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FDIC Law, Regulations, Related Acts

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6000 - Consumer Protection


CHAPTER 2—CREDIT TRANSACTIONS

Sec.

121. General requirement of disclosure.
122. Form of disclosure; additional information.
123. Exemption for State-regulated transactions.
124. Effect of subsequent occurrence.
125. Right of rescission as to certain transactions.
126. [Repealed].
127. Open end consumer credit plans.
127A. Disclosure requirements for open end consumer credit plans secured by the consumer's principal dwelling.
128. Consumer credit not under open end credit plans.
129. Requirements for certain mortgages.
130. Civil liability.
131. Liability of assignees.
132. Issuance of credit cards.
133. Liability of holder of credit card.
134. Fraudulent use of credit card.
135. Business credit cards.
136. Dissemination of annual percentage rates.
137. Home equity plans.
138. Reverse mortgages.
139. Certain limitations on liability.
140. Preventing unfair and deceptive private educational lending practices and eliminating conflicts of interest.
140A. Procedure for timely settlement of estates of decedent obligors.

§ 121.  Disclosure requirements

(a)  DUTY OF CREDITOR OR LESSOR RESPECTING ONE OR MORE THAN ONE OBLIGOR.--Subject to subsection (b), a creditor or lessor shall disclose to the person who is obligated on a consumer lease or a consumer credit transaction the information required under this title. In a transaction involving more than one obligor, a creditor or lessor, except in a transaction under section 125, need not disclose to more than one of such obligors if the obligor given disclosure is a primary obligor.

(b)  CREDITOR OR LESSOR REQUIRED TO MAKE DISCLOSURE.--If a transaction involves one creditor as defined in section 103(f), or one lessor as defined in section 181(3), such creditor or lessor shall make the disclosures. If a transaction involves more than one creditor or lessor, only one creditor or lessor shall be required to make the disclosures. The Bureau shall by regulation specify which creditor or lessor shall make the disclosures.

(c)  ESTIMATES AS SATISFYING STATUTORY REQUIREMENTS; BASIS OF DISCLOSURE FOR PERDIEM INTEREST.--The Bureau may provide by regulation that any portion of the information required to be disclosed by this title may be given in the form of estimates where the provider of such information is not in a position to know exact information. In the case of any consumer credit transaction a portion of the interest on which is determined on a per diem basis and is to be collected upon the consummation of such transaction, any disclosure with respect to such portion of interest shall be deemed to be accurate for purposes of this title if the disclosure is based on information actually known to the creditor at the time that the disclosure documents are being prepared for the consummation of the transaction.

(d)  TOLERANCES FOR NUMERICAL DISCLOSURES.--The Bureau shall determine whether tolerances for numerical disclosures other than the annual percentage rate are necessary to facilitate compliance with this title, and if it determines that such tolerances are necessary to facilitate compliance, it shall by regulation permit disclosures within such tolerances. The Bureau shall exercise its authority to permit tolerances for numerical disclosures other than the annual percentage rate so that such tolerances are narrow enough to prevent such tolerances from resulting in misleading disclosures or disclosures that circumvent the purposes of this title.

[Codified to 15 U.S.C. 1631]

[Source:  Section 121 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 152), effective July 1, 1969, as amended by section 307(c) and (d) of title III of the Act of October 28, 1974 (Pub. L. No. 93--495; 88 Stat. 1516), effective October 28, 1975; section 409 of title IV of the Act of October 28, 1974 (Pub. L. No. 93--495; 88 Stat. 1519), effective October 28, 1975; section 11 of the Act of January 2, 1976 (Pub. L. No. 94--205; 89 Stat. 1159), effective January 2, 1976; and section 611 of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 174), effective October 1, 1982; section 3 of the Act of September 30, 1995, (Pub. L. No. 104--29; 109 Stat. 273), effective September 30, 1995; section 1100A(2) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2010]

§ 122.  Form of disclosure; additional information

(a)  INFORMATION CLEARLY AND CONSPICUOUSLY DISCLOSED; ``ANNUAL PERCENTAGE RATE'' AND ``FINANCE CHARGE''; ORDER OF DISCLOSURES AND USE OF DIFFERENT TERMINOLOGY.--Information required by this title shall be disclosed clearly and conspicuously, in accordance with regulations of the Bureau. The terms "annual percentage rate" and "finance charge" shall be disclosed more conspicuously than other terms, data, or information provided in connection with a transaction, except information relating to the identity of the creditor. Except as provided in subsection (c), regulations of the Bureau need not require that disclosures pursuant to this title be made in the order set forth in this title and, except as otherwise provided, may permit the use of terminology different from that employed in this title if it conveys substantially the same meaning.

(b)  OPTIONAL INFORMATION BY CREDITOR OR LESSOR.--Any creditor or lessor may supply additional information or explanation with any disclosures required under chapters 4 and 5 and, except as provided in sections 127A(b)(3) and 128(b)(1), under this chapter.

(c)  TABULAR FORMAT REQUIRED FOR CERTAIN DISCLOSURES UNDER SECTION 127(c).--

(1)  IN GENERAL.--The information described in paragraphs (1)(A), (3)(B)(i)(I), (4)(A), and (4)(C)(i)(I) of section 127(c) shall be--

(A)  disclosed in the form and manner which the Bureau shall prescribe by regulations; and

(B)  placed in a conspicuous and prominent location on or with any written application, solicitation, or other document or paper with respect to which such disclosure is required.

(2)  TABULAR FORMAT.--

(A)  FORM OF TABLE TO BE PRESCRIBED.--In the regulations prescribed under paragraph (1)(A) of this subsection, the Bureau shall require that the disclosure of such information shall, to the extent the Bureau determines to be practicable and appropriate, be in the form of a table which--

(i)  contains clear and concise headings for each item of such information; and

(ii)  provides a clear and concise form for stating each item of information required to be disclosed under each such heading.

(B)  BUREAU DISCRETION IN PRESCRIBING ORDER AND WORDING OF TABLE.--In prescribing the form of the table under subparagraph (A), the Bureau may--

(i)  list the items required to be included in the table in a different order than the order in which such items are set forth in paragraph (1)(A) or (4)(A) of section 127(c); and

(ii)  subject to subparagraph (C), employ terminology which is different than the terminology which is employed in section 127(c) if such terminology conveys substantially the same meaning.

(C)  GRACE PERIOD.--Either the heading or the statement under the heading which relates to the time period referred to in section 127(c)(1)(A)(iii) shall contain the term "grace period".

(d)  ADDITIONAL ELECTRONIC DISCLOSURES.--

(1)  POSTING AGREEMENTS.--Each creditor shall establish and maintain an Internet site on which the creditor shall post the written agreement between the creditor and the consumer for each credit card account under an open-end consumer credit plan.

(2)  CREDITOR TO PROVIDE CONTRACTS TO THE BOARD.--Each creditor shall provide to the Board, in electronic format, the consumer credit card agreements that it publishes on its Internet site.

(3)  RECORD REPOSITORY.--The Bureau shall establish and maintain on its publicly available Internet site a central repository of the consumer credit card agreements received from creditors pursuant to this subsection, and such agreements shall be easily accessible and retrievable by the public.

(4)  EXCEPTION.--This subsection shall not apply to individually negotiated changes to contractual terms, such as individually modified workouts or renegotiations of amounts owed by a consumer under an open end consumer credit plan.

(5)  REGULATIONS.--The Bureau, in consultation with the other Federal banking agencies (as that term is defined in section 603) and the Bureau, may promulgate regulations to implement this subsection, including specifying the format for posting the agreements on the Internet sites of creditors and establishing exceptions to paragraphs (1) and (2), in any case in which the administrative burden outweights the benefit of increased transparency, such as where a credit card plan has a de minimis number of consumer account holders.

[Codified to 15 U.S.C. 1632]

[Source:  Section 122 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 152), effective July 1, 1969, as amended by sections 307(e) and (f) of title III of the Act of October 28, 1974 (Pub. L. No. 93--495; 88 Stat. 1516, 1517), effective October 28, 1975; section 611 of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 175), effective October 1, 1982; section 2(b) of the Act of November 3, 1988 (Pub. L. No. 100--583; 102 Stat. 2966), effective November 3, 1988; and section 2(d) of the Act of November 23, 1988 (Pub. L. No. 100--709; 102 Stat. 4731), effective November 23, 1988; section 204(a) of title II of the Act of May 22, 2009 (Pub. L. No. 111--24; 123 Stat. 1746), effective May 22, 2009; section 1100A(2) and 1100A(3) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011]

§ 123.  Exemption for State-regulated transactions

The Bureau shall by regulation exempt from the requirements of this chapter any class of credit transactions within any State if it determines that under the law of that State that class of transactions is subject to requirements substantially similar to those imposed under this chapter, and that there is adequate provision for enforcement.

[Codified to 15 U.S.C. 1633]

[Source:  Section 123 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 152), effective July 1, 1969; section 1100A(2) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2010]

§ 124.  Effect of subsequent occurrence

If information disclosed in accordance with this chapter is subsequently rendered inaccurate as the result of any act, occurrence, or agreement subsequent to the delivery of the required disclosures, the inaccuracy resulting therefrom does not constitute a violation of this chapter.

[Codified to 15 U.S.C. 1634]

[Source:  Section 124 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 152), effective July 1, 1969]

§ 125.  Right of rescission as to certain transactions

(a)  DISCLOSURE OF OBLIGOR'S RIGHT TO RESCIND.--Except as otherwise provided in this section, in the case of any consumer credit transaction (including opening or increasing the credit limit for an open end credit plan) in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this title, whichever is later, by notifying the creditor, in accordance with regulations of the Bureau, of his intention to do so. The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Bureau, to any obligor in a transaction subject to this section the rights of the obligor under this section. The creditor shall also provide, in accordance with regulations of the Bureau, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section.

(b)  RETURN OF MONEY OR PROPERTY FOLLOWING RECESSION.--When an obligor exercises his right to rescind under subsection (a), he is not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission. Within 20 days after receipt of a notice of rescission, the creditor shall return to the obligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the obligor, the obligor may retain possession of it. Upon the performance of the creditor's obligations under this section, the obligor shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the obligor shall tender its reasonable value. Tender shall be made at the location of the property or at the residence of the obligor, at the option of the obligor. If the creditor does not take possession of the property within 20 days after tender by the obligor, ownership of the property vests in the obligor without obligation on his part to pay for it. The procedures prescribed by this subsection shall apply except when otherwise ordered by a court.

(c)  REBUTTABLE PRESUMPTION OF DELIVERY OF REQUIRED DISCLOSURES.--Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosures required under this title by a person to whom information, forms, and a statement is required to be given pursuant to this section does no more than create a rebuttable presumption of delivery thereof.

(d)  MODIFICATION AND WAIVER OF RIGHTS.--The Bureau may, if it finds that such action is necessary in order to permit homeowners to meet bona fide personal financial emergencies, prescribe regulations authorizing the modification or waiver of any rights created under this section to the extent and under the circumstances set forth in those regulations.

(e)  EXEMPTED TRANSACTIONS; REAPPLICATION OF PROVISIONS.--This section does not apply to--

(1)  a residential mortgage transaction as defined in section 103(w);

(2)  a transaction which constitutes a refinancing or consolidation (with no new advances) of the principal balance then due and any accrued and unpaid finance charges of an existing extension of credit by the same creditor secured by an interest in the same property;

(3)  a transaction in which an agency of a State is the creditor; or

(4)  advances under a preexisting open end credit plan if a security interest has already been retained or acquired and such advances are in accordance with a previously established credit limit for such plan.

(f)  TIME LIMIT FOR EXERCISE RIGHT.--An obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this chapter have not been delivered to the obligor, except that if (1) any agency empowered to enforce the provisions of this title institutes a proceeding to enforce the provisions of this section within three years after the date of consummation of the transaction, (2) such agency finds a violation of section 125, and (3) the obligor's right to rescind is based in whole or in part on any matter involved in such proceeding, then the obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the earlier sale of the property, or upon the expiration of one year following the conclusion of the proceeding, or any judicial review or period for judicial review thereof, whichever is later.

(g)  ADDITIONAL RELIEF.--In any action in which it is determined that a creditor has violated this section, in addition to rescission the court may award relief under section 130 for violations of this title not relating to the right to rescind.

(h)  LIMITATION ON RESCISSION.--An obligor shall have no rescission rights arising solely from the form of written notice used by the creditor to inform the obligor of the rights of the obligor under this section, if the creditor provided the obligor the appropriate form of written notice published and adopted by the Board, or a comparable written notice of the rights of the obligor, that was properly completed by the creditor, and otherwise complied with all other requirements of this section regarding notice.

(i)  RESCISSION RIGHTS IN FORECLOSURE.--

(1)  IN GENERAL.--Notwithstanding section 139, and subject to the time period provided in subsection (f), in addition to any other right of rescission available under this section for a transaction, after the initiation of any judicial or nonjudicial foreclosure process on the primary dwelling of an obligor securing an extension of credit, the obligor shall have a right to rescind the transaction equivalent to other rescission rights provided by this section, if--

(A)  a mortgage broker fee is not included in the finance charge in accordance with the laws and regulations in effect at the time the consumer credit transaction was consummated; or

(B)  the form of notice of rescission for the transaction is not the appropriate form of written notice published and adopted by the Bureau or a comparable written notice, and otherwise complied with all the requirements of this section regarding notice.

(2)  TOLERANCE FOR DISCLOSURES.--Notwithstanding section 106(f), and subject to the time period provided in subsection (f), for the purposes of exercising any rescission rights after the initiation of any judicial or nonjudicial foreclosure process on the principal dwelling of the obligor securing an extension of credit, the disclosure of the finance charge and other disclosures affected by any finance charge shall be treated as being accurate for purposes of this section if the amount disclosed as the finance charge does not vary from the actual finance charge by more than $35 or is greater than the amount required to be disclosed under this title.

(3)  RIGHT OF RECOUPMENT UNDER STATE LAW.--Nothing in this subsection affects a consumer's right of rescission in recoupment under State law.

(4)  APPLICABILITY.--This subsection shall apply to all consumer credit transactions in existence or consummated on or after the date of the enactment of the Truth in Lending Act Amendments of 1995.

[Codified to 15 U.S.C. 1635]

[Source:  Section 125 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 152), effective July 1, 1969, as amended by sections 404, 405, and 412 of title IV of the Act of October 28, 1974 (Pub. L. No. 93--495; 88 Stat. 1517, 1519), effective October 28, 1974; section 612 of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 175), effective October 1, 1982; and section 205 of title II of the Act of October 17, 1984 (Pub. L. No. 98--479; 98 Stat. 2234), effective October 17, 1984; section 5 and 8 of the Act of September 30, 1995 (Pub. L. No. 104--29; 109 Stat. 274 and 275, respectively), effective September 30, 1995; section 1100A(2) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011]

§ 126.  [Repealed]

[Source:  Section 126 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 153), effective July 1, 1969; as repealed by section 614 of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 180), effective October 1, 1982]

§ 127.  Open end consumer credit plans

(a)  REQUIRED DISCLOSURES BY CREDITOR.--Before opening any account under an open end consumer credit plan, the creditor shall disclose to the person to whom credit is to be extended each of the following items, to the extent applicable:

(1)  The conditions under which a finance charge may be imposed, including the time period (if any) within which any credit extended may be repaid without incurring a finance charge, except that the creditor may, at his election and without disclosure, impose no such finance charge if payment is received after the termination of such time period. If no such time period is provided, the creditor shall disclose such fact.

(2)  The method of determining the balance upon which a finance charge will be imposed.

(3)  The method of determining the amount of the finance charge, including any minimum or fixed amount imposed as a finance charge.

(4)  Where one or more periodic rates may be used to compute the finance charge, each such rate, the range of balances to which it is applicable, and the corresponding nominal annual percentage rate determined by multiplying the periodic rate by the number of periods in a year.

(5)  Identification of other charges which may be imposed as part of the plan, and their method of computation, in accordance with regulations of the Bureau.

(6)  In cases where the credit is or will be secured, a statement that a security interest has been or will be taken in (A) the property purchased as part of the credit transaction, or (B) property not purchased as part of the credit transaction identified by item or type.

(7)  A statement, in a form prescribed by regulations of the Bureau of the protection provided by sections 161 and 170 to an obligor and the creditor's responsibilities under sections 162 and 170. With respect to one billing cycle per calendar year, at intervals of not less than six months or more than eighteen months, the creditor shall transmit such statement to each obligor to whom the creditor is required to transmit a statement pursuant to section 127(b) for such billing cycle.

(8)  In the case of any account under an open end consumer credit plan which provides for any extension of credit which is secured by the consumer's principal dwelling, any information which--

(A)  is required to be disclosed under section 127A(a); and

(B)  the Bureau determines is not described in any other paragraph of this subsection.

(b)  STATEMENT REQUIRED WITH EACH BILLING CYCLE.--The creditor of any account under an open end consumer credit plan shall transmit to the obligor, for each billing cycle at the end of which there is an outstanding balance in that account or with respect to which a finance charge is imposed, a statement setting forth each of the following items to the extent applicable:

(1)  The outstanding balance in the account at the beginning of the statement period.

(2)  The amount and date of each extension of credit during the period, and a brief identification, on or accompanying the statement of each extension of credit in a form prescribed by the Bureau sufficient to enable the obligor either to identify the transaction or to relate it to copies of sales vouchers or similar instruments previously furnished, except that a creditor's failure to disclose such information in accordance with this paragraph shall not be deemed a failure to comply with this chapter or this title if (A) the creditor maintains procedures reasonably adapted to procure and provide such information, and (B) the creditor responds to and treats any inquiry for clarification or documentation as a billing error and an erroneously billed amount under section 161. In lieu of complying with the requirements of the previous sentence, in the case of any transaction in which the creditor and seller are the same person, as defined by the Bureau, and such person's open end credit plan has fewer than 15,000 accounts, the creditor may elect to provide only the amount and date of each extension of credit during the period and the seller's name and location where the transaction took place if (A) a brief identification of the transaction has been previously furnished, and (B) the creditor responds to and treats any inquiry for clarification or documentation as a billing error and an erroneously billed amount under section 161.

(3)  The total amount credited to the account during the period.

(4)  The amount of any finance charge added to the account during the period, itemized to show the amounts, if any, due to the application of percentage rates and the amount, if any, imposed as a minimum or fixed charge.

(5)  Where one or more periodic rates may be used to compute the finance charge, each such rate, the range of balances to which it is applicable, and, unless the annual percentage rate (determined under section 107(a)(2)) is required to be disclosed pursuant to paragraph (6), the corresponding nominal annual percentage rate determined by multiplying the periodic rate by the number of periods in a year.

(6)  Where the total finance charge exceeds 50 cents for a monthly or longer billing cycle, or the pro rata part of 50 cents for a billing cycle shorter than monthly, the total finance charge expressed as an annual percentage rate (determined under section 107(a)(2)), except that if the finance charge is the sum of two or more products of a rate times a portion of the balance, the creditor may, in lieu of disclosing a single rate for the total charge, disclose each such rate expressed as an annual percentage rate, and the part of the balance to which it is applicable.

(7)  The balance on which the finance charge was computed and a statement of how the balance was determined. If the balance is determined without first deducting all credits during the period, that fact and the amount of such payments shall also be disclosed.

(8)  The outstanding balance in the account at the end of the period.

(9)  The date by which or the period (if any) within which, payment must be made to avoid additional finance charges, except that the creditor may, at his election and without disclosure, impose no such additional finance charge if payment is received after such date or the termination of such period.

(10)  The address to be used by the creditor for the purpose of receiving billing inquiries from the obligor.

(11)(A)  A written statement in the following form: Minimum Payment Warning: Making only the minimum payment will increase the amount of interest you pay and the time it takes to repay your balance.', or such similar statement as is established by the Bureau pursuant to consumer testing.

(B)  Repayment information that would apply to the outstanding balance of the consumer under the credit plan, including--

(i)  the number of months (rounded to the nearest month) that it would take to pay the entire amount of that balance, if the consumer pays only the required minimum monthly payments and if no further advances are made;

(ii)  the total cost to the consumer, including interest and principal payments, of paying that balance in full, if the consumer pays only the required minimum monthly payments and if no further advances are made;

(iii)  the monthly payment amount that would be required for the consumer to eliminate the outstanding balance in 36 months, if no further advances are made, and the total cost to the consumer, including interest and principal payments, of paying that balance in full if the consumer pays the balance over 36 months; and

(iv)  a toll-free telephone number at which the consumer may receive information about accessing credit counseling and debt management services.

(C)(i)  Subject to clause (ii), in making the disclosures under subparagraph (B), the creditor shall apply the interest rate or rates in effect on the date on which the disclosure is made until the date on which the balance would be paid in full.

(ii)  If the interest rate in effect on the date on which the disclosure is made is a temporary rate that will change under a contractual provision applying an index or formula for subsequent interest rate adjustment, the creditor shall apply the interest rate in effect on the date on which the disclosure is made for as long as that interest rate will apply under that contractual provision, and then apply an interest rate based on the index or formula in effect on the applicable billing date.

(D)  All of the information described in subparagraph (B) shall--

(i)  be disclosed in the form and manner which the Bureau shall prescribe, by regulation, and in a manner that avoids duplication; and

(ii)  be placed in a conspicuous and prominent location on the billing statement.

(E)  In the regulations prescribed under subparagraph (D), the Bureau shall require that the disclosure of such information shall be in the form of a table that--

(i)  contains clear and concise headings for each item of such information; and

(ii)  provides a clear and concise form stating each item of information required to be disclosed under each such heading.

(F)  In prescribing the form of the table under subparagraph (E), the board shall require that--

(i)  all of the information in the table, and not just a reference to the table, be placed on the billing statement, as required by this paragraph; and

(ii)  the items required to be included in the table shall be listed in the order in which such items are set forth in subparagraph (B).

(G)  In prescribing the form of the table under subparagraph (D), the Bureau shall employ terminology which is different than the terminology which is employed in subparagraph (B), if such terminology is more easily understood and conveys substantially the same meaning.

(12)  REQUIREMENTS RELATING TO LATE PAYMENT DEADLINES AND PENALTIES.--

(A)  LATE PAYMENT DEADLINE REQUIRED TO BE DISCLOSED.--In the case of a credit card account under an open end consumer credit plan under which a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment, the periodic statement required under subsection (b) with respect to the account shall include, in a conspicuous location on the billing statement, the date on which the payment is due or, if different, the date on which a late payment fee will be charged, together with the amount of the fee or charge to be imposed if payment is made after that date.

(B)  DISCLOSURE OF INCREASE IN INTEREST RATES FOR LATE PAYMENTS.--If 1 or more late payments under an open end consumer credit plan may result in an increase in the annual percentage rate applicable to the account, the statement required under subsection (b) with respect to the account shall include conspicuous notice of such fact, together with the applicable penalty annual percentage rate, in close proximity to the disclosure required under subparagraph (A) of the date on which payment is due under the terms of the account.

(C)  PAYMENTS AT LOCAL BRANCHES.--If the creditor, in the case of a credit card account referred to in subparagraph (A), is a financial institution which maintains branches or offices at which payments on any such account are accepted from the obligor in person, the date on which the obligor makes a payment on the account at such branch or office shall be considered to be the date on which the payment is made for purposes of determining whether a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment.

(c)  DISCLOSURE IN CREDIT AND CHARGE CARD APPLICATIONS AND SOLICITATIONS.--

(1)  DIRECT MAIL APPLICATIONS AND SOLICITATIONS.--

(A)  INFORMATION IN TABULAR FORMAT.--Any application to open a credit card account for any person under an open end consumer credit plan, or a solicitation to open such an account without requiring an application, that is mailed to consumers shall disclose the following information, subject to subsection (e) and section 122(c):

(i)  ANNUAL PERCENTAGE RATES.--

(I)  Each annual percentage rate applicable to extensions of credit under such credit plan.

(II)  Where an extension of credit is subject to a variable rate, the fact that the rate is variable, the annual percentage rate in effect at the time of the mailing, and how the rate is determined.

(III)  Where more than one rate applies, the range of balances to which each rate applies.

(ii)  ANNUAL AND OTHER FEES.--

(I)  Any annual fee, other periodic fee, or membership fee imposed for the issuance or availability of a credit card, including any account maintenance fee or other charge imposed based on activity or inactivity for the account during the billing cycle.

(II)  Any minimum finance charge imposed for each period during which any extension of credit which is subject to a finance charge is outstanding.

(III)  Any transaction charge imposed in connection with use of the card to purchase goods or services.

(iii)  GRACE PERIOD.--

(I)  The date by which or the period within which any credit extended under such credit plan for purchases of goods or services must be repaid to avoid incurring a finance charge, and, if no such period is offered, such fact shall be clearly stated.

(II)  If the length of such "grace period" varies, the card issuer may disclose the range of days in the grace period, the minimum number of days in the grace period, or the average number of days in the grace period, if the disclosure is identified as such.

(iv)  BALANCE CALCULATION METHOD.--

(I)  The name of the balance calculation method used in determining the balance on which the finance charge is computed if the method used has been defined by the Bureau, or a detailed explanation of the balance calculation method used if the method has not been so defined.

(II)  In prescribing regulations to carry out this clause, the Bureau shall define and name not more than the 5 balance calculation methods determined by the Bureau to be the most commonly used methods.

(B)  OTHER INFORMATION.--In addition to the information required to be disclosed under subparagraph (A), each application or solicitation to which such subparagraph applies shall disclose clearly and conspicuously the following information, subject to subsections (e) and (f):

(i)  CASH ADVANCE FEE.--Any fee imposed for an extension of credit in the form of cash.

(ii)  LATE FEE.--Any fee imposed for a late payment.

(iii)  OVER-THE-LIMIT FEE.--Any fee imposed in connection with an extension of credit in excess of the amount of credit authorized to be extended with respect to such account.

(2)  TELEPHONE SOLICITATIONS.--

(A)  IN GENERAL.--In any telephone solicitation to open a credit card account for any person under an open end consumer credit plan, the person making the solicitation shall orally disclose the information described in paragraph (1)(A).

(B)  EXCEPTION.--Subparagraph (A) shall not apply to any telephone solicitation if--

(i)  the credit card issuer--

(I)  does not impose any fee described in paragraph (1)(A)(ii)(I); or

(II)  does not impose any fee in connection with telephone solicitations unless the consumer signifies acceptance by using the card;

(ii)  the card issuer discloses clearly and conspicuously in writing the information described in paragraph (1) within 30 days after the consumer requests the card, but in no event later than the date of delivery of the card; and

(iii)  the card issuer discloses clearly and conspicuously that the consumer is not obligated to accept the card or account and the consumer will not be obligated to pay any of the fees or charges disclosed unless the consumer elects to accept the card or account by using the card.

(3)  APPLICATIONS AND SOLICITATIONS BY OTHER MEANS.--

(A)  IN GENERAL.--Any application to open a credit card account for any person under an open end consumer credit plan, and any solicitation to open such an account without requiring an application, that is made available to the public or contained in catalogs, magazines, or other publications shall meet the disclosure requirements of subparagraph (B), (C), or (D).

(B)  SPECIFIC INFORMATION.--An application or solicitation described in subparagraph (A) meets the requirement of this subparagraph if such application or solicitation contains--

(i)  the information--

(I)  described in paragraph (1)(A) in the form required under section 122(c) of this chapter, subject to subsection (e), and

(II)  described in paragraph (1)(B) in a clear and conspicuous form, subject to subsections (e) and (f);

(ii)  a statement, in a conspicuous and prominent location on the application or solicitation, that--

(I)  the information is accurate as of the date the application or solicitation was printed;

(II)  the information contained in the application or solicitation is subject to change after such date; and

(III)  the applicant should contact the creditor for information on any change in the information contained in the application or solicitation since it was printed;

(iii)  a clear and conspicuous disclosure of the date the application or solicitation was printed; and

(iv)  a disclosure, in a conspicuous and prominent location on the application or solicitation, of a toll free telephone number or a mailing address at which the applicant may contact the creditor to obtain any change in the information provided in the application or solicitation since it was printed.

(C)  GENERAL INFORMATION WITHOUT ANY SPECIFIC TERM.--An application or solicitation described in subparagraph (A) meets the requirement of this subparagraph if such application or solicitation--

(i)  contains a statement, in a conspicuous and prominent location on the application or solicitation, that--

(I)  there are costs associated with the use of credit cards; and

(II)  the applicant may contact the creditor to request disclosure of specific information of such costs by calling a toll free telephone number or by writing to an address, specified in the application;

(ii)  contains a disclosure, in a conspicuous and prominent location on the application or solicitation, of a toll free telephone number and a mailing address at which the applicant may contact the creditor to obtain such information; and

(iii)  does not contain any of the items described in paragraph (1).

(D)  APPLICATIONS OR SOLICITATIONS CONTAINING SUBSECTION (A) DISCLOSURES.--An application or solicitation meets the requirement of this subparagraph if it contains, or is accompanied by--

(i)  the disclosures required by paragraphs (1) through (6) of subsection (a);

(ii)  the disclosures required by subparagraphs (A) and (B) of paragraph (1) of this subsection included clearly and conspiciously (except that the provisions of section 122(c) shall not apply); and

(iii)  a toll free telephone number or a mailing address at which the applicant may contact the creditor to obtain any change in the information provided.

(E)  PROMPT RESPONSE TO INFORMATION REQUESTS.--Upon receipt of a request for any of the information referred to in subparagraph (B), (C), or (D), the card issuer or the agent of such issuer shall promptly disclose all of the information described in paragraph (1).

(4)  CHARGE CARD APPLICATIONS AND SOLICITATIONS.--

(A)  IN GENERAL.--Any application or solicitation to open a charge card account shall disclose clearly and conspicuously the following information in the form required by section 122(c) of this chapter, subject to subsection (e):

(i)  Any annual fee, other periodic fee, or membership fee imposed for the issuance or availability of the charge card, including any account maintenance fee or other charge imposed based on activity or inactivity for the account during the billing cycle.

(ii)  Any transaction charge imposed in connection with use of the card to purchase goods or services.

(iii)  A statement that charges incurred by use of the charge card are due and payable upon receipt of a periodic statement rendered for such charge card account.

(B)  OTHER INFORMATION.--In addition to the information required to be disclosed under subparagraph (A), each written application or solicitation to which such subparagraph applies shall disclose clearly and conspicuously the following information, subject to subsections (e) and (f):

(i)  CASH ADVANCE FEE.--Any fee imposed for an extension of credit in the form of cash.

(ii)  LATE FEE.--Any fee imposed for a late payment.

(iii)  OVER-THE-LIMIT FEE.--Any fee imposed in connection with an extension of credit in excess of the amount of credit authorized to be extended with respect to such account.

(C)  APPLICATIONS AND SOLICITATIONS BY OTHER MEANS.--Any application to open a charge card account, and any solicitation to open such an account without requiring an application, that is made available to the public or contained in catalogs, magazines, or other publications shall contain--

(i)  the information--

(I)  described in subparagraph (A) in the form required under section 122(c) of this chapter, subject to subsection (e), and

(II)  described in subparagraph (B) in a clear and conspicuous form, subject to subsections (e) and (f);

(ii)  a statement, in a conspicuous and prominent location on the application or solicitation, that--

(I)  the information is accurate as of the date the application or solicitation was printed;

(II)  the information contained in the application or solicitation is subject to change after such date; and

(III)  the applicant should contact the creditor for information on any change in the information contained in the application or solicitation since it was printed;

(iii)  a clear and conspicuous disclosure of the date the application or solicitation was printed; and

(iv)  a disclosure, in a conspicuous and prominent location on the application or solicitation, of a toll free telephone number or a mailing address at which the applicant may contact the creditor to obtain any change in the information provided in the application or solicitation since it was printed.

(D)  ISSUERS OF CHARGE CARDS WHICH PROVIDE ACCESS TO OPEN END CONSUMER CREDIT PLANS.--If a charge card permits the card holder to receive an extension of credit under an open end consumer credit plan, which is not maintained by the charge card issuer, the charge card issuer may provide the information described in subparagraphs (A) and (B) in the form required by such subparagraphs in lieu of the information required to be provided under paragraph (1), (2), or (3) with respect to any credit extended under such plan, if the charge card issuer discloses clearly and conspicuously to the consumer in the application or solicitation that--

(i)  the charge card issuer will make an independent decision as to whether to issue the card;

(ii)  the charge card may arrive before the decision is made with respect to an extension of credit under an open end consumer credit plan; and

(iii)  approval by the charge card issuer does not constitute approval by the issuer of the extension of credit.

The information required to be disclosed under paragraph (1) shall be provided to the charge card holder by the creditor which maintains such open end consumer credit plan before the first extension of credit under such plan.

(E)  CHARGE CARD DEFINED.--For the purposes of this subsection, the term "charge card" means a card, plate, or other single credit device that may be used from time to time to obtain credit which is not subject to a finance charge.

(5)  REGULATORY AUTHORITY OF THE BUREAU.--The Bureau may, by regulation, require the disclosure of information in addition to that otherwise required by this subsection or subsection (d), and modify any disclosure of information required by this subsection or subsection (d), in any application to open a credit card account for any person under an open end consumer credit plan or any application to open a charge card account for any person, or a solicitation to open any such account without requiring an application, if the Board determines that such action is necessary to carry out the purposes of, or prevent evasions of, any paragraph of this subsection.

(6)  ADDITIONAL NOTICE CONCERNING ``INTRODUCTORY RATES''.--

(A)  IN GENERAL.--Except as provided in subparagraph (B), an application or solicitation to open a credit card account and all promotional materials accompanying such application or solicitation for which a disclosure is required under paragraph (1), and that offers a temporary annual percentage rate of interest, shall--

(i)  use the term "introductory" in immediate proximity to each listing of the temporary annual percentage rate applicable to such account, which term shall appear clearly and conspicuously;

(ii)  if the annual percentage rate of interest that will apply after the end of the temporary rate period will be a fixed rate, state in a clear and conspicuous manner in a prominent location closely proximate to the first listing of the temporary annual percentage rate (other than a listing of the temporary annual percentage rate in the tabular format described in section 122(c)), the time period in which the introductory period will end and the annual percentage rate that will apply after the end of the introductory period; and

(iii)  if the annual percentage rate that will apply after the end of the temporary rate period will vary in accordance with an index, state in a clear and conspicuous manner in a prominent location closely proximate to the first listing of the temporary annual percentage rate (other than a listing in the tabular format prescribed by section 122(c)), the time period in which the introductory period will end and the rate that will apply after that, based on an annual percentage rate that was in effect within 60 days before the date of mailing the application or solicitation.

(B)  EXCEPTION.--Clauses (ii) and (iii) of subparagraph. (A) do not apply with respect to any listing of a temporary annual percentage rate on an envelope or other enclosure in which an application or solicitation to open a credit card account is mailed.

(C)  CONDITIONS FOR INTRODUCTORY RATES.--An application or solicitation to open a credit card account for which a disclosure is required under paragraph (1), and that offers a temporary annual percentage rate of interest shall, if that rate of interest is revocable under any circumstance or upon any event, clearly and conspicuously disclose, in a prominent manner on or with such application or solicitation--

(i)  a general description of the circumstances that may result in the revocation of the temporary annual percentage rate; and

(ii)  if the annual percentage rate that will apply upon the revocation of the temporary annual percentage rate--

(I)  will be a fixed rate, the annual percentage rate that will apply upon the revocation of the temporary annual percentage rate; or

(II)  will vary in accordance with an index, the rate that will apply after the temporary rate, based on an annual percentage rate that was in effect within 60 days before the date of mailing the application or solicitation.

(D)  DEFINITIONS.--In this paragraph--

(i)  the terms "temporary annual percentage rate of interest" and "temporary annual percentage rate" mean any rate of interest applicable to a credit card account for an introductory period of less than 1 year, if that rate is less than an annual percentage rate that was in effect within 60 days before the date of mailing the application or solicitation; and

(ii)  the term "introductory period" means the maximum time period for which the temporary annual percentage rate may be applicable.

(E)  RELATION TO OTHER DISCLOSURE REQUIREMENTS.--Nothing in this paragraph may be construed to supersede subsection (a) of section 122, or any disclosure required by paragraph (1) or any other provision of this subsection.

(7)  INTERNET-BASED SOLICITATIONS.--

(A)  IN GENERAL.--In any solicitation to open a credit card account for any person under an open end consumer credit plan using the Internet or other interactive computer service, the person making the solicitation shall clearly and conspicuously disclose--

(i)  the information described in subparagraphs (A) and (B) of paragraph (1); and

(ii)  the information described in paragraph (6).

(B)  FORM OF DISCLOSURE.--The disclosures required by subparagraph (A) shall be--

(i)  readily accessible to consumers in close proximity to the solicitation to open a credit card account; and

(ii)  updated regularly to reflect the current policies, terms, and fee amounts applicable to the credit card account.

(C)  DEFINITIONS.--For purposes of this paragraph--

(i)  the term "Internet" means the international computer network of both Federal and non-Federal interoperable packet switched data networks; and

(ii)  the term "interactive computer service" means any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.

(8)  APPLICATIONS FROM UNDERAGE CONSUMERS.--

(A)  PROHIBITION ON ISSUANCE.--No credit card may be issued to, or open end consumer credit plan established by or on behalf of, a consumer who has not attained the age of 21, unless the consumer has submitted a written application to the card issuer that meets the requirements of subparagraph (B).

(B)  APPLICATION REQUIREMENTS.--An application to open a credit card account by a consumer who has not attained the age of 21 as of the date of submission of the application shall require--

(i)  the signature of a cosigner, including the parent, legal guardian, spouse, or any other individual who has attained the age of 21 having a means to repay debts incurred by the consumer in connection with the account, indicating joint liability for debts incurred by the consumer in connection with the account before the consumer has attained the age of 21; or

(ii)  submission by the consumer of financial information, including through an application, indicating an independent means of repaying any obligation arising from the proposed extension of credit in connection with the account.

(C)  SAFE HARBOR.--The Bureau shall promulgate regulations providing standards that, if met, would satisfy the requirements of subparagraph (B)(ii).

(d)  DISCLOSURE PRIOR TO RENEWAL.--

(1)  IN GENERAL.--A card issuer that has changed or amended any term of the account since the last renewal that has not been previously disclosed or that imposes any fee described in subsection (c)(1)(A)(ii)(I) or (c)(4)(A)(i) shall transmit to a consumer at least 30 days prior to the scheduled renewal date of the consumer's credit or charge card account a clear and conspicuous disclosure of--

(A)  the date by which, the month by which, or the billing period at the close of which, the account will expire if not renewed;

(B)  the information described in subsection (c)(1)(A) or (c)(4)(A) that would apply if the account were renewed, subject to subsection (e); and

(C)  the method by which the consumer may terminate continued credit availability under the account.

(2)  SHORT-TERM RENEWALS.--The Bureau may by regulation provide for fewer disclosures than are required by paragraph (1) in the case of an account which is renewable for a period of less than 6 months.

(e)  OTHER RULES FOR DISCLOSURES UNDER SUBSECTIONS (C) AND (D).—

(1)  FEES DETERMINED ON THE BASIS OF A PERCENTAGE.--If the amount of any fee required to be disclosed under subsection (c) or (d) is determined on the basis of a percentage of another amount, the percentage used in making such determination and the identification of the amount against which such percentage is applied shall be disclosed in lieu of the amount of such fee.

(2)  DISCLOSURE ONLY OF FEES ACTUALLY IMPOSED.--If a credit or charge card issuer does not impose any fee required to be disclosed under any provision of subsection (c) or (d), such provision shall not apply with respect to such issuer.

(f)  DISCLOSURE OF RANGE OF CERTAIN FEES WHICH VARY BY STATE ALLOWED.--If the amount of any fee required to be disclosed by a credit or charge card issuer under paragraph (1)(B), (3)(B)(i)(II), (4)(B), or (4)(C)(i)(II) of subsection (c) varies from State to State, the card issuer may disclose the range of such fees for purposes of subsection (c) in lieu of the amount for each applicable State, if such disclosure includes a statement that the amount of such fee varies from State to State.

(g)  INSURANCE IN CONNECTION WITH CERTAIN OPEN END CREDIT CARD PLANS.--

(1)  CHANGE IN INSURANCE CARRIER.--Whenever a card issuer that offers any guarantee or insurance for repayment of all or part of the outstanding balance of an open end credit card plan proposes to change the person providing that guarantee or insurance, the card issuer shall send each insured consumer written notice of the proposed change not less than 30 days prior to the change, including notice of any increase in the rate or substantial decrease in coverage or service which will result from such change. Such notice may be included on or with the monthly statement provided to the consumer prior to the month in which the proposed change would take effect.

(2)  NOTICE OF NEW INSURANCE COVERAGE.--In any case in which a proposed change described in paragraph (1) occurs, the insured consumer shall be given the name and address of the new guarantor or insurer and a copy of the policy or group certificate containing the basic terms and conditions, including the premium rate to be charged.

(3)  RIGHT TO DISCONTINUE GUARANTEE OR INSURANCE.--The notices required under paragraphs (1) and (2) shall each include a statement that the consumer has the option to discontinue the insurance or guarantee.

(4)  NO PREEMPTION OF STATE LAW.--No provision of this subsection shall be construed as superseding any provision of State law which is applicable to the regulation of insurance.

(5)  BOARD DEFINITION OF SUBSTANTIAL DECREASE IN COVERAGE OR SERVICE.--The Board shall define, in regulations, what constitutes a "substantial decrease in coverage or service" for purposes of paragraph (1).

(h)  PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO INCUR FINANCE CHARGES.--A creditor of an account under an open end consumer credit plan may not terminate an account prior to its expiration date solely because the consumer has not incurred finance charges on the account. Nothing in this subsection shall prohibit a creditor from terminating an account for inactivity in 3 or more consecutive months.

(i)  ADVANCE NOTICE OF RATE INCREASE AND OTHER CHANGES REQUIRED.--

(1)  ADVANCE NOTICE OF INCREASE IN INTEREST RATE REQUIRED.--In the case of any credit card account under an open end consumer credit plan, a creditor shall provide a written notice of an increase in an annual percentage rate (except in the case of an increase described in paragraph (1), (2), or (3) of section 171(b)) not later than 45 days prior to the effective date of the increase.

(2)  ADVANCE NOTICE OF OTHER SIGNIFICANT CHANGES REQUIRED.--In the case of any credit card account under an open end consumer credit plan, a creditor shall provide a written notice of any significant change, as determined by rule of the Bureau, in the terms (including an increase in any fee or finance charge, other than as provided in paragraph (1)) of the cardholder agreement between the creditor and the obligor, not later than 45 days prior to the effective date of the change.

(3)  NOTICE OF RIGHT TO CANCEL.--Each notice required by paragraph (1) or (2) shall be made in a clear and conspicuous manner, and shall contain a brief statement of the right of the obligor to cancel the account pursuant to rules established by the Bureau before the effective date of the subject rate increase or other change.

(4)  RULES OF CONSTRUCTION.--Closure or cancellation of an account by the obligor shall not constitute a default under an existing cardholder agreement, and shall not trigger an obligation to immediately repay the obligation in full or through a method that is less beneficial to the obligor than one of the methods described in section 171(c)(2), or the imposition of any other penalty or fee.

(j)  PROHIBITION ON PENALTIES FOR ON-TIME PAYMENTS.--

(1)  PROHIBITION ON DOUBLE-CYCLE BILLING AND PENALTIES FOR ON-TIME PAYMENTS.--Except as provided in paragraph (2), a creditor may not impose any finance charge on a credit card account under an open end consumer credit plan as a result of the loss of any time period provided by the creditor within which the obligor may repay any portion of the credit extended without incurring a finance charge, with respect to--

(A)  any balances for days in billing cycles that precede the most recent billing cycle; or

(B)  any balances or portion thereof in the current billing cycle that were repaid within such time period.

(2)  EXCEPTIONS.--Paragraph (1) does not apply to--

(A)  any adjustment to a finance charge as a result of the resolution of a dispute; or

(B)  any adjustment to a finance charge as a result of the return of a payment for insufficient funds.

(k)  OPT-IN REQUIRED FOR OVER-THE-LIMIT TRANSACTIONS IF FEES ARE IMPOSED.--

(1)  IN GENERAL.--In the case of any credit card account under an open end consumer credit plan under which an over-the-limit fee may be imposed by the creditor for any extension of credit in excess of the amount of credit authorized to be extended under such account, no such fee shall be charged, unless the consumer has expressly elected to permit the creditor, with respect to such account, to complete transactions involving the extension of credit under such account in excess of the amount of credit authorized.

(2)  DISCLOSURE BY CREDITOR.--No election by a consumer under paragraph (1) shall take effect unless the consumer, before making such election, received a notice from the creditor of any over-the-limit fee in the form and manner, and at the time, determined by the Bureau. If the consumer makes the election referred to in paragraph (1), the creditor shall provide notice to the consumer of the right to revoke the election, in the form prescribed by the Bureau, in any periodic statement that includes notice of the imposition of an over-the-limit fee during the period covered by the statement.

(3)  FORM OF ELECTION.--A consumer may make or revoke the election referred to in paragraph (1) orally, electronically, or in writing, pursuant to regulations prescribed by the Bureau. The Bureau shall prescribe regulations to ensure that the same options are available for both making and revoking such election.

(4)  TIME OF ELECTION.--A consumer may make the election referred to in paragraph (1) at any time, and such election shall be effective until the election is revoked in the manner prescribed under paragraph (3).

(5)  REGULATIONS.--The Bureau shall prescribe regulations--

(A)  governing disclosures under this subsection; and

(B)  that prevent unfair or deceptive acts or practices in connection with the manipulation of credit limits designed to increase over-the-limit fees or other penalty fees.

(6)  RULE OF CONSTRUCTION.--Nothing in this subsection shall be construed to prohibit a creditor from completing an over-the-limit transaction, provided that a consumer who has not made a valid election under paragraph (1) is not charged an over-the-limit fee for such transaction.

(7)  RESTRICTION ON FEES CHARGED FOR AN OVER-THE-LIMIT TRANSACTION.--With respect to a credit card account under an open end consumer credit plan, an over-the-limit fee may be imposed only once during a billing cycle if the credit limit on the account is exceeded, and an over-the-limit fee, with respect to such excess credit, may be imposed only once in each of the 2 subsequent billing cycles, unless the consumer has obtained an additional extension of credit in excess of such credit limit during any such subsequent cycle or the consumer reduces the outstanding balance below the credit limit as of the end of such billing cycle.

(l)  LIMIT ON FEES RELATED TO METHOD OF PAYMENT.--With respect to a credit card account under an open end consumer credit plan, the creditor may not impose a separate fee to allow the obligor to repay an extension of credit or finance charge, whether such repayment is made by mail, electronic transfer, telephone authorization, or other means, unless such payment involves an expedited service by a service representative of the creditor.

(m)  USE OF TERM ``FIXED RATE''.--With respect to the terms of any credit card account under an open end consumer credit plan, the term fixed', when appearing in conjunction with a reference to the annual percentage rate or interest rate applicable with respect to such account, may only be used to refer to an annual percentage rate or interest rate that will not change or vary for any reason over the period specified clearly and conspicuously in the terms of the account.

(n)  STANDARDS APPLICABLE TO INITIAL ISSUANCE OF SUBPRIME OR ``FEE HARVESTER'' CARDS.--

(1)  IN GENERAL.--If the terms of a credit card account under an open end consumer credit plan require the payment of any fees (other than any late fee, over-the-limit fee, or fee for a payment returned for insufficient funds) by the consumer in the first year during which the account is opened in an aggregate amount in excess of 25 percent of the total amount of credit authorized under the account when the account is opened, no payment of any fees (other than any late fee, over-the-limit fee, or fee for a payment returned for insufficient funds) may be made from the credit made available under the terms of the account.

(2)  RULE OF CONSTRUCTION.--No provision of this subsection may be construed as authorizing any imposition or payment of advance fees otherwise prohibited by any provision of law.

(o)  DUE DATES FOR CREDIT CARD ACCOUNTS.--

(1)  IN GENERAL.--The payment due date for a credit card account under an open end consumer credit plan shall be the same day each month.

(2)  WEEKEND OR HOLIDAY DUE DATES.--If the payment due date for a credit card account under an open end consumer credit plan is a day on which the creditor does not receive or accept payments by mail (including weekends and holidays), the creditor may not treat a payment received on the next business day as late for any purpose.

(p)  PARENTAL APPROVAL REQUIRED TO INCREASE CREDIT LINES FOR ACCOUNTS FOR WHICH PARENT IS JOINTLY LIABLE.--No increase may be made in the amount of credit authorized to be extended under a credit card account for which a parent, legal guardian, or spouse of the consumer, or any other individual has assumed joint liability for debts incurred by the consumer in connection with the account before the consumer attains the age of 21, unless that parent, guardian, or spouse approves in writing, and assumes joint liability for, such increase.

(r)1   COLLEGE CARD AGREEMENTS.--

(1)  DEFINITIONS.--For purposes of this subsection, the following definitions shall apply:

(A)  COLLEGE AFFINITY CARD.--The term college affinity card' means a credit card issued by a credit card issuer under an open end consumer credit plan in conjunction with an agreement between the issuer and an institution of higher education, or an alumni organization or foundation affiliated with or related to such institution, under which such cards are issued to college students who have an affinity with such institution, organization and--

(i)  the creditor has agreed to donate a portion of the proceeds of the credit card to the institution, organization, or foundation (including a lump sum or 1-time payment of money for access);

(ii)  the creditor has agreed to offer discounted terms to the consumer; or

(iii)  the credit card bears the name, emblem, mascot, or logo of such institution, organization, or foundation, or other words, pictures, or symbols readily

[Codified to 15 U.S.C. 1637]

[Source:  Section 127 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 153), effective July 1, 1969, as amended by sections 304 and 305 of title III of the Act of October 28, 1974 (Pub. L. No. 93--495; 88 Stat. 1511), effective October 28, 1975, sections 411 and 415 of title IV of the Act of October 28, 1974 (Pub. L. No. 93--495; 88 Stat. 1519, 1521), effective October 28, 1975 and October 28, 1974, respectively; section 613 of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 176), effective October 1, 1982; sections 2(a) and 6 of the Act of November 3, 1988 (Pub. L. No. 100--583; 102 Stat. 2960--2966 and 2968), effective November 3, 1988; and section 2(b) of the Act of November 23, 1988 (Pub. L. No. 100--709; 102 Stat. 4729), effective November 23, 1988; sections 1301(a), 1303(a), 1304(a), 1305(a), and 1306(a) of title XIII of the Act of April 20, 2005 (Pub. L. No. 109-8; 119 Stat. 204, 209, 211, and 212, respectively), effective 18 months (October 20, 2006) after the date of enactment of this Act, or 12 months (April 20, 2006) after the publication of such final regulations by the board sections 101(a)(1), 102(a), 103, 105, 106(a) of title I of the Act of May 22, 2009 (Pub. L. No. 111--24; 123 Stat, 1735, and 1738--1742, respectively); sections 201(a), 202 and 203 of title II of the Act of May 22, 2009 (Pub. L. No. 111--24; 123 Stat. 1743, 1745, and 1746), effective May 22, 2009; sections 301, 303, and 305(a) of title III of the Act of May 22, 2009 Pub. L. No. 111--24; 123 Stat. 1747, 1748, and 1749), effective May 22, 2009; section 1100A(2) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011]

Note

(2)  EFFECTIVE DATE.--Notwithstanding section 3, section 127(i) of the Truth in Lending Act, as added to this subsection, shall become effective 90 days after the date of enactment of this Act.

[Codified to 15 U.S.C. 1637 note.]

[Section 101(a)(2) of title I of the Act of May 22, 2009 (Pub. L. No. 111--24; 123 Stat. 1736), effective May 22, 2009]

Note

(b)  STUDY AND REPORT BY THE COMPTROLLER GENERAL.--

(1)  STUDY.--The Comptroller General of the United States shall, from time to time, review the reports submitted by creditors under section 127(r) of the Truth in Lending Act, as added by this section, and the marketing practices of creditors to determine the impact that college affinity card agreements and college student card agreements have on credit card debt.

(2)  REPORT.--Upon completion of any study under paragraph (1), the Comptroller General shall periodically submit a report to the Congress on the findings and conclusions of the study, together with such recommendations for administrative or legislative action as the Comptroller General determines to be appropriate.

[Codified to 15 U.S.C. 1637 note.]

[Section 305(b) of title II of the Act of May 22, 2009 (Pub. L. No. 111--24; 123 Stat. 1750), effective May 22, 2009]

Note

(c)  GUIDELINES REQUIRED.--

(1)  IN GENERAL.--Not later than 6 months after the date of enactment of this Act, the Board shall issue guidelines, by rule, in consultation with the Secretary of the Treasury, for the establishment and maintenance by creditors of a toll-free telephone number for purposes of providing information about accessing credit counseling and debt management services, as required under section 127(b)(11)(B)(iv) of the Truth in Lending Act, as added by this section.

(2)  APPROVED AGENCIES.--Guidelines issued under this subsection shall ensure that referrals provided by the toll-free number referred to in paragraph (1) include only those nonprofit budget and credit counseling agencies approved by a United States bankruptcy trustee pursuant to section 111(a) of title 11, United States Code.

[Codified to 15 U.S.C. 1637 note.]

[Section 201(c) of title II of the Act of May 22, 2009 (Pub. L. No. 111--24; 123 Stat. 1745), effective May 22, 2009]

§ 127A. Disclosure requirements for open end consumer credit plans secured by the consumer's principal dwelling.

(a)   APPLICATION DISCLOSURES.--In the case of any open end consumer credit plan which provides for any extension of credit which is secured by the consumer's principal dwelling, the creditor shall make the following disclosures in accordance with subsection (b):

(1)   FIXED ANNUAL PERCENTAGE RATE.--Each annual percentage rate imposed in connection with extensions of credit under the plan and a statement that such rate does not include costs other than interest.

(2)   VARIABLE PERCENTAGE RATE.--In the case of a plan which provides for variable rates of interest on credit extended under the plan--

(A)  a description of the manner in which such rate will be computed and a statement that such rate does not include costs other than interest;

(B)  a description of the manner in which any changes in the annual percentage rate will be made, including--

(i)  any negative amortization and interest rate carryover;

(ii)  the timing of any such changes;

(iii)  any index or margin to which such changes in the rate are related; and

(iv)  a source of information about any such index;

(C)  if an initial annual percentage rate is offered which is not based on an index--

(i)  a statement of such rate and the period of time such initial rate will be in effect; and

(ii)  a statement that such rate does not include costs other than interest;

(D)  a statement that the consumer should ask about the current index value and interest rate;

(E)  a statement of the maximum amount by which the annual percentage rate may change in any 1-year period or a statement that no such limit exists;

(F)  a statement of the maximum annual percentage rate that may be imposed at any time under the plan;

(G)  subject to subsection (b)(3), a table, based on a $10,000 extension of credit, showing how the annual percentage rate and the minimum periodic payment amount under each repayment option of the plan would have been affected during the preceding 15-year period by changes in any index used to compute such rate;

(H)  a statement of--

(i)  the maximum annual percentage rate which may be imposed under each repayment option of the plan;

(ii)  the minimum amount of any periodic payment which may be required, based on a $10,000 outstanding balance, under each such option when such maximum annual percentage rate is in effect; and

(iii)  the earliest date by which such maximum annual interest rate may be imposed; and

(I)  a statement that interest rate information will be provided on or with each periodic statement.

(3)   OTHER FEES IMPOSED BY THE CREDITOR.--An itemization of any fees imposed by the creditor in connection with the availability or use of credit under such plan, including annual fees, application fees, transaction fees, and closing costs (including costs commonly described as "points"), and the time when such fees are payable.

(4)   ESTIMATES OF FEES WHICH MAY BE IMPOSED BY THIRD PARTIES.--

(A)   AGGREGATE AMOUNT.--An estimate, based on the creditor's experience with such plans and stated as a single amount or as a reasonable range, of the aggregate amount of additional fees that may be imposed by third parties (such as governmental authorities, appraisers, and attorneys) in connection with opening an account under the plan.

(B)   STATEMENT OF AVAILABILITY.--A statement that the consumer may ask the creditor for a good faith estimate by the creditor of the fees that may be imposed by third parties.

(5)   STATEMENT OF RISK OF LOSS OF DWELLING.--A statement that--

(A)  any extension of credit under the plan is secured by the consumer's dwelling; and

(B)  in the event of any default, the consumer risks the loss of the dwelling.

(6)   CONDITIONS TO WHICH DISCLOSED TERMS ARE SUBJECT.--

(A)   PERIOD DURING WHICH SUCH TERMS ARE AVAILABLE.--A clear and conspicuous statement--

(i)  of the time by which an application must be submitted to obtain the terms disclosed; or

(ii)  if applicable, that the terms are subject to change.

(B)  RIGHT OF REFUSAL IF CERTAIN TERMS CHANGE.--A statement that--

(i) the consumer may elect not to enter into an agreement to open an account under the plan if any term changes (other than a change contemplated by a variable feature of the plan) before any such agreement is final; and

(ii) if the consumer makes an election described in clause (i), the consumer is entitled to a refund of all fees paid in connection with the application.

(C)  RETENTION OF INFORMATION.--A statement that the consumer should make or otherwise retain a copy of information disclosed under this subparagraph.

(7)  RIGHTS OF CREDITOR WITH RESPECT TO EXTENSIONS OF CREDIT.--A statement that--

(A) under certain conditions, the creditor may terminate any account under the plan and require immediate repayment of any outstanding balance, prohibit any additional extension of credit to the account, or reduce the credit limit applicable to the account; and

(B) the consumer may receive, upon request, more specific information about the conditions under which the creditor may take any action described in subparagraph (A).

(8)  REPAYMENT OPTIONS AND MINIMUM PERIODIC PAYMENTS.--The repayment options under the plan, including--

(A) if applicable, any differences in repayment options with regard to--

(i) any period during which additional extensions of credit may be obtained; and

(ii) any period during which repayment is required to be made and no additional extensions of credit may be obtained;

(B) the length of any repayment period, including any differences in the length of any repayment period with regard to the periods described in clauses (i) and (ii) of subparagraph (A); and

(C) an explanation of how the amount of any minimum monthly or periodic payment will be determined under each such option, including any differences in the determination of any such amount with regard to the periods described in clauses (i) and (ii) of subparagraph (A).

(9)  EXAMPLE OF MINIMUM PAYMENTS AND MAXIMUM REPAYMENT PERIOD.--An example, based on a $10,000 outstanding balance and the interest rate (other than a rate not based on the index under the plan) which is, or was recently, in effect under such plan, showing the minimum monthly or periodic payment, and the time it would take to repay the entire $10,000 if the consumer paid only the minimum periodic payments and obtained no additional extensions of credit.

(10)  STATEMENT CONCERNING BALLOON PAYMENTS.--If, under any repayment option of the plan, the payment of not more than the minimum periodic payments required under such option over the length of the repayment period--

(A) would not repay any of the principal balance; or

(B) would repay less than the outstanding balance by the end of such period, as the case may be, a statement of such fact, including an explicit statement that at the end of such repayment period a balloon payment (as defined in section 147(f)) would result which would be required to be paid in full at that time.

(11)  NEGATIVE AMORTIZATION.--If applicable, a statement that--

(A) any limitation in the plan on the amount of any increase in the minimum payments may result in negative amortization;

(B) negative amortization increases the outstanding principal balance of the account; and

(C) negative amortization reduces the consumer's equity in the consumer's dwelling.

(12)  LIMITATIONS AND MINIMUM AMOUNT REQUIREMENTS ON EXTENSIONS OF CREDIT.--

(A)  NUMBER AND DOLLAR AMOUNT LIMITATIONS.--Any limitation contained in the plan on the number of extensions of credit and the amount of credit which may be obtained during any month or other defined time period.

(B)  MINIMUM BALANCE AND OTHER TRANSACTION AMOUNT REQUIREMENTS.--Any requirement which establishes a minimum amount for--

(i) the initial extension of credit to an account under the plan;

(ii) any subsequent extension of credit to an account under the plan; or

(iii) any outstanding balance of an account under the plan.

(13)   STATEMENT REGARDING TAX DEDUCTIBILITY.--A statement that--

(A)  the consumer should consult a tax advisor regarding the deductibility of interest and charges under the plan; and

(B)  in any case in which the extension of credit exceeds the fair market value (as defined under the Internal Revenue Code of 1986) of the dwelling, the interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax deductible for Federal income tax purposes.

(14)   DISCLOSURE REQUIREMENTS ESTABLISHED BY BOARD.--Any other term which the Bureau requires, in regulations, to be disclosed.

(b) TIME AND FORM OF DISCLOSURES.--

(1) TIME OF DISCLOSURE.--

(A) IN GENERAL.--The disclosures required under subsection (a) with respect to any open end consumer credit plan which provides for any extension of credit which is secured by the consumer's principal dwelling and the pamphlet required under subsection (e) shall be provided to any consumer at the time the creditor distributes an application to establish an account under such plan to such consumer.

(B) TELEPHONE, PUBLICATIONS, AND 3d PARTY APPLICATIONS.--In the case of telephone applications, applications contained in magazines or other publications, or applications provided by a third party, the disclosures required under subsection (a) and the pamphlet required under subsection (e) shall be provided by the creditor before the end of the 3-day period beginning on the date the creditor receives a completed application from a consumer.

(2) FORM.--

(A) IN GENERAL.--Except as provided in paragraph (1)(B), the disclosures required under subsection (a) shall be provided on or with any application to establish an account under an open end consumer credit plan which provides for any extension of credit which is secured by the consumer's principal dwelling.

(B)  SEGREGATION OF REQUIRED DISCLOSURES FROM OTHER INFORMATION.--The disclosures required under subsection (a) shall be conspicuously segregated from all other terms, data, or additional information provided in connection with the application, either by grouping the disclosures separately on the application form or by providing the disclosures on a separate form, in accordance with regulations of the Bureau.

(C)  PRECEDENCE OF CERTAIN INFORMATION.--The disclosures required by paragraphs (5), (6), and (7) of subsection (a) shall precede all of the other required disclosures.

(D)   SPECIAL PROVISION RELATING TO VARIABLE INTEREST RATE INFORMATION. -- Whether or not the disclosures required under subsection (a) are provided on the application form, the variable rate information described in subsection (a)(2) may be provided separately from the other information required to be disclosed.

(3)   REQUIREMENT FOR HISTORICAL TABLE.--In preparing the table required under subsection (a)(2)(G), the creditor shall consistently select one rate of interest for each year and the manner of selecting the rate from year to year shall be consistent with the plan.

(c) 3d PARTY APPLICATIONS.--In the case of an application to open an account under any open end consumer credit plan described in subsection (a) which is provided to a consumer by any person other than the creditor--

(1)  such person shall provide such consumer with--

(A)  the disclosures required under subsection (a) with respect to such plan, in accordance with subsection (b); and

(B)  the pamphlet required under subsection (e); or

(2)  if such person cannot provide specific terms about the plan because specific information about the plan terms is not available, no nonrefundable fee may be imposed in connection with such application before the end of the 3-day period beginning on the date the consumer receives the disclosures required under subsection (a) with respect to the application.

(d)  PRINCIPAL DWELLING DEFINED.--For purposes of this section and sections 137 and 147, the term "principal dwelling" includes any second or vacation home of the consumer.

(e)   PAMPHLET.--In addition to the disclosures required under subsection (a) with respect to an application to open an account under any open end consumer credit plan described in such subsection, the creditor or other person providing such disclosures to the consumer shall provide--

(1)  a pamphlet published by the Bureau pursuant to section 4 of the Home Equity Consumer Protection Act of 1988; or

(2)  any pamphlet which provides substantially similar information to the information described in such section, as determined by the Bureau.

[Codified to 15 U.S.C. 1637a]

[Source: Section 127A added by section 2(a) of the Act of November 23, 1988 (Pub. L. No. 100--709; 102 Stat. 4725--4729), effective November 23, 1988; as amended by 1302(a)(1) of title XIII of the Act of April 20, 2005 (Pub. L. No. 109-8; 119 Stat. 208), effective 12 months (April 20, 2006) after the date of enactment of this Act, or 12 months (April 20, 2006) after the date of publication of such final regulations by the Bureau; section 1100A(2) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011]

§ 128.  Transactions other than under an open end credit plan

(a)  REQUIRED DISCLOSURE BY CREDITOR.--For each consumer credit transaction other than under an open end credit plan, the creditor shall disclose each of the following items, to the extent applicable:

(1)  The identity of the creditor required to make disclosure.

(2)(A)  The "amount financed", using that term, which shall be the amount of credit of which the consumer has actual use. This amount shall be computed as follows, but the computations need not be disclosed and shall not be disclosed with the disclosures conspicuously segregated in accordance with subsection (b)(1):

(i)  take the principal amount of the loan or the cash price less downpayment and trade-in;

(ii)  add any charges which are not part of the finance charge or of the principal amount of the loan and which are financed by the consumer, including the cost of any items excluded from the finance charge pursuant to section 106; and

(iii)  subtract any charges which are part of the finance charge but which will be paid by the consumer before or at the time of the consummation of the transaction, or have been withheld from the proceeds of the credit.

(B)  In conjunction with the disclosure of the amount financed, a creditor shall provide a statement of the consumer's right to obtain, upon a written request, a written itemization of the amount financed. The statement shall include spaces for a "yes" and "no" indication to be initialed by the consumer to indicate whether the consumer wants a written itemization of the amount financed. Upon receiving an affirmative indication, the creditor shall provide, at the time other disclosures are required to be furnished, a written itemization of the amount financed. For the purposes of this subparagraph, "itemization of the amount financed" means a disclosure of the following items, to the extent applicable:

(i)  the amount that is or will be paid directly to the consumer;

(ii)  the amount that is or will be credited to the consumer's account to discharge obligations owed to the creditor;

(iii)  each amount that is or will be paid to third persons by the creditor on the consumer's behalf, together with an identification of or reference to the third person; and

(iv)  the total amount of any charges described in the preceding subparagraph (A)(iii).

(3)  The "finance charge", not itemized, using that term.

(4)  The finance charge expressed as an "annual percentage rate", using that term. This shall not be required if the amount financed does not exceed $75 and the finance charge does not exceed $5, or if the amount financed exceeds $75 and the finance charge does not exceed $7.50.

(5)  The sum of the amount financed and the finance charge, which shall be termed the "total of payments".

(6)  The number, amount, and due dates or period of payments scheduled to repay the total of payments.

(7)  In a sale of property or services in which the seller is the creditor required to disclose pursuant to section 121(b), the "total sale price", using that term, which shall be the total of the cash price of the property or services, additional charges, and the finance charge.

(8)  Descriptive explanations of the terms "amount financed", "finance charge", "annual percentage rate", "total of payments", and "total sale price" as specified by the Bureau. The descriptive explanation of "total sale price" shall include reference to the amount of the downpayment.

(9)  Where the credit is secured, a statement that a security interest has been taken in (A) the property which is purchased as part of the credit transaction, or (B) property not purchased as part of the credit transaction identified by item or type.

(10)  Any dollar charge or percentage amount which may be imposed by a creditor solely on account of a late payment, other than a deferral or extension charge.

(11)  A statement indicating whether or not the consumer is entitled to a rebate of any finance charge upon refinancing or prepayment in full pursuant to acceleration or otherwise, if the obligation involves a precomputed finance charge. A statement indicating whether or not a penalty will be imposed in those same circumstances if the obligation involves a finance charge computed from time to time by application of a rate to the unpaid principal balance.

(12)  A statement that the consumer should refer to the appropriate contract document for any information such document provides about nonpayment, default, the right to accelerate the maturity of the debt, and prepayment rebates and penalties.

(13)  In any residential mortgage transaction, a statement indicating whether a subsequent purchaser or assignee of the consumer may assume the debt obligation on its original terms and conditions.

(14)  In the case of any variable interest rate residential mortgage transaction, in disclosures provided at application as prescribed by the Bureau for a variable rate transaction secured by the consumer's principal dwelling, at the option of the creditor, a statement that the periodic payments may increase or decrease substantially, and the maximum interest rate and payment for a $10,000 loan originated at a recent interest rate, as determined by the Bureau, assuming the maximum periodic increases in rates and payments under the program, or a historical example illustrating the effects of interest rate changes implemented according to the loan program.

(15)  In the case of a consumer credit transaction that is secured by the principal dwelling of the consumer, in which the extension of credit may exceed the fair market value of the dwelling, a clear and conspicuous statement that--

(A)  the interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax deductible for Federal income tax purposes; and

(B)  the consumer should consult a tax adviser for further information regarding the deductibility of interest and charges.

(16)  In the case of a variable rate residential mortgage loan for which an escrow or impound account will be established for the payment of all applicable taxes, insurance, and assessments--

(A)  the amount of initial monthly payment due under the loan for the payment of principal and interest, and the amount of such initial monthly payment including the monthly payment deposited in the account for the payment of all applicable taxes, insurance, and assessments; and

(B)  the amount of the fully indexed monthly payment due under the loan for the payment of principal and interest, and the amount of such fully indexed monthly payment including the monthly payment deposited in the account for the payment of all applicable taxes, insurance, and assessments.

(17)  In the case of a residential mortgage loan, the aggregate amount of settlement charges for all settlement services provided in connection with the loan, the amount of charges that are included in the loan and the amount of such charges the borrower must pay at closing, the approximate amount of the wholesale rate of funds in connection with the loan, and the aggregate amount of other fees or required payments in connection with the loan.

(18)  In the case of a residential mortgage loan, the aggregate amount of fees paid to the mortgage originator in connection with the loan, the amount of such fees paid directly by the consumer, and any additional amount received by the originator from the creditor.

(19)  In the case of a residential mortgage loan, the total amount of interest that the consumer will pay over the life of the loan as a percentage of the principal of the loan. Such amount shall be computed assuming the consumer makes each monthly payment in full and on-time, and does not make any over-payments.

(b)  FORM AND TIMING OF DISCLOSURES; RESIDENTIAL MORTGAGE TRANSACTION REQUIREMENTS.--(1)  Except as otherwise provided in this chapter, the disclosures required under subsection (a) shall be made before the credit is extended. Except for the disclosures required by subsection (a)(1) of this section, all disclosures required under subsection (a) and any disclosure provided for in subsection (b), (c), or (d) of section 106 shall be conspicuously segregated from all other terms, data, or information provided in connection with a transaction, including any computations or itemization.

(2)(A)  In the case of any extension of credit that is secured by the dwelling of a consumer, which is also subject to the Real Estate Settlement Procedures Act, good faith estimates of the disclosures required under subsection (a) shall be made in accordance with regulations of the Bureau under section 121(c) and shall be delivered or placed in the mail not later than three business days after the creditor receives the consumer's written application which shall be at least 7 business days before consummation of the transaction.

(B)  In the case of an extension of credit that is secured by the dwelling of a consumer, the disclosures provided under subparagraph (A), shall be in addition to the other disclosures required by subsection (a), and shall--

(i)  state in conspicuous type size and format, the following: "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."; and

(ii)  be provided in the form of final disclosures at the time of consummation of the transaction, in the form and manner prescribed by this section.

(C)  In the case of an extension of credit that is secured by the dwelling of a consumer, under which the annual rate of interest is variable, or with respect to which the regular payments may otherwise be variable, in addition to the other disclosures required by subsection (a), the disclosures provided under this subsection shall do the following:

(i)  Label the payment schedule as follows: "Payment Schedule: Payments Will Vary Based on Interest Rate Changes".

(ii)  State in conspicuous type size and format examples of adjustments to the regular required payment on the extension of credit based on the change in the interest rates specified by the contract for such extension of credit. Among the examples required to be provided under this clause is an example that reflects the maximum payment amount of the regular required payments on the extension of credit, based on the maximum interest rate allowed under the contract, in accordance with the rules of the Bureau. Prior to issuing any rules pursuant to this clause, the Bureau shall conduct consumer testing to determine the appropriate format for providing the disclosures required under this subparagraph to consumers so that such disclosures can be easily understood, including the fact that the initial regular payments are for a specific time period that will end on a certain date, that payments will adjust afterwards potentially to a higher amount, and that there is no guarantee that the borrower will be able to refinance to a lower amount.

(D)  In any case in which the disclosure statement under subparagraph (A) contains an annual percentage rate of interest that is no longer accurate, as determined under section 107(c), the creditor shall furnish an additional, corrected statement to the borrower, not later than 3 business days before the date of consummation of the transaction.

(E)  The consumer shall receive the disclosures required under this paragraph before paying any fee to the creditor or other person in connection with the consumer's application for an extension of credit that is secured by the dwelling of a consumer. If the disclosures are mailed to the consumer, the consumer is considered to have received them 3 business days after they are mailed. A creditor or other person may impose a fee for obtaining the consumer's credit report before the consumer has received the disclosures under this paragraph, provided the fee is bona fide and reasonable in amount.

(F)  WAIVER OF TIMELINESS OF DISCLOSURES.--To expedite consummation of a transaction, if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency, the consumer may waive or modify the timing requirements for disclosures under subparagraph (A), provided that--

(i)  the term "bona fide personal emergency" may be further defined in regulations issued by the Bureau;

(ii)  the consumer provides to the creditor a dated, written statement describing the emergency and specifically waiving or modifying those timing requirements, which statement shall bear the signature of all consumers entitled to receive the disclosures required by this paragraph; and

(iii)  the creditor provides to the consumer at or before the time of such waiver or modification, the final disclosures required by paragraph (1).

(G)(i)  In the case of an extension of credit relating to a plan described in section 101(53D) of title 11, United States Code--

(I)  the requirements of subparagraphs (A) through (E) shall not apply; and

(II)  a good faith estimate of the disclosures required under subsection (a) shall be made in accordance with regulations of the Bureau under section 121(c) before such credit is extended, or shall be delivered or placed in the mail not later than 3 business days after the date on which the creditor receives the written application of the consumer for such credit, whichever is earlier.

(ii)  If a disclosure statement furnished within 3 business days of the written application (as provided under clause (i)(II)) contains an annual percentage rate which is subsequently rendered inaccurate, within the meaning of section 107(c), the creditor shall furnish another disclosure statement at the time of settlement or consummation of the transaction.

(3)  In the case of a credit transaction described in paragraph (15) of subsection (a), disclosures required by that paragraph shall be made to the consumer at the time of application for such extension of credit.

(4)  REPAYMENT ANALYSIS REQUIRED TO INCLUDE ESCROW PAYMENTS.--

(A)  IN GENERAL.--In the case of any consumer credit transaction secured by a first mortgage or lien on the principal dwelling of the consumer, other than a consumer credit transaction under an open end credit plan or a reverse mortgage, for which an impound, trust, or other type of account has been or will be established in connection with the transaction for the payment of property taxes, hazard and flood (if any) insurance premiums, or other periodic payments or premiums with respect to the property, the information required to be provided under subsection (a) with respect to the number, amount, and due dates or period of payments scheduled to repay the total of payments shall take into account the amount of any monthly payment to such account for each such repayment in accordance with section 10(a)(2) of the Real Estate Settlement Procedures Act of 1974.

(B)  ASSESSMENT VALUE.--The amount taken into account under subparagraph (A) for the payment of property taxes, hazard and flood (if any) insurance premiums, or other periodic payments or premiums with respect to the property shall reflect the taxable assessed value of the real property securing the transaction after the consummation of the transaction, including the value of any improvements on the property or to be constructed on the property (whether or not such construction will be financed from the proceeds of the transaction), if known, and the replacement costs of the property for hazard insurance, in the initial year after the transaction.

(c)  TIMING OF DISCLOSURES ON UNSOLICITED MAILED OR TELEPHONE PURCHASE ORDER OR LOAN REQUEST.--(1)  If a creditor receives a purchase order by mail or telephone without personal solicitation, and the cash price and the total sale price and the terms of financing, including the annual percentage rate, are set forth in the creditor's catalog or other printed material distributed to the public, then the disclosures required under subsection (a) may be made at any time not later than the date the first payment is due.

(2)  If a creditor receives a request for a loan by mail or telephone without personal solicitation and the terms of financing, including the annual percentage rate for representative amounts of credit, are set forth in the creditor's printed material distributed to the public, or in the contract of loan or other printed material delivered to the obligor, then the disclosures required under subsection (a) may be made at any time not later than the date the first payment is due.

(d)  TIMING OF DISCLOSURE IN CASES OF AN ADDITION OF A DEFERRED PAYMENT PRICE TO AN EXISTING OUTSTANDING BALANCE.--If a consumer credit sale is one of a series of consumer credit sales transactions made pursuant to an agreement providing for the addition of the deferred payment price of that sale to an existing outstanding balance, and the person to whom the credit is extended has approved in writing both the annual percentage rate or rates and the method of computing the finance charge or charges, and the creditor retains no security interest in any property as to which he has received payments aggregating the amount of the sales price including any finance charges attributable thereto, then the disclosure required under subsection (a) for the particular sale may be made at any time not later than the date the first payment for that sale is due. For the purposes of this subsection, in the case of items purchased on different dates, the first purchased shall be deemed first paid for, and in the case of items purchased on the same date, the lowest priced shall be deemed first paid for.

(e)  TERMS AND DISCLOSURE WITH RESPECT TO PRIVATE EDUCATION LOANS.--

(1)  DISCLOSURES REQUIRED IN PRIVATE EDUCATION LOAN APPLICATIONS AND SOLICITATIONS.--In any application for a private education loan, or a solicitation for a private education loan without requiring an application, the private educational lender shall disclose to the borrower, clearly and conspicuously--

(A)  the potential range of rates of interest applicable to the private education loan;

(B)  whether the rate of interest applicable to the private education loan is fixed or variable;

(C)  limitations on interest rate adjustments, both in terms of frequency and amount, or the lack thereof, if applicable;

(D)  requirements for a co-borrower, including any changes in the applicable interest rates without a co-borrower;

(E)  potential finance charges, late fees, penalties, and adjustments to principal, based on defaults or late payments of the borrower;

(F)  fees or range of fees applicable to the private education loan;

(G)  the term of the private education loan;

(H)  whether interest will accrue while the student to whom the private education loan relates is enrolled at a covered educational institution;

(I)  payment deferral options;

(J)  general eligibility criteria for the private education loan;

(K)  an example of the total cost of the private education loan over the life of the loan--

(i)  which shall be calculated using the principal amount and the maximum rate of interest actually offered by the private educational lender; and

(ii)  calculated both with and without capitalization of interest, if an option exists for postponing interest payments;

(L)  that a covered educational institution may have school-specific education loan benefits and terms not detailed on the disclosure form;

(M)  that the borrower may qualify for Federal student financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), in lieu of, or in addition to, a loan from a non-Federal source;

(N)  the interest rates available with respect to such Federal student financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.);

(O)  that, as provided in paragraph (6)--

(i)  the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within 30 calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education loan is approved and the borrower receives the disclosure documents required under this subsection for the loan; and

(ii)  except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender during the period described in clause (i);

(P)  that, before a private education loan may be consummated, the borrower must obtain from the relevant institution of higher education the form required under paragraph (3), and complete, sign, and return such form to the private educational lender;

(Q)  that the consumer may obtain additional information concerning such Federal student financial assistance from their institution of higher education, or at the website of the Department of Education; and

(R)  such other information as the Bureau shall prescribe, by rule, as necessary or appropriate for consumers to make informed borrowing decisions.

(2)  DISCLOSURES AT THE TIME OF PRIVATE EDUCATION LOAN APPROVAL.--Contemporaneously with the approval of a private education loan application, and before the loan transaction is consummated, the private educational lender shall disclose to the borrower, clearly and conspicuously--

(A)  the applicable rate of interest in effect on the date of approval;

(B)  whether the rate of interest applicable to the private educational loan is fixed or variable;

(C)  limitations on interest rate adjustments, both in terms of frequency and amount, or the lack thereof, if applicable;

(D)  the initial approved principal amount;

(E)  applicable finance charges, late fees, penalties, and adjustments to principal, based on borrower defaults or late payments, including limitations on the discharge of a private education loan in bankruptcy;

(F)  fees or range of fees applicable to the private education loan;

(G)  the maximum term under the private education loan program;

(H)  an estimate of the total amount for repayment, at both the interest rate in effect on the date of approval and at the maximum possible rate of interest offered by the private educational lender and applicable to the borrower, to the extent that such maximum rate may be determined, or if not, a good faith estimate thereof;

(I)  any principal and interest payments required while the student for whom the private education loan is intended is enrolled at a covered educational institution and unpaid interest that will accrue during such enrollment;

(J)  payment deferral options applicable to the borrower;

(K)  whether monthly payments are graduated;

(L)  that, as provided in paragraph (6)--

(i)  the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within 30 calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education loan is approved and the borrower received the disclosure documents required under this subsection for the loan; and

(ii)  except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender during the period described in clause (i);

(M)  that the borrower--

(i)  may qualify for Federal financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), in lieu of, or in addition to, a loan from a non-Federal source; and

(ii)  may obtain additional information concerning such assistance from their institution of higher education or the website of the Department of Education;

(N)  the interest rates available with respect to such Federal financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.);

(O)  the maximum monthly payment, calculated using the maximum rate of interest actually offered by the private educational lender and applicable to the borrower, to the extent that such maximum rate may be determined, or if not, a good faith estimate thereof; and

(P)  such other information as the Bureau shall prescribe, by rule, as necessary or appropriate for consumers to make informed borrowing decisions.

(3)  SELF-CERTIFICATION OF INFORMATION.--

(A)  IN GENERAL.--Before a private educational lender may consummate a private education loan with respect to a student attending an institution of higher education, the lender shall obtain from the applicant for the private education loan the form developed by the Secretary of Education under section 155 of the Higher Education Act of 1965, signed by the applicant, in written or electronic form.

(B)  RULE OF CONSTRUCTION.--No other provision of this subsection shall be construed to require a private educational lender to perform any additional duty under this paragraph, other than collecting the form required under subparagraph (A).

(4)  DISCLOSURES AT THE TIME OF PRIVATE EDUCATION LOAN CONSUMMATION.--Contemporaneously with the consummation of a private education loan, a private educational lender shall make to the borrower each of the disclosures described in--

(A)  paragraph (2)(A) (adjusted, as necessary, for the rate of interest in effect on the date of consummation, based on the index used for the loan);

(B)  subparagraphs (B) through (K) and (M) through (P) of paragraph (2); and

(C)  paragraph (7).

(5)  FORMAT OF DISCLOSURES.--

(A)  MODEL FORM.--Not later than 2 years after the date of enactment of this subsection, the Bureau shall, based on consumer testing, and in consultation with the Secretary of Education, develop and issue model forms that may be used, at the option of the private educational lender, for the provision of disclosures required under this subsection.

(B)  FORMAT.--Model forms developed under this paragraph shall--

(i)  be comprehensible to borrowers, with a clear format and design;

(ii)  provide for clear and conspicuous disclosures;

(iii)  enable borrowers easily to identify material terms of the loan and to compare such terms among private education loans; and

(iv)  be succinct, and use an easily readable type font.

(C)  SAFE HARBOR.--Any private educational lender that elects to provide a model form developed under this subsection that accurately reflects the practices of the private educational lender shall be deemed to be in compliance with the disclosures required under this subsection.

(6)  EFFECTIVE PERIOD OF APPROVED RATE OF INTEREST AND LOAN TERMS.--

(A)  IN GENERAL.--With respect to a private education loan, the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within 30 calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education loan is approved and the borrower receives the disclosure documents required under this subsection for the loan, and the rates and terms of the loan may not be changed by the private educational lender during that period.

(B)  PROHIBITION ON CHANGES.--Except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender prior to the earlier of--

(i)  the date of acceptance of the terms of the loan and consummation of the transaction by the borrower, as described in subparagraph (A); or

(ii)  the expiration of the period described in subparagraph (A).

(7)  RIGHT TO CANCEL.--With respect to a private education loan, the borrower may cancel the loan, without penalty to the borrower, at any time within 3 business days of the date on which the loan is consummated, and the private educational lender shall disclose such right to the borrower in accordance with paragraph (4).

(8)  PROHIBITION ON DISBURSEMENT.--No funds may be disbursed with respect to a private education loan until the expiration of the 3-day period described in paragraph (7).

(9)  BUREAU REGULATIONS.--In issuing regulations under this subsection, the Bureau shall prevent, to the extent possible, duplicative disclosure requirements for private educational lenders that are otherwise required to make disclosures under this title, except that in any case in which the disclosure requirements of this subsection differ or conflict with the disclosure requirements of any other provision of this title, the requirements of this subsection shall be controlling.

(10)  DEFINITIONS.--For purposes of this subsection, the terms "covered educational institution", "private education lender", and "private education loan" have the same meanings as in section 140.

(11)  DUTIES OF LENDERS PARTICIPATING IN PREFERRED LENDER ARRANGEMENTS.--Each private educational lender that has a preferred lender arrangement with a covered educational institution shall annually, by a date determined by the Bureau, in consultation with the Secretary of Education, provide to the covered educational institution such information as the Bureau determines to include in the model form developed under paragraph (5) for each type of private education loan that the lender plans to offer to students attending the covered educational institution, or to the families of such students, for the next award year (as that term is defined in section 481 of the Higher Education Act of 1965).

(f)  PERIODIC STATEMENTS FOR RESIDENTIAL MORTGAGE LOANS.--

(1)  IN GENERAL.--The creditor, assignee, or servicer with respect to any residential mortgage loan shall transmit to the obligor, for each billing cycle, a statement setting forth each of the following items, to the extent applicable, in a conspicuous and prominent manner:

(A)  The amount of the principal obligation under the mortgage.

(B)  The current interest rate in effect for the loan.

(C)  The date on which the interest rate may next reset or adjust.

(D)  The amount of any prepayment fee to be charged, if any.

(E)  A description of any late payment fees.

(F)  A telephone number and electronic mail address that may be used by the obligor to obtain information regarding the mortgage.

(G)  The names, addresses, telephone numbers, and Internet addresses of counseling agencies or programs reasonably available to the consumer that have been certified or approved and made publicly available by the Secretary of Housing and Urban Development or a State housing finance authority (as defined in section 1301 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989).

(H)  Such other information as the Bureau may prescribe in regulations.

(2)  DEVELOPMENT AND USE OF STANDARD FORM.--The Bureau shall develop and prescribe a standard form for the disclosure required under this subsection, taking into account that the statements required may be transmitted in writing or electronically.

(3)  Exception.--Paragraph (1) shall not apply to any fixed rate residential mortgage loan where the creditor, assignee, or servicer provides the obligor with a coupon book that provides the obligor with substantially the same information as required in paragraph (1).

[Codified to 15 U.S.C. 1638]

[Source:  Section 128 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 155), effective July 1, 1969, as amended by section 614 of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 178--180), effective October 1, 1982; section 2105 of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--402), effective September 30, 1996; section 1302(b)(1) of title XIII of the Act of April 20, 2005 (Pub. L. No. 109--8; 119 Stat. 209), effective April 20, 2005; section 2502(a) of title V of the Act of July 30, 2008 (Pub. L. No. 110--289; 122 Stat. 2855), effective July 30, 2008; section 1021(a) of title X of the Act of August 14, 2008 (Pub. L. No. 110--315, 122 Stat. 3483), effective August 14, 2008; section 130(a)(2) of title I of the Act of October 3, 2008 (Pub. L. No. 110--343; 122 Stat. 3797), effective October 3, 2008; section 1100A(2) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011; sections 1419, 1420 and 1465 of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2155 and 2185), effective July 21, 2010]

§ 128A.  Reset of hybrid adjustable rate mortgages

(a)  HYBRID ADJUSTABLE RATE MORTGAGES DEFINED.--For purposes of this section, the term "hybrid adjustable rate mortgage" means a consumer credit transaction secured by the consumer's principal residence with a fixed interest rate for an introductory period that adjusts or resets to a variable interest rate after such period.

(b)  NOTICE OF RESET AND ALTERNATIVES.--During the 1-month period that ends 6 months before the date on which the interest rate in effect during the introductory period of a hybrid adjustable rate mortgage adjusts or resets to a variable interest rate or, in the case of such an adjustment or resetting that occurs within the first 6 months after consummation of such loan, at consummation, the creditor or servicer of such loan shall provide a written notice, separate and distinct from all other correspondence to the consumer, that includes the following:

(1)  Any index or formula used in making adjustments to or resetting the interest rate and a source of information about the index or formula.

(2)  An explanation of how the new interest rate and payment would be determined, including an explanation of how the index was adjusted, such as by the addition of a margin.

(3)  A good faith estimate, based on accepted industry standards, of the creditor or servicer of the amount of the monthly payment that will apply after the date of the adjustment or reset, and the assumptions on which this estimate is based.

(4)  A list of alternatives consumers may pursue before the date of adjustment or reset, and descriptions of the actions consumers must take to pursue these alternatives, including--

(A)  refinancing;

(B)  renegotiation of loan terms;

(C)  payment forbearances; and

(D)  pre-foreclosure sales.

(5)  The names, addresses, telephone numbers, and Internet addresses of counseling agencies or programs reasonably available to the consumer that have been certified or approved and made publicly available by the Secretary of Housing and Urban Development or a State housing finance authority (as defined in section 1301 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989).

(6)  The address, telephone number, and Internet address for the State housing finance authority (as so defined) for the State in which the consumer resides.

(c)  SAVINGS CLAUSE.--The Board may require the notice in paragraph (b) or other notice consistent with this Act for adjustable rate mortgage loans that are not hybrid adjustable rate mortgage loans.

[Codified to 15 U.S.C. 1638a]

[Source: Section 128 added by section 1418(a) of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2154), effective July 21, 2010]

§ 129.  Requirements for certain mortgages

(a)  DISCLOSURES.--

(1)  SPECIFIC DISCLOSURES.--In addition to other disclosures required under this title, for each mortgage referred to in section 103(aa), the creditor shall provide the following disclosures in conspicuous type size:

(A)  "You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application."

(B)  "If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan."

(2)  ANNUAL PERCENTAGE RATE.--In addition to the disclosures required under paragraph (1), the creditor shall disclose--

(A)  in the case of a credit transaction with a fixed rate of interest, the annual percentage rate and the amount of the regular monthly payment; or

(B)  in the case of any other credit transaction, the annual percentage rate of the loan, the amount of the regular monthly payment, a statement that the interest rate and monthly payment may increase, and the amount of the maximum monthly payment, based on the maximum interest rate allowed pursuant to section 1204 of the Competitive Equality Banking Act of 1987.

(b)  TIME OF DISCLOSURES.--

(1)  IN GENERAL.--The disclosures required by this section shall be given not less than 3 business days prior to consummation of the transaction.

(2)  NEW DISCLOSURES REQUIRED.--

(A)  IN GENERAL.--After providing the disclosures required by this section, a creditor may not change the terms of the extension of credit if such changes make the disclosures inaccurate, unless new disclosures are provided that meet the requirements of this section.

(B)  TELEPHONE DISCLOSURE.--A creditor may provide new disclosures pursuant to subparagraph (A) by telephone, if--

(i)  the change is initiated by the consumer; and

(ii)  at the consummation of the transaction under which the credit is extended--

(I)  the creditor provides to the consumer the new disclosures, in writing; and

(II)  the creditor and consumer certify in writing that the new disclosures were provided by telephone, by not later than 3 days prior to the date of consummation of the transaction.

(3)  MODIFICATIONS.--The Bureau may, if it finds that such action is necessary to permit homeowners to meet bona fide personal financial emergencies, prescribe regulations authorizing the modification or waiver of rights created under this subsection, to the extent and under the circumstances set forth in those regulations.

(c)  NO PREPAYMENT PENALTY.--

(1)  IN GENERAL.--

(A)  LIMITATION ON TERMS.--A mortgage referred to in section 103(aa) may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal before the date on which the principal is due.

(B)  CONSTRUCTION.--For purposes of this subsection, any method of computing a refund of unearned scheduled interest is a prepayment penalty if it is less favorable to the consumer than the actuarial method (as that term is defined in section 933(d) of the Housing and Community Development Act of 1992).

(2)  Repealed.

(d)  LIMITATIONS AFTER DEFAULT.--A mortgage referred to in section 103(aa) may not provide for an interest rate applicable after default that is higher than the interest rate that applies before default. If the date of maturity of a mortgage referred to in subsection 103(aa) is accelerated due to default and the consumer is entitled to a rebate of interest, that rebate shall be computed by any method that is not less favorable than the actuarial method (as that term is defined in section 933(d) of the Housing and Community Development Act of 1992).

(e)  NO BALLOON PAYMENTS.--No high-cost mortgage may contain a scheduled payment that is more than twice as large as the average of earlier scheduled payments. This subsection shall not apply when the payment schedule is adjusted to the seasonal or irregular income of the consumer.

(f)  NO NEGATIVE AMORTIZATION.--A mortgage referred to in section 103(aa) may not include terms under which the outstanding principal balance will increase at any time over the course of the loan because the regular periodic payments do not cover the full amount of interest due.

(g)  NO PREPAID PAYMENTS.--A mortgage referred to in section 103(aa) may not include terms under which more than 2 periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the consumer.

(h)  PROHIBITION ON EXTENDING CREDIT WITHOUT REGARD TO PAYMENT ABILITY OF CONSUMER.--A creditor shall not engage in a pattern or practice of extending credit to consumers under mortgages referred to in section 103(aa) based on the consumers' collateral without regard to the consumers' repayment ability, including the consumers' current and expected income, current obligations, and employment.

(i)  REQUIREMENTS FOR PAYMENTS UNDER HOME IMPROVEMENT CONTRACTS.--A creditor shall not make a payment to a contractor under a home improvement contract from amounts extended as credit under a mortgage referred to in section 103(aa), other than--

(1)  in the form of an instrument that is payable to the consumer or jointly to the consumer and the contractor; or

(2)  at the election of the consumer, by a third party escrow agent in accordance with terms established in a written agreement signed by the consumer, the creditor, and the contractor before the date of payment.

(j)  RECOMMENDED DEFAULT.--No creditor shall recommend or encourage default on an existing loan or other debt prior to and in connection with the closing or planned closing of a high-cost mortgage that refinances all or any portion of such existing loan or debt.

(k)  LATE FEES.--

(1)  IN GENERAL.--No creditor may impose a late payment charge or fee in connection with a high-cost mortgage--

(A)  in an amount in excess of 4 percent of the amount of the payment past due;

(B)  unless the loan documents specifically authorize the charge or fee;

(C)  before the end of the 15-day period beginning on the date the payment is due, or in the case of a loan on which interest on each installment is paid in advance, before the end of the 30-day period beginning on the date the payment is due; or

(D)  more than once with respect to a single late payment.

(2)  COORDINATION WITH SUBSEQUENT LATE FEES.--If a payment is otherwise a full payment for the applicable period and is paid on its due date or within an applicable grace period, and the only delinquency or insufficiency of payment is attributable to any late fee or delinquency charge assessed on any earlier payment, no late fee or delinquency charge may be imposed on such payment.

(3)  FAILURE TO MAKE INSTALLMENT PAYMENT.--If, in the case of a loan agreement the terms of which provide that any payment shall first be applied to any past due principal balance, the consumer fails to make an installment payment and the consumer subsequently resumes making installment payments but has not paid all past due installments, the creditor may impose a separate late payment charge or fee for any principal due (without deduction due to late fees or related fees) until the default is cured.

(l)  ACCELERATION OF DEBT.--No high-cost mortgage may contain a provision which permits the creditor to accelerate the indebtedness, except when repayment of the loan has been accelerated by default in payment, or pursuant to a due-on-sale provision, or pursuant to a material violation of some other provision of the loan document unrelated to payment schedule.

(m)  RESTRICTION ON FINANCING POINTS AND FEES.--No creditor may directly or indirectly finance, in connection with any high-cost mortgage, any of the following:

(1)  Any prepayment fee or penalty payable by the consumer in a refinancing transaction if the creditor or an affiliate of the creditor is the noteholder of the note being refinanced.

(2)  Any points or fees.

(n)  CONSEQUENCE OF FAILURE TO COMPLY.--Any mortgage that contains a provision prohibited by this section shall be deemed a failure to deliver the material disclosures required under this title, for the purpose of section 125.

(o)  DEFINITION.--For purposes of this section, the term "affiliate" has the same meaning as in section 2(k) of the Bank Holding Company Act of 1956.

(p)  DISCRETIONARY REGULATORY AUTHORITY OF BOARD.--

(1)  EXEMPTIONS.--The Bureau may, by regulation or order, exempt specific mortgage products or categories of mortgages from any or all of the prohibitions specified in subsections (c) through (i), if the Bureau finds that the exemption--

(A)  is in the interest of the borrowing public; and

(B)  will apply only to products that maintain and strengthen home ownership and equity protection.

(2)  PROHIBITIONS.--The Bureau, by regulation or order, shall prohibit acts or practices in connection with--

(A)  mortgage loans that the Bureau finds to be unfair, deceptive, or designed to evade the provisions of this section; and

(B)  refinancing of mortgage loans that the Bureau finds to be associated with abusive lending practices, or that are otherwise not in the interest of the borrower.

(q)  CIVIL PENALTIES IN FEDERAL TRADE COMMISSION ENFORCEMENT ACTIONS.--For purposes of enforcement by the Federal Trade Commission, any violation of a regulation issued by the Federal Reserve Bureau pursuant to subsection (1)(2) of this section shall be treated as a violation of a rule promulgated under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a regarding unfair or deceptive acts or practices.

(r)  PROHIBITIONS ON EVASIONS, STRUCTURING OF TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.--A creditor may not take any action in connection with a high-cost mortgage--

(1)  to structure a loan transaction as an open-end credit plan or another form of loan for the purpose and with the intent of evading the provisions of this title; or

(2)  to divide any loan transaction into separate parts for the purpose and with the intent of evading provisions of this title.

(s)  MODIFICATION AND DEFERRAL FEES PROHIBITED.--A creditor, successor in interest, assignee, or any agent of any of the above, may not charge a consumer any fee to modify, renew, extend, or amend a high-cost mortgage, or to defer any payment due under the terms of such mortgage.

(t)  PAYOFF STATEMENT.--

(1)  FEES.--

(A)  IN GENERAL.--Except as provided in subparagraph (B), no creditor or servicer may charge a fee for informing or transmitting to any person the balance due to pay off the outstanding balance on a high-cost mortgage.

(B)  TRANSACTION FEE.--When payoff information referred to in subparagraph (A) is provided by facsimile transmission or by a courier service, a creditor or servicer may charge a processing fee to cover the cost of such transmission or service in an amount not to exceed an amount that is comparable to fees imposed for similar services provided in connection with consumer credit transactions that are secured by the consumer's principal dwelling and are not high-cost mortgages.

(C)  FEE DISCLOSURE.--Prior to charging a transaction fee as provided in subparagraph (B), a creditor or servicer shall disclose that payoff balances are available for free pursuant to subparagraph (A).

(D)  MULTIPLE REQUESTS.--If a creditor or servicer has provided payoff information referred to in subparagraph (A) without charge, other than the transaction fee allowed by subparagraph (B), on 4 occasions during a calendar year, the creditor or servicer may thereafter charge a reasonable fee for providing such information during the remainder of the calendar year.

(2)  PROMPT DELIVERY.--Payoff balances shall be provided within 5 business days after receiving a request by a consumer or a person authorized by the consumer to obtain such information.

(u)  PRE-LOAN COUNSELING.--

(1)  IN GENERAL.--A creditor may not extend credit to a consumer under a high-cost mortgage without first receiving certification from a counselor that is approved by the Secretary of Housing and Urban Development, or at the discretion of the Secretary, a State housing finance authority, that the consumer has received counseling on the advisability of the mortgage. Such counselor shall not be employed by the creditor or an affiliate of the creditor or be affiliated with the creditor.

(2)  DISCLOSURES REQUIRED PRIOR TO COUNSELING.--No counselor may certify that a consumer has received counseling on the advisability of the high-cost mortgage unless the counselor can verify that the consumer has received each statement required (in connection with such loan) by this section or the Real Estate Settlement Procedures Act of 1974 with respect to the transaction.

(3)  REGULATIONS.--The Board may prescribe such regulations as the Board determines to be appropriate to carry out the requirements of paragraph (1).

(v)  CORRECTIONS AND UNINTENTIONAL VIOLATIONS.--A creditor or assignee in a high-cost mortgage who, when acting in good faith, fails to comply with any requirement under this section will not be deemed to have violated such requirement if the creditor or assignee establishes that either--

(1)  within 30 days of the loan closing and prior to the institution of any action, the consumer is notified of or discovers the violation, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the consumer--

(A)  make the loan satisfy the requirements of this chapter; or

(B)  in the case of a high-cost mortgage, change the terms of the loan in a manner beneficial to the consumer so that the loan will no longer be a high-cost mortgage; or

(2)  within 60 days of the creditor's discovery or receipt of notification of an unintentional violation or bona fide error and prior to the institution of any action, the consumer is notified of the compliance failure, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the consumer--

(A)  make the loan satisfy the requirements of this chapter; or

(B)  in the case of a high-cost mortgage, change the terms of the loan in a manner beneficial so that the loan will no longer be a high-cost mortgage.

[Codified to 15 U.S.C. 1639]

[Source:  Section 129 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 156), effective July 1, 1969, as repealed by section 614 of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 180), effective October 1, 1982, as added by section 151(d) of title I of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2191), effective September 23, 1994; section 626(c) of title VI of the Act of March 11, 2009 (Pub. L. No. 111--8; 123 Stat. 679, effective March 11, 2009; section 1100A(2) and (A)(9) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011; sections 1432, and 1433 of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2160--2163), effective July 21, 2010]

§ 129A.  DUTY OF SERVICERS OF RESIDENTIAL MORTGAGES

(a)  IN GENERAL.--Notwithstanding any other provisions of law, whenever a servicer of residential mortgages agrees to enter into a qualified loss mitigation plan with respect to 1 or more residential mortgages originated before the date of enactment of the Helping Families Save Their Homes Act of 2009, including mortgages held in a securitization or other investment vehicle--

(1)  to the extent that the servicer owes a duty to investors or other parties to maximize the net present value of such mortgages, the duty shall be construed to apply to all such investors and parties, and not to any individual party or group of parties; and

(2)  the servicer shall be deemed to have satisfied the duty set forth in paragraph (1) if, before December 31, 2012, the servicer implements a qualified loss mitigation plan that meets the following criteria:

(A)  Default on the payment of such mortgage has occurred, is imminent, or is reasonably foreseeable, as such terms are defined by guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008.

(B)  The mortgagor occupies the property securing the mortgage as his or her principal residence.

(C)  The servicer reasonably determined, consistent with the guidelines issued by the Secretary of the Treasury or his designee, that the application of such qualified loss mitigation plan to a mortgage or class of mortgages will likely provide an anticipated recovery on the outstanding principal mortgage debt that will exceed the anticipated recovery through foreclosures.

(b)  NO LIABILITY.--A servicer that is deemed to be acting in the best interests of all investors or other parties under this section shall not be liable to any party who is owed a duty under subsection (a)(1), and shall not be subject to any injunction, stay, or other equitable relief to such party, based solely upon the implementation by the servicer of a qualified loss mitigation plan.

(c)  STANDARD INDUSTRY PRACTICE.--The qualified loss mitigation plan guidelines issued by the Secretary of the Treasury under the Emergency Economic Stabilization Act of 2008 shall constitute standard industry practice for purposes of all Federal and State laws.

(d)  SCOPE OF SAFE HARBOR.--Any person, including a trustee, issuer, and loan originator, shall not be liable for monetary damages or be subject to an injunction, stay, or other equitable relief, based solely upon the cooperation of such person with a servicer when such cooperation is necessary for the servicer to implement a qualified loss mitigation plan that meets the requirements of subsection (a).

(e)  REPORTING.--Each servicer that engages in qualified loss mitigation plans under this section shall regularly report to the Secretary of the Treasury the extent, scope, and results of the servicer's modification activities. The Secretary of the Treasury shall prescribe regulations or guidance specifying the form, content, and timing of such reports.

(f)  DEFINITIONS.--As used in this section--

(1)  the term qualified loss mitigation plan' means--

(A)  a residential loan modification, workout, or other loss mitigation plan, including to the extent that the Secretary of the Treasury determines appropriate, a loan sale, real property disposition, trial modification, pre-foreclosure sale, and deed in lieu of foreclosure, that is described or authorized in guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008, and

(B)  a refinancing of a mortgage under the Hope for Homeowners program;

(2)  the term "servicer" means the person responsible for the servicing for others of residential mortgage loans (including of a pool of residential mortgage loans); and

(3)  the term "securitization vehicle" means a trust, special purpose entity, or other legal structure that is used to facilitate the issuing of securities, participation certificates, or similar instruments backed by or referring to a pool of assets that includes residential mortgages (or instruments that are related to residential mortgages such as credit-linked notes).

(g)  RULE OF CONSTRUCTION.--No provision of subsection (b) or (d) shall be construed as affecting the liability of any servicer or person as described in subsection (d) for actual fraud in the origination or servicing of a loan or in the implementation of a qualified loss mitigation plan, or for the violation of a State or Federal law, including laws regulating the origination of mortgage loans, commonly referred to as predatory lending laws.

[Codified at 15 U.S.C. 1639a]

[Section 1403 of title IV of the Act of July 30, 2008 (Pub. L. No. 110--289; 122 Stat. 2809), effective July 30, 2008; as amended by section 201(b) of title II of the Act of May 20, 2009 (Pub. L. No. 111--22; 123 Stat. 1638), effective May 20, 2009; section 1402(a)(1) of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2138), effective July 21, 2010]

§ 129B.  Residential mortgage loan origination

(a)  FINDING AND PURPOSE.--

(1)  FINDING.--The Congress finds that economic stabilization would be enhanced by the protection, limitation, and regulation of the terms of residential mortgage credit and the practices related to such credit, while ensuring that responsible, affordable mortgage credit remains available to consumers.

(2)  PURPOSE.--It is the purpose of this section and section 129C to assure that consumers are offered and receive residential mortgage loans on terms that reasonably reflect their ability to repay the loans and that are understandable and not unfair, deceptive or abusive.

(b)  DUTY OF CARE.--

(1)  STANDARD.--Subject to regulations prescribed under this subsection, each mortgage originator shall, in addition to the duties imposed by otherwise applicable provisions of State or Federal law--

(A)  be qualified and, when required, registered and licensed as a mortgage originator in accordance with applicable State or Federal law, including the Secure and Fair Enforcement for Mortgage Licensing Act of 2008; and

(B)  include on all loan documents any unique identifier of the mortgage originator provided by the Nationwide Mortgage Licensing System and Registry.

(2)  COMPLIANCE PROCEDURES REQUIRED.--The Bureau shall prescribe regulations requiring depository institutions to establish and maintain procedures reasonably designed to assure and monitor the compliance of such depository institutions, the subsidiaries of such institutions, and the employees of such institutions or subsidiaries with the requirements of this section and the registration procedures established under section 1507 of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

(c)  PROHIBITION ON STEERING INCENTIVES.--

(1)  IN GENERAL.--For any residential mortgage loan, no mortgage originator shall receive from any person and no person shall pay to a mortgage originator, directly or indirectly, compensation that varies based on the terms of the loan (other than the amount of the principal).

(2)  RESTRUCTURING OF FINANCING ORIGINATION FEE.--

(A)  IN GENERAL.--For any mortgage loan, a mortgage originator may not receive from any person other than the consumer and no person, other than the consumer, who knows or has reason to know that a consumer has directly compensated or will directly compensate a mortgage originator may pay a mortgage originator any origination fee or charge except bona fide third party charges not retained by the creditor, mortgage originator, or an affiliate of the creditor or mortgage originator.

(B)  EXCEPTION.--Notwithstanding subparagraph (A), a mortgage originator may receive from a person other than the consumer an origination fee or charge, and a person other than the consumer may pay a mortgage originator an origination fee or charge, if--

(i)  the mortgage originator does not receive any compensation directly from the consumer; and

(ii)  the consumer does not make an upfront payment of discount points, origination points, or fees, however denominated (other than bona fide third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or originator), except that the Bureau may, by rule, waive or provide exemptions to this clause if the Bureau determines that such waiver or exemption is in the interest of consumers and in the public interest.

(3)  REGULATIONS.--The Bureau shall prescribe regulations to prohibit--

(A)  mortgage originators from steering any consumer to a residential mortgage loan that--

(i)  the consumer lacks a reasonable ability to repay (in accordance with regulations prescribed under section 129C(a)); or

(ii)  has predatory characteristics or effects (such as equity stripping, excessive fees, or abusive terms);

(B)  mortgage originators from steering any consumer from a residential mortgage loan for which the consumer is qualified that is a qualified mortgage (as defined in section 129C(b)(2)) to a residential mortgage loan that is not a qualified mortgage;

(C)  abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but of different race, ethnicity, gender, or age; and

(D)  mortgage originators from--

(i)  mischaracterizing the credit history of a consumer or the residential mortgage loans available to a consumer;

(ii)  mischaracterizing or suborning the mischaracterization of the appraised value of the property securing the extension of credit; or

(iii)  if unable to suggest, offer, or recommend to a consumer a loan that is not more expensive than a loan for which the consumer qualifies, discouraging a consumer from seeking a residential mortgage loan secured by a consumer's principal dwelling from another mortgage originator.

(4)  RULES OF CONSTRUCTION.--No provision of this subsection shall be construed as--

(A)  permitting any yield spread premium or other similar compensation that would, for any residential mortgage loan, permit the total amount of direct and indirect compensation from all sources permitted to a mortgage originator to vary based on the terms of the loan (other than the amount of the principal);

(B)  limiting or affecting the amount of compensation received by a creditor upon the sale of a consummated loan to a subsequent purchaser;

(C)  restricting a consumer's ability to finance, at the option of the consumer, including through principal or rate, any origination fees or costs permitted under this subsection, or the mortgage originator's right to receive such fees or costs (including compensation) from any person, subject to paragraph (2)(B), so long as such fees or costs do not vary based on the terms of the loan (other than the amount of the principal) or the consumer's decision about whether to finance such fees or costs; or

(D)  prohibiting incentive payments to a mortgage originator based on the number of residential mortgage loans originated within a specified period of time.

(d)  LIABILITY FOR VIOLATIONS.--

(1)  IN GENERAL.--For purposes of providing a cause of action for any failure by a mortgage originator, other than a creditor, to comply with any requirement imposed under this section and any regulation prescribed under this section, section 130 shall be applied with respect to any such failure by substituting "mortgage originator" for "creditor" each place such term appears in each such subsection.

(2)  MAXIMUM.--The maximum amount of any liability of a mortgage originator under paragraph (1) to a consumer for any violation of this section shall not exceed the greater of actual damages or an amount equal to 3 times the total amount of direct and indirect compensation or gain accruing to the mortgage originator in connection with the residential mortgage loan involved in the violation, plus the costs to the consumer of the action, including a reasonable attorney's fee.

(e)  DISCRETIONARY REGULATORY AUTHORITY.--

(1)  IN GENERAL.--The Bureau shall, by regulations, prohibit or condition terms, acts or practices relating to residential mortgage loans that the Bureau finds to be abusive, unfair, deceptive, predatory, necessary or proper to ensure that responsible, affordable mortgage credit remains available to consumers in a manner consistent with the purposes of this section and section 129C, necessary or proper to effectuate the purposes of this section and section 129C, to prevent circumvention or evasion thereof, or to facilitate compliance with such sections, or are not in the interest of the borrower.

(2)  APPLICATION.--The regulations prescribed under paragraph (1) shall be applicable to all residential mortgage loans and shall be applied in the same manner as regulations prescribed under section 105.

(f)  Section 129B and any regulations promulgated thereunder do not apply to an extension of credit relating to a plan described in section 101(53D) of title 11, United States Code.

[Codified to 15 U.S.C. 1639b]

[Source: Section 1100A(2) of title XI of the Act of July 21, 2101 (Pub. L. No. 111--203; 124 stat. 2107), effective July 21, 2010; section 129B added by section 1402(a)(2) of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2138); sections 1403--1405(a) of title IXV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat 2139--2142), effective July 21, 2010]

Note

Except as otherwise expressly provided in section 129B or 129C of the Truth in Lending Act (as added by this title), no provision of such section 129B or 129C shall be construed as superseding, repealing, or affecting any duty, right, obligation, privilege, or remedy of any person under any other provision of the Truth in Lending Act or any other provision of Federal or State law.

[Codified to 15 U.S.C. note]

[Source: Section 1415 of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2153), effective July 21, 2010]

§ 129C.  Minimum standards for residential mortgage loans

(a)  ABILITY TO REPAY.--

(1)  IN GENERAL.--In accordance with regulations prescribed by the Bureau, no creditor may make a residential mortgage loan unless the creditor makes a reasonable and good faith determination based on verified and documented information that, at the time the loan is consummated, the consumer has a reasonable ability to repay the loan, according to its terms, and all applicable taxes, insurance (including mortgage guarantee insurance), and assessments.

(2)  MULTIPLE LOANS.--If the creditor knows, or has reason to know, that 1 or more residential mortgage loans secured by the same dwelling will be made to the same consumer, the creditor shall make a reasonable and good faith determination, based on verified and documented information, that the consumer has a reasonable ability to repay the combined payments of all loans on the same dwelling according to the terms of those loans and all applicable taxes, insurance (including mortgage guarantee insurance), and assessments.

(3)  BASIS FOR DETERMINATION.--A determination under this subsection of a consumer's ability to repay a residential mortgage loan shall include consideration of the consumer's credit history, current income, expected income the consumer is reasonably assured of receiving, current obligations, debt-to-income ratio or the residual income the consumer will have after paying non-mortgage debt and mortgage-related obligations, employment status, and other financial resources other than the consumer's equity in the dwelling or real property that secures repayment of the loan. A creditor shall determine the ability of the consumer to repay using a payment schedule that fully amortizes the loan over the term of the loan.

(4)  INCOME VERIFICATION.--A creditor making a residential mortgage loan shall verify amounts of income or assets that such creditor relies on to determine repayment ability, including expected income or assets, by reviewing the consumer's Internal Revenue Service Form W-2, tax returns, payroll receipts, financial institution records, or other third-party documents that provide reasonably reliable evidence of the consumer's income or assets. In order to safeguard against fraudulent reporting, any consideration of a consumer's income history in making a determination under this subsection shall include the verification of such income by the use of--

(A)  Internal Revenue Service transcripts of tax returns; or

(B)  a method that quickly and effectively verifies income documentation by a third party subject to rules prescribed by the Bureau.

(5)  EXEMPTION.--With respect to loans made, guaranteed, or insured by Federal departments or agencies identified in subsection (b)(3)(B)(ii), such departments or agencies may exempt refinancings under a streamlined refinancing from this income verification requirement as long as the following conditions are met:

(A)  The consumer is not 30 days or more past due on the prior existing residential mortgage loan.

(B)  The refinancing does not increase the principal balance outstanding on the prior existing residential mortgage loan, except to the extent of fees and charges allowed by the department or agency making, guaranteeing, or insuring the refinancing.

(C)  Total points and fees (as defined in section 103(aa) (4), other than bona fide third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator) payable in connection with the refinancing do not exceed 3 percent of the total new loan amount.

(D)  The interest rate on the refinanced loan is lower than the interest rate of the original loan, unless the borrower is refinancing from an adjustable rate to a fixed- rate loan, under guidelines that the department or agency shall establish for loans they make, guarantee, or issue.

(E)  The refinancing is subject to a payment schedule that will fully amortize the refinancing in accordance with the regulations prescribed by the department or agency making, guaranteeing, or insuring the refinancing.

(F)  The terms of the refinancing do not result in a balloon payment, as defined in subsection (b)(2)(A)(ii).

(G)  Both the residential mortgage loan being refinanced and the refinancing satisfy all requirements of the department or agency making, guaranteeing, or insuring the refinancing.

(6)  NONSTANDARD LOANS.--

(A)  VARIABLE RATE LOANS THAT DEFER REPAYMENT OF ANY PRINCIPAL OR INTEREST.--For purposes of determining, under this subsection, a consumer's ability to repay a variable rate residential mortgage loan that allows or requires the consumer to defer the repayment of any principal or interest, the creditor shall use a fully amortizing repayment schedule.

(B)  INTEREST-ONLY LOANS.--For purposes of determining, under this subsection, a consumer's ability to repay a residential mortgage loan that permits or requires the payment of interest only, the creditor shall use the payment amount required to amortize the loan by its final maturity.

(C)  CALCULATION FOR NEGATIVE AMORTIZATION.--In making any determination under this subsection, a creditor shall also take into consideration any balance increase that may accrue from any negative amortization provision.

(D)  CALCULATION PROCESS.--For purposes of making any determination under this subsection, a creditor shall calculate the monthly payment amount for principal and interest on any residential mortgage loan by assuming--

(i)  the loan proceeds are fully disbursed on the date of the consummation of the loan;

(ii)  the loan is to be repaid in substantially equal monthly amortizing payments for principal and interest over the entire term of the loan with no balloon payment, unless the loan contract requires more rapid repayment (including balloon payment), in which case the calculation shall be made (I) in accordance with regulations prescribed by the Bureau, with respect to any loan which has an annual percentage rate that does not exceed the average prime offer rate for a comparable transaction, as of the date the interest rate is set, by 1.5 or more percentage points for a first lien residential mortgage loan; and by 3.5 or more percentage points for a subordinate lien residential mortgage loan; or (II) using the contract's repayment schedule, with respect to a loan which has an annual percentage rate, as of the date the interest rate is set, that is at least 1.5 percentage points above the average prime offer rate for a first lien residential mortgage loan; and 3.5 percentage points above the average prime offer rate for a subordinate lien residential mortgage loan; and

(iii)  the interest rate over the entire term of the loan is a fixed rate equal to the fully indexed rate at the time of the loan closing, without considering the introductory rate.

(E)  REFINANCE OF HYBRID LOANS WITH CURRENT LENDER.--In considering any application for refinancing an existing hybrid loan by the creditor into a standard loan to be made by the same creditor in any case in which there would be a reduction in monthly payment and the mortgagor has not been delinquent on any payment on the existing hybrid loan, the creditor may--

(i)  consider the mortgagor's good standing on the existing mortgage;

(ii)  consider if the extension of new credit would prevent a likely default should the original mortgage reset and give such concerns a higher priority as an acceptable underwriting practice; and

(iii)  offer rate discounts and other favorable terms to such mortgagor that would be available to new customers with high credit ratings based on such underwriting practice.

(7)  FULLY-INDEXED RATE DEFINED.--For purposes of this subsection, the term "fully indexed rate" means the index rate prevailing on a residential mortgage loan at the time the loan is made plus the margin that will apply after the expiration of any introductory interest rates.

(8)  REVERSE MORTGAGES AND BRIDGE LOANS.--This subsection shall not apply with respect to any reverse mortgage or temporary or bridge loan with a term of 12 months or less, including to any loan to purchase a new dwelling where the consumer plans to sell a different dwelling within 12 months.

(9)  SEASONAL INCOME.--If documented income, including income from a small business, is a repayment source for a residential mortgage loan, a creditor may consider the seasonality and irregularity of such income in the underwriting of and scheduling of payments for such credit.

(b)  PRESUMPTION OF ABILITY TO REPAY.--

(1)  IN GENERAL.--Any creditor with respect to any residential mortgage loan, and any assignee of such loan subject to liability under this title, may presume that the loan has met the requirements of subsection (a), if the loan is a qualified mortgage.

(2)  DEFINITIONS.--For purposes of this subsection, the following definitions shall apply:

(A)  QUALIFIED MORTGAGE.--The term "qualified mortgage" means any residential mortgage loan--

(i)  for which the regular periodic payments for the loan may not--

(I)  result in an increase of the principal balance; or

(II)  except as provided in subparagraph (E), allow the consumer to defer repayment of principal;

(ii)  except as provided in subparagraph (E), the terms of which do not result in a balloon payment, where a "balloon payment" is a scheduled payment that is more than twice as large as the average of earlier scheduled payments;

(iii)  for which the income and financial resources relied upon to qualify the obligors on the loan are verified and documented;

(iv)  in the case of a fixed rate loan, for which the underwriting process is based on a payment schedule that fully amortizes the loan over the loan term and takes into account all applicable taxes, insurance, and assessments;

(v)  in the case of an adjustable rate loan, for which the underwriting is based on the maximum rate permitted under the loan during the first 5 years, and a payment schedule that fully amortizes the loan over the loan term and takes into account all applicable taxes, insurance, and assessments;

(vi)  that complies with any guidelines or regulations established by the Bureau relating to ratios of total monthly debt to monthly income or alternative measures of ability to pay regular expenses after payment of total monthly debt, taking into account the income levels of the borrower and such other factors as the Bureau may determine relevant and consistent with the purposes described in paragraph (3)(B)(i);

(vii)  for which the total points and fees (as defined in subparagraph (C)) payable in connection with the loan do not exceed 3 percent of the total loan amount;

(viii)  for which the term of the loan does not exceed 30 years, except as such term may be extended under paragraph (3), such as in high-cost areas; and

(ix)  in the case of a reverse mortgage (except for the purposes of subsection (a) of section 129C, to the extent that such mortgages are exempt altogether from those requirements), a reverse mortgage which meets the standards for a qualified mortgage, as set by the Bureau in rules that are consistent with the purposes of this subsection.

(B)  AVERAGE PRIME OFFER RATE.--The term "average prime offer rate" means the average prime offer rate for a comparable transaction as of the date on which the interest rate for the transaction is set, as published by the Bureau.

(C)  POINTS AND FEES.--

(i)  IN GENERAL.--For purposes of subparagraph (A), the term "points and fees" means points and fees as defined by section 103(aa)(4) (other than bona fide third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator).

(ii)  COMPUTATION.--For purposes of computing the total points and fees under this subparagraph, the total points and fees shall exclude either of the amounts described in the following subclauses, but not both:

(I)  Up to and including 2 bona fide discount points payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage's interest rate will be discounted does not exceed by more than 1 percentage point the average prime offer rate.

(II)  Unless 2 bona fide discount points have been excluded under subclause (I), up to and including 1 bona fide discount point payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage's interest rate will be discounted does not exceed by more than 2 percentage points the average prime offer rate.

(iii)  BONA FIDE DISCOUNT POINTS DEFINED.--For purposes of clause (ii), the term "bona fide discount points" means loan discount points which are knowingly paid by the consumer for the purpose of reducing, and which in fact result in a bona fide reduction of, the interest rate or time-price differential applicable to the mortgage.

(iv)  INTEREST RATE REDUCTION.--Subclauses (I) and (II) of clause (ii) shall not apply to discount points used to purchase an interest rate reduction unless the amount of the interest rate reduction purchased is reasonably consistent with established industry norms and practices for secondary mortgage market transactions.

(D)  SMALLER LOANS.--The Bureau shall prescribe rules adjusting the criteria under subparagraph (A)(vii) in order to permit lenders that extend smaller loans to meet the requirements of the presumption of compliance under paragraph (1). In prescribing such rules, the Bureau shall consider the potential impact of such rules on rural areas and other areas where home values are lower.

(E)  BALLOON LOANS.--The Bureau may, by regulation, provide that the term "qualified mortgage" includes a balloon loan--

(i)  that meets all of the criteria for a qualified mortgage under subparagraph (A) (except clauses (i)(II), (ii), (iv), and (v) of such subparagraph);

(ii)  for which the creditor makes a determination that the consumer is able to make all scheduled payments, except the balloon payment, out of income or assets other than the collateral;

(iii)  for which the underwriting is based on a payment schedule that fully amortizes the loan over a period of not more than 30 years and takes into account all applicable taxes, insurance, and assessments; and

(iv)  that is extended by a creditor that-

(I)  operates predominantly in rural or underserved areas;

(II)  together with all affiliates, has total annual residential mortgage loan originations that do not exceed a limit set by the Bureau;

(III)  retains the balloon loans in portfolio; and

(IV)  meets any asset size threshold and any other criteria as the Bureau may establish, consistent with the purposes of this subtitle.

(3)  REGULATIONS.--

(A)  IN GENERAL.--The Bureau shall prescribe regulations to carry out the purposes of this subsection.

(B)  REVISION OF SAFE HARBOR CRITERIA.--

(i)  IN GENERAL.--The Bureau may prescribe regulations that revise, add to, or subtract from the criteria that define a qualified mortgage upon a finding that such regulations are necessary or proper to ensure that responsible, affordable mortgage credit remains available to consumers in a manner consistent with the purposes of this section, necessary and appropriate to effectuate the purposes of this section and section 129B, to prevent circumvention or evasion thereof, or to facilitate compliance with such sections.

(ii)  LOAN DEFINITION.--The following agencies shall, in consultation with the Bureau, prescribe rules defining the types of loans they insure, guarantee, or administer, as the case may be, that are qualified mortgages for purposes of paragraph (2)(A), and such rules may revise, add to, or subtract from the criteria used to define a qualified mortgage under paragraph (2)(A), upon a finding that such rules are consistent with the purposes of this section and section 129B, to prevent circumvention or evasion thereof, or to facilitate compliance with such sections:

(I)  The Department of Housing and Urban Development, with regard to mortgages insured under the National Housing Act (12 U.S.C. 1707 et seq.).

(II)  The Department of Veterans Affairs, with regard to a loan made or guaranteed by the Secretary of Veterans Affairs.

(III)  The Department of Agriculture, with regard loans guaranteed by the Secretary of Agriculture pursuant to 42 U.S.C. 1472(h).

(IV)  The Rural Housing Service, with regard to loans insured by the Rural Housing Service.

(c)  PROHIBITION ON CERTAIN PREPAYMENT PENALTIES.--

(1)  PROHIBITED ON CERTAIN LOANS.--

(A)  IN GENERAL.--A residential mortgage loan that is not a "qualified mortgage", as defined under subsection (b)(2), may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal after the loan is consummated.

(B)  EXCLUSIONS.--For purposes of this subsection, a "qualified mortgage" may not include a residential mortgage loan that--

(i)  has an adjustable rate; or

(ii)  has an annual percentage rate that exceeds the average prime offer rate for a comparable transaction, as of the date the interest rate is set--

(I)  by 1.5 or more percentage points, in the case of a first lien residential mortgage loan having a original principal obligation amount that is equal to or less than the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the 6th sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2));

(II)  by 2.5 or more percentage points, in the case of a first lien residential mortgage loan having a original principal obligation amount that is more than the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the 6th sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); and

(III)  by 3.5 or more percentage points, in the case of a subordinate lien residential mortgage loan.

(2)  PUBLICATION OF AVERAGE PRIME OFFER RATE AND APR THRESHOLDS.--The Bureau--

(A)  shall publish, and update at least weekly, average prime offer rates;

(B)  may publish multiple rates based on varying types of mortgage transactions; and

(C)  shall adjust the thresholds established under subclause (I), (II), and (III) of paragraph (1)(B)(ii) as necessary to reflect significant changes in market conditions and to effectuate the purposes of the Mortgage Reform and Anti-Predatory Lending Act.

(3)  PHASED-OUT PENALTIES ON QUALIFIED MORTGAGES.--A qualified mortgage (as defined in subsection (b)(2)) may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal after the loanis consummated in excess of the following limitations:

(A)  During the 1-year period beginning on the date the loan is consummated, the prepayment penalty shall not exceed an amount equal to 3 percent of the outstanding balance on the loan.

(B)  During the 1-year period beginning after the period described in subparagraph (A), the prepayment penalty shall not exceed an amount equal to 2 percent of the outstanding balance on the loan.

(C)  During the 1-year period beginning after the 1-year period described in subparagraph (B), the prepayment penalty shall not exceed an amount equal to 1 percent of the outstanding balance on the loan.

(D)  After the end of the 3-year period beginning on the date the loan is consummated, no prepayment penalty may be imposed on a qualified mortgage.

(4)  OPTION FOR NO PREPAYMENT PENALTY REQUIRED.--A creditor may not offer a consumer a residential mortgage loan product that has a prepayment penalty for paying all or part of the principal after the loan is consummated as a term of the loan without offering the consumer a residential mortgage loan product that does not have a prepayment penalty as a term of the loan.

(d)  SINGLE PREMIUM CREDIT INSURANCE PROHIBITED.--No creditor may finance, directly or indirectly, in connection with any residential mortgage loan or with any extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident, loss-of-income, life, or health insurance, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that--

(1)  insurance premiums or debt cancellation or suspension fees calculated and paid in full on a monthly basis shall not be considered financed by the creditor; and

(2)  this subsection shall not apply to credit unemployment insurance for which the unemployment insurance premiums are reasonable, the creditor receives no direct or indirect compensation in connection with the unemployment insurance premiums, and the unemployment insurance premiums are paid pursuant to another insurance contract and not paid to an affiliate of the creditor.

(e)  ARBITRATION.--

(1)  IN GENERAL.--No residential mortgage loan and no extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer may include terms which require arbitration or any other nonjudicial procedure as the method for resolving any controversy or settling any claims arising out of the transaction.

(2)  POST-CONTROVERSY AGREEMENTS.--Subject to paragraph (3), paragraph (1) shall not be construed as limiting the right of the consumer and the creditor or any assignee to agree to arbitration or any other nonjudicial procedure as the method for resolving any controversy at any time after a dispute or claim under the transaction arises.

(3)  NO WAIVER OF STATUTORY CAUSE OF ACTION.--No provision of any residential mortgage loan or of any extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, and no other agreement between the consumer and the creditor relating to the residential mortgage loan or extension of credit referred to in paragraph (1), shall be applied or interpreted so as to bar a consumer from bringing an action in an appropriate district court of the United States, or any other court of competent jurisdiction, pursuant to section 130 or any other provision of law, for damages or other relief in connection with any alleged violation of this section, any other provision of this title, or any other Federal law.

(f)  MORTGAGES WITH NEGATIVE AMORTIZATION.--No creditor may extend credit to a borrower in connection with a consumer credit transaction under an open or closed end consumer credit plan secured by a dwelling or residential real property that includes a dwelling, other than a reverse mortgage, that provides or permits a payment plan that may, at any time over the term of the extension of credit, result in negative amortization unless, before such transaction is consummated--

(1)  the creditor provides the consumer with a statement that--

(A)  the pending transaction will or may, as the case may be, result in negative amortization;

(B)  describes negative amortization in such manner as the Bureau shall prescribe;

(C)  negative amortization increases the outstanding principal balance of the account; and

(D)  negative amortization reduces the consumer's equity in the dwelling or real property; and

(2)  in the case of a first-time borrower with respect to a residential mortgage loan that is not a qualified mortgage, the first-time borrower provides the creditor with sufficient documentation to demonstrate that the consumer received homeownership counseling from organizations or counselors certified by the Secretary of Housing and Urban Development as competent to provide such counseling.

(g)  PROTECTION AGAINST LOSS OF ANTI-DEFICIENCY PROTECTION.--

(1)  DEFINITION.--For purposes of this subsection, the term "anti-deficiency law" means the law of any State which provides that, in the event of foreclosure on the residential property of a consumer securing a mortgage, the consumer is not liable, in accordance with the terms and limitations of such State law, for any deficiency between the sale price obtained on such property through foreclosure and the outstanding balance of the mortgage.

(2)  NOTICE AT TIME OF CONSUMMATION.--In the case of any residential mortgage loan that is, or upon consummation will be, subject to protection under an anti-deficiency law, the creditor or mortgage originator shall provide a written notice to the consumer describing the protection provided by the antideficiency law and the significance for the consumer of the loss of such protection before such loan is consummated.

(3)  NOTICE BEFORE REFINANCING THAT WOULD CAUSE LOSS OF PROTECTION.--In the case of any residential mortgage loan that is subject to protection under an anti-deficiency law, if a creditor or mortgage originator provides an application to a consumer, or receives an application from a consumer, for any type of refinancing for such loan that would cause the loan to lose the protection of such anti-deficiency law, the creditor or mortgage originator shall provide a written notice to the consumer describing the protection provided by the antideficiency law and the significance for the consumer of the loss of such protection before any agreement for any such refinancing is consummated.

(h)  POLICY REGARDING ACCEPTANCE OF PARTIAL PAYMENT.-- In the case of any residential mortgage loan, a creditor shall disclose prior to settlement or, in the case of a person becoming a creditor with respect to an existing residential mortgage loan, at the time such person becomes a creditor--

(1)  the creditor's policy regarding the acceptance of partial payments; and

(2)  if partial payments are accepted, how such payments will be applied to such mortgage and if such payments will be placed in escrow.

(i)  TIMESHARE PLANS.--This section and any regulations promulgated under this section do not apply to an extension of credit relating to a plan described in section 101(53D) of title 11, United States Code.

[Codified to 15 U.S.C. 1639c]

[Source: Section 1100A(2) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011; section 129C added by section 1411(a)(2), and amended by section 1412, and 1414(a)--1414(d) of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2142, 2145, and 2149--2153), effective July 21, 2010]

Note

(a)  IN GENERAL.--

(1)  RULE OF CONSTRUCTION.--No regulation, order, or guidance issued by the Bureau under this title shall be construed as requiring a depository institution to apply mortgage underwriting standards that do not meet the minimum underwriting standards required by the appropriate prudential regulator of the depository institution.

[Codified to 15 U.S.C. 1639c note]

[Source: Section 1411(a)(1) of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2142), effective July 21, 2010]

§ 129D.  Escrow or impound accounts relating to certain consumer credit transactions

(a)  IN GENERAL.--Except as provided in subsection (b), (c), (d), or (e), a creditor, in connection with the consummation of a consumer credit transaction secured by a first lien on the principal dwelling of the consumer, other than a consumer credit transaction under an open end credit plan or a reverse mortgage, shall establish, before the consummation of such transaction, an escrow or impound account for the payment of taxes and hazard insurance, and, if applicable, flood insurance, mortgage insurance, ground rents, and any other required periodic payments or premiums with respect to the property or the loan terms, as provided in, and in accordance with, this section.

(b)  WHEN REQUIRED.--No impound, trust, or other type of account for the payment of property taxes, insurance premiums, or other purposes relating to the property may be required as a condition of a real property sale contract or a loan secured by a first deed of trust or mortgage on the principal dwelling of the consumer, other than a consumer credit transaction under an open end credit plan or a reverse mortgage, except when--

(1)  any such impound, trust, or other type of escrow or impound account for such purposes is required by Federal or State law;

(2)  a loan is made, guaranteed, or insured by a State or Federal governmental lending or insuring agency;

(3)  the transaction is secured by a first mortgage or lien on the consumer's principal dwelling having an original principal obligation amount that--

(A)  does not exceed the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date such interest rate set, pursuant to the sixth sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and the annual percentage rate will exceed the average prime offer rate as defined in section 129C by 1.5 or more percentage points; or

(B)  exceeds the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date such interest rate set, pursuant to the sixth sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and the annual percentage rate will exceed the average prime offer rate as defined in section 129C by 2.5 or more percentage points; or

(4)  so required pursuant to regulation.

(c)  EXEMPTIONS.--The Bureau may, by regulation, exempt from the requirements of subsection (a) a creditor that--

(1)  operates predominantly in rural or underserved areas;

(2)  together with all affiliates, has total annual mortgage loan originations that do not exceed a limit set by the Bureau;

(3)  retains its mortgage loan originations in portfolio; and

(4)  meets any asset size threshold and any other criteria the Bureau may establish, consistent with the purposes of this subtitle.

(d)  DURATION OF MANDATORY ESCROW OR IMPOUND ACCOUNT.--An escrow or impound account established pursuant to subsection (b) shall remain in existence for a minimum period of 5 years, beginning with the date of the consummation of the loan, unless and until--

(1)  such borrower has sufficient equity in the dwelling securing the consumer credit transaction so as to no longer be required to maintain private mortgage insurance;

(2)  such borrower is delinquent;

(3)  such borrower otherwise has not complied with the legal obligation, as established by rule; or

(4)  the underlying mortgage establishing the account is terminated.

(e)  LIMITED EXEMPTIONS FOR LOANS SECURED BY SHARES IN A COOPERATIVE OR IN WHICH AN ASSOCIATION MUST MAINTAIN A MASTER INSURANCE POLICY.--Escrow accounts need not be established for loans secured by shares in a cooperative. Insurance premiums need not be included in escrow accounts for loans secured by dwellings or units, where the borrower must join an association as a condition of ownership, and that association has an obligation to the dwelling or unit owners to maintain a master policy insuring the dwellings or units.

(f)  CLARIFICATION ON ESCROW ACCOUNTS FOR LOANS NOT MEETING STATUTORY TEST.--For mortgages not covered by the requirements of subsection (b), no provision of this section shall be construed as precluding the establishment of an impound, trust, or other type of account for the payment of property taxes, insurance premiums, or other purposes relating to the property--

(1)  on terms mutually agreeable to the parties to the loan;

(2)  at the discretion of the lender or servicer, as provided by the contract between the lender or servicer and the borrower; or

(3)  pursuant to the requirements for the escrowing of flood insurance payments for regulated lending institutions in section 102(d) of the Flood Disaster Protection Act of 1973.

(g)  ADMINISTRATION OF MANDATORY ESCROW OR IMPOUND ACCOUNTS.--

(1)  IN GENERAL.--Except as may otherwise be provided for in this title or in regulations prescribed by the Bureau, escrow or impound accounts established pursuant to subsection (b) shall be established in a federally insured depository institution or credit union.

(2)  ADMINISTRATION.--Except as provided in this section or regulations prescribed under this section, an escrow or impound account subject to this section shall be administered in accordance with--

(A)  the Real Estate Settlement Procedures Act of 1974 and regulations prescribed under such Act;

(B)  the Flood Disaster Protection Act of 1973 and regulations prescribed under such Act; and

(C)  the law of the State, if applicable, where the real property securing the consumer credit transaction is located.

(3)  APPLICABILITY OF PAYMENT OF INTEREST.--If prescribed by applicable State or Federal law, each creditor shall pay interest to the consumer on the amount held in any impound, trust, or escrow account that is subject to this section in the manner as prescribed by that applicable State or Federal law.

(4)  PENALTY COORDINATION WITH RESPA.--Any action or omission on the part of any person which constitutes a violation of the Real Estate Settlement Procedures Act of 1974 or any regulation prescribed under such Act for which the person has paid any fine, civil money penalty, or other damages shall not give rise to any additional fine, civil money penalty, or other damages under this section, unless the action or omission also constitutes a direct violation of this section.

(h)  DISCLOSURES RELATING TO MANDATORY ESCROW OR IMPOUND ACCOUNT.--In the case of any impound, trust, or escrow account that is required under subsection (b), the creditor shall disclose by written notice to the consumer at least 3 business days before the consummation of the consumer credit transaction giving rise to such account or in accordance with timeframes established in prescribed regulations the following information:

(1)  The fact that an escrow or impound account will be established at consummation of the transaction.

(2)  The amount required at closing to initially fund the escrow or impound account.

(3)  The amount, in the initial year after the consummation of the transaction, of the estimated taxes and hazard insurance, including flood insurance, if applicable, and any other required periodic payments or premiums that reflects, as appropriate, either the taxable assessed value of the real property securing the transaction, including the value of any improvements on the property or to be constructed on the property (whether or not such construction will be financed from the proceeds of the transaction) or the replacement costs of the property.

(4)  The estimated monthly amount payable to be escrowed for taxes, hazard insurance (including flood insurance, if applicable) and any other required periodic payments or premiums.

(5)  The fact that, if the consumer chooses to terminate the account in the future, the consumer will become responsible for the payment of all taxes, hazard insurance, and flood insurance, if applicable, as well as any other required periodic payments or premiums on the property unless a new escrow or impound account is established.

(6)  Such other information as the Bureau determines necessary for the protection of the consumer.

(i)  DEFINITIONS.--For purposes of this section, the following definitions shall apply:

(1)  FLOOD INSURANCE.--The term "flood insurance" means flood insurance coverage provided under the national flood insurance program pursuant to the National Flood Insurance Act of 1968.

(2)  HAZARD INSURANCE.--The term "hazard insurance" shall have the same meaning as provided for "hazard insurance", "casualty insurance", "homeowner's insurance", or other similar term under the law of the State where the real property securing the consumer credit transaction is located.

(j)  DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE ESCROW SERVICES.--

(1)  IN GENERAL.--If--

(A)  an impound, trust, or other type of account for the payment of property taxes, insurance premiums, or other purposes relating to real property securing a consumer credit transaction is not established in connection with the transaction; or

(B)  a consumer chooses, and provides written notice to the creditor or servicer of such choice, at any time after such an account is established in connection with any such transaction and in accordance with any statute, regulation, or contractual agreement, to close such account, the creditor or servicer shall provide a timely and clearly written disclosure to the consumer that advises the consumer of the responsibilities of the consumer and implications for the consumer in the absence of any such account.

(2)  DISCLOSURE REQUIREMENTS.--Any disclosure provided to a consumer under paragraph (1) shall include the following:

(A)  Information concerning any applicable fees or costs associated with either the non-establishment of any such account at the time of the transaction, or any subsequent closure of any such account.

(B)  A clear and prominent statement that the consumer is responsible for personally and directly paying the non-escrowed items, in addition to paying the mortgage loan payment, in the absence of any such account, and the fact that the costs for taxes, insurance, and related fees can be substantial.

(C)  A clear explanation of the consequences of any failure to pay non-escrowed items, including the possible requirement for the forced placement of insurance by the creditor or servicer and the potentially higher cost (including any potential commission payments to the servicer) or reduced coverage for the consumer in the event of any such creditor-placed insurance.

(D)  Such other information as the Bureau determines necessary for the protection of the consumer.'

[Codified to 15 USC 1639d]

[Source: Section 1100(A)(2) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011; section 129D added by section 1461(a) of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2150), effective July 21, 2010]

Note

(b)  EXEMPTIONS AND MODIFICATIONS.--The Board may prescribe rules that revise, add to, or subtract from the criteria of section 129D(b) of the Truth in Lending Act if the Board determines that such rules are in the interest of consumers and in the public interest.

[Codified to 15 U.S.C. 1639d note]

[Source: Section 1461(b) of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2181), effective July 21, 2010]

§ 129E.  Appraisal independence requirements

(a)  IN GENERAL.--It shall be unlawful, in extending credit or in providing any services for a consumer credit transaction secured by the principal dwelling of the consumer, to engage in any act or practice that violates appraisal independence as described in or pursuant to regulations prescribed under this section.

(b)  APPRAISAL INDEPENDENCE.--For purposes of subsection (a), acts or practices that violate appraisal independence shall include--

(1)  any appraisal of a property offered as security for repayment of the consumer credit transaction that is conducted in connection with such transaction in which a person with an interest in the underlying transaction compensates, coerces, extorts, colludes, instructs, induces, bribes, or intimidates a person, appraisal management company, firm, or other entity conducting or involved in an appraisal, or attempts, to compensate, coerce, extort, collude, instruct, induce, bribe, or intimidate such a person, for the purpose of causing the appraised value assigned, under the appraisal, to the property to be based on any factor other than the independent judgment of the appraiser;

(2)  mischaracterizing, or suborning any mischaracterization of, the appraised value of the property securing the extension of the credit;

(3)  seeking to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing of the transaction; and

(4)  withholding or threatening to withhold timely payment for an appraisal report or for appraisal services rendered when the appraisal report or services are provided for in accordance with the contract between the parties.

(c)  EXCEPTIONS.--The requirements of subsection (b) shall not be construed as prohibiting a mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, consumer, or any other person with an interest in a real estate transaction from asking an appraiser to undertake 1 or more of the following:

(1)  Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal.

(2)  Provide further detail, substantiation, or explanation for the appraiser's value conclusion.

(3)  Correct errors in the appraisal report.

(d)  PROHIBITIONS ON CONFLICTS OF INTEREST.--No certified or licensed appraiser conducting, and no appraisal management company procuring or facilitating, an appraisal in connection with a consumer credit transaction secured by the principal dwelling of a consumer may have a direct or indirect interest, financial or otherwise, in the property or transaction involving the appraisal.

(e)  MANDATORY REPORTING.--Any mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, or any other person involved in a real estate transaction involving an appraisal in connection with a consumer credit transaction secured by the principal dwelling of a consumer who has a reasonable basis to believe an appraiser is failing to comply with the Uniform Standards of Professional Appraisal Practice, is violating applicable laws, or is otherwise engaging in unethical or unprofessional conduct, shall refer the matter to the applicable State appraiser certifying and licensing agency.

(f)  NO EXTENSION OF CREDIT.--In connection with a consumer credit transaction secured by a consumer's principal dwelling, a creditor who knows, at or before loan consummation, of a violation of the appraisal independence standards established in subsections (b) or (d) shall not extend credit based on such appraisal unless the creditor documents that the creditor has acted with reasonable diligence to determine that the appraisal does not materially misstate or misrepresent the value of such dwelling.

(g)  RULES AND INTERPRETIVE GUIDELINES.--

(1)  IN GENERAL.--Except as provided under paragraph (2), the Board, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau may jointly issue rules, interpretive guidelines, and general statements of policy with respect to acts or practices that violate appraisal independence in the provision of mortgage lending services for a consumer credit transaction secured by the principal dwelling of the consumer and mortgage brokerage services for such a transaction, within the meaning of subsections (a), (b), (c), (d), (e), (f), (h), and (i).

(2)  INTERIM FINAL REGULATIONS.--The Board shall, for purposes of this section, prescribe interim final regulations no later than 90 days after the date of enactment of this section defining with specificity acts or practices that violate appraisal independence in the provision of mortgage lending services for a consumer credit transaction secured by the principal dwelling of the consumer or mortgage brokerage services for such a transaction and defining any terms in this section or such regulations. Rules prescribed by the Board under this paragraph shall be deemed to be rules prescribed by the agencies jointly under paragraph (1).

(h)  APPRAISAL REPORT PORTABILITY.--Consistent with the requirements of this section, the Board, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau may jointly issue regulations that address the issue of appraisal report portability, including regulations that ensure the portability of the appraisal report between lenders for a consumer credit transaction secured by a 1--4 unit single family residence that is the principal dwelling of the consumer, or mortgage brokerage services for such a transaction.

(i)  CUSTOMARY AND REASONABLE FEE.--

(1)  IN GENERAL.--Lenders and their agents shall compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised. Evidence for such fees may be established by objective third-party information, such as government agency fee schedules, academic studies, and independent private sector surveys. Fee studies shall exclude assignments ordered by known appraisal management companies.

(2)  FEE APPRAISER DEFINITION.--For purposes of this section, the term "fee appraiser" means a person who is not an employee of the mortgage loan originator or appraisal management company engaging the appraiser and is--

(A)  a State licensed or certified appraiser who receives a fee for performing an appraisal and certifies that the appraisal has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice; or

(B)  a company not subject to the requirements of section 1124 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) that utilizes the services of State licensed or certified appraisers and receives a fee for performing appraisals in accordance with the Uniform Standards of Professional Appraisal Practice.

(3)  EXCEPTION FOR COMPLEX ASSIGNMENTS.--In the case of an appraisal involving a complex assignment, the customary and reasonable fee may reflect the increased time, difficulty, and scope of the work required for such an appraisal and include an amount over and above the customary and reasonable fee for non-complex assignments.

(j)  SUNSET.--Effective on the date the interim final regulations are promulgated pursuant to subsection (g), the Home Valuation Code of Conduct announced by the Federal Housing Finance Agency on December 23, 2008, shall have no force or effect.

(k)  PENALTIES.--

(1)  FIRST VIOLATION.--In addition to the enforcement provisions referred to in section 130, each person who violates this section shall forfeit and pay a civil penalty of not more than $10,000 for each day any such violation continues.

(2)  SUBSEQUENT VIOLATIONS.--In the case of any person on whom a civil penalty has been imposed under paragraph (1), paragraph (1) shall be applied by substituting "$20,000" for "$10,000" with respect to all subsequent violations.

(3)  ASSESSMENT.--The agency referred to in subsection (a) or (c) of section 108 with respect to any person described in paragraph (1) shall assess any penalty under this subsection to which such person is subject.

[Codified to 12 U.S.C. 1639e]

[Source: Section 129E added by section 1472(a) of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2151) effective July 21, 2010]

§ 129F.  Requirements for prompt crediting of home loan payments

(a)  IN GENERAL.--In connection with a consumer credit transaction secured by a consumer's principal dwelling, no servicer shall fail to credit a payment to the consumer's loan account as of the date of receipt, except when a delay in crediting does not result in any charge to the consumer or in the reporting of negative information to a consumer reporting agency, except as required in subsection (b).

(b)  EXCEPTION.--If a servicer specifies in writing requirements for the consumer to follow in making payments, but accepts a payment that does not conform to the requirements, the servicer shall credit the payment as of 5 days after receipt.

[Codified to 15 U.S.C. 1639f]

[Source: Section 129F added by section 1464(a) of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2184) effective July 21, 2010]

§ 129G.  Requests for payoff amounts of home loan

A creditor or servicer of a home loan shall send an accurate payoff balance within a reasonable time, but in no case more than 7 business days, after the receipt of a written request for such balance from or on behalf of the borrower.

[Codified to 15 U.S.C. 1639g]

[Source: Section 129G added by section 1464(b) of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2185) effective July 21, 2010]

§ 129H.  Property appraisal requirements

(a)  IN GENERAL.--A creditor may not extend credit in the form of a higher-risk mortgage to any consumer without first obtaining a written appraisal of the property to be mortgaged prepared in accordance with the requirements of this section.

(b)  APPRAISAL REQUIREMENTS.--

(1)  PHYSICAL PROPERTY VISIT.--Subject to the rules prescribed under paragraph (4), an appraisal of property to be secured by a higher-risk mortgage does not meet the requirement of this section unless it is performed by a certified or licensed appraiser who conducts a physical property visit of the interior of the mortgaged property.

(2)  SECOND APPRAISAL UNDER CERTAIN CIRCUMSTANCES.--

(A)  IN GENERAL.--If the purpose of a higher-risk mortgage is to finance the purchase or acquisition of the mortgaged property from a person within 180 days of the purchase or acquisition of such property by that person at a price that was lower than the current sale price of the property, the creditor shall obtain a second appraisal from a different certified or licensed appraiser. The second appraisal shall include an analysis of the difference in sale prices, changes in market conditions, and any improvements made to the property between the date of the previous sale and the current sale.

(B)  NO COST TO APPLICANT.--The cost of any second appraisal required under subparagraph (A) may not be charged to the applicant.

(3)  CERTIFIED OR LICENSED APPRAISER DEFINED.--For purposes of this section, the term "certified or licensed appraiser" means a person who--

(A)  is, at a minimum, certified or licensed by the State in which the property to be appraised is located; and

(B)  performs each appraisal in conformity with the Uniform Standards of Professional Appraisal Practice and title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, and the regulations prescribed under such title, as in effect on the date of the appraisal.

(4)  REGULATIONS.--

(A)  IN GENERAL.--The Board, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau shall jointly prescribe regulations to implement this section.

(B)  EXEMPTION.--The agencies listed in subparagraph (A) may jointly exempt, by rule, a class of loans from the requirements of this subsection or subsection (a) if the agencies determine that the exemption is in the public interest and promotes the safety and soundness of creditors.

(c)  FREE COPY OF APPRAISAL.--A creditor shall provide 1 copy of each appraisal conducted in accordance with this section in connection with a higher-risk mortgage to the applicant without charge, and at least 3 days prior to the transaction closing date.

(d)  CONSUMER NOTIFICATION.--At the time of the initial mortgage application, the applicant shall be provided with a statement by the creditor that any appraisal prepared for the mortgage is for the sole use of the creditor, and that the applicant may choose to have a separate appraisal conducted at the expense of the applicant.

(e)  VIOLATIONS.--In addition to any other liability to any person under this title, a creditor found to have willfully failed to obtain an appraisal as required in this section shall be liable to the applicant or borrower for the sum of $2,000.

(f)  HIGHER-RISK MORTGAGE DEFINED.--For purposes of this section, the term "higher-risk mortgage" means a residential mortgage loan, other than a reverse mortgage loan that is a qualified mortgage, as defined in section 129C, secured by a principal dwelling--

(1)  that is not a qualified mortgage, as defined in section 129C; and

(2)  with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction, as defined in section 129C, as of the date the interest rate is set--

(A)  by 1.5 or more percentage points, in the case of a first lien residential mortgage loan having an original principal obligation amount that does not exceed the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the sixth sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2));

(B)  by 2.5 or more percentage points, in the case of a first lien residential mortgage loan having an original principal obligation amount that exceeds the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the sixth sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); and

(C)  by 3.5 or more percentage points for a subordinate lien residential mortgage loan.

[Codified to 15 U.S.C. 1639h]

[Source: Section 129H added by section 1471 of title XIV of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2185) effective July 21, 2010]

§ 130.  Civil liability

(a)  INDIVIDUAL OR CLASS ACTION FOR DAMAGES; AMOUNT OF AWARD; FACTORS DETERMINING AMOUNT OF AWARD.--Except as otherwise provided in this section, any creditor who fails to comply with any requirement imposed under this chapter, including any requirement under section 125, subsection (f) or (g) of section 131 or chapter 4 or 5 of this title with respect to any person is liable to such person in an amount equal to the sum of--

(1)  any actual damage sustained by such person as a result of the failure;

(2)  (A)(i)  in the case of an individual action twice the amount of any finance charge in connection with the transaction, (ii) in the case of an individual action relating to a consumer lease under chapter 5 of this title, 25 per centum of the total amount of monthly payments under the lease except that the liability under this subparagraph shall not be less than $200 nor greater than $2,000, or (iii) in the case of an individual action relating to an open end consumer plan that is not secured by real property or a dwelling, twice the amount of any finance charge in connection with the transaction, with a minimum of $500 and a maximum of $5,000 or such higher amount may be appropriate in the case of an established pattern or practice of such failures; or (iv) in the case of an individual action relating to a credit transaction not under an open end credit plan that is secured by real property or a dwelling, not less than $400 or greater than $4,000; or

(B)  in the case of a class action, such amount as the court may allow, except that as to each member of the class no minimum recovery shall be applicable, and the total recovery under this subparagraph in any class action or series of class actions arising out of the same failure to comply by the same creditor shall not be more than the lesser of $1,000,000 or 1 per centum of the net worth of the creditor;

(3)  in the case of any successful action to enforce the foregoing liability or in any action in which a person is determined to have a right of rescission under section 125 or 128(e)(7), the costs of the action, together with a reasonable attorney's fee as determined by the court.

(4)  in the case of a failure to comply with any requirement under section 129, paragraph (1) or (2) of section 129B(c), or section 129C(a), an amount equal to the sum of all finance charges and fees paid by the consumer, unless the creditor demonstrates that the failure to comply is not material.

In determining the amount of award in any class action, the court shall consider, among other relevant factors, the amount of any actual damages awarded, the frequency and persistence of failures of compliance by the creditor, the resources of the creditor, the number of persons adversely affected, and the extent to which the creditor's failure of compliance was intentional. In connection with the disclosures referred to in subsections (a) and (b) of section 127, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 125, 127(a), or any of paragraphs (4) through (13) of section 127(b), or for failing to comply with disclosure requirements under State law for any term or item that the Bureau has determined to be substantially the same in meaning under section 111(a)(2) as any of the terms or items referred to in section 127(a), or any of paragraphs (4) through (13) of section 127(b). In connection with the disclosures referred to in subsection (c) or (d) of section 127, a card issuer shall have a liability under this section only to a cardholder who pays a fee described in section 127(c)(1)(A)(ii)(I) or section 127(c)(4)(A)(i) or who uses the credit card or charge card. In connection with the disclosures referred to in section 128, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 125, or section 128(b)(2)(C)(ii) of paragraph (2) (insofar as it requires a disclosure of the "amount financed" ), (3), (4), (5), (6), or (9) of section 128(a), or for failing to comply with disclosure requirements under State law for any term which the Bureau has determined to be substantially the same in meaning under section 111(a)(2) as any of the terms referred to in any of those paragraphs of section 128(a) or section 128(b)(2)(C)(ii). With respect to any failure to make disclosures required under this chapter or chapter 4 or 5 of this title, liability shall be imposed only upon the creditor required to make disclosure, except as provided in section 131; and

(b)  CORRECTION OF ERRORS.--A creditor or assignee has no liability under this section or section 108 or section 112 for any failure to comply with any requirement imposed under this chapter or chapter 5, if within sixty days after discovering an error, whether pursuant to a final written examination report or notice issued under section 108(e)(1) or through the creditor's or assignee's own procedures, and prior to the institution of an action under this section or the receipt of written notice of the error from the obligor, the creditor or assignee notifies the person concerned of the error and makes whatever adjustments in the appropriate account are are necessary to assure that the person will not be required to pay an amount in excess of the charge actually disclosed, or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower.

(c)  UNINTENTIONAL VIOLATIONS; BONA FIDE ERRORS.--A creditor or assignee may not be held liable in any action brought under this section or section 125 for a violation of this title if the creditor or assignee shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. Examples of a bona fide error include, but are not limited to, clerical, calculation, computer malfunction and programming, and printing errors, except that an error of legal judgment with respect to a person's obligations under this title is not a bona fide error.

(d)  LIABILITY IN TRANSACTION OR LEASE INVOLVING MULTIPLE OBLIGORS.--When there are multiple obligors in a consumer credit transaction or consumer lease, there shall be no more than one recovery of damages under subsection (a)(2) for a violation of this title.

(e)  JURISDICTION OF COURTS; LIMITATIONS ON ACTIONS; STATE ATTORNEY GENERAL ENFORCEMENT.--Except as provided in the subsequent sentence, any action under this section may be brought in any United States district court, or in any other court of competent jurisdiction, within one year from the date of the occurrence of the violation or, in the case of a violation involving a private education loan (as that term is defined in section 140(a)), 1 year from the date on which the first regular payment of principal is due under the loan. Any action under this section with respect to any violation of section 129, 129B, or 129C may be brought in any United States district court, or in any other court of competent jurisdiction, before the end of the 3-year period beginning on the date of the occurrence of the violation. This subsection does not bar a person from asserting a violation of this title in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action, except as otherwise provided by State law. An action to enforce a violation of section 129, 129B, 129C, 129D, 129E, 129F, 129G, or 129H, of this Act may also be brought by the appropriate State attorney general in any appropriate United States district court, or any other court of competent jurisdiction, not later than 3 years after the date on which the violation occurs. The State attorney general shall provide prior written notice of any such civil action to the Federal agency responsible for enforcement under section 108 and shall provide the agency with a copy of the complaint. If prior notice is not feasible, the State attorney general shall provide notice to such agency immediately upon instituting the action. The Federal agency may--

(1)  intervene in the action;

(2)  upon intervening--

(A)  remove the action to the appropriate United States district court, if it was not originally brought there; and

(B)  be heard on all matters arising in the action; and

(3)  file a petition for appeal.

(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.--No provision of this section, section 108(b), section 108(c), section 108(e), or section 112 imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Bureau, or in conformity with any interpretation or approval by an official or employee of the Federal Reserve System duly authorized by the Bureau to issue such interpretations or approvals under such procedures as the Bureau may prescribe therefor, notwithstanding that after such act or omission has occurred, such rule, regulation, interpretation, or approval is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

(g)  RECOVERY FOR MULTIPLE FAILURES TO DISCLOSE.--The multiple failure to disclose to any person any information required under this chapter or chapter 4 or 5 of this title to be disclosed in connection with a single account under an open end consumer credit plan, other single consumer credit sale, consumer loan, consumer lease or other extension of consumer credit, shall entitle the person to a single recovery under this section but continued failure to disclose after a recovery has been granted shall give rise to rights to additional recoveries. This subsection does not bar any remedy permitted by section 125.

(h)  OFFSET FROM AMOUNT OWED TO CREDITOR OR ASSIGNEE; RIGHTS OF DEFAULTING CONSUMER.--A person may not take any action to offset any amount for which a creditor or assignee is potentially liable to such person under subsection (a)(2) against any amount owed by such person, unless the amount of the creditor's or assignee's liability under this title has been determined by judgment of a court of competent jurisdiction in an action of which such person was a party. This subsection does not bar a consumer then in default on the obligation from asserting a violation of this title as an original action, or as a defense or counterclaim to an action to collect amounts owed by the consumer brought by a person liable under this title.

(i)  CLASS ACTION MORATORIUM.--

(1)  IN GENERAL.--During the period beginning on the date of the enactment of the Truth in Lending Class Action Relief Act of 1995 and ending on October 1, 1995, no court may enter any order certifying any class in any action under this title--

(A)  which is brought in connection with any credit transaction not under an open end credit plan which is secured by a first lien on real property or a dwelling and constitutes a refinancing or consolidation of an existing extension of credit; and

(B)  which is based on the alleged failure of a creditor--

(i)  to include a charge actually incurred (in connection with the transaction) in the finance charge disclosed pursuant to section 128;

(ii)  to properly make any other disclosure required under section 128 as a result of the failure described in clause (i); or

(iii)  to provide proper notice of rescission rights under section 125(a) due to the selection by the creditor of the incorrect form from among the model forms prescribed by the Bureau or from among forms based on such model forms.

(2)  EXCEPTIONS FOR CERTAIN ALLEGED VIOLATIONS.--Paragraph (1) shall not apply with respect to any action--

(A)  described in clause (i) or (ii) of paragraph (1)(B), if the amount disclosed as the finance charge results in an annual percentage rate that exceeds the tolerance provided in section 107(c); or

(B)  described in paragraph (1)(B)(iii), if--

(i)  no notice relating to rescission rights under section 125(a) was provided in any form; or

(ii)  proper notice was not provided for any reason other than the reason described in such paragraph.

(j)  PRIVATE EDUCATIONAL LENDER.--A private educational lender (as that term is defined in section 140(a)) has no liability under this section for failure to comply with section 128(e)(3)).

(k)  DEFENSE TO FORECLOSURE.--

(1)  IN GENERAL.--Notwithstanding any other provision of law, when a creditor, assignee, or other holder of a residential mortgage loan or anyone acting on behalf of such creditor, assignee, or holder, initiates a judicial or nonjudicial foreclosure of the residential mortgage loan, or any other action to collect the debt in connection with such loan, a consumer may assert a violation by a creditor of paragraph (1) or (2) of section 129B(c), or of section 129C(a), as a matter of defense by recoupment or set off without regard for the time limit on a private action for damages under subsection (e).

(2)  AMOUNT OF RECOUPMENT OR SETOFF.--

(A)  IN GENERAL.--The amount of recoupment or setoff under paragraph (1) shall equal the amount to which the consumer would be entitled under subsection (a) for damages for a valid claim brought in an original action against the creditor, plus the costs to the consumer of the action, including a reasonable attorney's fee.

(B)  SPECIAL RULE.--Where such judgment is rendered after the expiration of the applicable time limit on a private action for damages under subsection (e), the amount of recoupment or set-off under paragraph (1) derived from damages under subsection (a)(4) shall not exceed the amount to which the consumer would have been entitled under subsection (a)(4) for damages computed up to the day preceding the expiration of the applicable time limit.

(l)  EXEMPTION FROM LIABILITY AND RESCISSION IN CASE OF BORROWER FRAUD OR DECEPTION.--In addition to any other remedy available by law or contract, no creditor or assignee shall be liable to an obligor under this section, if such obligor, or co-obligor has been convicted of obtaining by actual fraud such residential mortgage loan.

[Codified to 15 U.S.C. 1640]

[Source:  Section 130 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 157), effective July 1, 1969, as amended by sections 406--408(d) of title IV of the Act of October 28, 1974 (Pub. L. No. 93--495; 88 Stat. 1518), effective October 28, 1974; section 3(b) of the Act of February 27, 1976 (Pub. L. No. 94--222; 90 Stat. 197), effective February 27, 1976; section 4 of the Act of March 23, 1976 (Pub. L. No. 94--240; 90 Stat. 260), effective March 23, 1977; section 615 of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 180-181), effective October 1, 1982; section 3 of the Act of November 3, 1988 (Pub. L. No. 100--583; 102 Stat. 2966), effective November 3, 1988; sections 153(a)--(b) of title I of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2195), effective September 23, 1994; section 2 of the Act of May 18, 1995 (Pub. L. 104-12; 109 Stat. 161), effective May 18, 1995; section 6 of the Act of September 30, 1995 (Pub. L. No. 104--29; 109 Stat. 274), effective September 30, 1995; section 1012a of title X of the Act of August 14, 2008 (Pub. L. No. 110--315; 122 Stat. 3482), effective August 14, 2008; section 2502(b) of title V of the Act of August 14, 2008 (Pub. L. No. 110--289; 122 Stat. 2857), effective August 14, 2008; sections 107 of title I and 201(b) of title II of the Act of May 22, 2009 (Pub. L. No. 111--24; 123 Stat. 1743 and 1745), effective May 22, 2009; section 404(b) of title IV of the Act of May 20, 2009; 123 Stat. 1658), effective May 20, 2009; section 1100A(2) of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011; sections 1413, 1416, 1417, and 1422 of title XI of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2148, 2153, 2157, and 2158, respectively), effective July 21, 2010]

§ 131.  Liability of assignees

(a)  PREREQUISITES.--Except as otherwise specifically provided in this title, any civil action for a violation of this title or proceeding under section 108 which may be brought against a creditor may be maintained against any assignee of such creditor only if the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement, except where the assignment was involuntary. For the purpose of this section, a violation apparent on the face of the disclosure statement includes, but is not limited to (1) a disclosure which can be determined to be incomplete or inaccurate from the face of the disclosure statement or other documents assigned, or (2) a disclosure which does not use the terms required to be used by this title.

(b)  PROOF OF COMPLIANCE WITH STATUTORY PROVISIONS.--Except as provided in section 125(c), in any action or proceeding by or against any subsequent assignee of the original creditor without knowledge to the contrary by the assignee when he acquires the obligation, written acknowledgement of receipt by a person to whom a statement is required to be given pursuant to this title shall be conclusive proof of the delivery thereof and, except as provided in subsection (a), of compliance with this chapter. This section does not affect the rights of the obligor in any action against the original creditor.

(c)  RIGHT OF RECISSION BY CONSUMER UNAFFECTED.--Any consumer who has the right to rescind a transaction under section 125 may rescind the transaction as against any assignee of the obligation.

(d)  RIGHTS UPON ASSIGNMENT OF CERTAIN MORTGAGES.--

(1)  IN GENERAL.--Any person who purchases or is otherwise assigned a mortgage referred to in section 103(aa) shall be subject to all claims and defenses with respect to that mortgage that the consumer could assert against the creditor of the mortgage, unless the purchaser or assignee demonstrates, by a preponderance of the evidence, that a reasonable person exercising ordinary due diligence, could not determine, based on the documentation required by this title, the itemization of the amount financed, and other disclosure of disbursements that the mortgage was a mortgage referred to in section 103(aa). The preceding sentence does not affect rights of a consumer under subsection (a), (b), or (c) of this section or any other provision of this title.

(2)  LIMITATION ON DAMAGES.--Notwithstanding any other provision of law, relief provided as a result of any action made permissible by paragraph (1) may not exceed--

(A)  with respect to actions based upon a violation of this title, the amount specified in section 130; and

(B)  with respect to all other causes of action, the sum of--

(i)  the amount of all remaining indebtedness; and

(ii)  the total amount paid by the consumer in connection with the transaction.

(3)  OFFSET.--The amount of damages that may be awarded under paragraph (2)(B) shall be reduced by the amount of any damages awarded under paragraph (2)(A).

(4)  NOTICE.--Any person who sells or otherwise assigns a mortgage referred to in section 103(aa) shall include a prominent notice of the potential liability under this subsection as determined by the Bureau.

(e)  LIABILITY OF ASSIGNEE FOR CONSUMER CREDIT TRANSACTIONS SECURED BY REAL PROPERTY.--

(1)  IN GENERAL.--Except as otherwise specifically provided in this title, any civil action against a creditor for a violation of this title, and any proceeding under section 108 against a creditor, with respect to a consumer credit transaction secured by real property may be maintained against any assignee of such creditor only if--

(A)  the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement provided in connection with such transaction pursuant to this title; and

(B)  the assignment to the assignee was voluntary.

(2)  VIOLATION APPARENT TO THE FACE OF THE DISCLOSURE DESCRIBED.--For the purpose of this section, a violation is apparent on the face of the disclosure statement if--

(A)  the disclosure can be determined to be incomplete or inaccurate by a comparison among the disclosure statement, any itemization of the amount financed, the note, or any other disclosure of disbursement; or

(B)  the disclosure statement does not use the terms or format required to be used by this title.

(f)  TREATMENT OF SERVICER.--

(1)  IN GENERAL.--A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as an assignee of such obligation for purposes of this section unless the servicer is or was the owner of the obligation.

(2)  SERVICER NOT TREATED AS OWNER ON BASIS OF ASSIGNEMENT FOR ADMINISTRATIVE CONVENIENCE.--A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as the owner of the obligation for purposes of this section on the basis of an assignment of the obligation from the creditor or another assignee to the servicer solely for the administrative convenience of the servicer in servicing the obligation. Upon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation or the master servicer of the obligation.

(3)  SERVICER DEFINED.--For purposes of this subsection, the term "servicer" has the same meaning as in section 6(i)(2) of the Real Estate Settlement Procedures Act of 1974.

(4)  APPLICABILITY.--This subsection shall apply to all consumer credit transactions in existence or consummated on or after the date of the enactment of the Truth in Lending Act Amendments of 1995.

(g)  NOTICE OF NEW CREDITOR.--

(1)  IN GENERAL.--In addition to other disclosures required by this title, not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer, including--

(A)  the identity, address, telephone number of the new creditor;

(B)  the date of transfer;

(C)  how to reach an agent or party having authority to act on behalf of the new creditor;

(D)  the location of the place where transfer of ownership of the debt is recorded; and

(E)  any other relevant information regarding the new creditor.

(2)  DEFINITION.--As used in this subsection, the term mortgage loan' means any consumer credit transaction that is secured by the principal dwelling of a consumer.

[Codified to 15 U.S.C. 1641]

[Source:  Section 131 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321; 82 Stat. 157), effective July 1, 1969, as amended by section 616 of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 182), effective October 1, 1982; section 153(c) of title I of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2195), effective September 23, 1994; section 7 of the Act of September 30, 1995 (Pub. L. No. 104--29; 109 Stat. 274), effective September 30, 1995; section 404(a) of title V of the Act of May 20, 2009 (Pub. L. No. 111--22; 123 Stat. 1658), effective May 20, 2009; section 1100A(2) of title XI of the Act of July 21, 2010 (Pub. L. No, 111--203; 124 Stat. 2107), effective July 21, 2011]

§ 132.  Issuance of credit cards

No credit card shall be issued except in response to a request or application therefor. This prohibition does not apply to the issuance of a credit card in renewal of, or in substitution for, an accepted credit card.

[Codified to 15 U.S.C. 1642]

[Source:  Section 132 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321), as added by section 502(a) of title V of the Act of October 26, 1970 (Pub. L. No. 91--508; 84 Stat. 1126), effective October 26, 1970]

§ 133.  Liability of holder of credit card

(a)  LIMITS ON LIABILITY.--(1)  A cardholder shall be liable for the unauthorized use of a credit card only if--

(A)  the card is an accepted credit card;

(B)  the liability is not in excess of $50;

(C)  the card issuer gives adequate notice to the cardholder of the potential liability;

(D)  the card issuer has provided the cardholder with a description of a means by which the card issuer may be notified of loss or theft of the card, which description may be provided on the face or reverse side of the statement required by section 127(b) or on a separate notice accompanying such statement;

(E)  the unauthorized use occurs before the card issuer has been notified that an unauthorized use of the credit card has occurred or may occur as the result of loss, theft, or otherwise; and

(F)  the card issuer has provided a method whereby the user of such card can be identified as the person authorized to use it.

(2)  For purposes of this section, a card issuer has been notified when such steps as may be reasonably required in the ordinary course of business to provide the card issuer with the pertinent information have been taken, whether or not any particular officer, employee, or agent of the card issuer does in fact receive such information.

(b)  BURDEN OF PROOF.--In any action by a card issuer to enforce liability for the use of a credit card, the burden of proof is upon the card issuer to show that the use was authorized or, if the use was unauthorized, then the burden of proof is upon the card issuer to show that the conditions of liability for the unauthorized use of a credit card, as set forth in subsection (a), have been met.

(c)  LIABILITY IMPOSED BY OTHER LAWS OR BY AGREEMENT WITH ISSUER.--Nothing in this section imposes liability upon a cardholder for the unauthorized use of a credit card in excess of his liability for such use under other applicable law or under any agreement with the card issuer.

(d)  EXCLUSIVENESS OF LIABILITY.--Except as provided in this section, a cardholder incurs no liability from the unauthorized use of a credit card.

[Codified to 15 U.S.C. 1643]

[Source:  Section 133 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321), as added by section 502(a) of title V of the Act of October 26, 1970 (Pub. L. No. 91--508; 84 Stat. 1126), effective January 25, 1971, and as amended by section 617 of title VI of the Act of March 31, 1980 (Pub. L. No. 96--221; 94 Stat. 182), effective October 1, 1982]

§ 134.  Fraudulent use of credit cards; penalties

(a)  USE, ATTEMPT OR CONSPIRACY TO USE CARD IN TRANSACTION AFFECTING INTERSTATE OR FOREIGN COMMERCE.--Whoever knowingly in a transaction affecting interstate or foreign commerce, uses or attempts or conspires to use any counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained credit card to obtain money, goods, services, or anything else of value which within any one-year period has a value aggregating $1,000 or more; or

(b)  TRANSPORTING, ATTEMPTING OR CONSPIRING TO TRANSPORT CARD IN INTERSTATE COMMERCE.--Whoever, with unlawful or fraudulent intent, transports or attempts or conspires to transport in interstate or foreign commerce a counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained credit card knowing the same to be counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained; or

(c)  USE OF INTERSTATE COMMERCE TO SELL OR TRANSPORT CARD.--Whoever, with unlawful or fraudulent intent, uses any instrumentality of interstate or foreign commerce to sell or transport a counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained credit card knowing the same to be counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained; or

(d)  RECEIPT, CONCEALMENT, ETC., OF GOODS OBTAINED BY USE OF CARD.--Whoever knowingly receives, conceals, uses, or transports money, goods, services, or anything else of value (except tickets for interstate or foreign transportation) which (1) within any one-year period has a value aggregating $1,000 or more, (2) has moved in or is part of, or which constitutes interstate or foreign commerce, and (3) has been obtained with a counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained credit card; or

(e)  RECEIPT, CONCEALMENT, ETC., OF TICKETS FOR INTERSTATE OR FOREIGN TRANSPORTATION OBTAINED BY USE OF CARD.--Whoever knowingly receives, conceals, uses, sells, or transports in interstate or foreign commerce one or more tickets for interstate or foreign transportation, which (1) within any one-year period have a value aggregating $500 or more, and (2) have been purchased or obtained with one or more counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained credit cards; or

(f)  FURNISHING OF MONEY, ETC., THROUGH USE OF CARD.--Whoever in a transaction affecting interstate or foreign commerce furnishes money, property, services, or anything else of value, which within any one-year period has a value aggregating $1,000 or more, through the use of any counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained credit card knowing the same to be counterfeit, fictitious, altered, forged, lost, stolen or fraudulently obtained--

shall be fined not more than $10,000 or imprisoned not more than ten years, or both.

[Codified to 15 U.S.C. 1644]

[Source:  Section 134 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321), as added by section 502(a) of title V of the Act of October 26, 1970 (Pub. L. No. 91--508; 84 Stat. 1127), effective October 26, 1970, and as amended by section 414 of title IV of the Act of October 28, 1974 (Pub. L. No. 93--495; 88 Stat. 1520), effective October 28, 1974]

§ 135.  Business credit cards; limits on liability of employees

The exemption provided by section 104(1) does not apply to the provisions of sections 132, 133, and 134, except that a card issuer and a business or other organization which provides credit cards issued by the same card issuer to ten or more of its employees may by contract agree as to liability of the business or other organization with respect to unauthorized use of such credit cards without regard to the provisions of section 133, but in no case may such business or other organization or card issuer impose liability upon any employee with respect to unauthorized use of such a credit card except in accordance with and subject to the limitations of section 133.

[Codified to 15 U.S.C. 1645]

[Source:  Section 135 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321), as added by section 410(a) of title IV of the Act of October 28, 1974 (Pub. L. No. 93--495; 88 Stat. 1519), effective October 28, 1974]

§ 136.  Dissemination of annual percentage rates; implementation, etc.

(a)  ANNUAL PERCENTAGE RATES.--The Bureau shall collect, publish, and disseminate to the public, on a demonstration basis in a number of standard metropolitan statistical areas to be determined by the Bureau, the annual percentage rates charged for representative types of nonsale credit by creditors in such areas. For the purpose of this section, the Bureau is authorized to require creditors in such areas to furnish information necessary for the Bureau to collect, publish, and disseminate such information.

(b)  CREDIT CARD PRICE AND AVAILABILITY INFORMATION.--

(1)  COLLECTION REQUIRED.--The Bureau shall collect, on a semiannual basis, credit card price and availability information, including the information required to be disclosed under section 127(c) of this chapter, from a broad sample of financial institutions which offer credit card services.

(2)  SAMPLE REQUIREMENTS.--The broad sample of financial institutions required under paragraph (1) shall include--

(A)  the 25 largest issuers of credit cards; and

(B)  not less than 125 additional financial institutions selected by the Bureau in a manner that ensures--

(i)  an equitable geographical distribution within the sample; and

(ii)  the representation of a wide spectrum of institutions within the sample.

(3)  REPORT OF INFORMATION FROM SAMPLE.--Each financial institution in the broad sample established pursuant to paragraph (2) shall report the information to the Bureau in accordance with such regulations or orders as the Bureau may prescribe.

(4)  PUBLIC AVAILABILITY OF COLLECTED INFORMATION, REPORT TO CONGRESS.--The Bureau shall--

(A)  make the information collected pursuant to this subsection available to the public upon request; and

(B)  report such information semiannually to Congress.

(c)  IMPLEMENTATION.--The Bureau is authorized to enter into contracts or other arrangements with appropriate persons, organizations, or State agencies to carry out its functions under subsection (a) and to furnish financial assistance in support thereof.

[Codified to 15 U.S.C. 1646]

[Source:  Section 136 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321), as added by section 618 of title VI of the Act of March 31, 1980 (Pub. L. No. 0296--221; 94 Stat. 183), effective October 1, 1982, and as amended by section 5 of the Act of November 3, 1988 (Pub. L. No. 100--583; 102 Stat. 2967), effective November 3, 1988; section 1100A(2) of title X of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011]

§ 137. Home equity plans

(a)   INDEX REQUIREMENT. --In the case of extensions of credit under an open end consumer credit plan which are subject to a variable rate and are secured by a consumer's principal dwelling, the index or other rate of interest to which changes in the annual percentage rate are related shall be based on an index or rate of interest which is publicly available and is not under the control of the creditor.

(b)   GROUNDS FOR ACCELERATION OF OUTSTANDING BALANCE. --A creditor may not unilaterally terminate any account under an open end consumer credit plan under which extensions of credit are secured by a consumer's principal dwelling and require the immediate repayment of any outstanding balance at such time, except in the case of--

(1)  fraud or material misrepresentation on the part of the consumer in connection with the account;

(2)  failure by the consumer to meet the repayment terms of the agreement for any outstanding balance; or

(3)  any other action or failure to act by the consumer which adversely affects the creditor's security for the account or any right of the creditor in such security.

This subsection does not apply to reverse mortgage transactions.

(c)   CHANGE IN TERMS. --

(1)   IN GENERAL. --No open end consumer credit plan under which extensions of credit are secured by a consumer's principal dwelling may contain a provision which permits a creditor to change unilaterally any term required to be disclosed under section 127A(a) or any other term, except a change in insignificant terms such as the address of the creditor for billing purposes.

(2)  CERTAIN CHANGES NOT PRECLUDED.--Notwithstanding the provisions of subsection (1), a creditor may make any of the following changes:

(A)  Change the index and margin applicable to extensions of credit under such plan if the index used by the creditor is no longer available and the substitute index and margin would result in a substantially similar interest rate.

(B)  Prohibit additional extensions of credit or reduce the credit limit applicable to an account under the plan during any period in which the value of the consumer's principal dwelling which secures any outstanding balance is significantly less than the original appraisal value of the dwelling.

(C)  Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which the creditor has reason to believe that the consumer will be unable to comply with the repayment requirements of the account due to a material change in the consumer's financial circumstances.

(D)  Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which the consumer is in default with respect to any material obligation of the consumer under the agreement.

(E)  Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which--

(i)  the creditor is precluded by government action from imposing the annual percentage rate provided for in the account agreement; or

(ii)  any government action is in effect which adversely affects the priority of the creditor's security interest in the account to the extent that the value of the creditor's secured interest in the property is less than 120 percent of the amount of the credit limit applicable to the account.

(F)  Any change that will benefit the consumer.

(3)  MATERIAL OBLIGATIONS.--Upon the request of the consumer and at the time an agreement is entered into by a consumer to open an account under an open end consumer credit plan under which extensions of credit are secured by the consumer's principal dwelling, the consumer shall be given a list of the categories of contract obligations which are deemed by the creditor to be material obligations of the consumer under the agreement for purposes of paragraph (2)(D).

(4)   CONSUMER BENEFIT.—

(A)  IN GENERAL.--For purposes of paragraph (2)(F), a change shall be deemed to benefit the consumer if the change is unequivocally beneficial to the borrower and the change is beneficial through the entire term of the agreement.

(B)  BUREAU CATEGORIZATION.--The Bureau may, by regulation, determine categories of changes that benefit the consumer.

(d)  TERMS CHANGED AFTER APPLICATION.--If any term or condition described in section 127A(a) which is disclosed to a consumer in connection with an application to open an account under an open end consumer credit plan described in such section (other than a variable feature of the plan) changes before the account is opened, and if, as a result of such change, the consumer elects not to enter into the plan agreement, the creditor shall refund all fees paid by the consumer in connection with such application.

(e)   ADDITIONAL REQUIREMENTS RELATING TO REFUNDS AND IMPOSITION OF NONREFUNDABLE FEES.—

(1)  IN GENERAL.--No nonrefundable fee may be imposed by a creditor or any other person in connection with any application by a consumer to establish an account under any open end consumer credit plan which provides for extensions of credit which are secured by a consumer's principal dwelling before the end of the 3-day period beginning on the date such consumer receives the disclosure required under section 127A(a) and the pamphlet required under section 127A(e) with respect to such application.

(2)  CONSTRUCTIVE RECEIPT.--For purposes of determining when a nonrefundable fee may be imposed in accordance with this subsection if the disclosures and pamphlet referred to in paragraph (1) are mailed to the consumer, the date of the receipt of the disclosures by such consumer shall be deemed to be 3 business days after the date of mailing by the creditor.

[Codified to 15 U.S.C. 1647]

[Source:  Section 137 added by section 3 of the Act of November 23, 1988 (Pub. L. No. 100--709; 102 Stat. 4731), effective November 23, 1988; as amended by section 154(c) of title I of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2196), effective September 23, 1994; section 1100A(e) of title X of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011]

§ 138. Reverse mortgages

(a)  IN GENERAL.--In addition to the disclosures required under this title, for each reverse mortgage, the creditor shall, not less than 3 days prior to consummation of the transaction, disclose to the consumer in conspicuous type a good faith estimate of the projected total cost of the mortgage to the consumer expressed as a table of annual interest rates. Each annual interest rate shall be based on a projected total future credit extension balance under a projected appreciation rate for the dwelling and a term for the mortgage. The disclosure shall include--

(1)  statements of the annual interest rates for not less than 3 projected appreciation rates and not less than 3 credit transaction periods, as determined by the Bureau, including--

(A)  a short-term reverse mortgage;

(B)  a term equaling the actuarial life expectancy of the consumer; and

(C)  such longer term as the Bureau deems appropriate; and

(2)  a statement that the consumer is not obligated to complete the reverse mortgage transaction merely because the consumer has received the disclosure required under this section or has signed an application for the reverse mortgage.

(b)  PROJECTED TOTAL COST.--In determining the projected total cost of the mortgage to be disclosed to the consumer under subsection (a), the creditor shall take into account--

(1)  any shared appreciation or equity that the lender will, by contract, be entitled to receive;

(2)  all costs and charges to the consumer, including the costs of any associated annuity that the consumer elects or is required to purchase as part of the reverse mortgage transaction;

(3)  all payments to and for the benefit of the consumer, including, in the case in which an associated annuity is purchased (whether or not required by the lender as a condition of making the reverse mortgage), the annuity payments received by the consumer and financed from the proceeds of the loan, instead of the proceeds used to finance the annuity; and

(4)  any limitation on the liability of the consumer under reverse mortgage transactions (such as nonrecourse limits and equity conservation agreements).

[Codified to 15 U.S.C. 1648]

[Source:  Section 138 of title I of the Act of May 29, 1968 (Pub. L. No. 90--321), as added by section 154(b) of title I of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2196), effective September 23, 1994; section 1100A(2) of title X of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011]

§ 139. Certain Limitations on Liability

(a)  LIMITATIONS ON LIABILITY.--For any closed end consumer credit transaction that is secured by real property or a dwelling, that is subject to this title, and that is consummated before the date of the enactment of the Truth in Lending Act Amendments of 1995, a creditor or any assignee of a creditor shall have no civil, administrative, or criminal liability under this title for, and a consumer shall have no extended rescission rights under section 125(f) with respect to--

(1)  the creditor's treatment, for disclosure purposes, of--

(A)  taxes described in section 106(d)(3);

(B)  fees described in section 106(e)(2) and (5);

(C)  fees and amounts referred to in the 3rd sentence of section 106(a); or

(D)  borrower-paid mortgage broker fees referred to in section 106(a)(6);

(2) the form of written notice used by the creditor to inform the obligor of the rights of the obligor under section 125 if the creditor provided the obligor with a properly dated form of written notice published and adopted by the Bureau or a comparable written notice, and otherwise complied with all the requirements of this section regarding notice; or

(3)  any disclosure relating to the finance charge imposed with respect to the transaction if the amount or percentage actually disclosed--

(A)  may be treated as accurate for purposes of this title if the amount disclosed as the finance charge does not vary from the actual finance charge by more than $200;

(B)  may, under section 106(f)(2), be treated as accurate for purposes of section 125; or

(C)  is greater than the amount or percentage required to be disclosed under this title.

(b)  EXCEPTIONS.--Subsection (a) shall not apply to--

(1)  any individual action or counterclaim brought under this title which was filed before June 1, 1995;

(2)  any class action brought under this title for which a final order certifying a class was entered before January 1, 1995;

(3)  the named individual plaintiffs in any class action brought under this title which was filed before June 1, 1995; or

(4)  any consumer credit transaction with respect to which a timely notice of rescission was sent to the creditor before June 1, 1995.

[Codified to 15 U.S.C. 1649]

[Source:  Section 139 added by section 4 of the Act of September 30, 1995 (Pub. L. No. 104--29; 109 Stat. 273), effective September 30, 1995; as amended by section 2107(a) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--402), effective September 30, 1996; section 1100A(2) of title X of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011]

§ 140.  Preventing unfair and deceptive private educational lending practices and eliminating conflicts of interest

(a)  DEFINITIONS.--As used in this section--

(1)  the term "covered educational institution"--

(A)  means any educational institution that offers a postsecondary educational degree, certificate, or program of study (including any institution of higher education); and

(B)  includes an agent, officer, or employee of the educational institution;

(2)  the term "gift"--

(A)(i)  means any gratuity, favor, discount, entertainment, hospitality, loan, or other item having more than a de minimis monetary value, including services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred; and

(ii)  includes an item described in clause (i) provided to a family member of an officer, employee, or agent of a covered educational institution, or to any other individual based on that individual's relationship with the officer, employee, or agent, if--

(I)  the item is provided with the knowledge and acquiescence of the officer, employee, or agent; and

(II)  the officer, employee, or agent has reason to believe the item was provided because of the official position of the officer, employee, or agent; and

(B)  does not include--

(i)  standard informational material related to a loan, default aversion, default prevention, or financial literacy;

(ii)  food, refreshments, training, or informational material furnished to an officer, employee, or agent of a covered educational institution, as an integral part of a training session or through participation in an advisory council that is designed to improve the service of the private educational lender to the covered educational institution, if such training or participation contributes to the professional development of the officer, employee, or agent of the covered educational institution;

(iii)  favorable terms, conditions, and borrower benefits on a private education loan provided to a student employed by the covered educational institution, if such terms, conditions, or benefits are not provided because of the student's employment with the covered educational institution;

(iv)  the provision of financial literacy counseling or services, including counseling or services provided in coordination with a covered educational institution, to the extent that such counseling or services are not undertaken to secure--

(I)  applications for private education loans or private education loan volume;

(II)  applications or loan volume for any loan made, insured, or guaranteed under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); or

(III)  the purchase of a product or service of a specific private educational lender;

(v)  philanthropic contributions to a covered educational institution from a private educational lender that are unrelated to private education loans and are not made in exchange for any advantage related to private education loans; or

(vi)  State education grants, scholarships, or financial aid funds administered by or on behalf of a State;

(3)  the term "institution of higher education" has the same meaning as in section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002);

(4)  the term "postsecondary educational expenses" means any of the expenses that are included as part of the cost of attendance of a student, as defined under section 472 of the Higher Education Act of 1965 (20 U.S.C. 10871l);

(5)  the term "preferred lender arrangement" has the same meaning as in section 151 of the Higher Education Act of 1965;

(6)  the term "private educational lender" means--

(A)  a financial institution, as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) that solicits, makes, or extends private education loans;

(B)  a Federal credit union, as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752) that solicits, makes, or extends private education loans; and

(C)  any other person engaged in the business of soliciting, making, or extending private education loans;

(7)  the term "private education loan"--

(A)  means a loan provided by a private educational lender that--

(i)  is not made, insured, or guaranteed under of title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); and

(ii)  is issued expressly for postsecondary educational expenses to a borrower, regardless of whether the loan is provided through the educational institution that the subject student attends or directly to the borrower from the private educational lender; and

(B)  does not include an extension of credit under an open end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling; and

(8)  the term "revenue sharing" means an arrangement between a covered educational institution and a private educational lender under which--

(A)  a private educational lender provides or issues private education loans with respect to students attending the covered educational institution;

(B)  the covered educational institution recommends to students or others the private educational lender or the private education loans of the private educational lender; and

(C)  the private educational lender pays a fee or provides other material benefits, including profit sharing, to the covered educational institution in connection with the private education loans provided to students attending the covered educational institution or a borrower acting on behalf of a student.

(b)  PROHIBITION ON CERTAIN GIFTS AND ARRANGEMENTS.--A private educational lender may not, directly or indirectly--

(1)  offer or provide any gift to a covered educational institution in exchange for any advantage or consideration provided to such private educational lender related to its private education loan activities; or

(2)  engage in revenue sharing with a covered educational institution.

(c)  PROHIBITION ON CO-BRANDING.--A private educational lender may not use the name, emblem, mascot, or logo of the covered educational institution, or other words, pictures, or symbols readily identified with the covered educational institution, in the marketing of private education loans in any way that implies that the covered educational institution endorses the private education loans offered by the private educational lender.

(d)  ADVISORY BOARD COMPENSATION.--Any person who is employed in the financial aid office of a covered educational institution, or who otherwise has responsibilities with respect to private education loans or other financial aid of the institution, and who serves on an advisory board, commission, or group established by a private educational lender or group of such lenders shall be prohibited from receiving anything of value from the private educational lender or group of lenders. Nothing in this subsection prohibits the reimbursement of reasonable expenses incurred by an employee of a covered educational institution as part of their service on an advisory board, commission, or group described in this subsection.

(e)  PROHIBITION ON PREPAYMENT OR REPAYMENT FEES OR PENALTY.--It shall be unlawful for any private educational lender to impose a fee or penalty on a borrower for early repayment or prepayment of any private education loan.

(f)  CREDIT CARD PROTECTIONS FOR COLLEGE STUDENTS.--

(1)  DISCLOSURE REQUIRED.--An institution of higher education shall publicly disclose any contract or other agreement made with a card issuer or creditor for the purpose of marketing a credit card.

(2)  INDUCEMENTS PROHIBITED.--No card issuer or creditor may offer to a student at an institution of higher education any tangible item to induce such student to apply for or participate in an open end consumer credit plan offered by such card issuer or creditor, if such offer is made--

(A)  on the campus of an institution of higher education;

(B)  near the campus of an institution of higher education, as determined by rule of the Board; or

(C)  at an event sponsored by or related to an institution of higher education.

(3)  SENSE OF THE CONGRESS.--It is the sense of the Congress that each institution of higher education should consider adopting the following policies relating to credit cards:

(A)  That any card issuer that markets a credit card on the campus of such institution notify the institution of the location at which such marketing will take place.

(B)  That the number of locations on the campus of such institution at which the marketing of credit cards takes place be limited.

(C)  That credit card and debt education and counseling sessions be offered as a regular part of any orientation program for new students of such institution.

[Codified to 15 U.S.C. 1650]

[Section 140 added by section 1011 of the Act of August 14, 2008 (Pub. L. No. 110--315; 122 Stat. 3479), effective August 14, 2008; as amended by section 304 of title III of the Act of May 22, 2009 (Pub. L. No. 111--24; 123 Stat. 1749), effective May 22, 2009]

§ 140A  Procedure for timely settlement of estates of decedent obligors

The Bureau, in consultation with the Bureau and each other agency referred to in section 108(a), shall prescribe regulations to require any creditor, with respect to any credit card account under an open end consumer credit plan, to establish procedures to ensure that any administrator of an estate of any deceased obligor with respect to such account can resolve outstanding credit balances in a timely manner.

[Codified to 15 U.S.C. 1651]

[Source: Section 504(a) of title V of the Act of May 22, 2009 (Pub. L. No. 111--124; 123 Stat. 1756), effective May 22, 2009; section 1100A(2) and (3) of title X of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 2107), effective July 21, 2011]

1So in original. No subsection (q) has been enacted. Go back to Text


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