A really, really brief overview TRUTH IN LENDING.
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Transcript of A really, really brief overview TRUTH IN LENDING.
A really, really brief overview
TRUTH IN LENDING
Full and fair disclosure of credit terms
Most commonly violated regulation
Has evolved beyond being a disclosure regulation
Enormous Scope
INTRODUCTION
Non-consumer credit Amount financed is more than $50,000 (except real
property)Certain student loans
EXEMPTIONS
Annual Percentage Rate
Business DayClosed-end Credit
Open-end Credit
Finance Charge
KEY DEFINITIONS
OPEN-END CREDIT
At applicationBefore first
transaction or at consummation
After consummation
TIMING OF OPEN-END DISCLOSURES
General Clear, conspicuous, in writing, in a form the member may
keep Model forms required
Initial Disclosures Finance charge Other charges Voluntary Credit Insurance, Debt Cancellation, or Debt
Suspension Premiums Security interests Statement of billing rights
DISCLOSURES
Plan termination or change
Payment informationNegative amortizationTransaction
requirementsTax implicationsAPR only includes
interestVariable rate
disclosure and example
HELOC DISCLOSURES
APRsAnnual or other periodic
feesFixed fi nance chargesTransaction chargesGrace periodBalance computation
method FeesRequired insurance, debt
cancellation or debt suspension
FRB WebsiteBilling error rights
reference
TABLE DISCLOSURES (NON-HELOC)
Give required disclosures
Give rescission notice
Delay line access and deed recording for three business days
RESCISSION
Previous balance Identification of transactionsCreditsPeriodic ratesBalance on which finance charge computedAmount of finance charge and other chargesGrace periodAddress for notice of billing errorsClosing date of billing cycleNew balance
PERIODIC STATEMENT – ALL ACCOUNTS
Formatting requirementsChange-in-terms and increased penalty rate Deferred interest or similar transactions
PERIODIC STATEMENT – NON-HELOC
Due date and late payment costs
Repayment disclosures
PERIODIC STATEMENT – CREDIT CARDS
15 days for HELOCs45 days for non-HELOC accounts (formatting
requirements apply)
CHANGE IN TERMS
Limitations on increasing APRs, fees, and charges
Opt-in for over-the-limit charges
Fee limitations Special rules for marketing
to college students Special rules for handling
payments Evaluation of consumer’s
ability to pay Allocation of payments Internet posting of credit
card agreements Reevaluation of rate
increases
CARD ACT REQUIREMENTS
Clear and conspicuous
LegibleReasonably
understandableActually available
terms
MARKETING AND ADVERTISING
A description of the circumstances under which a finance charge will be imposed, or how it is to be determined
APRPeriodic rateGrace periodThe amounts of any other charges Security InterestBilling RightsHome equity plan information
TRIGGER TERMS
Any minimum, fixed, transaction, activity, or similar charge
Any periodic rate that may apply, expressed as an annual percentage rate
Variable rate informationMembership or participation fees
ADDITIONAL DISCLOSURES REQUIRED
APRs referred to as “fixed” unless a time period is also mentioned
“Free Money”Promotional rates
must list a time period
MISLEADING TERMS
FeesThe periodic rate, if any, used to compute the finance
charge, expressed as an annual percentage rate.The maximum annual percentage rate that may be
charged if it is a variable-rate plan.Special variable rate information if the ad contains an
introductory rate not based on the index and margin used to determine future rate changes
Balloon Payment informationTax ImplicationsPromotional Rate informationAlternative Disclosures for Television or Radio
Advertisements
HELOC ADDITIONAL DISCLOSURES
CLOSED-END CREDIT
Clearly and conspicuously
In writingIn a form that the
consumer may keepGrouped togetherSegregated from
everything elseBefore consummation
of a loanEarly disclosures
required for certain mortgage loans
FORM OF DISCLOSURES
Identity of the creditorThe amount financedItemization of the
Amount FinancedFinance ChargeAnnual Percentage
RateVariable-Rate
InformationPayment ScheduleTotal of paymentsTotal sales price
Demand featurePrepaymentLate paymentSecurity interestCertain security
interest chargesContract referenceAssumption policyRequired depositMaximum interest
disclosure for variable-rate mortgage loans
CONTENTS
Reverse mortgage loansHigh-rate, high-fee mortgage loans (Section 32 loans)Mortgage Disclosure Improvement Act (rules for
mortgages)Notice of purchase, assignment or transfer
(mortgages)Loan originator compensation and steering
(mortgages)Private education loans
SPECIAL DISCLOSURES
Give required disclosures
Give rescission notice
Delay loan funding and deed recording for three business days
RESCISSION
Terms advertised must be actually availableThe “annual percentage rate” (or APR) must be used
whenever a rate is disclosedDisclosures must be legible and reasonably
understandableTRIGGER TERMS:The amount or percentage of any down paymentThe number of payments or the period of repaymentThe amount of any paymentThe amount of any finance chargedThe amounts of any other charges you mightThe fact that the credit union will take a security
interest in any asset
MARKETING AND ADVERTISING
The amount or percentage of the down paymentThe terms of repaymentThe “annual percentage rate,” using that termFor an APR that may be increased after
consummation, a statement to that eff ect.
ADDITIONAL DISCLOSURES