6.8.6.1.2 Delayed notice6.8.6.2 Contents6.8.6.3 Notification on Periodic Statements6.8.7 Change in Credit Card Account’s Insurance Provider6.8.7.1 General6.8.7.2 Notice Prior to Change6.8.7.3 Notice of New Insurance Coverage6.8.7.4 Definition of Substantial Decrease6.8.7.5 Preemption of State Law6.9 Summary of Remedies for TILA Open-End Credit Disclosure Violations6.10 Chart: TILA and Regulation Z Provisions Applicable to All Open-End Credit, including Credit Not Home-Secured and Not Involving a Credit CardChapter 7 Substantive Protections for Credit Cards and Other Open-End Credit7.1 Overview7.1.1 Organization of This Chapter7.1.2 Credit CARD Act Amendments to TILA7.1.2.1 Enactment of Credit CARD Act7.1.2.2 Scope of Protections7.2 Protections Against Price Increases7.2.1 Introduction7.2.2 Background: Common Repricing Abuses7.2.2.1 Penalty Rates7.2.2.2 Universal Default7.2.3 Limits on Increasing the APR, Fees, or Charges for an Outstanding Balance7.2.3.1 Introduction and Scope7.2.3.1.1 Overview7.2.3.1.2 Pricing terms covered by the protections7.2.3.1.3 Protections apply to closed or acquired accounts7.2.3.2 Promotional Rate Exception7.2.3.2.1 General7.2.3.2.2 Six-month minimum7.2.3.2.3 Contingent increases prohibited7.2.3.2.4 Deferred interest programs7.2.3.2.5 Waiver or rebate of interest, fee or charge7.2.3.3 Variable Rate Exception7.2.3.4 Sixty Days Delinquency Exception7.2.3.4.1 General7.2.3.4.2 Required disclosures7.2.3.4.3 Right to have former rate reinstated for six months of on-time payments7.2.3.5 Outstanding or Protected Balances7.2.3.5.1 Definition7.2.3.5.2 Rate increases permitted on future transactions—advanced notice exception7.2.3.5.3 Repayment protections for protected balances7.2.3.6 Workout or Temporary Hardship Arrangement Exception7.2.3.7 Servicemembers Civil Relief Act Exception7.2.4 Protections for the First Year of an Account7.2.4.1 General Rule7.2.4.2 When Is an Account Considered Newly Opened Versus a Substitution7.2.5 Mandatory Re-Evaluation of Rate Increases7.2.5.1 General7.2.5.2 Timing and Length of Obligation7.2.5.3 Rate Increases That Must Be Re-Evaluated7.2.5.4 Intersection with Right to Reinstatement of Pre-Increase Rate After Six Months of On-Time Payments7.2.5.5 Factors for Re-Evaluation7.2.5.6 Rate Reductions Resulting from Re-Evaluation7.2.5.7 Acquired Accounts7.3 Consumer’s Right to Reject Changes to an Account7.3.1 Overview; Substantive Right to Reject Changes7.3.2 When Applicable7.3.2.1 Substantive Right Exists Only When Change-in-Terms Notice Required to Be Given7.3.2.2 Exceptions7.3.3 Reasonable Requirements for Consumer’s Submission of Rejections7.3.4 Effect of Consumer’s Rejection7.3.4.1 Summary7.3.4.2 Prohibition on Applying the Change or Imposing Fees or Charges As a Penalty for Rejection7.3.4.3 Method of Repayment7.3.5 Use of the Account Following the Notice of Rejection7.4 Protections Against Double Cycle Billing7.4.1 Double Cycle Billing Imposes Higher Costs on Consumers7.4.2 Prohibition on Imposing Finance Charges Based on Prior Billing Cycles7.4.3 Prohibition Applies When There Is a Loss of the Grace Period7.4.4 Exceptions7.4.4.1 Statutory Exceptions7.4.4.2 Exception for Deferred Interest Programs7.5 Protections Against Penalty Fee Abuses7.5.1 Credit Card Junk Fees and Fee Income7.5.2 Requirement for Reasonable and Proportional Penalty Fees7.5.2.1 General7.5.2.2 Scope7.5.2.3 Rules to Determine If a Fee Is Reasonable7.5.2.3.1 General7.5.2.3.2 Fees based on costs7.5.2.3.3 Safe harbors7.5.2.4 Prohibited Fees7.5.2.5 Particular Fees7.5.2.5.1 Late fees7.5.2.5.2 Returned payment fees7.5.2.5.3 Over-the-limit fees7.5.2.5.4 Decline access check fees7.5.2.5.5 Declined transaction fees7.5.2.5.6 Inactivity fees7.5.2.6 Account Closure or Termination Fees7.5.3 Over-the-Limit Fee Opt-In Requirement and Additional Restrictions7.5.3.1 Over-the-Limit Fee Abuses7.5.3.2 Opt-In Requirement7.5.3.2.1 General7.5.3.2.2 Initial notice of right to opt in7.5.3.2.3 Method of election; reasonable opportunity to opt in7.5.3.2.4 The consumer’s opt-in7.5.3.2.5 Confirmation of opt-in7.5.3.2.6 Right to revoke consent7.5.3.3 Other Prohibited Over-the-Limit Practices7.5.3.3.1 Overview7.5.3.3.2 No more than one over-the-limit fee per billing cycle7.5.3.3.3 No more than three over-the-limit fees for the same transaction7.5.3.3.4 Requirement to replenish the credit line7.5.3.3.5 Prohibition against conditioning amount of credit7.5.3.3.6 Interest or fees cannot trigger over-the-limit fees7.6 Protections Against Improvident Lending7.6.1 History of Card Issuers’ Aggressive Solicitation7.6.2 Generally Applicable Requirement That Issuers Consider Ability-to-Repay7.6.2.1 General7.6.2.2 Reasonable Policies and Procedures7.6.2.3 What Assets, Income, and Debts May Be Considered7.6.2.3.1 General7.6.2.3.2 Consideration of income from non-applicants7.6.2.4 Ability-to-Repay Based on Minimum Payment7.6.3 Protections for Young Consumers7.6.3.1 Consideration of Ability to Repay for Young Consumers7.6.3.1.1 General7.6.3.1.2 Two alternative methods to establish ability to repay7.6.3.1.3 Co-signor approval for a credit line increase7.6.3.1.4 Written application required7.6.3.2 Restrictions on Marketing of Credit Cards to College Students7.6.3.3 Disclosures of Marketing Agreements Between Card Issuers and Schools7.7 Protections Regarding Payments on Credit Card Accounts7.7.1 Payment Abuses7.7.2 Prompt Crediting of Consumer Payments7.7.3 Reasonable Requirements for Payment7.7.4 Payment Due Date Restrictions7.7.4.1 No Cut-Off Time Before 5:00 p.m.7.7.4.2 Same Due Date Each Month7.7.4.3 Weekend and Holiday Due Dates7.7.5 Address for Payment7.7.5.1 Designation of Address for Payment; Change in Address7.7.5.2 In-Person Payments7.7.6 Limit on Fees Related to Method of Payment7.7.7 Payment Allocation Order7.7.7.1 General7.7.7.2 Minimum Payment Not Governed7.7.7.3 Deferred Interest Plans7.7.7.4 Secured Balances7.7.7.5 When the Consumer Withholds Payment7.8 Limit on First-Year Fees Charged to a Credit Card Account7.8.1 Overview of Subprime Credit Cards7.8.2 Prohibition on Fees Exceeding 25% of the Credit Limit7.8.2.1 25% Limit7.8.2.2 Credit Limit for the Account7.8.2.3 Account Opening7.8.2.4 Types of Fees Counted Toward the Limit7.8.2.4.1 Included fees7.8.2.4.2 Excluded fees7.8.2.4.3 Security deposits charged to the account7.8.2.5 Advance Fees7.9 Fair Credit Billing Act; Billing Error Procedures7.9.1 Introduction to FCBA7.9.2 Scope of Billing Error Protections7.9.2.1 Who Is Protected by Billing Error Procedures?7.9.2.2 Billing Error Procedures Apply to All Forms of Open-End Credit7.9.2.3 Exemption for Transactions Governed by Regulation E7.9.2.4 Coverage of Third-Party Payment Intermediaries7.9.3 Relationship of Billing Error Procedures to Other Consumer Claims7.9.4 What Constitutes a Billing Error7.9.4.1 Definition of Billing Error7.9.4.2 Improper Assessments of Finance Charges or Fees7.9.5 Notice of Billing Error7.9.5.1 General7.9.5.2 Timing of Notice7.9.5.3 Form of Notice7.9.5.4 Content of Notice7.9.5.5 Repeat Notices for the Same Error7.9.5.6 When Is a Second Billing Error Notice Permitted?7.9.6 Creditor’s Duties upon Notice of Billing Error7.9.6.1 General7.9.6.2 Acknowledgment of Receipt7.9.6.3 Right to Withhold Payment7.9.6.4 Creditor’s Collection Efforts over the Disputed Amount7.9.6.5 Credit Reports and Billing Errors7.9.6.5.1 FCBA requirements7.9.6.5.2 Fair Credit Reporting Act requirements7.9.7 Creditor’s Billing Error Investigation7.9.7.1 When Required7.9.7.2 Reasonable Investigation7.9.7.3 Time Limits for Investigation7.9.8 Resolution of Error7.9.8.1 Finality of Resolution7.9.8.2 Resolution Favoring the Consumer7.9.8.3 Resolution Not Favoring the Consumer7.9.8.4 Charges for the Error-Resolution Procedure7.9.9 Remedies for Billing Error Violations7.9.10 FCBA Preemption7.10 Protections Against Liability for Card’s Unauthorized Use7.10.1 General7.10.1.1 Introduction7.10.1.2 Scope of the Protections7.10.1.2.1 Protections apply to all types of credit cards, including telephone cards7.10.1.2.2 Exclusion for convenience checks7.10.2 When Is Use Authorized?7.10.2.1 Description of Authorized Users7.10.2.2 Misuse by Authorized Users7.10.2.3 Is a User an Authorized User?7.10.3 Cardholder Cannot “Benefit” from Unauthorized Use7.10.4 Conditions for Creditor Imposing $50 Liability7.10.5 Cardholder Notice to Card Issuer of Unauthorized Use7.10.6 Investigation Procedures7.10.7 Resolution; Adverse Credit Reports7.10.8 Remedies to Enforce Unauthorized Use Protections7.11 Cardholder’s Claims and Defenses7.11.1 General7.11.2 When Is a Credit Card Issuer Subject to Claims and Defenses?7.11.3 Types of Actionable Claims and Defenses7.11.4 Preconditions for Cardholder Asserting Claims or Defenses7.11.5 Relationship to Bill Error Disputes and Claims of Unauthorized Use7.11.6 Nature of the Consumer’s Rights to Withhold Payment7.11.7 Adverse Credit Reports; Collection Activity7.12 Restrictions on Issuing a Credit Card7.12.1 General7.12.1.1 Introduction7.12.1.2 Conforming requests for a credit card7.12.1.3 Examples of unsolicited issuance7.12.2 Adding Credit Features to a Card7.12.3 Replacement of an “Accepted” Card: Renewal and Substitute Cards7.12.3.1 General7.12.3.2 One-for-One Rule7.12.3.3 Acceptance of the Prior Credit Card7.12.4 Protections Apply to All Types of Credit Cards, Including Telephone Cards7.12.5 Enforcement of the Prohibition Against Unsolicited Issuance7.13 No Offset Against Consumer’s Deposit Account for Credit Card Debt7.13.1 General7.13.2 Allowable Interests in the Consumer’s Deposit Account7.14 Restrictions on the Creditor-Merchant-Cardholder Relationship7.14.1 General7.14.2 Tie-Ins7.14.3 Prompt Crediting of Refunds7.14.4 Discounts and Surcharges7.14.5 Minimum Purchase Amounts7.15 Other Substantive TILA Protections7.15.1 Record Retention Requirements7.15.2 Treatment of Credit Balances7.15.3 Prohibition on Terminating Accounts7.15.4 Procedure for Timely Settlement of Claims Against Decedents’ Estates7.15.4.1 Reasonable Policies and Procedures Required7.15.4.2 Account Balance Disclosure Required7.15.4.3 Exemption for Joint Accounts7.16 Summary of Remedies for Violations of TILA Substantive Credit Card and Open-End Credit ProvisionsChapter 8 Home Equity Lines of Credit (HELOCs) and Reverse Mortgages8.1 General Considerations8.1.1 Introduction8.1.2 History8.1.3 Closed-End Credit Disguised As HELOCs8.1.4 Scope of HELOC Rules8.1.5 HELOC APR8.2 HELOC Advertising Disclosures8.2.1 Introduction8.2.2 Trigger for HELOC Advertising Disclosures8.2.3 Disclosures Must Be Clear and Conspicuous8.2.4 Teaser Rate Disclosures8.2.4.1 General8.2.4.2 Initial Discounted and Premium Rate Disclosures8.2.4.3 Promotional Rate and Promotional Payment Disclosures8.2.5 Tax Deductibility Disclosures8.2.6 Balloon Payment Disclosures8.2.7 Alternative Disclosures for Television and Radio Advertisements8.3 “Early” Disclosures at Loan Application8.3.1 General; Proposed Changes8.3.2 Form of Disclosures8.3.2.1 General8.3.2.2 Brochure8.3.3 Time of Disclosures8.3.3.1 General8.3.3.2 Exceptions: When the Creditor Can Delay for Three Days8.3.4 Duties of Third Parties8.3.5 Content of Application Disclosures8.3.5.1 General8.3.5.2 Retention of Information8.3.5.3 Conditions for Disclosed Terms8.3.5.4 Security Interest and Risk to Home8.3.5.5 Possible Actions by Creditor8.3.5.6 Payment Terms8.3.5.6.1 General8.3.5.6.2 Balloon payments8.3.5.6.3 Multiple payment option disclosures8.3.5.6.4 Negative amortization8.3.5.6.5 Reverse mortgages8.3.5.7 Annual Percentage Rate8.3.5.8 Fees Imposed by the Creditor8.3.5.8.1 Generally8.3.5.8.2 Fees charged upon account termination8.3.5.9 Fees Imposed by Third Parties to Open a Plan8.3.5.10 Credit Limits8.3.5.11 Tax Implications8.3.5.12 Disclosures for Variable Rate Plans8.4 HELOC Account-Opening Disclosures8.4.1 General8.4.2 Finance Charges8.4.2.1 Disclosure of the Finance Charge Accrual Date8.4.2.2 Disclosure of the Periodic Rate, Range of Balances, and APR8.4.2.3 Disclosure of the Balance Method8.4.2.4 Determination of the Amount of the Finance Charge8.4.3 Disclosure of “Other Charges”8.4.3.1 General8.4.3.2 Excluded Charges8.4.3.3 Real-Estate-Related Charges8.4.4 Home-Equity Plan Information8.4.5 Security Interest Disclosure8.4.6 Statement of Billing Rights8.4.7 Disclosure of Maximum Interest Rate8.4.7.1 Overview8.4.7.2 Changes to the Maximum Interest Rate8.5 Disclosures After Account-Opening8.5.1 Periodic Statements8.5.1.1 General Requirements8.5.1.2 Disclosure of the Amount of the Finance Charge8.5.1.3 Disclosure of Other Charges8.5.1.4 Charges Excluded from “Other Charges”8.5.2 Credit Limit Increases8.5.3 Change of Terms Notices8.5.3.1 Change of Terms—Fifteen Days’ Advance Notice8.5.3.2 Change of Terms—Notice By the Effective Date8.5.3.3 Change of Terms—Notice by Three-Business Days After Taking Action8.5.3.4 Change of Terms—No Notice Required8.6 Substantive Limitations on HELOCs8.6.1 General8.6.2 Fees8.6.2.1 Refund of Fees8.6.2.2 Nonrefundable Fees8.6.3 Indices for Variable Rate HELOCs8.6.4 Changes in the APR8.6.5 Early Termination of HELOCs8.6.6 Early Termination of Reverse Mortgage HELOCs8.6.7 Unilateral Change in Terms8.6.7.1 General8.6.7.2 Change in Terms for Events Provided for in the Contract8.6.7.3 Change Where Index or Margin Becomes Unavailable8.6.7.4 Changes Made by Written Agreement8.6.7.5 Beneficial Changes8.6.7.6 Insignificant Changes8.6.7.7 Temporary Suspensions of Credit and Reductions of Credit Limit8.6.7.7.1 Basis for temporary suspensions of credit and reductions of credit limit8.6.7.7.2 Notice and duration of temporary suspensions of credit and reductions of credit8.6.7.7.3 Challenging the creditor’s temporary suspensions of credit and reductions of credit8.6.8 High-Cost HELOCs8.7 TILA Damages and Rescission Are Available for HELOC Violations8.8 Reverse Mortgages8.8.1 Overview8.8.2 Exemptions8.8.3 Total Annual Loan Cost Rate Disclosure8.8.4 Other Reverse Mortgage Disclosures8.8.5 Reverse Mortgage RemediesChapter 9 Substantive Mortgage Regulation9.1 Introduction9.1.1 Overview of TILA’s Substantive Mortgage Rules9.1.2 Other Substantive Claims Regarding Overreaching Mortgage Loans9.1.3 Credit Balances Rule for Mortgage Loans9.2 TILA Authority to Prohibit Unfair Trade Practices9.2.1 Overview9.2.2 Remedies for Violations of Regulations Issued Under the CFPB’s Authority to Prohibit Unfair, Deceptive, or Evasive Practices9.3 Substantive Protections for Closed-End Mortgages Secured by a Dwelling9.3.1 Overview; Scope; Record Retention and Monitoring Requirements9.3.2 Mortgage Originator Compensation and Steering Protections9.3.2.1 Overview9.3.2.2 The Rules Agree: Coverage9.3.2.3 The Rules Agree: What Is a Mortgage Broker?9.3.2.4 The Rules Overlap: The Definition of Loan Originator9.3.2.4.1 Definition of loan originator effective between April 1, 2011 and January 1, 20149.3.2.4.2 Definition of loan originator under the rule in effect January 1, 20149.3.2.5 The Rules Overlap: What Is Compensation?9.3.2.5.1 Definition of compensation between April 1, 2011 and January 1, 20149.3.2.5.2 Definition of compensation effective January 1, 20149.3.2.6 Prohibition Against Compensation Based on Terms of the Mortgage9.3.2.6.1 Rule in effect between April 1, 2011 and January 1, 20149.3.2.6.2 Rule against compensation based on terms of the mortgage effective January 1, 20149.3.2.7 The Rules Diverge: Prohibition Against Dual Compensation9.3.2.7.1 Problems with dual compensation9.3.2.7.2 What are payments directly from the consumer?9.3.2.7.3 Rule against dual compensation in effect between April 1, 2011 and January 1, 20149.3.2.7.4 Rule against dual compensation in effect January 10, 20149.3.2.8 Steering Prohibitions9.3.2.8.1 Regulation Z steering prohibitions9.3.2.8.2 Dodd-Frank Act’s steering prohibitions9.3.2.9 Qualification, Registration, and Licensing of Loan Originators9.3.3 Loan Affordability and Income Verification Under the Dodd-Frank Act9.3.3.1 Introduction9.3.3.2 Scope9.3.3.2.1 General9.3.3.2.2 Reverse mortgages9.3.3.3 Ability to Repay9.3.3.3.1 General9.3.3.3.2 What goes into the payment?9.3.3.3.3 Income and expenses9.3.3.3.4 Income verification9.3.3.3.5 Standards for nontraditional mortgages9.3.3.3.6 Standards for open-end HOEPA loans effective January 20149.3.3.3.7 Exemptions for streamlined refinancing9.3.3.3.7.1 Exemption for streamlined refinancing insured or guaranteed by federal agencies9.3.3.3.7.2 Exemption for streamlined refinancing of non-standard mortgages9.3.3.3.8 Exemption for non-profit or government-supported lenders9.3.3.4 Qualified Mortgages9.3.3.4.1 Definition9.3.3.4.1.1 General definition of qualified mortgage9.3.3.4.1.2 Points and fees definition and limited creditor right to cure9.3.3.4.1.3 Loans eligible for purchase or guarantee by the GSEs or for insurance or guarantee by a federal agency9.3.3.4.1.4 Small creditors and creditors operating predominantly in rural or underserved areas9.3.3.4.2 Presumption of compliance9.3.4 Financing of Credit Insurance and Debt Cancellation Agreement Premiums Banned9.3.4.1 Statutory and Regulatory Ban9.3.4.2 Impact of McCarran-Ferguson Act9.3.4.2.1 Scope of McCarran-Ferguson Act9.3.4.2.2 McCarran-Ferguson Act does not invalidate the ban on the financing of credit insurance premiums9.3.4.2.2.1 Overview9.3.4.2.2.2 TILA’s ban on the financing of credit insurance premiums specifically relates to the business of insurance9.3.4.2.2.3 TILA’s ban on the financing of credit insurance premiums does not impinge on state laws regulating the business of insurance9.3.5 Prepayment Penalties9.3.5.1 Overview9.3.5.2 Prohibition of Prepayment Penalties for Certain Loans9.3.5.3 Limits on the Amount of Prepayment Penalties When Allowed9.3.5.4 Requirement That Consumer Be Offered a Loan Without a Prepayment Penalty9.3.6 Disclosure and Counseling for Negatively Amortizing Loans9.3.7 Arbitration and Restrictions on Court Actions9.3.8 Remedies for Violation of Dodd-Frank Act’s Mortgage Protections9.4 Protections for Loans Secured by the Consumer’s Principal Dwelling9.4.1 Introduction9.4.2 Appraisal Standards9.4.2.1 Dodd-Frank Act and FRB Overlap9.4.2.2 Scope9.4.2.3 Prohibited Practices9.4.2.4 Conflicts of Interest9.4.2.5 Supervision and Compensation of Appraisers9.4.3 Servicing Practices9.4.3.1 Introduction9.4.3.2 Crediting of Payments9.4.3.2.1 General9.4.3.2.2 Rule effective until January 10, 20149.4.3.2.3 Rule effective January 10, 20149.4.3.3 Pyramiding of Late Fees9.4.4 Remedies9.5 Substantive Protections for Higher-Priced Mortgages9.5.1 Introduction9.5.2 Annual Percentage Rate Trigger for Higher-Priced Loan Protections9.5.3 Coverage9.5.4 Prohibited Acts or Practices for Higher-Priced Mortgages9.5.4.1 Overview9.5.4.2 Ability to Repay9.5.4.3 Evasions Through Structuring a Loan As Open-End Credit9.5.4.4 Prepayment Penalty Restrictions9.5.4.4.1 From October 9, 2009 to January 9, 20149.5.4.4.2 From January 10, 20149.5.4.5 Escrow Requirements9.5.4.5.1 General9.5.4.5.2 Exemptions9.5.4.5.3 Escrow account requirements9.5.4.6 Appraisal Requirements for Higher-Risk Mortgages9.5.4.6.1 General9.5.4.6.2 Exemptions9.5.4.6.3 Appraisal requirements9.5.5 Remedies9.6 Protections for High-Cost Mortgages (HOEPA Mortgages)9.6.1 Overview9.6.1.1 Introduction9.6.1.2 Background and Legislative History9.6.1.3 Major Regulatory Action Since HOEPA’s Effective Date9.6.1.4 Preemption9.6.2 HOEPA Coverage9.6.2.1 General9.6.2.2 Consumer Credit Transactions Secured by the Consumer’s Principal Dwelling9.6.2.3 Expanded Definition of Creditor9.6.2.3.1 HOEPA’s special definition of “creditor”9.6.2.3.1.1 Overview9.6.2.3.1.2 Pleading requirements and factual development9.6.2.3.1.3 Who is a mortgage broker?9.6.2.3.2 Is HOEPA’s definition independent of the general definition of “creditor”?9.6.2.4 Exempt Transactions9.6.2.4.1 Purchase and construction credit9.6.2.4.2 Reverse mortgages9.6.2.4.3 Open-end credit9.6.2.4.4 Agency authority to exempt other mortgage transactions9.6.3 Annual Percentage Rate Trigger9.6.3.1 Trigger Spreads9.6.3.1.1 Trigger spreads pre-January 10, 20149.6.3.1.2 Trigger spreads effective January 10, 20149.6.3.1.3 Trigger spreads: Summary of effective dates9.6.3.2 The Relevant Date9.6.3.3 “Comparable Maturities” Defined9.6.3.4 APR Accuracy and Tolerances9.6.4 Points and Fees Trigger9.6.4.1 General9.6.4.2 Points and Fees Trigger Prior to January 10, 20149.6.4.3 Points and Fees Trigger Effective January 10, 20149.6.5 Prepayment Penalty Trigger9.6.6 HOEPA Disclosure Requirements9.6.6.1 Required Disclosures9.6.6.2 Conspicuous Type Size9.6.6.3 Number of Copies; Multiple Borrowers9.6.6.4 Content of Disclosures9.6.6.5 Redisclosure9.6.6.6 Tolerances9.6.6.7 Additional Inconsistent Information9.6.6.8 Timing of Disclosures9.6.6.9 Delivery of Notice; Presumption of Delivery9.6.7 Modification or Waiver of the HOEPA Notice9.6.8 Electronic Disclosures9.6.9 Consequences of Failure to Disclose9.6.10 HOEPA Limitations on Contract Terms9.6.10.1 Introduction9.6.10.2 Limitations on Prepayment Penalties9.6.10.2.1 Loans originated before October 1, 20099.6.10.2.1.1 Overview9.6.10.2.1.2 Precondition one: Cap on payments at 50% of gross income9.6.10.2.1.3 Precondition two: Verified income and expenses9.6.10.2.1.4 Precondition three: No same creditor refinancing9.6.10.2.1.5 Precondition four: Prepayment penalties cannot last more than five years9.6.10.2.1.6 Precondition five: Prepayment penalties must be otherwise legal9.6.10.2.2 Loans originated after October 1, 20099.6.10.2.3 Loans as of January 10, 20149.6.10.3 Prohibition of Interest Rate Increases on Default9.6.10.4 Limitation on Balloon Payments9.6.10.4.1 General9.6.10.4.2 Rule prior to January 10, 20149.6.10.4.3 Rule effective January 10, 20149.6.10.5 Prohibition of Negative Amortization9.6.10.6 Limitation on Prepaid Payments9.6.10.7 Limitations on Due-on-Demand Clauses9.6.10.8 Chart of Prohibited Provisions9.6.10.9 Remedies for Including a Prohibited Term9.6.11 HOEPA Prohibited Acts or Practices9.6.11.1 Introduction9.6.11.2 Extending Credit Without Regard to Ability to Repay9.6.11.2.1 Introduction9.6.11.2.2 Regime for loans pre-October 20099.6.11.2.2.1 Definition of “pattern and practice”9.6.11.2.2.2 Guidance from other statutes9.6.11.2.2.3 Collateral-based lending9.6.11.2.2.4 Verification requirements9.6.11.2.2.5 Practice tips: Investigating the pattern and practice case9.6.11.2.3 Regime for loans post-October 2009 and before the Dodd-Frank Act’s effective date9.6.11.2.3.1 Overview9.6.11.2.3.2 Verifying ability to repay9.6.11.2.3.3 Exceptions to the verification requirement9.6.11.2.3.4 Presumption of compliance9.6.11.3 Special Requirements for Payments to Home Improvement Contractors9.6.11.4 Notice to Assignee9.6.11.5 Early Refinancings9.6.11.6 Structuring the Loan As Open-End to Evade HOEPA9.6.11.7 Recommending Default9.6.11.8 Financing Points and Fees and Certain Prepayment Penalties9.6.11.9 Charging Modification and Deferral Fees9.6.11.10 Requiring Pre-Loan Counseling9.6.11.11 Late Fees9.6.11.12 Fees for Payoff Statements9.6.11.13 Chart of Prohibited Acts or Practices9.6.12 HOEPA Remedies9.6.12.1 Civil Liability and Enhanced Damages9.6.12.1.1 General9.6.12.1.2 Statute of limitations9.6.12.1.3 Material violation standard for enhanced damages9.6.12.1.4 Requirement that finance charges and fees be paid9.6.12.1.5 Statutory damages for multiple violations and for multiple obligors9.6.12.2 Rescission9.6.12.3 HOEPA Pleading Requirements9.6.12.4 Correction of Error Defense9.6.12.5 Attorney General Enforcement9.6.13 HOEPA’s Extension of Assignee Liability9.6.13.1 Overview9.6.13.2 Scope of Extended Liability9.6.13.3 Limitation on Assignee Liability and the Assignee’s Burden of Proof to Invoke It9.6.13.4 Interplay Between the Various Assignee Provisions in § 16419.6.13.5 Limits on Damages9.6.13.5.1 Monetary cap and offset9.6.13.5.2 Damages roadmap9.6.13.5.3 Using the roadmap to calculate assignee damages9.7 Determining Coverage for High-Cost and Higher-Priced Mortgage Loans: The Average Prime Offer Rate and the APR Trigger9.7.1 Calculating the Average Prime Offer Rate9.7.2 HOEPA Pre-Dodd-Frank Act: Finding the Relevant Rate and Calculating the APR Trigger9.7.3 Calculating the APR Trigger for an Open-End Mortgage9.8 Points and Fees Trigger9.8.1 Introduction9.8.2 Calculating the Total Loan Amount for Loans Prior to January 10, 20149.8.3 Calculating the Points and Fees for Loans Prior to January 10, 20149.8.3.1 Four-Part Definition9.8.3.2 All Items Included in the Finance Charge9.8.3.3 Broker Fees9.8.3.4 Special Issue: Yield Spread Premiums9.8.3.4.1 General9.8.3.4.2 Why the YSP should be included9.8.3.4.3 Is it double counting?9.8.3.4.4 Is it payable at or before closing?9.8.3.4.5 Is it payable by the borrower?9.8.3.4.6 Discovery and documenting the YSP9.8.3.5 Other Closing Costs As Points and Fees9.8.3.5.1 Overview9.8.3.5.2 No direct or indirect compensation9.8.3.5.3 Paid to a third party9.8.3.5.4 How much of the fee is included in the points and fees?9.8.3.6 Must Fees Be Paid Before Closing to Count As a Point and Fee?9.8.3.7 Credit Insurance Premiums and Debt Cancellation Charges9.8.3.8 Crunching the Numbers: A Review of the Pre-Dodd-Frank Act HOEPA Calculations9.8.4 The Points and Fees Test after January 10, 20149.8.4.1 Introduction9.8.4.2 Post-Dodd-Frank Points and Fees Trigger for Closed-End Mortgages9.8.4.2.1 Points and fees9.8.4.2.2 Calculating mortgage originator compensation9.8.4.2.3 Bona fide discount points9.8.4.2.4 Total loan amount9.8.4.3 Post-Dodd-Frank Points and Fees Trigger for Open-End Mortgages9.8.4.3.1 Points and fees for open-end mortgages9.8.4.3.2 Discount points9.8.4.3.3 Total loan amount9.9 Foreclosure Rescue Scams: Calculating the Numbers9.9.1 Introduction9.9.2 APR Calculations in Foreclosure Rescue Scams9.9.3 Points and Fee Trigger Calculations in Foreclosure Rescue ScamsChapter 10 Truth in Lending Rescission Rights10.1 TILA Rescission Overview10.2 Transactions and Persons Protected by TILA Rescission Rights10.2.1 Overview of Scope of Rescission10.2.2 Consumer Credit Transaction; Creditor10.2.3 Security Interest10.2.3.1 Basic Definition10.2.3.2 Adding a Security Interest to Existing Transaction; Open-End Credit10.2.3.3 Interests Arising by Operation of Law10.2.3.4 Effect of Spreader Clauses10.2.4 Secured by Principal Dwelling10.2.4.1 General10.2.4.2 Manufactured Home Transactions10.2.5 Disguised Transactions; Sale/Leaseback and Sale/Repurchase Agreements10.2.6 Transactions Exempt from Rescission10.2.6.1 Transactions to Purchase or Construct a Residence Are Exempt10.2.6.1.1 General10.2.6.1.2 Transactions involving a preexisting joint owner10.2.6.1.3 Bridge loans10.2.6.1.4 When the loan is in foreclosure, and a broker fee was not included in the finance charge10.2.6.2 Rescission Rights Limited to the New Advance in a Refinancing by the Same Creditor10.2.6.2.1 Overview10.2.6.2.2 New advance10.2.6.2.3 Same creditor10.2.6.3 Conversion of Open-End to Closed-End Account10.2.6.4 State Agency As Creditor10.2.6.5 Open-End Credit Exclusions10.2.6.6 Series of Advances10.2.7 “Opting-In” to Rescission Rights: Contracting for Coverage; Waiving Exemptions10.2.7.1 Introduction10.2.7.2 Incorporating Rescission Rights As a Contract Term10.2.7.3 Equitable Estoppel10.2.8 Who Has Rescission Rights10.2.8.1 Any Consumer with Ownership Interest10.2.8.2 Where More Than One Consumer Has Rescission Rights10.2.8.3 Standing to Rescind10.2.9 Waiver of Right to Rescind10.2.9.1 General10.2.9.2 Rescission Cannot Be Revoked or Waived10.2.9.3 Former Temporary Waiver Rules for Disaster Areas10.2.10 Interrelationship Between FTC Cooling-Off Period, State Cooling-Off Periods and TILA Rescission10.3 Time Period for Exercising the Right to Rescind10.3.1 The Three-Day Unconditional Right; Trigger Times10.3.2 The Extended Right to Rescind10.3.2.1 General10.3.2.2 Termination of Extended Right by Sale or Transfer of Property10.3.2.2.1 General10.3.2.2.2 Bankruptcy does not constitute a transfer10.3.2.3 Payoff or Refinancing Should Not Terminate the Extended Right10.3.3 The Three-Year Rule and Exceptions to It10.3.3.1 General Interpretation of the Three-Year Rule10.3.3.2 Recoupment and Beach v. Ocwen Federal Bank10.3.3.3 Rescission by Recoupment Under State Disclosure Laws10.3.3.4 Rescission by Recoupment Under State UDAP Statutes10.3.3.5 Rescission by Recoupment Where Consumer Attempted to Exercise Rescission Within the Three-Year Period10.3.3.6 Bankruptcy Filing May Toll Period for Rescinding10.3.3.6.1 Extension of rescission period10.3.3.6.2 Extension of time to file suit to enforce rescission10.3.3.6.3 Time limits when lender files bankruptcy10.3.3.7 Extension of Rescission Period Due to Agency Enforcement Action10.3.3.8 Class Action May Suspend Running of Rescission Period10.3.3.9 Extension of Rescission Period Due to Delay in Consummation of Transaction10.3.3.10 Equitable Tolling10.3.3.11 Assertion of Damage Claims by Way of Recoupment10.3.3.12 Recoupment in Nonjudicial Foreclosure States10.4 Violations Giving Rise to the Extended Right to Rescind10.4.1 Overview10.4.2 Strict Liability Standard10.4.3 Failure to Make Material Disclosures Properly10.4.3.1 General10.4.3.2 Material Disclosures in Closed-End Transactions10.4.3.2a Material Disclosures in Closed-End Transactions Governed by Integrated TILA/RESPA Rules10.4.3.3 Material Disclosures in Open-End Transactions10.4.3.4 HOEPA Loans10.4.3.5 Higher-Priced Mortgage Loans10.4.3.6 Evaluating the Accuracy of the Material Disclosures10.4.4 Violations Regarding the Notice of Right to Rescind10.4.4.1 General10.4.4.2 All Consumers with Rescission Rights Must Receive Two Copies of Notice10.4.4.3 Content of Notice10.4.4.4 Physical Format of Notice10.4.4.5 Unclear or Ambiguous Notice; Provision of Contradictory Supplemental Information10.4.4.6 Creditor’s Grant of Longer Right to Rescind10.4.4.7 Misstatement or Omission of Dates on Notice10.4.4.7.1 Rescission period is extended when dates are misstated or omitted10.4.4.7.2 Specific errors that extend the rescission period10.4.4.7.3 Aberrant First Circuit decisions10.4.4.8 Use of Premature Election Not to Cancel10.4.4.9 Use of Wrong Model Form10.4.5 Non-Delivery of Disclosures or Notice of Right to Cancel10.4.5.1 Creditor Has Burden of Showing Receipt in Absence of Signed Acknowledgment10.4.5.2 Rebuttable Presumption of Receipt if Debtor Signed Acknowledgment of Receipt10.4.5.3 Rebutting the Presumption of Receipt10.4.5.4 Tips on Preserving the Chain of Custody10.5 Delay of Performance Rule10.5.1 Creditor Must Delay Performance During Rescission Period10.5.2 Does Violation of Delay of Performance Rule Extend the Right to Rescind?10.5.3 “Spiking”: Premature Performance in Home Improvement Transactions10.5.3.1 Described10.5.3.2 The “Two-Contract Dodge”10.5.3.3 Special Issue: Tender in a Spiking Case10.5.3.4 Non-TILA Claims for Spiking10.6 How Rescission Works: A Three-Step Process After Consumer Gives Notice10.6.1 Introduction and Overview10.6.2 Triggering the Process by Consumer’s Written Notice of Cancellation10.6.2.1 Basic Requirements10.6.2.2 Drafting a Cancellation Letter10.6.2.2.1 Whether to specify the TILA violations and surrounding circumstances10.6.2.2.2 Addressing tender issues in the rescission letter10.6.2.3 Delivering the Rescission Letter10.6.2.4 To Whom Should the Rescission Letter Be Sent?10.6.2.4.1 Rescission letter should be sent to the original creditor, all assignees, and other involved parties10.6.2.4.2 Identifying the assignee10.6.2.4.3 Miguel and the role of notice to a servicer10.6.2.5 Can a Complaint Serve As the Consumer’s Notice of Cancellation?10.6.3 Step One: Automatic Termination of Security Interest and Cancellation of Consumer’s Liability to Pay Finance or Other Charges10.6.3.1 Automatic Termination of Security Interest10.6.3.1.1 Generally10.6.3.1.2 Common law rescission recognizes automatic termination10.6.3.1.3 Litigation over automatic termination10.6.3.2 Cancellation of Consumer’s Liability for Finance Charges or Other Charges10.6.4 Step Two: Creditor’s Obligation to Return Money or Property and Reflect the Termination of the Security Interest10.6.4.1 Overview10.6.4.2 Return of “Any Amount” or Property10.6.4.3 Action to Reflect Termination of Security Interest10.6.4.4 Effect of Creditor’s Erroneous Payment of Proceeds After Rescission10.6.5 Step Three: Consumer’s Tender (General)10.6.5.1 Timing of the Tender Obligation10.6.5.2 Return of Money10.6.5.3 Return of Property or Its Reasonable Value10.6.5.4 Circumstances in Which the Consumer Need Not Tender10.7 The Court’s Equitable Modification Authority and Conditional Rescission10.7.1 Overview10.7.2 The Act and Regulation Z10.7.2.1 Basic Provisions and History10.7.2.2 Regulation Z10.7.2.3 Official Interpretations on Modification10.7.3 Conditional Rescission in the Ninth Circuit10.7.3.1 Yamamoto v. Bank of New York10.7.3.2 Discussion of Yamamoto10.7.3.3 Limits on Conditional Rescission in the Ninth Circuit10.7.4 Other Judicial Decisions10.7.4.1 Williams v. Homestake Mortgage Company10.7.4.2 American Mortgage Network v. Shelton10.7.4.3 Arguments For and Against Conditional Rescission10.7.5 Are Consumers Required to Plead Ability to Tender?10.7.5.1 The Weight of Authority Holds That Consumers Need Not Plead Ability to Tender10.7.5.2 Reasons That Consumers Should Not Be Required to Plead Ability to Tender10.7.6 Making the Arguments on the Equities and Litigation Tips10.7.6.1 General Principles10.7.6.2 Creditor Conduct10.8 Tender Issues10.8.1 Determining the Amount10.8.1.1 Basic Calculations10.8.1.2 Calculations in Refinancing Cases10.8.1.2.1 Same-creditor refinance10.8.1.2.2 Series of refinance loans with different creditors10.8.1.2.3 Refinance of unsecured debt into mortgage debt10.8.1.3 Tender in Foreclosure Rescue Scam Cases10.8.1.4 Strategic Considerations in Addressing Disputes About Calculation of Tender Amount and Offsets10.8.2 Planning for Tender10.8.2.1 Strategic Considerations10.8.2.2 Tender in Cash10.8.2.3 Tender by Third-Party Refinancing10.8.2.4 Tender through a Reverse Mortgage for Older Homeowners10.8.2.5 Tender Through a Loan Modification10.8.2.6 Tender in Bankruptcy or by Installments10.8.2.7 Tender Through Sale of the House10.8.2.8 Tender of the Home to Lender10.8.3 Continuing Installment Payments While Right to Rescind Is Litigated10.8.3.1 Reasons for the Consumer to Continue Making Payments10.8.3.2 Continuing to Make Payments to the Creditor10.8.3.3 Making Payments into Escrow10.8.4 Tender in Bankruptcy10.9 Remedies10.9.1 Overview10.9.2 Assignees Are Fully Subject to Rescission10.9.3 Damages for Rescission Violations10.9.3.1 General Availability of Statutory and Actual Damages10.9.3.2 Maximizing Statutory and Actual Damages in Rescission Cases10.9.3.3 Statutory Damages Against Assignees for Rescission Violations10.9.4 Attorney Fees10.9.5 The Consumer’s Right to Keep the Property or Proceeds10.9.5.1 Vesting of Ownership in the Consumer If the Creditor Does Not Accept Tender10.9.5.2 Elimination of Consumer’s Tender Obligation If Creditor Does Not Respond to the Rescission Notice10.9.5.3 Equitable Modification10.9.6 Raising Rescission As a Defense to Foreclosure10.9.6.1 General10.9.6.2 1995 Amendments and Tolerances10.9.6.3 TILA Monetary Damage Claims in Foreclosures; Distinguished from Rescission Claims10.9.7 Forum Selection; Rescission in Bankruptcy10.9.7.1 General Reasons to Choose Bankruptcy10.9.7.2 Choosing Between Chapter 7 and 13: Preserving the Home from Unsecured Creditors10.9.7.3 Mechanics of Raising a Rescission Claim in Bankruptcy10.9.7.4 Timing Issues of Raising a Rescission Claim in Bankruptcy10.9.8 Settlement10.9.8.1 Valuing the Rescission Case10.9.8.2 Settlement Strategy10.9.9 Exercising Rescission Rights in a Class ActionChapter 11 Consumer Remedies11.1 Introduction11.2 Standing11.2.1 General11.2.2 Co-Obligors11.2.3 Forgery Victims11.2.3a Standing and Statutory Damages11.2.3a.1 Spokeo and Article III Standing11.2.3a.2 Spokeo Does Not Change the Law of Article III Standing11.2.3a.3 Scope of the Spokeo Ruling11.2.3a.4 Application of Spokeo in TILA cases11.2.3a.4.1 Violations of disclosure rules11.2.3a.4.2 Violations of actionable disclosure rules are “significant”11.2.3a.4.3 Disclosure analysis example: misdisclosure of the APR or finance charge11.2.3a.4.4 Violations of rules creating substantive protections11.2.4 Bankruptcy Issues: Standing and Judicial Estoppel11.2.4.1 Standing in Bankruptcy11.2.4.1.1 General11.2.4.1.2 Removing the legal claim from the bankruptcy estate11.2.4.1.3 Did the TILA claim arise before the bankruptcy filing?11.2.4.1.4 Standing in chapter 13 bankruptcy11.2.4.2 Standing After Bankruptcy11.2.4.2.1 General11.2.4.2.2 Responding to postbankruptcy standing challenges11.2.4.2.3 Exception to postbankruptcy standing problem—bankruptcy cases without discharges11.2.4.3 Judicial Estoppel11.2.4.3.1 General background11.2.4.3.2 Responding to judicial estoppel claims11.2.4.3.3 Judicial estoppel and mistake or inadvertence11.2.4.3.4 Judicial estoppel where no substantial benefit from the bankruptcy filing11.2.4.3.5 Postbankruptcy legal claims11.2.4.3.6 Other bankruptcy estoppel issues11.2.4.3.7 Rescission and other equitable clams11.2.4.3.8 State law standards11.2.4.3.9 Class actions11.2.4.3.10 General policy arguments against judicial estoppel11.3 Who Is Liable? Creditors, Assignees, Servicers, Originators, and Others11.4 Declaratory and Injunctive Relief11.4.1 Availability of Declaratory and Injunctive Relief11.4.2 Declaratory and Injunctive Relief When There Is a Related State Court Case11.4.2.1 Introduction11.4.2.2 Younger Abstention11.4.2.2.1 Nature of Younger abstention11.4.2.2.2 Does Younger abstention apply to eviction or foreclosure proceedings between private parties?11.4.2.2.3 Eviction or foreclosure case may not meet the Middlesex criteria for Younger abstention11.4.2.2.4 How courts have applied Younger in TILA rescission cases11.4.2.3 Colorado River Abstention11.4.2.4 The Anti-Injunction Act11.4.2.4.1 The Act and its exceptions11.4.2.4.2 Injunctions against institution of state court proceedings not prohibited11.4.2.5 The Rooker-Feldman Doctrine11.4.2.5.1 Definition of the doctrine11.4.2.5.2 Inapplicable where the state court winner files the federal claim11.4.2.5.3 Where the parties are different in the state and federal suits11.4.2.5.4 If the federal plaintiff could not have raised the TILA claim in the state action11.4.2.5.5 Where there is not yet a final judgment in the state court action11.4.2.5.6 Cases removed to federal court11.4.2.5.7 “Independent” claims11.4.2.5.8 Other related obstacles11.4.2.6 The Bankruptcy Automatic Stay As an Alternative11.5 Actual Damages11.5.1 Importance of Actual Damages11.5.1a Actual Damages and the Integrated TILA/RESPA Disclosures11.5.2 Legislative History11.5.3 The Detrimental Reliance Standard for Actual Damages for Disclosure Violations11.5.3.1 Development of the Detrimental Reliance Standard11.5.3.2 What Must Be Shown to Establish Detrimental Reliance?11.5.3.2.1 What is reliance? Giving up a better loan or giving up this loan?11.5.3.2.2 Elements may depend on the damages sought11.5.3.2.3 Proving detrimental reliance if availability of other credit is an element11.5.3.2.4 Benefit of the bargain damages11.5.3.2.5 A special case: Actual damage in cases involving hidden payments11.5.4 Alternate Standards for Determining Actual Damages for Disclosure Violations11.5.4.1 Why the Detrimental Reliance Standard Is Wrong11.5.4.2 Correction of Error As a Standard for Actual Damages11.5.4.3 Enforcement Agency Restitution Power As Standard for Actual Damages11.5.4.4 Enforcing Erroneous Disclosure As Contract Term; Refusing to Enforce Improperly Disclosed Contract Terms11.5.4.5 Avoidance or Reformation of Contract Due to Mistake11.5.4.6 Reliance upon Fair Dealing by Creditor11.5.5 Detrimental Reliance Not Required Where Violation Does Not Hinge on Disclosure or Misrepresentation11.5.6 Components of Actual Damage Awards11.5.6.1 Consequential Damages; Emotional Distress11.5.6.2 Prejudgment Interest11.5.6.3 Multiple Actual Damage Awards11.5.6.4 Relation Between Usurious Interest and Actual Damages11.6 Statutory Damages11.6.1 Statutory Damages Issues Examined Elsewhere in This Treatise11.6.2 General: Availability, Purpose, and Character11.6.3 Calculating TILA Statutory Damages11.6.3.1 The Statutory Minimum and Capped Amounts11.6.3.2 Retroactive Effect of Increase in Minimum and Capped Amounts11.6.3.3 Interpreting Ambiguous Statutory Language Regarding the Cap11.6.3.4 What Is the Finance Charge That Should Be Doubled?11.6.3.4.1 General11.6.3.4.2 Open-end credit11.6.3.5 Special Statutory Damages for Violation of Dodd-Frank Property Appraisal Requirements11.6.4 Multiple TILA Statutory Damages11.6.4.1 Multiple Statutory Damages for One Transaction11.6.4.2 Multiple Statutory Damages for Multiple Transactions11.6.4.3 Recovering Both TILA and State Law Statutory Damages11.6.5 The General Rule As to Violations Giving Rise to Statutory Damages11.6.5.1 Overview11.6.5.2 Part A (General Provisions) Violations11.6.5.3 Part B (Credit Transactions) Violations11.6.5.3.1 General11.6.5.3.2 Part B Provisions and Statutory Damages11.6.5.3.3 15 U.S.C. § 1632, Requirements that disclosures be clear and conspicuous11.6.5.3.4 15 U.S.C. § 1635, Rescission11.6.5.4 Part C (Credit Advertising) Violations11.6.5.5 Part D (Credit Billing) Violations11.6.6 Which Closed-End Disclosure Violations (15 U.S.C. § 1638) Lead to Statutory Damages?11.6.6.1 15 U.S.C. § 1638: Paragraph-by-Paragraph Survey of Statutory Damages Availability11.6.6.2 Statutory Damages for Untimely or Improperly Segregated Closed-End Disclosures11.6.6.2.1 Overview11.6.6.2.2 Statutory damages for untimely disclosures11.6.6.2.3 Statutory damages for improperly segregated disclosures11.6.6.3 Statutory Damages Under State Disclosure Laws As an Alternative11.6.7 Which Open-End Disclosure Violations of 15 U.S.C. §§ 1637–1637a Lead to Statutory Damages: Paragraph by Paragraph Survey11.6.8 Statutory Damages for Regulation Z Violations11.6.8.1 General11.6.8.2 Where No Direct Statutory Parallel11.6.8.3 Integrated TILA/RESPA Mortgage Loan Disclosures11.6.9 Where Assignee, Servicer, Originator, or Settlement Agent Violates TILA11.6.9.1 Overview11.6.9.2 Originator and Settlement Agent Liability11.6.9.3 Assignee Liability for Failing to Provide Transfer of Ownership Notices Under 15 U.S.C. § 1641(g)11.6.9.3.1 TILA’s liability provisions apply to assignees that fail to provide transfer of ownership notices11.6.9.3.2 Liability for violations of section 1641(g) includes actual damages, statutory damages, and attorney fees11.6.9.4 Are Servicers Liable for Their Own Violations, Including 15 U.S.C. § 1641(f)(2) Violations?11.6.9.4.1 Overview11.6.9.4.2 Where servicer is original creditor11.6.9.4.3 Where the servicer is not the original creditor11.6.9.4.4 Other theories of servicer liability11.6.9.5 Creditor and assignee liability for servicer violations11.6.9.5.1 General11.6.9.5.2 Agency principles11.6.9.5.3 Are creditors liable for the actions of servicers?11.6.9.5.4 Are assignees liable for servicers’ violations?11.7 Remedies for Violations of the Federal Rebate Statute11.8 TILA Class Actions11.8.1 Background11.8.2 Certifying the TILA Class Action11.8.2.1 General11.8.2.2 Numerosity11.8.2.3 Commonality11.8.2.4 Typicality11.8.2.5 Adequacy of Representation11.8.2.5.1 General11.8.2.5.2 Named plaintiff may be in default on credit contract11.8.2.5.3 Cost of notifying the class11.8.2.6 Class Actions for Injunctive or Declaratory Relief11.8.2.7 TILA Damage Class Actions Under Rule 23(b)(3)11.8.2.7.1 Common questions must predominate11.8.2.7.2 Superiority11.8.3 TILA Class Action Monetary Damages11.8.3.1 General11.8.3.2 Factors Determining Size of Statutory Damages11.8.3.3 Determining the Creditor’s Net Worth11.8.3.4 Statutory Damages in a Series of TILA Class Actions11.8.3.5 Who Determines the Size of the Award—Court or Jury?11.9 Attorney Fees11.9.1 Overview11.9.1.1 Fees to the Successful Consumer Are Key to TILA’s Enforcement Scheme11.9.1.2 Most Federal Court Fee Jurisprudence Is Applicable to TILA11.9.2 Situations Where Attorney Fees Are Awarded11.9.2.1 Where the Consumer Successfully Concludes an Action11.9.2.2 Attorney Fees in Connection with Recoupment Claims11.9.2.3 Attorney Fees for Litigation of the Fee Award11.9.2.4 Attorney Fees for Appeals11.9.2.5 Attorney Fees in Rescission Cases and Against Assignees11.9.2.6 Attorney Fees Where the Claim Is Settled11.9.2.6.1 Right to attorney fee award11.9.2.6.2 Tactical and ethical factors in negotiating a settlement containing attorney fees11.9.2.7 Fees for Work in Bankruptcy Court11.9.2.8 Fees After Acceptance of Rule 68 Offer of Judgment11.9.2.9 Fees for Work Performed Postjudgment11.9.3 Who Is Entitled to a Fee Award?11.9.3.1 The Attorney or the Client?11.9.3.1.1 Award usually goes to the client11.9.3.1.2 As against third parties, award goes to attorney11.9.3.2 Fees for Nonprofit and Pro Bono Attorneys11.9.3.3 Individuals Appearing Pro Se11.9.3.4 No TILA Attorney Fees for Prevailing Creditors11.9.4 Calculating the Attorney Fee Award11.9.4.1 The General Approach; Determining the “Lodestar”11.9.4.2 Determining the Allowable Hours11.9.4.2.1 Excessive or duplicative time11.9.4.2.2 Distinguishing work on various claims and activities11.9.4.2.3 Paralegal and law student time; travel time11.9.4.3 Establishing the Hourly Rate11.9.4.4 Adjustments to the Lodestar11.9.4.4.1 Upward adjustments11.9.4.4.2 Downward adjustments11.9.4.5 Costs, Expert Fees, and Other Expenses11.9.5 Fee Applications11.9.6 Appeals of Attorney Fee Awards11.9.7 Interim Fees11.9.8 Apportionment of Award Among Defendants11.10 Right to Jury Trial11.10.1 Practical Significance11.10.2 Constitutional and Statutory Requirements11.11 Government Enforcement11.11.1 An Overview of Federal Agency Enforcement11.11.2 Where the Creditor Has Filed for BankruptcyChapter 12 Creditor Defenses and Counterclaims12.1 Introduction12.2 TILA’s Statute of Limitations12.2.1 General; Status As Affirmative Defense or Jurisdictional Prerequisite12.2.2 Calculating the Limitations Period12.2.2.1 General12.2.2.2 Closed-End Credit Disclosure Violations12.2.2.3 Open-End Credit Requirements12.2.2.3.1 General12.2.2.3.2 Fair Credit Billing Act violations12.2.2.4 Suits to Enforce Rescission12.2.2.4.1 Overview12.2.2.4.1a Effectuating rescission within three years12.2.2.4.1b When to file suit to enforce rescission12.2.2.4.1c Statutory support for timing of suit to enforce rescission12.2.2.4.2 Analysis of circuit decisions [Removed]12.2.2.4.3 The statutory text shows that the one-year period to file a rescission suit runs from the creditor’s refusal to rescind [Removed]12.2.2.4.4 Beach leaves the question undecided [Removed]12.2.2.5 Suits for Damages for Rescission Violations12.2.2.6 Does a Rescission Claim Extend the Limitations Period for Underlying Disclosure Violations?12.2.2.7 Repeat Transactions and Continuing Violations12.2.2.8 Violations of 15 U.S.C. § 1641(f)(2) and (g)12.2.3 Equitable Tolling and Fraudulent Concealment [Removed]12.2.3.1 TILA Limitations Period Can Be Equitably Tolled [Removed]12.2.3.2 Equitable Tolling, Equitable Estoppel, and Fraudulent Concealment [Removed]12.2.3.3 Elements of Equitable Tolling and Fraudulent Concealment [Removed]12.2.3.4 Due Diligence [Removed]12.2.3.5 Circumstances That Justify Equitable Tolling [Removed]12.2.3.6 Pleading and Proving Grounds for Tolling [Removed]12.2.3a Doctrines Affecting When the Limitations Period Runs12.2.3a.1 Overview12.2.3a.2 The Discovery Rule and Fraudulent Concealment12.2.3a.3 Equitable Tolling12.2.3a.3.1 Generally12.2.3a.3.2 Due diligence requirement12.2.3a.4 Equitable Estoppel12.2.3a.5 Application of Equitable Doctrines to TILA’s Statute of Limitations12.2.3a.6 Pleading and Proving Equitable Estoppel and Equitable Tolling12.2.4 Other Tolling Rules12.2.4.1 State Court Action May Toll the Limitation Period in Federal Court12.2.4.2 Limitation Period for Individual Claim Is Tolled During Pendency of Class Action12.2.4.3 Mental Incompetency12.2.4.4 Servicemembers Civil Relief Act12.2.4.5 Effect of Bankruptcy12.2.5 TILA Recoupment Claims After the Limitations Period Has Run12.2.5.1 TILA Explicitly Allows Recoupment for Damage Claims12.2.5.2 Nature of Recoupment12.2.5.3 State Law12.2.5.4 Recoupment Where Creditor Initiates Nonjudicial Foreclosure12.2.5.5 Recoupment in Bankruptcy12.2.5.5.1 Availability of recoupment in bankruptcy after the limitation period has run12.2.5.5.2 Raising the recoupment claim in bankruptcy12.2.5.5.2.1 Bankruptcy schedules12.2.5.5.2.2 Procedural and strategic choices12.2.5.5.2.3 Filing a proof of claim for a creditor12.2.5.5.3 Treatment of bifurcated secured and unsecured claims12.3 Limitations on Assignee Liability12.3.1 Overview12.3.2 Damages Liability for Violations Apparent on the Face of the Documents12.3.2.1 General Rule12.3.2.2 Identifying and Evaluating the Documents Assigned in Transactions Not Secured by Real Property12.3.2.3 Identifying and Evaluating the Relevant Documents in a Real-Property-Secured Transaction12.3.2.4 Types of Violations That Are Apparent on the Face of the Documents12.3.2.5 Impact of Assignee’s Actual Knowledge12.3.2.6 What Is Apparent on the Face for Post-Consummation and Post-Assignment Violations12.3.3 Right of Rescission Against Assignees12.3.4 Assignee’s Liability for TILA Defenses and Setoffs Raised in Recoupment12.3.5 Assignee Liability for Violations of Dodd-Frank Act’s Ability-to-Repay and Steering Incentive Protections12.3.5.1 When a Judicial or Non-Judicial Foreclosure Has Been Initiated12.3.5.2 Relationship Between § 1640(k) and § 164112.3.5.3 When the Homeowner Brings an Affirmative Case Before a Judicial or Non-Judicial Foreclosure Has Been Initiated12.3.6 Involuntary Assignments12.3.7 Servicers12.3.8 Assignees of HOEPA Obligations12.3.9 Series of Assignments12.3.10 Effect of Written Acknowledgment of Receipt in Suits Against Assignees12.3.11 Effect of FTC Holder Rule and HOEPA Assignee Liability Provision12.4 TILA Statutory Defenses12.4.1 Overview12.4.2 Good Faith Conformity with Rulings and Official Interpretations12.4.2.1 Scope of the Defense12.4.2.2 Elements of the Defense12.4.3 Use of Model Forms12.4.4 Bona Fide Error Defense12.4.4.1 Introduction; Scope12.4.4.2 Burden of Proof12.4.4.3 Unintentional Error12.4.4.4 Types of Bona Fide Errors12.4.4.5 Maintenance of Procedures12.4.5 Faulty Calculation Tool Defense12.4.6 Correction of Error Defenses12.4.6.1 Introduction; Scope12.4.6.2 Determining Whether Corrections Are Timely12.4.6.3 Not All Errors Are Correctable12.4.6.4 Correction and Notification Efforts Must Be Sufficient12.4.6.5 Correction of Error Defense Does Not Affect Rescission12.4.7 Refunds Related to Good-Faith Analysis12.4.8 Effect of Subsequent Occurrence12.4.9 Governmental Agencies Acting As Creditors12.4.10 Tolerances12.4.11 Conviction of Fraud in Obtaining Residential Mortgage Loan12.4.12 Limits on Debtor’s Attempt to Offset Obligation; Creditor’s Attempt to Offset TILA Claim12.5 Creditor Defenses Not Expressly Provided by TILA12.5.1 Technical Violations12.5.2 Consumer Not Misled by TILA Violation12.5.3 Consumer Contribution to TILA Violation12.5.4 Consumer’s Waiver of TILA Rights12.5.5 Invalidity of Underlying Loan As TILA Defense12.5.6 Retroactivity of Judicial Decisions and Amendments to Regulation Z and the Official Interpretations12.5.7 Other Defenses Claimed by Creditors12.6 Selected Jurisdictional and Procedural Defenses and Issues12.6.1 General Jurisdiction Requirements12.6.1.1 Consumer’s Option to File in Federal or State Court12.6.1.2 Federal Jurisdiction in States Exempted from TILA12.6.1.3 Personal Jurisdiction over Out-of-State Creditors12.6.2 Removal of TILA Claims to Federal Court12.6.3 Supplemental Federal Court Jurisdiction12.6.3.1 A Consumer’s Non-TILA Claim12.6.3.2 A Creditor’s Collection Counterclaim12.6.4 Concurrent Litigation of TILA Case in State and Federal Courts12.6.5 Res Judicata and Related Doctrines12.6.5.1 Introduction12.6.5.2 Res Judicata12.6.5.2.1 Elements12.6.5.2.2 Identity of parties12.6.5.2.3 Identity of causes of action12.6.5.2.4 Final judgment on the merits12.6.5.3 Collateral Estoppel12.6.5.4 Judicial Estoppel12.6.5.5 Acceptance of Rule 68 Offer of Judgment12.6.6 D’Oench Duhme and Jurisdictional Issues in Litigation Against Failed Banks12.6.7 Pleading12.6.7.1 Level of Specificity Required for Pleading TILA Claims12.6.7.2 Elements to Plead12.6.7.3 Tolerances and Affirmative Defenses12.6.8 Burden of Proof Issues12.6.9 Asserting TILA Violations in Response to Foreclosure, Eviction, and Collection Actions12.6.10 Forum Selection Clauses12.7 TILA Claims and Arbitration Clauses12.7.1 Introduction12.7.2 TILA Limits on Arbitration in Mortgage Loans12.7.2.1 Coverage12.7.2.1a Two Separate TILA Requirements Limit Arbitration12.7.2.2 Effective Date and Retroactive Effect12.7.3 A Threshold Issue: Who Determines Arbitrability—the Court or the Arbitrator?12.7.4 Grounds to Challenge an Arbitration Agreement’s Enforceability12.7.5 Where Designated Arbitration Forum Is Unavailable12.7.6 TILA Rescission and Arbitration Requirements12.7.7 Are High Costs in an Individual Arbitration Inconsistent with TILA?12.7.8 TILA Class Actions and ArbitrationChapter 13 Consumer Leasing Act13.1 Introduction13.1.1 Summary of Consumer Leasing Act Requirements13.1.2 Structure of the Act13.1.3 Regulation M and Official Interpretations13.1.4 Key Terms13.2 Scope13.2.1 Lease Must Exceed Four Months; Coverage of Rent-to-Own, Other Terminable Leases13.2.2 Dollar Limitations As to Lease Size13.2.2.1 General13.2.2.2 Inclusion of Down Payment and Trade-In Amounts13.2.2.3 Inclusion of Taxes and Other Third-Party Payments13.2.2.4 Inclusion of Lease Extensions, Purchase Option, or Residual Value13.2.3 Distinguishing Leases from Credit Sales13.2.4 Consumer Must Be Natural Person Leasing Property for Consumer Purposes13.2.5 CLA Applies to Lessors, Arrangers of Leases, Certain Assignees13.2.6 Real Property Leases Are Not Covered13.2.7 Other Exempt Property13.3 Lease Disclosures13.3.1 General13.3.1.1 Federal Requirements13.3.1.2 State Disclosure Statutes13.3.2 When and How Disclosures Are Made13.3.2.1 Timing for Consumer Receipt of Disclosures13.3.2.2 Type of Document Containing the Disclosures13.3.2.3 Disclosures Not Made in English13.3.2.4 Electronic Disclosures13.3.2.5 Disclosure of Multiple Leased Items13.3.2.6 Whether Renegotiations, Extensions, or Assumptions Require New Disclosures13.3.2.7 Should Disclosures Include Prior Outstanding Lease or Credit Balances?13.3.2.8 Should Disclosures Include Insurance, Other Incidental Services, Other Products Obtained in Conjunction with the Lease?13.3.3 Who Makes and Receives Disclosures; Identification of the Parties13.3.4 Format of Disclosures13.3.4.1 Segregated Disclosures13.3.4.2 Form of Non-Segregated Disclosures13.3.5 Excusable Errors in Disclosure13.3.5.1 General13.3.5.2 Unknown Information and Estimates13.3.5.3 Subsequent Occurrences13.3.5.4 Minor Variations13.3.6 Specific Required Disclosures13.3.6.1 Description of Property13.3.6.2 Amount Due at Lease Signing or Delivery13.3.6.2.1 Itemization of amounts to be paid13.3.6.2.2 Itemization of how the consumer pays the amounts due at lease signing13.3.6.2.3 Disclosure of trade-in’s positive or negative equity13.3.6.2.4 Disclosure of rebates13.3.6.2.5 Practice tips13.3.6.3 Payment Schedule and Total Amount of Periodic Payments13.3.6.4 Other Charges—§ 1013.4(d)13.3.6.5 Total of Payments13.3.6.6 Payment Calculation, Including Capitalized Cost, Rent, and Residual Value13.3.6.6.1 General13.3.6.6.2 Gross capitalized cost and the agreed-upon value of the vehicle13.3.6.6.3 Itemization of the gross capitalized cost13.3.6.6.4 Capitalized cost reduction13.3.6.6.5 Adjusted capitalized cost13.3.6.6.6 Residual value13.3.6.6.7 Depreciation and any amortized amounts13.3.6.6.8 Rent charges13.3.6.6.9 Total of base periodic payments13.3.6.6.10 Number of payments in the lease term13.3.6.6.11 Base periodic payment13.3.6.6.12 Itemization of the periodic payment13.3.6.6.13 Total periodic payment13.3.6.7 Early Termination and Default Charges13.3.6.7.1 General13.3.6.7.2 The formula must be completely and fully disclosed13.3.6.7.3 A generally accepted method to compute the unamortized cost need not be defined13.3.6.7.4 Is an overly complex formula a disclosure violation?13.3.6.7.5 Failure to apply in practice the formula disclosed in the lease13.3.6.8 Excess Wear and Use; Party Responsible for Maintenance13.3.6.9 Purchase Option13.3.6.9.1 Disclosure whether there is a purchase option13.3.6.9.2 Disclosure of the purchase option price13.3.6.9.3 Use of independent source to determine purchase option price13.3.6.9.4 Disclosure of taxes, fees, and other charges related to purchase option13.3.6.10 Statement Referencing Nonsegregated Disclosures—§ 1013.4(j) [§ 213.4(j)]13.3.6.11 Liability for Difference Between Residual and Realized Value13.3.6.12 Right to an Appraisal13.3.6.13 Special Open-End Lease Disclosures13.3.6.14 Official Fees and Taxes13.3.6.15 Insurance13.3.6.16 Identification of Express Warranties13.3.6.16.1 General13.3.6.16.2 Insufficient to mention manufacturer warranties without confirming their existence13.3.6.16.3 Disclaimers of warranties13.3.6.16.4 Need warranties on components be disclosed?13.3.6.17 Penalties and Other Charges for Delinquency13.3.6.18 Security Interest13.3.6.19 Limits on Rate Information13.3.6.20 Special Disclosures for Non-Motor Vehicle Open-End Leases13.4 Required Advertising Disclosures13.4.1 Private Remedies for Advertising Violations13.4.2 What Is an Advertisement?13.4.3 Advertising Requirements13.4.3.1 Triggering Terms Requiring Additional Disclosure13.4.3.2 Alternative Disclosures for Merchandise Tags13.4.3.3 Alternative Disclosures for Television or Radio Advertising13.4.3.4 Multi-Page Advertisements, Catalogs, and Electronic Advertisements13.4.3.5 Bait-and-Switch Advertising13.5 Substantive Regulation of Default and Early Termination Charges13.5.1 CLA Standards for Default and Early Termination Charges13.5.2 Other Legal Standards As to Size of Default and Early Termination Charges13.5.2.1 Relation of Federal and State Law Standards13.5.2.2 UCC Article 2A13.5.2.3 State Leasing Statutes13.5.2.4 Unconscionability13.5.3 Understanding How Lessors Compute Consumers’ Default and Early Termination Liability13.5.3.1 Introduction13.5.3.2 Understanding the Method Disclosed in the Lease13.5.3.2.1 Reading the formula13.5.3.2.2 Lessor’s core damage, expressed as difference between actual and paid-in depreciation13.5.3.2.3 The adjusted lease balance method13.5.3.2.4 Calculations based on remaining lease payments plus the residual value13.5.3.3 Where the Actual Computation Deviates from the Disclosed Method13.5.4 Excessive Residual Values and Inadequate Realized Values13.5.4.1 General13.5.4.2 Realized Value Must Exceed the Residual Value13.5.4.3 Inflated Residual Values13.5.4.4 Manufacturer “Supported” Residual Values13.5.4.5 Use of a Sale Price to Determine the Realized Value13.5.4.6 Approaches to Avoiding a Sale to Determine Realized Value13.5.4.7 Double Counting of Excess Use and Wear Charges13.5.4.8 Selling Expenses Should Not Be Charged to the Lessee13.5.4.9 When Formula Fails to Provide Credit for Realized Value13.5.5 Other Limitations on Early Termination Charges13.5.5.1 Capitalized Cost Manipulation13.5.5.2 Rebate of Third-Party Charges13.5.5.3 Extra Penalties13.5.5.4 Taxes Not Paid to Taxing Authority13.5.5.5 Limits on Early Termination Charges for Servicemembers13.5.5.6 Limits on Consumer Liability After Vehicle Loss13.5.5.7 Failure to Credit the Security Deposit or Interest on the Security Deposit13.6 Liability at Expiration of Open-End Leases13.7 Consumer Leasing Act Remedies13.7.1 When Remedies Are Triggered13.7.1.1 Disclosure Violations13.7.1.2 Violations Related to Unreasonable Early Termination Penalties13.7.1.2.1 Disclosure of an unreasonable early termination charge is a disclosure violation13.7.1.2.2 Inclusion of unreasonable early termination formula triggers CLA remedies13.7.1.2.3 Seventh Circuit requires early termination as precondition to challenging reasonableness of charge13.7.1.2.4 Other courts require consumer to independently establish injury13.7.1.3 Advertising Violations13.7.2 Remedies Provided13.7.2.1 General13.7.2.2 Multiple Statutory Damages for Multiple Violations, Lessors or Lessees13.7.2.3 Class Action Definition and Settlement13.7.3 Statute of Limitations; Recoupment Claims13.7.3.1 General13.7.3.2 Recoupment Claims13.7.4 Jurisdiction13.7.5 CLA Statutory Defenses13.7.5.1 CLA Adopts TILA Statutory Defenses13.7.5.2 Assignee Liability13.7.5.3 Correction Defense13.7.5.4 Bona Fide Error Defense13.7.5.5 Good Faith Conformity with Federal Agency Rulings and Official Interpretations AppendicesAppendix A The Truth in Lending ActIntroductionA.1 TILA Cross References to Title 15 of the United States CodeA.2 The Truth in Lending ActLegislative HistoryPART A—GENERAL PROVISIONSListing of Part A Provisions§ 1601. Congressional findings and declaration of purpose [TILA § 102]1601 NOTE (Selected Provisions)§ 1602. Definitions and rules of construction [TILA § 103]§ 1602(a) – (i)§ 1602(j) – (u)§ 1602(v) – (aa)§ 1602(bb) High-cost mortgage§ 1602(cc): Definitions relating to mortgage origination and residential mortgage loansAmendment History§ 1603. Exempted transactions [TILA § 104]§ 1604. Disclosure guidelines [TILA § 105]§ 1605. Determination of finance charge [TILA § 106]§ 1606. Determination of annual percentage rate [TILA § 107]§ 1607. Administrative enforcement [TILA § 108](a) Enforcing agencies(b) Violations of this subchapter deemed violations of pre-existing statutory requirements; additional agency powers(c) Overall enforcement authority of the Federal Trade Commission(d) Rules and regulations(e) Adjustment of finance charges; procedures applicable, coverage, criteria, etc.Amendment History§ 1608. Views of other agencies [TILA § 109]§ 1609. Repealed. Pub. L. 94-239, § 3(b)(1), Mar. 23, 1976, 90 Stat. 253. [TILA § 110]§ 1610. Effect on other laws [TILA § 111]§ 1611. Criminal liability for willful and knowing violation [TILA § 112]§ 1612. Effect on government agencies [TILA § 113]§ 1613. Annual reports to Congress by Bureau [TILA § 114]§ 1614. Repealed. Pub. L. 96-221, Title VI, 616(b), Mar. 31, 1980, 94 Stat. 182. [TILA § 115]§ 1615. Prohibition on use of “Rule of 78’s” in connection with mortgage refinancings and other consumer loans§ 1616. Bureau review of consumer credit plans and regulationsPART B—CREDIT TRANSACTIONSListing of Part B Provisions§ 1631. Disclosure requirements [TILA § 121]§ 1632. Form of disclosure; additional information [TILA § 122]§ 1633. Exemption for State-regulated transactions [TILA § 123]§ 1634. Effect of subsequent occurrence [TILA § 124]§ 1635. Right of rescission as to certain transactions [TILA § 125](a) Disclosure of obligor’s right to rescind(b) Return of money or property following rescission(c) Rebuttable presumption of delivery of required disclosures(d) Modification and waiver of rights(e) Exempted transactions; reapplication of provisions(f) Time limit for exercise of right(g) Additional relief(h) Limitation on rescission(i) Rescission rights in foreclosureAmendment History§ 1636. Repealed. Pub. L. 96-221, Title VI, § 614(e)(1), Mar. 31, 1980, 94 Stat. 108. [TILA § 126]§ 1637. Open end consumer credit plans [TILA § 127](a) Required disclosures by creditor(b) Statement required with each billing cycle(c) Disclosure in credit and charge card applications and solicitations(d) Disclosure prior to renewal(e) Other rules for disclosures under subsections (c) and (d)(f) Disclosure of range of certain fees which vary by State allowed(g) Insurance in connection with certain open end credit card plans(h) Prohibition on certain actions for failure to incur finance charges(i) Advance notice of rate increase and other changes required(j) Prohibition on penalties for on-time payments(k) Opt-in required for over-the-limit transactions if fees are imposed(l) Limit on fees related to method of payment(m) Use of term “fixed rate”(n) Standards applicable to initial issuance of subprime or “fee harvester” cards(o) Due dates for credit card accounts(p) Parental approval required to increase credit lines for accounts for which parent is jointly liable(q) [Editor’s note: No text has been assigned to paragraph q.](r) College card agreementsAmendment History§ 1637a. Disclosure requirements for open end consumer credit plans secured by consumer’s principal dwelling [TILA § 127a](a) Application disclosures(b) Time and form of disclosures(c) Third party applications(d) “Principal dwelling” defined(e) PamphletAmendment History§ 1638. Transactions other than under an open end credit plan [TILA § 128](a) Required disclosures by creditor(b) Form and timing of disclosures; residential mortgage transaction requirements(c) Timing of disclosures on unsolicited mailed or telephone purchase orders or loan requests(d) Timing of disclosure in cases of an addition of a deferred payment price to an existing outstanding balance(e) Terms and disclosure with respect to private education loans(f) Periodic statements for residential mortgage loansAmendment History§ 1638a. Reset of hybrid adjustable rate mortgages [TILA § 128A]§ 1639. Requirements for certain mortgages [TILA § 129](a) Disclosures(b) Time of disclosures(c) No prepayment penalty(d) Limitations after default(e) No balloon payments(f) No negative amortization(g) No prepaid payments(h) Prohibition on extending credit without regard to payment ability of consumer(i) Requirements for payments under home improvement contracts(j) Recommended default(k) Late fees(l) Acceleration of debt(m) Restriction on financing points and fees(nj) Consequence of failure to comply(ok) “Affiliate” defined(pl) Discretionary regulatory authority of Bureau(qm) Civil penalties in Federal Trade Commission enforcement actions(r) Prohibitions on evasions, structuring of transactions, and reciprocal arrangements(s) Modification and deferral fees prohibited(t) Payoff statement(u) Pre-loan counseling(v) Corrections and unintentional violationsAmendment History§ 1639a. Fiduciary duty of servicers of pooled residential mortgages [TILA § 129A]§ 1639b. Residential mortgage loan origination [TILA § 129B]Editor’s Note(a) Finding and purpose(b) Duty of care(c) Prohibition on steering incentives(d) Liability for violations(e) Discretionary regulatory authority§ 1639c. Minimum standards for residential mortgage loans [TILA § 129C]Editor’s Note(a) Ability to repay(b) Presumption of ability to repay(c) Prohibition on certain prepayment penalties(d) Single premium credit insurance prohibited(e) Arbitration(f) Mortgages with negative amortization(g) Protection against loss of anti-deficiency protection(h) Policy regarding acceptance of partial payment(i) Timeshare plansAmendment History§ 1639d. Escrow or impound accounts relating to certain consumer credit transactions [TILA § 129D](a) In general(b) When required(c) Exemptions(d) Duration of mandatory escrow or impound account(e) Limited exemptions for loans secured by shares in a cooperative or in which an association must maintain a master insurance policy(f) Clarification on escrow accounts for loans not meeting statutory test(g) Administration of mandatory escrow or impound accounts(h) Disclosures relating to mandatory escrow or impound account(i) Definitions(j) Disclosure notice required for consumers who waive escrow servicesAmendment History§ 1639e. Appraisal independence requirements [TILA § 129E]Editor’s Note(a) In general(b) Appraisal independence(c) Exceptions(d) Prohibitions on conflicts of interest(e) Mandatory reporting(f) No extension of credit(g) Rules and interpretive guidelines(h) Appraisal report portability(i) Customary and reasonable fee(j) Sunset(k) PenaltiesAmendment History§ 1639f. Requirements for prompt crediting of home loan payments [TILA § 129F]§ 1639g. Requests for payoff amounts of home loan [TILA § 129G]§ 1639h. Property appraisal requirements [TILA § 129H]§ 1640. Civil liability [TILA § 130](a) Individual or class action for damages; amount of award; factors determining amount of award(b) Correction of errors(c) Unintentional violations; bona fide errors(d) Liability in transaction or lease involving multiple obligors(e) Jurisdiction of courts; limitations on actions; State attorney general enforcement(f) Good faith compliance with rule, regulation, or interpretation of Bureau or with interpretation or approval of duly authorized official or employee of Federal Reserve System(g) Recovery for multiple failures to disclose(h) Offset from amount owed to creditor or assignee; rights of defaulting consumer(i) Class action moratorium(j) Private educational lender(k) Defense to foreclosureAmendment History§ 1641. Liability of assignees [TILA § 131](a) Prerequisites(b) Proof of compliance with statutory provisions(c) Right of rescission by consumer unaffected(d) Rights upon assignment of certain mortgages(e) Liability of assignee for consumer credit transactions secured by real property(f) Treatment of servicer(g) Notice of new creditor§ 1642. Issuance of credit cards [TILA § 132]§ 1643. Liability of holder of credit card [TILA § 133]§ 1644. Fraudulent use of credit cards; penalties [TILA § 134]§ 1645. Business credit cards; limits on liability of employees [TILA § 135]§ 1646. Dissemination of annual percentage rates; implementation, etc. [TILA § 136]§ 1647. Home equity plans [TILA § 137]§ 1648. Reverse mortgages [TILA § 138]§ 1649. Certain limitations on liability [TILA § 139]§ 1650. Preventing unfair and deceptive private educational lending practices and eliminating conflicts of interest [TILA § 140](a) Definitions(b) Prohibition on certain gifts and arrangements(c) Prohibition on co-branding(d) Advisory board compensation(e) Prohibition on prepayment or repayment fees or penalty(f) Credit card protections for college studentsAmendment History§ 1651. Procedure for timely settlement of estates of decedent obligors [TILA § 140A]PART C—CREDIT ADVERTISING AND LIMITS ON CREDIT CARD FEESListing of Part C Provisions§ 1661. Catalogs and multiple-page advertisements [TILA § 141]§ 1662. Advertising of downpayments and installments [TILA § 142]§ 1663. Advertising of open end credit plans [TILA § 143]§ 1664. Advertising of credit other than open end plans [TILA § 144]§ 1665. Nonliability of advertising media [TILA § 145]§ 1665a. Use of annual percentage rate in oral disclosures; exceptions [TILA § 146]§ 1665b. Advertising of open end consumer credit plans secured by consumer’s principal dwelling [TILA § 147]§ 1665c. Interest rate reduction on open end consumer credit plans§ 1665d. Reasonable penalty fees on open end consumer credit plans§ 1665e. Consideration of ability to repayPART D—CREDIT BILLINGListing of Part D Provisions§ 1666. Correction of billing errors [TILA § 161]§ 1666a. Regulation of credit reports [TILA § 162]§ 1666b. Timing of payments [TILA § 163]§ 1666c. Prompt and fair crediting of payments [TILA § 164]§ 1666d. Treatment of credit balances [TILA § 165]§ 1666e. Notification of credit card issuer by seller of return of goods, etc., by obligor; credit for account of obligor [TILA § 166]§ 1666f. Inducements to cardholders by sellers of cash discounts for payments by cash, check or similar means; finance charge for sales transactions involving cash discounts [TILA § 167]§ 1666g. Tie-in services prohibited for issuance of credit card [TILA § 168]§ 1666h. Offset of cardholder’s indebtedness by issuer of credit card with funds deposited with issuer by cardholder; remedies of creditors under State law not affected [TILA § 169]§ 1666i. Assertion by cardholder against card issuer of claims and defenses arising out of credit card transaction; prerequisites; limitation on amount of claims or defenses [TILA § 170]§ 1666i-1. Limits on interest rate, fee, and finance charge increases applicable to outstanding balances [TILA § 171]§ 1666i-2. Additional limits on interest rate increases [TILA § 172]§ 1666j. Applicability of State laws [TILA § 173]A.3 Adjustable Rate Mortgages CapsAmendment History and Title and Chapter§ 3806. Adjustable rate mortgage capsAppendix B Regulation ZEditor’s NoteCorrelation Table Between CFPB and FRB Regulation VersionsListing of Regulation Z ProvisionsSUBPART A—GENERALSECTION 1026.1 Authority, Purpose, Coverage, Organization, Enforcement, and Liability [§ 226.1]SECTION 1026.2 Definitions and Rules of Construction [§ 226.2]SECTION 1026.3 Exempt Transactions [§ 226.3]SECTION 1026.4 Finance Charge [§ 226.4]SUBPART B—OPEN-END CREDITSECTION 1026.5 General Disclosure Requirements [§ 226.5]SECTION 1026.6 Account-Opening Disclosures [§ 226.6]SECTION 1026.7 Periodic Statement [§ 226.7]SECTION 1026.8 Identifying Transactions on Periodic Statements [§ 226.8]SECTION 1026.9 Subsequent Disclosure Requirements [§ 226.9]SECTION 1026.10 Payments [§ 226.10]SECTION 1026.11 Treatment of Credit Balances; Account Termination [§ 226.11]SECTION 1026.12 Special Credit Card Provisions [§ 226.12]SECTION 1026.13 Billing-Error Resolution [§ 226.13]SECTION 1026.14 Determination of Annual Percentage Rate [§ 226.14]SECTION 1026.15 Right of Rescission [§ 226.15]SECTION 1026.16 Advertising [§ 226.16]SUBPART C—CLOSED-END CREDITSECTION 1026.17 General Disclosure Requirements [§ 226.17]SECTION 1026.18 Content of Disclosures [§ 226.18]SECTION 1026.19 Certain Mortgage and Variable-Rate Transactions [§ 226.19]SECTION 1026.20 Subsequent Disclosure Requirements Regarding Post-Consummation Events [§ 226.20]SECTION 1026.21 Treatment of Credit Balances [§ 226.21]SECTION 1026.22 Determination of Annual Percentage Rate [§ 226.22]SECTION 1026.23 Right of Rescission [§ 226.23]SECTION 1026.24 Advertising [§ 226.24]SUBPART D—MISCELLANEOUSSECTION 1026.25 Record Retention [§ 226.25]SECTION 1026.26 Use of Annual Percentage Rate in Oral Disclosures [§ 226.26]SECTION 1026.27 Language of Disclosures [§ 226.27]SECTION 1026.28 Effect on State Laws [§ 226.28]SECTION 1026.29 State Exemptions [§ 226.29]SECTION 1026.30 Limitation on Rates [§ 226.30]SUBPART E—SPECIAL RULES FOR CERTAIN HOME MORTGAGE TRANSACTIONSSECTION 1026.31 General Rules [§ 226.31]SECTION 1026.32 Requirements for Certain Closed-End HomeHigh-Cost Mortgages [§ 226.32]SECTION 1026.33 Requirements for Reverse Mortgages [§ 226.33]SECTION 1026.34 Prohibited Acts or Practices in Connection with High-Cost Mortgages [§ 226.34]SECTION 1026.35 Requirements for Higher-Priced Mortgage LoansSECTION 1026.36 Prohibited Acts or Practices in Connection withand Certain Requirements for Credit Secured by a Dwelling [§ 226.36]SECTION 1026.37 Content of Disclosures for Certain Mortgage Transactions (Loan Estimate)[§ 226.37]SECTION 1026.38 Content of Disclosures for Certain Mortgage Transactions (Closing Disclosure) [§ 226.38]SECTION 1026.39 Mortgage Transfer Disclosures [§ 226.39]SECTION 1026.40 Requirements for Home-Equity Plans [§ 226.5b]SECTION 1026.41 Periodic Statements for Residential Mortgage Loans [§ 226.41]SECTION 1026.42 Valuation Independence [§ 226.42]SECTIONS 1026.43–1026.45 [§§ 226.43–226.45]SECTION 1026.43 Minimum Standards for Transactions secured by a DwellingSECTIONS 1026.44–1026.45 [§§ 226.43–226.45]SUBPART F—SPECIAL RULES FOR PRIVATE EDUCATION LOANSSECTION 1026.46 Special Disclosure Requirements for Private Education Loans [§ 226.46]§ 1026.47 Content of Disclosures [§ 226.47]§ 1026.48 Limitations on Private Education Loans [§ 226.48]SUBPART G—SPECIAL RULES APPLICABLE TO CREDIT CARD ACCOUNTS AND OPEN-END CREDIT OFFERED TO COLLEGE STUDENTSSECTION 1026.51 Ability to Pay [§ 226.51]SECTION 1026.52 Limitations on Fees [§ 226.52]SECTION 1026.53 Allocation of Payments [§ 226.53]SECTION 1026.54 Limitations on the Imposition of Finance Charges [§ 226.54]SECTION 1026.55 Limitations on Increasing Annual Percentage Rates, Fees, and Charges [§ 226.55]SECTION 1026.56 Requirements for Over-the-Limit Transactions [§ 226.56]SECTION 1026.57 Reporting and Marketing Rules for College Student Open-End Credit [§ 226.57]SECTION 1026.58 Internet Posting of Credit Card Agreements [§ 226.58]SECTION 1026.59 Reevaluation of Rate Increases [§ 226.59]SECTION 1026.60 Credit and Charge Card Applications and Solicitations [§ 226.5a]AppendicesAPPENDIX A Effect on State LawsAPPENDIX B State ExemptionsAPPENDIX C Issuance of Official InterpretationsAPPENDIX D Multiple Advance Construction LoansAPPENDIX E Rules for Card Issuers That Bill on a Transaction-By-Transaction BasisAPPENDIX F Optional Annual Percentage Rate Computations for Creditors Offering Open-End Credit Plans Secured by a Consumer’s DwellingAPPENDIX G Open-End Model Forms and ClausesListing of Model Forms and ClausesG-1—Balance Computation Methods Model Clauses (Home-Equity Plans)G-1(A)—Balance Computation Methods Model Clauses (Plans Other Than Home-Equity Plans)G-2—Liability for Unauthorized Use Model Clause (Home-Equity Plans)G-2(A)—Liability for Unauthorized Use Model Clause (Plans Other Than Home-Equity Plans)G-3—Long-Form Billing-Error Rights Model Form (Home-Equity Plans)G-3(A)—Long-Form Billing-Error Rights Model Form (Plans Other Than Home-Equity Plans)G-4—Alternative Billing-Error Rights Model Form (Home-Equity Plans)G-4(A)—Alternative Billing-Error Rights Model Form (Plans Other Than Home-Equity Plans)G-5—Rescission Model Form (When Opening An Account)G-6—Rescission Model Form (For Each Transaction)G-7—Rescission Model Form (When Increasing the Credit Limit)G-8—Rescission Model Form (When Adding a Security Interest)G-9—Rescission Model Form (When Increasing the Security)G-10(A) Applications and Solicitations Model Form (Charge Cards)G-10(B) Applications and Solicitations Sample (Charge Cards)G-10(C) Applications and Solicitations Sample (Charge Cards)G-10(D) Applications and Solicitations Model Form (Charge Cards)G-10(E) Applications and Solicitations Sample (Charge Cards)G-11—Applications and Solicitations Made Available to the General Public Model ClausesG-12 [Reserved]G-13(A)—Change in Insurance Provider Model Form (Combined Notice)G-13(B)—Change in Insurance Provider Model FormG-14A Home Equity SampleG-14B Home Equity SampleG-15 Home Equity Model ClausesG-16(A) Debt Suspension Model ClauseG-16(B) Debt Suspension SampleG-17(A) Account-Opening Model FormG-17(B) Account-Opening SampleG-17(C) Account-Opening SampleG-17(D) Account-Opening Sample (Line of Credit)G-18(A)—Periodic Statement Transactions: Interest Charges; Fees SampleG-18(B)—Late Payment Fee SampleG-18(C)(1)—Minimum Payment Warning (When Amortization Occurs and the 36-month Disclosures Are Required)G-18(C)(2)—Minimum Payment Warning (When Amortization Occurs and the 36-month Disclosures Are Not Required)G-18(C)(3)—Minimum Payment Warning (When Negative or No Amortization Occurs)G-18(D)—Periodic Statement New Balance, Due Date, Late Payment and Minimum Payment Sample (Credit Cards)G-18(E)G-18(F) Periodic Statement FormG-18(G) Periodic Statement FormG-18(H)—Deferred Interest Periodic Statement ClauseG-19 Checks Accessing a Credit Card SampleG-20 Change-in-Terms Sample (Increase in Annual Percentage Rate)G-21 Change-in-Terms Sample (Increase in Fees)G-22 Penalty Rate Increase Sample (Payment 60 or Fewer Days Late)G-23 Penalty Rate Increase Sample (Payment More Than 60 Days Late)G-24—Deferred Interest Offer ClausesG-25(A)—Consent Form for Over-the-Credit Limit TransactionsG-25(B)—Revocation Notice for Periodic Statement Regarding Over-the-Credit Limit TransactionsAmendment HistoryAPPENDIX H Closed-End Model Forms and ClausesListing of Model Forms and ClausesH-1-Credit Sale Model FormH-2-Loan Model FormH-3-Amount Financed Itemization Model FormH-4(A)-Variable-Rate Model ClausesH-4(B)-Variable-Rate Model ClausesH-4(C)—Variable-Rate Model ClausesH-4(D)—Variable-Rate Model ClausesH-4(D)(1)—Adjustable-Rate Mortgage Model Form (§ 1026.20(c))H-4(D)(2)—Adjustable-Rate Mortgage Sample Form (§ 1026.20(c))H-4(D)(3)—Adjustable-Rate Mortgage Model Form (§ 1026.20(d))H-4(D)(4)—Adjustable-Rate Mortgage Sample Form (§ 1026.20(d))H-4(E)—Fixed-Rate Mortgage Interest Rate and Payment Summary Model Clause (§ 1026.18(s))H-4(F)—Adjustable-Rate Mortgage or Step-Rate Mortgage Interest Rate and Payment Summary Model Clause (§ 1026.18(s))H-4(G)—Mortgage with Negative Amortization Interest Rate and Payment Summary Model Clause (§ 1026.18(s))H-4(H)—Fixed-Rate Mortgage with Interest-Only Interest Rate and Payment Summary Model Clause (§ 1026.18(s))H-4(I)—Introductory Rate Model ClauseH-4(J)—Balloon Payment Model ClauseH-4(K)—“No-Guarantee-to-Refinance” Statement Model ClauseH-5—Demand Feature Model ClausesH-6—Assumption Policy Model ClauseH-7—Required Deposit Model ClauseH-8—Rescission Model Form (General)H-9—Rescission Model Form (Refinancing With Original Creditor)H-10—Credit Sale SampleH-11—Installment Loan SampleH-12—Refinancing SampleH-13—MortgageClosed-End Transaction with Demand Feature SampleH-14—Variable-Rate Mortgage SampleH-15 Closed-End Graduated Payment MortgageTransaction SampleH-16 Mortgage SampleH-17(A) Debt Suspension Model ClauseH-17(B) Debt Suspension SampleH-18 Private Education Loan Application and Solicitation Model FormH-19 Private Education Loan Approval Model FormH-20 Private Education Loan Final Model FormH-21 Private Education Loan Application and Solicitation SampleH-22 Private Education Loan Approval SampleH-23 Private Education Loan Final SampleH–24(A) Mortgage Loan Transaction Loan Estimate—Model FormH–24(B) Mortgage Loan Transaction Loan Estimate—Fixed Rate Loan SampleH–24(C) Mortgage Loan Transaction Loan Estimate—Interest Only Adjustable Rate Loan SampleH–24(D) Mortgage Loan Transaction Loan Estimate—Refinance SampleH–24(E) Mortgage Loan Transaction Loan Estimate—Balloon Payment SampleH–24(F) Mortgage Loan Transaction Loan Estimate—Negative Amortization SampleH–24(G) Mortgage Loan Transaction Loan Estimate—Modification to Loan Estimate for Transaction Not Involving Seller—Model FormH–25(A) Mortgage Loan Transaction Closing Disclosure—Model FormH–25(B) Mortgage Loan Transaction Closing Disclosure—Fixed Rate Loan SampleH–25(C) Mortgage Loan Transaction Closing Disclosure—Borrower Funds From Second-Lien Loan in Summaries of Transactions SampleH–25(D) Mortgage Loan Transaction Closing Disclosure—Borrower Satisfaction of Seller’s Second-Lien Loan Outside of Closing in Summaries of Transactions SampleH–25(E) Mortgage Loan Transaction Closing Disclosure—Refinance Transaction SampleH–25(F) Mortgage Loan Transaction Closing Disclosure—Refinance Transaction Sample (Amount in Excess of § 1026.19(e)(3))H–25(G) Mortgage Loan Transaction Closing Disclosure—Refinance Transaction With Cash From Consumer at ConsummationH–25(H) Mortgage Loan Transaction Closing Disclosure—Modification to Closing Cost Details—Model FormH–25(I) Mortgage Loan Transaction Closing Disclosure—Modification to Closing Disclosure for Disclosure Provided to Seller—Model FormH–25(J) Mortgage Loan Transaction Closing Disclosure—Modification to Closing Disclosure for Transaction Not Involving Seller—Model FormH–26 Mortgage Loan Transaction—Pre-Loan Estimate Statement—Model FormH–27(A) Mortgage Loan Transaction—Written List of Providers—Model FormH–27(B) Mortgage Loan Transaction—Sample of Written List of ProvidersH–27(C) Mortgage Loan Transaction—Sample of Written List of Providers With Services You Cannot Shop forH–28(A) Mortgage Loan Transaction Loan Estimate—Spanish Language Model FormH–28(B) Mortgage Loan Transaction Loan Estimate—Spanish Language Purchase SampleH–28(C) Mortgage Loan Transaction Loan Estimate—Spanish Language Refinance SampleH–28(D) Mortgage Loan Transaction Loan Estimate—Spanish Language Balloon Payment SampleH–28(E) Mortgage Loan Transaction Loan Estimate—Spanish Language Negative Amortization SampleH–28(F) Mortgage Loan Transaction Closing Disclosure—Spanish Language Model FormH–28(G) Mortgage Loan Transaction Closing Disclosure—Spanish Language Purchase SampleH–28(H) Mortgage Loan Transaction Closing Disclosure—Spanish Language Refinance SampleH–28(I) Mortgage Loan Transaction Loan Estimate—Modification to Loan Estimate for Transaction Not Involving Seller—Spanish Language Model FormH–28(J) Mortgage Loan Transaction Closing Disclosure—Modification to Closing Disclosure for Transaction Not Involving Seller—Spanish Language Model FormH–29 Escrow Cancellation Notice Model Form (§ 1026.20(e))H-30(A)—Sample Form of Periodic Statement (§ 1026.41)H-30(B)—Sample Form of Periodic Statement with Delinquency Box (§ 1026.41)H-30(C)—Sample Form of Periodic Statement for a Payment-Option Loan (§ 1026.41)H-30(D)—Sample Clause for Homeownership Counselor Contact Information (§ 1026.41)Amendment HistoryAPPENDIX I Federal Enforcement AgenciesAPPENDIX J Annual Percentage Rate Computations for Closed-End Credit TransactionsAPPENDIX K Total Annual Loan Cost Rate Computations for Reverse Mortgage TransactionsAPPENDIX L Assumed Loan Periods for Computations of Total Annual Loan Cost RatesAppendix M1 to Part 1026—Repayment DisclosuresAppendix M2 to Part 1026—Sample Calculations of Repayment DisclosuresAppendix N to Part 1026—Higher-Priced Mortgage Loan Appraisal Safe Harbor ReviewAppendix O to Part 1026—Illustrative Written Source Documents for Higher-Priced Mortgage Loan Appraisal RulesAppendix P to Part 1026—[Reserved]Appendix Q to Part 1026—Standards for Determining Monthly Debt and IncomeAppendix B Addendum October 3, 2015 Changes (Federal Register Reprint)New AppendixAppendix B Historical Chart: Regulation Z and Official InterpretationsNew AppendixAppendix C Official Interpretations of Regulation ZEditor’s NoteCorrelation Table Between CFPB Official Interpretations and FRB Official Staff CommentaryINTRODUCTIONSUBPART A GENERALSECTION 1026.1 Authority, Purpose, Coverage, Organization, Enforcement and Liability [§ 226.1]1(c) Coverage1(d) Organization.Amendment HistorySECTION 1026.2 Definitions and Rules of Construction [§ 226.2]2(a)(2) Advertisement2(a)(3) Application.2(a)(4) Billing Cycle or Cycle2(a)(6) Business Day2(a)(7) Card Issuer2(a)(8) Cardholder2(a)(9) Cash Price2(a)(10) Closed-End Credit2(a)(11) Consumer2(a)(12) Consumer Credit2(a)(13) Consummation2(a)(14) Credit2(a)(16) Credit Sale2(a)(17) Creditor2(a)(18) Downpayment2(a)(19) Dwelling2(a)(20) Open-End Credit2(a)(21) Periodic Rate2(a)(22) Person2(a)(23) Prepaid Finance Charge2(a)(24) Residential Mortgage Transaction2(a)(25) Security Interest2(b) Rules of ConstructionAmendment HistorySECTION 1026.3 Exempt Transactions [§ 226.3]1. Relationship to § 1026.123(a) Business, Commercial, Agricultural, or Organizational Credit3(b) Credit Over Applicable Threshold Amount3(c) Public Utility Credit3(d) Securities or Commodities Accounts3(e) Home Fuel Budget Plans3(f) Student Loan Programs3(h) Partial exemption for certain mortgage loans.Amendment HistorySECTION 1026.4 Finance Charge [§ 226.4]4(a) Definition4(a)(1) Charges by Third Parties4(a)(2) Special Rule; Closing Agent Charges4(a)(3) Special Rule; Mortgage Broker Fees4(b) Examples of Finance Charges4(c) Charges Excluded From the Finance Charge4(c)(7) Real-Estate Related Fees4(d) Insurance and Debt Cancellation and Debt Suspension Coverage4(d)(3) Voluntary Debt Cancellation or Debt Suspension Fees4(d)(4) Telephone Purchases4(e) Certain Security Interest Charges4(f) Prohibited OffsetsAmendment HistorySUBPART B OPEN-END CREDITSECTION 1026.5 General Disclosure Requirements [§ 226.5]5(a) Form of Disclosures5(a)(1) General5(a)(2) Terminology5(b) Time of Disclosures5(b)(1) Account-Opening Disclosures5(b)(1)(i) General Rule5(b)(1)(ii) Charges Imposed as Part of an Open-End (Not Home-Secured) Plan5(b)(1)(iii) Telephone Purchases5(b)(1)(iv) Membership Fees5(b)(2) Periodic Statements5(b)(2)(i) Statement Required5(b)(2)(ii) Timing Requirements5(c) Basis of Disclosures and Use of Estimates5(d) Multiple Creditors; Multiple Consumers5(e) Effect of Subsequent EventsAmendment HistorySECTION 1026.6 Account-Opening Disclosures [§ 226.6]6(a) Rules Affecting Home-Equity Plans6(a)(1) Finance Charge6(a)(2) Other Charges6(a)(3) Home-Equity Plan Information6(a)(4) Security Interests6(a)(5) Statement of Billing Rights6(b) Rules Affecting Open-End (Not Home-Secured) Plans6(b)(1) Form of Disclosures; Tabular Format for Open-End (Not Home-Secured) Plans6(b)(2) Required Disclosures for Account-Opening Table for Open-End (Not Home-Secured) Plans6(b)(2)(iii) Fixed Finance Charge; Minimum Interest Charge6(b)(2)(v) Grace Period6(b)(2)(vi) Balance Computation Method6(b)(2)(xiii) Available Credit6(b)(3) Disclosure of Charges Imposed as Part of Open-End (Not Home-Secured) Plans6(b)(4) Disclosure of Rates for Open-End (Not Home-Secured) Plans6(b)(4)(i)(B) Range of Balances6(b)(4)(i)(D) Balance Computation Method6(b)(4)(ii) Variable-Rate Accounts6(b)(4)(iii) Rate Changes Not Due to Index or Formula6(b)(5) Additional Disclosures for Open-End (Not Home-Secured) Plans6(b)(5)(i) Voluntary Credit Insurance, Debt Cancellation or Debt Suspension6(b)(5)(ii) Security Interests6(b)(5)(iii) Statement of Billing RightsAmendment HistorySECTION 1026.7 Periodic Statement [§ 226.7]1. Multifeatured plans.7(a) Rules Affecting Home-Equity Plans7(a)(1) Previous Balance7(a)(2) Identification of Transactions7(a)(3) Credits7(a)(4) Periodic Rates7(a)(5) Balance on Which Finance Charge Computed7(a)(6) Amount of Finance Charge and Other Charges7(a)(6)(i) Finance Charges7(a)(6)(ii) Other Charges7(a)(7) Annual Percentage Rate7(a)(8) Grace Period7(a)(9) Address for Notice of Billing Errors7(a)(10) Closing Date of Billing Cycle; New Balance7(b) Rules Affecting Open-End (Not Home-Secured) Plans1. Deferred interest or similar transactions7(b)(1) Previous Balance7(b)(2) Identification of Transactions7(b)(3) Credits7(b)(4) Periodic Rates7(b)(5) Balance on Which Finance Charge Computed7(b)(6) Charges Imposed7(b)(7) Change-in-Terms and Increased Penalty Rate Summary for Open-End (Not Home-Secured) Plan7(b)(8) Grace Period7(b)(9) Address for Notice of Billing Errors7(b)(10) Closing Date of Billing Cycle; New Balance7(b)(11) Due Date; Late Payment Costs7(b)(12) Repayment Disclosures7(b)(12)(iv) Provision of Information About Credit Counseling Services7(b)(12)(v) Exemptions7(b)(13) Format RequirementsAmendment HistorySECTION 1026.8 Identifying Transactions on Periodic Statements [§ 226.8]8(a) Sale Credit8(b) Nonsale credit.Amendment HistorySECTION 1026.9 Subsequent Disclosure Requirements [§ 226.9]9(a) Furnishing Statement of Billing Rights9(a)(1) Annual Statement9(a)(2) Alternative Summary Statement9(b) Disclosures for Supplemental Credit Access Devices and Additional Features9(b)(3) Checks That Access a Credit Card Account9(b)(3)(i) Disclosures9(c) Change in Terms9(c)(1) Rules Affecting Home-Equity Plans9(c)(1)(i) Written Notice Required9(c)(1)(ii) Notice not Required9(c)(1)(iii) Notice to Restrict Credit9(c)(2) Rules Affecting Open-End (Not Home-Secured) Plans9(c)(2)(i) Changes Where Written Advance Notice is Required9(c)(2)(iii) Charges not Covered by § 1026.6(b)(1) and (b)(2)9(c)(2)(iv) Disclosure Requirements9(c)(2)(v) Notice not Required9(d) Finance Charge Imposed at Time of Transaction9(e) Disclosures Upon Renewal of Credit or Charge Card9(e)(2) Notification on Periodic Statements9(f) Change in Credit Card Account Insurance Provider9(f)(3) Substantial Decrease in Coverage9(g) Increase in Rates Due to Delinquency or Default or as a Penalty9(g)(4) Exception for Decrease in Credit Limit9(h) Consumer Rejection of Certain Significant Changes in Terms1. Circumstances in which § 1026.9(h) does not apply9(h)(1) Right To Reject9(h)(3) ExceptionAmendment HistorySECTION 1026.10 Payments [§ 226.10]10(a) General Rule.10(b) Specific Requirements for Payments10(d) Crediting of Payments When Creditor Does Not Receive or Accept Payments on Due Date10(e) Limitations on Fees Related to Method of Payment10(f) Changes by Card IssuerAmendment HistorySECTION 1026.11 Treatment of Credit Balances; Account Termination [§ 226.11]11(a) Credit Balances11(b) Account Termination11(c) Timely Settlement of Estate DebtsAmendment HistorySECTION 1026.12 Special Credit Card Provisions [§ 226.12]1. Scope and 2. Definition of “accepted credit card”12(a) Issuance of Credit Cards12(b) Liability of Cardholder for Unauthorized Use12(b)(1)(ii) Limitation on Amount12(b)(2) Conditions of Liability12(b)(3) Notification to Card Issuer12(b)(5) Business Use of Credit Cards12(c) Right of Cardholder To Assert Claims or Defenses Against Card Issuer12(c)(1) General Rule12(c)(2) Adverse Credit Reports Prohibited12(c)(3) Limitations12(c)(3)(ii) Exclusion12(d) Offsets by Card Issuer Prohibited12(e) Prompt Notification of Returns and Crediting of RefundsAmendment HistorySECTION 1026.13 Billing Error Resolution [§ 226.13]1. Creditor’s failure to comply with billing error provisions2. Charges for error resolution13(a) Definition of Billing Error13(b) Billing Error Notice13(c) Time for Resolution; General Procedures13(d) Rules Pending Resolution13(d)(1) Consumer’s Right To Withhold Disputed Amount; Collection Action Prohibited13(d)(2) Adverse Credit Reports Prohibited13(e) Procedures If Billing Error Occurred as Asserted13(f) Procedures If Different Billing Error or No Billing Error Occurred13(g) Creditor’s Rights and Duties After Resolution13(i) Relation to Electronic Fund Transfer Act and Regulation EAmendment HistorySECTION 1026.14 Determination of Annual Percentage Rate [§ 226.14]14(a) General Rule14(b) Annual Percentage Rate—In General14(c) Optional Effective Annual Percentage Rate for Periodic Statements for Creditors Offering Open-End Credit Plans Secured by a Consumer’s Dwelling14(c)(1) Solely Periodic Rates Imposed14(c)(2) Minimum or Fixed Charge, But Not Transaction Charge, Imposed14(c)(3) Transaction Charge Imposed14(d) Calculations Where Daily Periodic Rate AppliedAmendment HistorySECTION 1026.15 Right of Rescission [§ 226.15]1. Transactions not covered15(a) Consumer’s Right To Rescind15(b) Notice of Right To Rescind15(c) Delay of Creditor’s Performance15(d) Effects of Rescission15(e) Consumer’s Waiver of Right To Rescind15(f) Exempt TransactionsAmendment HistorySECTION 1026.16 Advertising [§ 226.16]1026.16-1 through 1026.16-616(a) Actually Available Terms16(b) Advertisement of Terms That Require Additional Disclosures16(c) Catalogs or Other Multiple-Page Advertisements; Electronic Advertisements16(d) Additional Requirements for Home-Equity Plans16(e) Alternative Disclosures—Television or Radio Advertisements16(g) Promotional Rates and Fees16(h) Deferred Interest or Similar OffersAmendment HistorySUBPART C CLOSED-END CREDITSECTION 1026.17 General Disclosure Requirements [§ 226.17]1. Rules for certain mortgage disclosures.17(a) Form of Disclosures17(b) Time of Disclosures17(c) Basis of Disclosures and Use of Estimates17(d) Multiple Creditors; Multiple Consumers17(e) Effect of Subsequent Events17(f) Early Disclosures17(g) Mail or Telephone Orders—Delay in Disclosures17(h) Series of Sales—Delay in Disclosures17(i) Interim Student Credit ExtensionsAmendment HistorySECTION 1026.18 Content of Disclosures [§ 226.18]1. As applicable; 2. Format; 3. Scope of Coverage18(a) Creditor18(b) Amount Financed18(c) Itemization of Amount Financed18(d) Finance Charge18(d)(2) Other Credit18(e) Annual Percentage Rate18(f) Variable Rate18(g) Payment ScheduleParagraph 18(h) Total of PaymentsParagraph 18(i) Demand FeatureParagraph 18(j) Total Sale Price18(k) Prepayment18(l) Late Payment18(m) Security Interest18(n) Insurance and Debt Cancellation18(o) Certain Security Interest ChargesParagraph 18(p) Contract Reference18(q) Assumption Policy18(r) Required Deposit18(s) Interest Rate and Payment Summary for Mortgage Transactions18(s)(2) Interest Rates18(s)(2)(i) Amortizing Loans18(s)(2)(ii) Negative Amortization Loans18(s)(2)(iii) Introductory Rate Disclosure for Amortizing Adjustable-Rate Mortgage18(s)(3) Payments for Amortizing Loans18(s)(3)(ii) Interest-Only Payments18(s)(4) Payments for Negative Amortization Loans18(s)(5) Balloon Payments18(s)(6) Special Disclosures for Loans With Negative Amortization18(s)(7) DefinitionsAmendment HistorySECTION 1026.19 Certain Mortgage and Variable-Rate Transactions [§ 226.19]19(a)(1)(i) Time of Disclosures19(a)(1)(ii) Imposition of Fees19(a)(1)(iii) Exception to Fee Restriction19(a)(2) Waiting Periods for Early Disclosures and Corrected Disclosures19(a)(3) Consumer’s Waiver of Waiting Period Before Consummation19(a)(4) Notice19(a)(5) Timeshare Plans19(b) Certain Variable-Rate Transactions19(c) Electronic Disclosures19(e) Mortgage loans secured by real property—Early disclosures.19(e)(1) Provision of disclosures.19(e)(1)(i) Creditor.19(e)(1)(ii) Mortgage broker.19(e)(1)(iii) Timing.19(e)(1)(iv) Receipt of early disclosures.19(e)(1)(v) Consumer’s waiver of waiting period before consummation.19(e)(1)(vi) Shopping for settlement service providers.19(e)(2) Predisclosure activity.19(e)(2)(i) Imposition of fees on consumer.19(e)(2)(i)(A) Fee restriction.19(e)(2)(i)(B) Exception to fee restriction.19(e)(2)(ii) Written information provided to consumer.19(e)(2)(iii) Verification of information.19(e)(3) Good faith determination for estimates of closing costs.19(e)(3)(i) General rule.19(e)(3)(ii) Limited increases permitted for certain charges.19(e)(3)(iii) Variations permitted for certain charges.19(e)(3)(iv) Revised estimates.19(e)(3)(iv)(A) Changed circumstance affecting settlement charges.19(e)(3)(iv)(B) Changed circumstance affecting eligibility.19(e)(3)(iv)(C) Revisions requested by the consumer.19(e)(3)(iv)(D) Interest rate dependent charges.19(e)(3)(iv)(E) Expiration.19(e)(3)(iv)(F) Delayed settlement date on a construction loan.19(e)(4) Provision and receipt of revised disclosures.19(e)(4)(i) General rule.19(e)(4)(ii) Relationship to disclosures required under § 1026.19(f)(1)(i).19(f) Mortgage loans secured by real property—Final disclosures.19(f)(1) Provision of disclosures.19(f)(1)(i) Scope.19(f)(1)(ii) Timing.19(f)(1)(iii) Receipt of disclosures.19(f)(1)(iv) Consumer’s waiver of waiting period before consummation.19(f)(1)(v) Settlement agent.19(f)(2) Subsequent changes.19(f)(2)(i) Changes before consummation not requiring a new waiting period.19(f)(2)(ii) Changes before consummation requiring a new waiting period.19(f)(2)(iii) Changes due to events occurring after consummation.19(f)(2)(iv) Changes due to clerical errors.19(f)(2)(v) Refunds related to the good faith analysis.19(f)(3) Charges disclosed.19(f)(3)(i) Actual charge.19(f)(3)(ii) Average charge.19(f)(4) Transactions involving a seller.19(f)(4)(i) Provision to seller.19(f)(4)(ii) Timing.19(g) Special information booklet at time of application.19(g)(1) Creditor to provide special information booklet.19(g)(2) Permissible changes.Amendment HistorySECTION 1026.20 Subsequent Disclosure Requirements Regarding Post-Consummation Events [§ 226.20]20(a) Refinancings20(b) Assumptions20(c) Variable-Rate Adjustments with a Corresponding Change in Payment20(d) Initial Rate Adjustment20(e) Escrow account cancellation notice for certain mortgage transactions.20(e)(1) Scope.20(e)(2) Content requirements.20(e)(3) Optional information.20(e)(4) Form of disclosures.20(e)(5) Timing.20(e)(5)(i) Cancellation upon consumer’s request.20(e)(5)(iii) Receipt of disclosure.Amendment HistorySECTION 1026.21 Treatment of Credit Balances [§ 226.21]SECTION 1026.22 Determination of Annual Percentage Rate [§ 226.22]22(a) Accuracy of Annual Percentage Rate22(a)(4) Mortgage Loans22(a)(5) Additional Tolerance for Mortgage Loans22(b) Computation Tools22(c) Single Add-On Rate Transactions22(d) Certain Transactions Involving Ranges of BalancesAmendment HistorySECTION 1026.23 Right of Rescission [§ 226.23]1. Transactions not covered23(a) Consumer’s Right to RescindParagraph 23(b)23(b)(1) Notice of Right To Rescind23(c) Delay of Creditor’s Performance23(d) Effects of Rescission23(e) Consumer’s Waiver of Right to Rescind23(f) Exempt Transactions23(g) Tolerances for Accuracy23(g)(2) One Percent Tolerance23(h) Special Rules for Foreclosures23(h)(2) Tolerance for DisclosuresAmendment HistorySECTION 1026.24 Advertising [§ 226.24]24(a) Actually Available Terms24(b) Clear and Conspicuous Standard24(c) Advertisement of Rate of Finance Charge24(d) Advertisement of Terms That Require Additional Disclosures24(d)(1) Triggering Terms24(d)(2) Additional Terms24(e) Catalogs or Other Multiple-Page Advertisements; Electronic Advertisements24(f) Disclosure of Rates and Payments in Advertisements for Credit Secured by a Dwelling24(f)(3) Disclosure of Payments24(g) Alternative Disclosures—Television or Radio Advertisements24(i) Prohibited Acts or Practices in Advertisements for Credit Secured by a DwellingAmendment HistorySUBPART D MISCELLANEOUSSECTION 1026.25 Record Retention [§ 226.25]25(a) General Rule25(c) Records Related to Certain Requirements for Mortgage Loans25(c)(1) Records related to requirements for loans secured by real property25(c)(2) Records Related to Requirements for Loan Originator Compensation25(c)(3) Records Related to Minimum Standards for Transactions Secured by a DwellingAmendment HistorySECTION 1026.26 Use of Annual Percentage Rate in Oral Disclosures [§ 226.26]1. Application of rules26(a) Open-End Credit26(b) Closed-End CreditAmendment HistorySECTION 1026.27 Language of Disclosures [§ 226.27]SECTION 1026.28 Effect on State Laws [§ 226.28]28(a) Inconsistent Disclosure Requirements28(b) Equivalent Disclosure Requirements28(d) Special Rule for Credit and Charge CardsAmendment HistorySECTION 1026.29 State Exemptions [§ 226.29]29(a) General Rule29(b) Civil LiabilityAmendment HistorySECTION 1026.30 Limitation on Rates [§ 226.30]SUBPART E SPECIAL RULES FOR CERTAIN HOME MORTGAGE TRANSACTIONSSECTION 1026.31 General Rules [§ 226.31]31(c) Timing of Disclosure1. Furnishing disclosures31(c)(1) Disclosures for Certain Closed-End HomeHigh-Cost Mortgages31(c)(1)(i) Change in Terms31(c)(1)(ii) Telephone Disclosures31(c)(1)(iii) Consumer’s Waiver of Waiting Period Before Consummation or Account Opening31(c)(2) Disclosures for Reverse Mortgages31(d) Basis of Disclosures and Use of Estimates31(d)(3) Per-Diem Interest31(h) Corrections and Unintentional ViolationsAmendment HistorySECTION 1026.32 Requirements for Certain Closed-End HomeHigh-Cost Mortgages [§ 226.32]SECTION 1026.32(a) through (d)32(a) Coverage32(a)(2) Exemptions32(a)(3) Determination of Annual Percentage Rate32(b) Definitions32(b)(3) Bona Fide Discount Point32(b)(3)(i) Closed-End Credit32(b)(4) Total Loan Amount32(b)(4)(i) Closed-End Credit32(b)(6) Prepayment Penalty32(c) Disclosures32(c)(2) Annual Percentage Rate32(c)(3) Regular Payment; Balloon Payment32(c)(3) Regular Payment; Minimum Periodic Payment Example; Balloon Payment32(c)(4) Variable-Rate32(c)(5) Amount Borrowed32(d) Limitations32(d)(1)(i) Balloon Payment32(d)(2) Negative Amortization32(d)(4) Increased Interest Rate32(d)(5) Rebates32(d)(68) Prepayment PenaltiesAcceleration of Debt32(d)(7) Prepayment Penalty Exception32(d)(8) Due-on-Demand ClauseAmendment HistorySECTION 1026.33 Requirements for Reverse Mortgages [§ 226.33]33(a) Definition33(c) Projected Total Cost of Credit33(c)(1) Costs to ConsumerParagraph 33(c)(2) Payments to Consumer33(c)(3) Additional Creditor Compensation33(c)(4) Limitations on Consumer LiabilityAmendment HistorySECTION 1026.34 Prohibited Acts or Practices in Connection With High-Cost Mortgages [§ 226.34]34(a) Prohibited Acts or Practices for High-Cost Mortgages34(a)(1) Home-Improvement Contracts34(a)(2) Notice to Assignee34(a)(3) Refinancings Within One-Year Period34(a)(4) Repayment Ability for High-Cost Mortgages34(a)(4)(i) Mortgage-Related Obligations34(a)(4)(ii) Verification of Repayment Ability34(a)(4)(iii) Presumption of Compliance34(a)(4)(iv) Exclusions From Presumption of Compliance34(b) Prohibited Acts or Practices for Dwelling-Secured Loans; Open-End Credita)(5) Pre-Loan Counseling34(a)(5)(i) Certification of Counseling Required34(a)(5)(ii) Timing of Counseling34(a)(5)(iv) Content of Certification34(a)(5)(v) Counseling Fees34(a)(5)(vi) Steering Prohibited34(a)(6) Recommended Default34(a)(8) Late Fees34(a)(8)(i) General34(a)(8)(iii) Multiple Late Charges Assessed on Payment Subsequently Paid34(a)(8)(iv) Failure to Make Required Payment34(a)(10) Financing of Points and Fees34(b) Prohibited Acts or Practices for Dwelling-Secured Loans; Structuring Loans to Evade High-Cost Mortgage RequirementsAmendment HistorySECTION 1026.35 Requirements for Higher-Priced Mortgage Loans [§ 226.35]SECTION 35(a) through 35(e)35(a) Definitions35(b) Escrow Accounts1. Principal dwelling35(b)(1) Requirement to Escrow for Property Taxes and Insurance35(b)(2) Exemptions35(b)(3) Cancellation35(c) Appraisals35(c)(1) Definitions35(c)(1)(i) Certified or Licensed Appraiser35(c)(2) Exemptions35(c)(3) Appraisals Required35(c)(3)(i) In General35(c)(3)(ii) Safe Harbor35(c)(4) Additional Appraisal for Certain Higher-Priced Mortgage Loans35(c)(4)(i) In General35(c)(4)(ii) Different Certified or Licensed Appraisers35(c)(4)(iii) Relationship to General Appraisal Requirements35(c)(4)(iv) Required Analysis in the Additional Appraisal35(c)(4)(v) No Charge for Additional Appraisal35(c)(4)(vi) Creditor’s Determination of Prior Sale Date and Price35(c)(4)(vi)(A) In General35(c)(4)(vi)(B) Inability to Determine Prior Sales Date or Price—Modified Requirements for Additional Appraisal35(c)(4)(vii) Exemptions from the Additional Appraisal Requirement35(c)(5) Required Disclosure35(c)(5)(i) In General35(c)(6) Copy of Appraisals35(c)(6)(i) In General35(c)(6)(ii) Timing35(c)(6)(iv) No Charge for Copy of Appraisal35(e) Rules for Higher-Priced Mortgage LoansAmendment HistorySECTION 1026.36 Prohibited Acts or Practices in Connection Withand Certain Requirements for Credit Secured by a Dwelling [§ 226.36]SECTION 1026.36(a) - (k)36(a) Loan Originator and Mortgage Broker Defined36(a) Definitions36(a)(1)(i)(B) Employee of a Retailer of Manufactured Homes36(a)(4) Seller Financers; Three Properties36(a)(5) Seller Financers; One Property36(b) Scope36(c) Servicing Practices36(d) Prohibited Payments to Loan Originators36(d)(1) Payments Based on a Term of a Transaction Terms and Conditions36(d)(2) Payments by Persons Other Than Consumer36(d)(2)(i) Dual Compensation36(d)(3) Affiliates36(e) Prohibition on Steering36(e)(1) General36(e)(2) Permissible Transactions36(e)(3) Loan Options Presented36(f) Loan Originator Qualification Requirements36(g) Name and NMLSR ID on Loan Documents36(i) Prohibition on Financing Credit Insurance36(k) Negative Amortization Counseling36(k)(1) Counseling Required36(k)(3) Steering ProhibitedAmendment HistorySECTION 1026.37 Content of Disclosures for Certain Mortgage Transactions (Loan Estimate)Paragraphs 1 and 237(a) General information.37(a)(3) Creditor.37(a)(4) Date issued.37(a)(5) Applicants.37(a)(6) Property.37(a)(7) Sale price.37(a)(8) Loan term.37(a)(9) Purpose.37(a)(10) Product.37(a)(11) Loan type.37(a)(12) Loan identification number (Loan ID #).37(a)(13) Rate lock.37(b) Loan terms.37(b)(2) Interest rate.37(b)(3) Principal and interest payment.37(b)(4) Prepayment penalty.37(b)(5) Balloon payment.37(b)(6) Adjustments after consummation.Paragraph 137(b)(6)(i) Adjustment in loan amount.37(b)(6)(ii) Adjustment in interest rate.37(b)(6)(iii) Increase in periodic payment.37(b)(7) Details about prepayment penalty and balloon payment.37(b)(8) Timing.37(c) Projected payments.37(c)(1) Periodic payment or range of payments.37(c)(2) Itemization.37(c)(3) Subheadings.37(c)(4) Taxes, insurance, and assessments. Paragraph 37(c)(4)(ii).37(d) Costs at closing.37(d)(2) Optional alternative table for transactions without a seller.37(f) Closing cost details; loan costs.37(f)(1) Origination charges.37(f)(2) Services you cannot shop for.37(f)(3) Services you can shop for.37(f)(5) Item descriptions and ordering.37(f)(6) Use of addenda.37(g) Closing cost details; other costs.37(g)(1) Taxes and other government fees.37(g)(2) Prepaids.37(g)(3) Initial escrow payment at closing.37(g)(4) Other.37(g)(6) Total closing costs.37(g)(7) Item descriptions and ordering.37(g)(8) Use of addenda.37(h) Calculating cash to close.37(h)(1) For all transactions.1. Labels for amounts disclosed.37(h)(1)(ii) Closing costs financed.37(h)(1)(iii) Downpayment and other funds from borrower.37(h)(1)(iv) Deposit.37(h)(1)(v) Funds for borrower.37(h)(1)(vi) Seller credits.37(h)(1)(vii) Adjustments and other credits.37(h)(1)(viii) Estimated cash to close.37(h)(2) Optional alternative calculating cash to close table for transactions without a seller.1. Optional use.37(h)(2)(iii) Payoffs and payments.37(h)(2)(iv) Cash to or from consumer.37(h)(2)(v) Closing costs financed.37(i) Adjustable payment table.37(i)(5) Principal and interest payments.37(j) Adjustable interest rate table.37(j)(1) Index and margin.37(j)(2) Increases in interest rate.37(j)(3) Initial interest rate.37(j)(4) Minimum and maximum interest rate.37(j)(5) Frequency of adjustments.37(j)(6) Limits on interest rate changes.37(k) Contact information.37(l) Comparisons.37(l)(1) In five years.37(l)(3) Total interest percentage.37(m) Other considerations.37(m)(1) Appraisal.37(m)(2) Assumption.37(m)(3) Homeowner’s insurance.37(m)(4) Late payment.37(m)(6) Servicing.37(m)(7) Liability after foreclosure.37(m)(8) Construction Loans.37(n) Signature statement.37(o) Form of disclosures.37(o)(1) General requirements.37(o)(2) Headings and labels.37(o)(3) Form.37(o)(4) Rounding.1. Rounding.2. Calculations37(o)(4)(i) Nearest dollar.37(o)(4)(ii) Percentages.37(o)(5) Exceptions.Amendment HistorySECTION 1026.38 Content of Disclosures for Certain Mortgage Transactions (Closing Disclosure)1. Disclosures not applicable.38(a) General information.38(a)(3) Closing information.38(a)(3)(i) Date issued.38(a)(3)(iv) Settlement agent.38(a)(3)(v) File number.38(a)(3)(vi) Property.38(a)(3)(vii) Sale price.38(a)(4) Transaction information.38(a)(5) Loan information.1. General.38(a)(5)(v) Loan identification number.38(b) Loan terms.38(c) Projected payments.38(c)(1) Projected payments or range of payments.38(d) Costs at closing.38(d)(2) Alternative table for transactions without a seller.38(e) Alternative calculating cash to close table for transactions without a seller.38(e)(1) Loan amount.38(e)(2) Total closing costs. Paragraph 38(e)(2)(i).1. Reference to disclosure of total closing costs.Paragraph 38(e)(2)(iii)(A).38(e)(3) Closing costs paid before closing.38(f) Closing cost details; loan costs.38(f)(1) Origination charges.38(f)(2) Services borrower did not shop for.38(f)(3) Services borrower did shop for.38(f)(5) Subtotal of loan costs.38(g) Closing costs details; other costs.38(g)(1) Taxes and other government fees.38(g)(2) Prepaids.38(g)(3) Initial escrow payment at closing.38(g)(4) Other.38(g)(6) Subtotal of costs.38(h) Closing cost totals. Paragraph 38(h)(2).38(i) Calculating cash to close.38(i)(1) Total closing costs.38(i)(2) Closing costs paid before closing.38(i)(4) Down payment/funds from borrower.38(i)(5) Deposit.38(i)(6) Funds for borrower. Paragraph 38(i)(6)(ii).38(i)(7) Seller credits. Paragraph 38(i)(7)(ii).38(i)(8) Adjustments and other credits.38(i)(9) Cash to close.38(j) Summary of borrower’s transaction.38(j)(1) Itemization of amounts due from borrower.38(j)(2) Itemization of amounts already paid by or on behalf of borrower.38(j)(3) Calculation of borrower’s transaction.38(j)(4) Items paid outside of closing funds.38(k) Summary of seller’s transaction.38(k)(2) Itemization of amounts due from seller.38(k)(3) Calculation of seller’s transaction.38(k)(4) Items paid outside of closing funds.38(l) Loan disclosures.38(l)(2) Demand feature.38(l)(3) Late payment.38(l)(6) Security interest.38(l)(7) Escrow account. Paragraph 38(l)(7)(i)(A)(2).38(m) Adjustable payment table.38(n) Adjustable interest rate table.38(o) Loan calculations.38(o)(1) Total of payments.38(o)(2) Finance charge.38(o)(3) Amount financed.38(o)(5) Total interest percentage.38(p) Other disclosures. 38(p)(1) Appraisal.38(p)(3) Liability after foreclosure.38(q) Questions notice. Paragraph 38(q)(3).38(r) Contact information.38(s) Signature statement.38(t) Form of disclosures.38(t)(1) General requirements.38(t)(2) Headings and labels.38(t)(3) Form.38(t)(4) Rounding.38(t)(5) Exceptions.38(t)(5)(iv) Closing Cost Details.38(t)(5)(vii) Transaction without a seller.38(t)(5)(ix) Customary recitals and information.Amendment HistorySECTION 1026.39 Mortgage Transfer Disclosures [§ 226.39]39(a) Scope39(b) Disclosure Required39(b)(1) Form of Disclosures39(b)(4) Multiple Transfers39(b)(5) Multiple Covered Person39(c) Exceptions39(d) Content of Required Disclosures39(e) Optional DisclosuresAmendment HistorySECTION 1026.40 Requirements for Home Equity Plans [§ 226.5b]SECTION 1026.40-1 through 1026.40-740(a) Form of Disclosures40(a)(1) General40(a)(2) Precedence of Certain Disclosures40(b) Time of Disclosures40(c) Duties of Third Parties40(d) Content of DisclosuresDisclosures given as applicable and Duty to respond to requests for information40(d)(1) Retention of Information40(d)(2) Conditions for Disclosed Terms40(d)(4) Possible Actions by Creditor40(d)(5) Payment Terms40(d)(6) Annual Percentage Rate40(d)(7) Fees Imposed by Creditor40(d)(8) Fees Imposed by Third Parties to Open a Plan40(d)(9) Negative Amortization40(d)(10) Transaction Requirements40(d)(12) Disclosures for Variable-Rate Plans40(e) Brochure40(f) Limitations on Home Equity Plans40(g) Refund of Fees40(h) Imposition of Nonrefundable FeesAmendment HistorySECTION 1026.41 Periodic Statements for Residential Mortgage Loans41(a) through 41(e)41(a) In General41(b) Timing of the Periodic Statement41(c) Form of the Periodic Statement41(d) Content and Layout of the Periodic Statement41(d)(3) Past Payment Breakdown41(d)(4) Transaction Activity41(e)41(e)(3) Coupon Book Exemption41(e)(4) Small Servicers41(e)(4)(ii) Small Servicer Defined41(e)(4)(iii) Small Servicer Determination41(e)(5) Consumers in bankruptcy.Amendment HistorySECTION 1026.42 Valuation Independence [§ 226.42]42(a) Scope42(b) Definitions42(c) Valuation for consumer’s principal dwelling42(c)(1) Coercion42(c)(2) Mischaracterization of Value42(c)(2)(i) Misrepresentation42(c)(2)(iii) Inducement of Mischaracterization42(d) Prohibition on Conflicts of Interest42(d)(1)(i) In General42(d)(1)(ii) Employees and Affiliates of Creditors; Providers of Multiple Settlement Services42(d)(2) Employees and Affiliates of Creditors with Assets of More than $250 Million for Both of the Past two Calendar Years42(d)(3) Employees and Affiliates of Creditors With Assets of $250 Million or Less for Either of the Past Two Calendar Years42(d)(4) Providers of Multiple Settlement Services42(d)(5) Definitions42(d)(5)(i) Loan Production Function42(e) When Extension of Credit Prohibited42(f) Customary and Reasonable Compensation42(f)(1) Requirement to Provide Customary and Reasonable Compensation to Fee Appraisers42(f)(2) Presumption of Compliance42(f)(3) Alternative Presumption of Compliance42(f)(4) Definitions42(f)(4)(i) Fee Appraiser42(g) Mandatory Reporting42(g)(1) Reporting RequiredAmendment HistorySECTION 1026.43 Minimum Standards for Transactions Secured by a DwellingSECTION 1026.43-1 Record retentionSECTION 1026.43(a) - 1026.43(h)43(a) Scope43(b) Definitions43(b)(1) Covered Transaction43(b)(3) Fully Indexed Rate43(b)(4) Higher-Priced Covered Transaction43(b)(5) Loan Amount43(b)(6) Loan Term43(b)(7) Maximum Loan Amount43(b)(8) Mortgage-Related Obligations43(b)(11) Recast43(b)(12) Simultaneous Loan43(b)(13) Third-Party Record43(c) Repayment Ability43(c)(1) General Requirement43(c)(2) Basis for Determination43(c)(3) Verification Using Third-Party Records43(c)(4) Verification of Income or Assets43(c)(5) Payment Calculation43(c)(5)(i) General Rule43(c)(5)(ii) Special Rules for Loans with a Balloon Payment, Interest-Only Loans, and Negative Amortization Loans43(c)(6) Payment Calculation for Simultaneous Loans43(c)(7) Monthly Debt-to-Income Ratio or Residual Income43(d) Refinancing of Non-Standard Mortgages43(d)(1) Definitions43(d)(1)(i) Non-Standard Mortgage43(d)(1)(ii) Standard Mortgage43(d)(2) Scope43(d)(3) Exemption from Repayment Ability Requirements43(d)(4) Offer of Rate Discounts and Other Favorable Terms43(d)(5) Payment Calculations43(d)(5)(i) Non-Standard Mortgage43(d)(5)(ii) Standard Mortgage43(e) Qualified Mortgages43(e)(1) Safe Harbor and Presumption of Compliance43(e)(1)(i) Safe harbor for Transactions That Are Not Higher-Priced Covered Transactions43(e)(1)(ii) Presumption of Compliance for Higher-Priced Covered Transactions43(e)(2) Qualified Mortgage Defined—General43(e)(3) Limits on Points and Fees for Qualified Mortgages43(e)(4) Qualified Mortgage Defined—Special RulesParagraph 43(e)(5)43(f) Balloon-Payment Qualified Mortgages Made by Certain Creditors43(f)(1) Exemption43(f)(2) Post-Consummation Transfer of Balloon-Payment Qualified Mortgage43(g) Prepayment Penalties43(g)(2) Limits on Prepayment Penalties43(g)(3) Alternative Offer Required43(g)(4) Offer Through a Mortgage Broker43(g)(5) Creditor That Is a Loan Originator43(h) Evasion; Open-End CreditAmendment HistorySUBPART F SPECIAL RULES FOR PRIVATE EDUCATION LOANSSECTION 1026.46 Special Disclosure Requirements for Private Education Loans [§ 226.46]46(a) Coverage46(b) Definitions46(b)(1) Covered Educational Institution46(b)(2) Institution of Higher Education46(b)(3) Postsecondary Educational Expenses46(b)(4) Preferred Lender Arrangement46(b)(5) Private Education Loan46(c) Form of Disclosures46(c)(3) Electronic Disclosures46(d) Timing of Disclosures46(d)(1) Application or Solicitation Disclosures46(d)(2) Approval Disclosures46(g) Effect of Subsequent EventsAmendment HistorySECTION 1026.47 Content of Disclosures [§ 226.47]1. As applicable47(a) Application or Solicitation Disclosures47(a)(2) Fees and Default or Late Payment Costs47(a)(3) Repayment Terms47(a)(4) Cost Estimates47(b) Approval Disclosures47(b)(1) Interest Rate47(b)(2) Fees and Default or Late Payment Costs47(b)(3) Repayment Terms47(b)(4) Alternatives to Private Education Loans47(b)(5) Rights of the Consumer47(c) Final DisclosuresAmendment HistorySECTION 1026.48 Limitations on Private Education Loans [§ 226.48]1026.48-1 through 1026.48-348(c) Consumer’s Right to Accept48(d) Consumer’s Right to Cancel48(e) Self-Certification Form48(f) Provision of Information by Preferred LendersAmendment HistorySUBPART G SPECIAL RULES APPLICABLE TO CREDIT CARD ACCOUNTS AND OPEN-END CREDIT OFFERED TO COLLEGE STUDENTSSECTION 1026.51 Ability To Pay [§ 226.51]51(a) General Rule51(a)(1)(i) Consideration of Ability to Pay51(a)(2) Minimum Periodic Payments51(b) Rules Affecting Young Consumers51(b)(1) Applications from Young Consumers51(b)(2) Credit Line Increases for Young ConsumersAmendment HistorySECTION 1026.52 Limitations on Fees [§ 226.52]52(a) Limitations During First Year After Account Opening52(a)(1) through 52(a)(3)52(a)(1) General Rule52(a)(2) Fees Not Subject to Limitations52(a)(3) Rule of Construction52(b) Limitations on Penalty Fees52(b)-1 and 52(b)-252(b)(1) General Rule52(b)(1)(i) Fees Based on Costs52(b)(1)(ii) Safe Harbors52(b)(2) Prohibited Fees52(b)(2)(i) Fees That Exceed Dollar Amount Associated with Violation52(b)(2)(ii) Multiple Fees Based on a Single Event or TransactionAmendment HistorySECTION 1026.53 Allocation of Payments [§ 226.53]1026.53-1 through 1026.53-453(b) Special RulesAmendment HistorySECTION 1026.54 Limitations on the Imposition of Finance Charges [§ 226.54]54(a) Limitations on Imposing Finance Charges As a Result of the Loss of a Grace Period54(a)(1) General RuleAmendment HistorySECTION 1026.55 Limitations on Increasing Annual Percentage Rates, Fees, and Charges [§ 226.55]55(a) General Rule55(b) Exceptions55b-1 through 55b-555(b)(1) Temporary Rate, Fee, or Charge Exception55(b)(2) Variable Rate Exception55(b)(3) Advance Notice Exception55(b)(4) Delinquency Exception55(b)(5) Workout and Temporary Hardship Arrangement Exception55(b)(6) Servicemembers Civil Relief Act Exception55(c) Treatment of Protected Balances55(c)(1) Definition of Protected Balance55(c)(2) Repayment of Protected Balance55(d) Continuing Application55(e) Promotional Waivers or Rebates of Interest, Fees, and Other ChargesAmendment HistorySECTION 1026.56 Requirements for Over-the-Limit Transactions [§ 226.56]56(b) Opt-In Requirement56(b)(2) Completion of Over-the-Limit Transactions Without Consumer Consent56(c) Method of Election56(d) Timing and Placement of Notices56(e) Content56(f) Joint Relationships56(g) Continuing Right to Opt In or Revoke Opt-In56(h) Duration of Opt-In56(j) Prohibited PracticesAmendment HistorySECTION 1026.57 Reporting and Marketing Rules for College Student Open-End Credit [§ 226.57]57(a) Definitions57(a)(1) College Student Credit Card57(a)(5) College Credit Card Agreement57(b) Public Disclosure of Agreements57(c) Prohibited Inducements57(d) Annual Report to the Bureau57(d)(2) Contents of ReportAmendment HistorySECTION 1026.58 Internet Posting of Credit Card Agreements [§ 226.58]58(b) Definitions58(b)(1) Agreement58(b)(2) Amends58(b)(4) Card Issuer58(b)(5) Offers58(b)(6) Open Account58(b)(8) Private Label Credit Card Account and Private Label Credit Card Plan58(c) Submission of Agreements to Bureau58(c)(1) Quarterly Submissions58(c)(3) Amended Agreements58(c)(4) Withdrawal of Agreements58(c)(5) De Minimis Exception58(c)(6) Private Label Credit Card Exception58(c)(8) Form and Content of Agreements Submitted to the Bureau58(d) Posting of Agreements Offered to the Public58(e) Agreements for All Open Accounts58(g) Temporary Suspension of Agreement Submission RequirementAmendment HistorySECTION 1026.59 Reevaluation of Rate Increases [§ 226.59]59(a) General Rule59(a)(1) Evaluation of Increased Rate59(a)(2) Rate Reductions59(a)(2)(ii) Applicability of Rate Reduction59(c) Timing59(d) Factors59(f) Termination of Obligation to Review Factors59(g) Acquired Accounts59(g)(1) General59(g)(2) Review of Acquired PortfolioAmendment HistorySECTION 1026.60 Credit and Charge Card Applications and Solicitations [§ 226.5a]1026.60-1 through 1026.60-360(a) General Rules60(a)(1) Definition of Solicitation60(a)(2) Form of Disclosures; Tabular Format60(a)(4) Fees That Vary by State60(a)(5) Exceptions60(b) Required Disclosures60(b)-1 and -2: Tabular format and Accuracy60(b)(1) Annual Percentage Rate60(b)(2) Fees for Issuance or Availability60(b)(3) Fixed Finance Charge; Minimum Interest Charge60(b)(4) Transaction Charges60(b)(5) Grace Period60(b)(6) Balance Computation Method60(b)(7) Statement on Charge Card Payments60(b)(8) Cash Advance Fee60(b)(9) Late Payment Fee60(b)(10) Over-the-Limit Fee60(b)(13) Required Insurance, Debt Cancellation or Debt Suspension Coverage60(b)(14) Available Credit60(b)(15) Web Site Reference60(c) Direct Mail and Electronic Applications and Solicitations60(d) Telephone Applications and Solicitations60(e) Applications and Solicitations Made Available to General Public60(e)(1) Disclosure of Required Credit Information60(e)(2) No Disclosure of Credit Information60(e)(3) Prompt Response to Requests for Information60(f) In-Person Applications and SolicitationsAmendment HistoryAppendicesAppendix A Effect on State LawsAppendix B State ExemptionsAppendix C Issuance of Official InterpretationsAppendix D Multiple-Advance Construction LoansAppendix F Optional Annual Percentage Rate Computations for Creditors Offering Open-End Credit Plans Secured by a Consumer’s DwellingAppendices G and H Open-End and Closed-End Model Forms and ClausesAppendix G Open-End Model Forms and ClausesAppendix H Closed-End Model Forms and ClausesAppendix J Annual Percentage Rate Computations for Closed-End Credit TransactionsAppendix K Total Annual Loan Cost Rate Computations for Reverse Mortgage Transactions1. General(b) Instructions and Equations for the Total Annual Loan Cost Rate(b)(5) Number of Unit-Periods Between Two Given Dates(b)(9) Assumption for Discretionary Cash Advances(b)(10) Assumption for Variable-Rate Reverse Mortgage Transactions(d) Reverse Mortgage Model Form and Sample Form(d)(2) Sample FormAmendment HistoryAppendix L Assumed Loan Periods for Computations of Total Annual Loan Cost RatesAppendix O Illustrative Written Source Documents for Higher-Priced Mortgage Loan Appraisal RulesAppendix D Sample TILA Rescission NoticeIntroductionD.1 Sample TILA Rescission NoticeD.2 Sample TILA Rescission Notice in Foreclosure Rescue Scam CaseAppendix E Sample PleadingsE.1 IntroductionE.2 Sample ComplaintsE.2.1 Sample TILA Complaint for Money DamagesE.2.2 Sample Complaint for TILA RescissionE.2.3 Sample Complaint for HOEPA Rescission and DamagesE.2.4 Sample Fair Credit Billing Act ComplaintE.2.5 Sample Consumer Leasing Act ComplaintE.3 TRO and Preliminary Injunction MotionsE.3.1 Motion Papers for TRO and Preliminary Injunction Against State Non-Judicial ForeclosureE.3.1.1 IntroductionE.3.1.2 Plaintiff’s Renewed Motions for Temporary Restraining Order and Preliminary InjunctionE.3.1.3 Plaintiff’s Declaration in Support of Motions for Temporary Restraining Order and Preliminary InjunctionE.3.1.4 Attorney Declaration in Support of Motions for Temporary Restraining Order and Preliminary InjunctionE.3.1.5 Memorandum in Support of Motions for Temporary Restraining Order and Preliminary InjunctionE.3.2 Sample Federal Court Motion for Temporary Restraining Order with Brief, Supporting Papers, and OrderE.3.2.1 IntroductionE.3.2.2 Motion for Temporary Restraining Order with Request for Expedited ConsiderationE.3.2.3 Plaintiff’s Affidavit in Support of Motion for Temporary Restraining OrderE.3.2.4 Attorney Statement in Support of Motion for Temporary Restraining OrderE.3.2.5 Brief in Support of Motion for Temporary Restraining OrderE.3.2.6 Temporary Restraining OrderAppendix F Sample DiscoveryF.1 IntroductionF.2 Sample First Set of InterrogatoriesF.3 Sample First Request for Production of DocumentsF.4 Sample Fair Credit Billing Act InterrogatoriesF.5 Sample Fair Credit Billing Act Request for Production of DocumentsF.6 Sample Consumer Leasing Act InterrogatoriesF.7 Sample Consumer Leasing Act Request for Production of DocumentsAppendix G Sample Jury Instructions on TILA IssuesIntroductionG.1 General TILA InstructionsG.2 TILA Disclosure InstructionsG.3 TILA Finance Charge InstructionsG.4 HOEPA InstructionsAppendix H Consumer Leasing ActH.1 Consumer Leasing ActAdditional MaterialH.1.1 Consumer Leasing Act Cross References to Title 15 of the United States CodeH.1.2 The Consumer Leasing ActIntroduction15 U.S.C. § 1667. Definitions15 U.S.C. § 1667a. Consumer lease disclosures15 U.S.C. § 1667b. Lessee’s liability on expiration or termination of lease15 U.S.C. § 1667c. Consumer lease advertising; radio advertisements; liability of advertisers15 U.S.C. § 1667d. Civil liability of lessors15 U.S.C. § 1667e. Applicability of State laws; exemptions by Bureau from leasing requirements15 U.S.C. § 1667f. Regulations.H.2 Regulation MCorrelation Table Between FRB and CFPB VersionsSection 1013.1 Authority, scope, purpose, and enforcement. [213.1]Section 1013.2 Definitions. [213.2]Section 1013.3 General disclosure requirements. [213.3]Section 1013.4 Content of disclosures. [213.4]Section 1013.5 Renegotiations, extensions, and assumptions. [213.5]Section 1013.6 [Reserved] [213.6]Section 1013.7 Advertising. [213.7]Section 1013.8 Record retention. [213.8]Section 1013.9 Relation to state laws. [213.9]Appendix A to Part 1013 [Part 213] Model FormsAppendix B to Part 1013 [Part 213] [Reserved]Appendix C to Part 1013 [Part 213] Issuance of Official InterpretationsH.3 Regulation M Official InterpretationsRegulatory HistoryIntroductionSection 1013.1 Authority, Scope, Purpose, and Enforcement [213.1]Section 1013.2 Definitions [213.2]2(b) Advertisement2(d) Closed-End Lease2(e) Consumer Lease2(g) Lessee2(h) Lessor2(j) Organization2(l) Personal Property2(m) Realized Value2(o) Security Interest and SecuritySection 1013.3 General Disclosure Requirements [213.3]3(a) General Requirements3(a)(1) Form of Disclosures3(a)(2) Segregation of Certain Disclosures3(a)(3) Timing of Disclosures3(b) Additional Information; Nonsegregated Disclosures3(c) Multiple Lessors or Lessees3(d) Use of Estimates3(d)(1) Standard3(e) Effect of Subsequent OccurrenceSection 1013.4 Content of Disclosures [213.4]4(a) Description of Property4(b) Amount Due at Lease Signing or Delivery4(c) Payment Schedule and Total Amount of Periodic Payments4(d) Other Charges4(e) Total of Payments4(f) Payment Calculation4(f)(1) Gross Capitalized Cost4(f)(7) Total of Base Periodic Payment4(f)(8) Lease Payments4(g) Early Termination4(g)(1) Conditions and Disclosure of Charges4(h) Maintenance Responsibilities4(i) Purchase Option4(j) Statement Referencing Nonsegregated Disclosures4(l) Right of Appraisal4(m) Liability at End of Lease Term Based on Residual Value4(m)(1) Rent and Other Charges4(m)(2) Excess Liability4(n) Fees and Taxes4(o) Insurance4(p) Warranties or Guarantees4(q) Penalties and Other Charges for Delinquency4(r) Security Interest4(s) Limitations on Rate InformationSection 1013.5 Renegotiations, Extensions, and Assumptions [213.5]5(a) Renegotiation5(b) Extension1013.6 [Reserved] [213.6]Section 1013.7 Advertising [213.7]7(a) General Rule7(b) Clear and Conspicuous Standard7(b)(1) Amount Due at Lease Signing or Delivery7(b)(2) Advertisement of a Lease Rate7(c) Catalogs or Other Multi-Page Advertisements; Electronic Advertisements7(d)(1) Triggering Terms7(d)(2) Additional Terms7(e) Alternative Disclosures—Merchandise Tags7(f) Alternative Disclosures—Television or Radio Advertisements7(f)(1) Toll-Free Number or Print AdvertisementSection 1013.8 Record Retention [213.8]Section 1013.9 Relation to State Laws [213.9]Appendix A Model FormsCompanion MaterialsSupplement Taxonomy Book Terms: Pleadings and DiscoveryInitial Pleadings, Forms and NoticesComplaintsCredit Reporting Impermissible PurposeMortgages, Foreclosures Abusive Lending TIL Rescission, HOEPAMotor Vehicles TIL Disclosure Violations Yo-Yo SalesOther Credit CardsAnswer, CounterclaimsMortgages, Foreclosures TIL, HOEPATRO, InjunctionMortgages, Foreclosures Foreclosure Defense TIL Rescission Contempt Motion for Failure to Rescind MortgageDiscoveryDocument Requests Credit Cards, Banking, Payments Home ImprovementMortgages, Foreclosures Abusive Lending HOEPA TIL General TIL RescissionMotor Vehicles Consumer LeasingInterrogatories Credit Cards, Banking, Payments Home Improvements Mortgages, ForeclosuresMotor Vehicles Consumer LeasingCombined Document Requests and InterrogatoriesMortgages, Foreclosures FlippingRequests for Admission Home ImprovementMultiple Forms of Discovery Motor Vehicles OtherSubpoena Mortgage, Foreclosure, Home SaleInitial Motions RemandMotion to DismissMortgages, Foreclosures Abusive Lending Foreclosure Rescue Scams TIL Rescission, HOEPAOther Consumer Bank Accounts Home Improvement Truth in LendingSummary JudgmentMortgages, Foreclosures TIL Rescission, HOEPA Motor VehiclesMotion in Limine Mortgages, ForeclosuresStanding/Spokeo Fed. Consumer Statutes Other StatutesTrialsTrial Brief Mortgages, ForeclosuresExperts, Exhibits Mortgages, ForeclosuresJury Instructions and Forms Mortgages, Foreclosures Motor VehiclesAttorney Fees Mortgages, ForeclosuresOrders, Settlements, Judgments, AppealsOrder Consumer Bank Accounts Credit CardsAppellate Brief Consumer Bank Accounts Motor VehiclesOther Tax IssuesClass ActionsClass Complaints Credit Cards, Banking, Payments Fringe LendingMortgages, Foreclosures Land Installment Sales Contracts TIL Rescission, HOEPAMotor Vehicles Leasing TILClass Discovery Mortgages, Foreclosures Motor VehiclesClass CertificationMortgages, Foreclosures Memoranda in Support Reply to Order to Redefine ClassClass Attorney Fees Motor VehiclesBankruptcyClaims Objection to Mortgagee's Claim TIL RescissionLitigationMortgages, Foreclosures Yield Spread PremiumsPractice Tools Sample Notices and Letters Calculation Tools CFPB Webinar Slides on TILA-RESPA Integrated Disclosures Informal Discovery Guides Historical Material Loan Documents, Contracts, and Related DocumentsPrimary SourcesTIL Act and History The Current ActTILA History Index Hearings 1961-1963TIL Act, 1967-68 Contents TILA, Pub. Law 90-321 (1968) Bills and Reports Hearings Cong. Record, Including Debates 1970 Amendments 1974 Amendments 1976 Amendments 1980 Amendments 1982 Amendments 1988 Amendments 1994 Amendments 1995 Amendments 1996 Amendments 2005 Bankruptcy Act 2008 Amendments (HERA) 2010 Amendments (Dodd-Frank) 2015 Amendments HOEPA History FCBA HistoryRegulation Z and Commentary Regulatory History Commentary History FRB Staff Interpretations Electronic DisclosuresFederal Register Notices 1968 - 1972 1973 - 1975 1976 - 1977 1978 - 1980 1981 1982 - 1984 1985 - 1987 1988 - 1989 1990 - 1993 1994 - 1996 1997 - 1999 2000 - 2001 2002 - 2003 2004 - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Massachusetts Exemption from TILA and Reg. Z Consumer Leasing Electronic Disclosures Overdraft Loans
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New Dodd-Frank legislation and Regulation Z changes ban numerous mortgage abuses
New CFPB rules restrict kickbacks to mortgage originators
Extensive new rules on mortgage servicing
Special rules regulating higher cost mortgage loans
Regulation Z now prohibits mandatory arbitration of mortgage disputes
The Credit CARD Act and new federal Rules establish new restrictions on credit card abuses
New teeth to regulation of HOEPA loans
Statutory damages are now increased to $2000 for car loans, $4000 and up for mortgage loans, and $5000 and up for credit cards
Liability of servicers and holders
Extensive new disclosure requirements for credit cards, home equity loans, mortgages and other credit
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