Iowa Administrative Code › Agency 189 - Credit Union Division › Chapter 5 - Debt Cancellation Products › Rule 189-5.10 - Long-form Disclosure

Current through Register Vol. 47, No. 3, July 24, 2024
The long-form disclosure must state:
(1)
The product is optional.
"Your purchase of [product name] is optional. Whether or not you purchase
			 [product name] will not affect your application for credit or the terms of any
			 credit agreement you have with the credit union."
(2)
Explanation of debt suspension
			 agreement.
"If [product name] is activated, your duty to pay the loan
			 principal and interest to the credit union is only suspended. You must fully
			 repay the loan after the period of suspension has expired." And, if applicable:
			 "This includes interest accumulated during the period of suspension."
Note: This provision is applicable if the contract has a debt
				suspension feature.
(3)
Amount of fee.
For closed-end credit: "The total fee for
			 [product name] is $_______." For open-end credit, either: "The monthly fee for
			 [product name] is based upon your account balance each month multiplied by the
			 unit cost, which is $______." or "The formula used to compute the fee is
			 ___________
(4)
Financing
			 the payment of the fee.
"Adding the fee to the amount you borrow will
			 increase the cost of [product name]."
Note: This provision is applicable if the credit union offers
				the option to pay the fee in a single payment. Lump-sum payment of the fee is
				prohibited where the debt subject to the contract or agreement is a residential
				mortgage loan.
(5)
No refund of fee paid in lump sum.
"You have the option to
			 purchase [product name], which includes a refund of the unearned fee if you
			 terminate the contract or repay the loan in full prior to the scheduled
			 termination date. Prices of refund and no-refund products may differ."
Note: This provision is applicable if the credit union offers
				the option to pay the fee in a single payment for a no-refund debt cancellation
				product. This provision is prohibited where the debt subject to the contract or
				agreement is a residential mortgage loan.
(6)
Refund of fee paid in lump
			 sum.
Either: "If you pay the fee in a single payment, you may cancel
			 [product name] within 30 days and receive a full refund." or "If you finance
			 the payment of the fee as part of your loan and you pay off your loan early,
			 you will receive a refund of any unearned fee calculated by the actuarial
			 method." or "If you cancel [product name] after the first 30 days of your loan,
			 you will not receive a refund."
Note: This provision is applicable where the borrower pays the
				fee in a single payment and the fee is added to the amount borrowed. This
				provision is prohibited where the debt subject to the contract or agreement is
				a residential mortgage loan.
(7)
Termination of [product
			 name].
Either: "You have no right to cancel [product name]." or "You
			 have the right to cancel [product name] in the following
			 circumstances:________________." And either: "The credit union has no right to
			 cancel [product name]." or "The credit union has the right to cancel [product
			 name] in the following circumstances: ________________."
(8)
Eligibility requirements,
			 conditions, and exclusions.
"There are certain eligibility
			 requirements, conditions, and exclusions that could prevent you from receiving
			 benefits under [product name]." And either: "The following is a summary of the
			 eligibility requirements, conditions, and exclusions: [Summary of eligibility
			 requirements, conditions, and exclusions.]" or "You may find a complete
			 explanation of the eligibility requirements, conditions, and exclusions in
			 paragraph(s) ___________of the [product name] agreement."