Truth in lending / Diane E. Thompson, Elizabeth Renuart ; contributing authors, Carolyn L. Carter [and others].
2010
KF1040 .K436 2010 (Map It)
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Details
Author
Title
Truth in lending / Diane E. Thompson, Elizabeth Renuart ; contributing authors, Carolyn L. Carter [and others].
Published
Boston, MA : National Consumer Law Center, 2010.
Call Number
KF1040 .K436 2010
Edition
Seventh edition.
ISBN
9781602480797 (pbk.)
1602480796 (pbk.)
0943116104 (Series)
9780943116105 (Series)
1602480796 (pbk.)
0943116104 (Series)
9780943116105 (Series)
Description
2 volumes (1,497 pages) : illustrations, forms ; 28 cm.
System Control No.
(OCoLC)694786808
Note
Revised edition of: Truth in lending / Elizabeth Renuart, Kathleen Keest. 6th. 2007.
Bibliography, etc. Note
Includes bibliographical references and index.
Other Fomats Issued
Current appendices, additional pleadings & other practice aids available online -- username and password required.
Record Appears in
Library Has
v.1-2, 2011 suppl.
Added Corporate Author
Table of Contents
About the Companion Website, Other Search Options
Chapter 1
Overview
1.1
Introduction
1
1.1.1
The Purpose of Truth in Lending
1
1.1.2
The Role of Truth in Lending in Consumer Advocacy
1
1.2
Legislative History
1
1.2.1
Original Act
1
1.2.2
Truth in Lending Simplification
2
1.2.3
1988 Consumer Protection Amendments
2
1.2.4
The Home Ownership and Equity Protection Act of 1994
2
1.2.5
Truth in Lending Act Amendments of 1995
2
1.2.6
The 2005 Bankruptcy Amendments Affecting TILA
2
1.2.7
Federal Reserve Board Review of Regulation Z
2
1.2.7.1
Introduction
2
1.2.7.2
Open-End Credit Review
2
1.2.7.3
Closed-End Credit Review
3
1.2.8
The Credit Card Accountability, Responsibility and Disclosures (CARD) Act
3
1.3
Outline of the Truth in Lending Act
4
1.4
Sources of Law in Truth in Lending Cases
5
1.4.2
The Statute
5
1.4.2.2
The Pre-Simplification Statute
5
1.4.2.3
Statutory Construction Principles
5
1.4.2.3.1
Liberal construction
5
1.4.2.3.2
Strict liability
5
1.4.3
Regulation Z and the FRB Staff Commentary
5
1.4.3.1
History of Regulation Z and the FRB Interpretations
5
1.4.3.2
Validity of Regulation Z and Commentary
6
1.4.5
Treatises
6
1.5
Organization of This Book
6
1.6
Getting Started: Quick Reference Checklist (Closed-End)
6
Chapter 2
Scope
2.1
Introduction
7
2.1.2
Devices to Evade TILA: Substance of Transaction, Not Form, Dictates
7
2.1.3
Opting-In to TIL Coverage
7
2.2
Consumer Credit
7
2.2.1
General
7
2.2.2
Consumer
7
2.2.2.1
Defined
7
2.2.3
Primarily for Personal, Family, or Household Purposes
7
2.2.4
Credit
8
2.2.4.1
Definition of "Credit"
8
2.2.4.2
Credit Sales and Leases
8
2.2.4.2.1
General Definition
8
2.2.4.2.2
Leases
8
2.3
Creditor
8
2.3.1
Introduction
8
2.3.3
Regularly Extends Consumer Credit
8
2.3.5
To Whom the Obligation is Initially Payable
8
2.3.5.1
General
8
2.3.5.2
Status and Liability of Assignees
9
2.3.5.3
Status and Liability of Servicers
9
2.3.5.4
Arrangers of Credit
10
2.3.6
HOEPA Mortgages: Special Definition of Creditor
10
2.4
Exempt Transactions
10
2.4.1
Overview
10
2.4.2
Business, Commercial, or Agricultural Credit
11
2.4.2.1
Primary Purpose
11
2.4.2.2
Business Credit
11
2.4.2.2.1
Determining a business purpose
11
2.4.2.2.2
Losing exemptions through refinancing
12
2.4.2.4
Agricultural Purpose
12
2.4.4
Credit Over $25,000 Not Secured by Real Property or a Dwelling
12
2.4.4.1
Scope of the Exemption
12
2.4.5
Student Loans
12
2.4.5.1
TIL Student Loan Disclosure Requirements
12
2.4.5.2
Non-TIL Student Loan Disclosure Requirements
13
2.4.6
Public Utility Credit
13
2.5
Disguised Credit and Credit Sales: Maybe; Maybe Not
14
2.5.1
Introduction
14
2.5.2
Pawn Transactions; Auto-Pawns
14
2.5.3
Sale/Leasebacks; Sale/Repurchase Requests
14
2.5.3.1
Is the Transaction a Loan Secured by the Consumer's Home?
14
2.5.4
Rent to Own (RTO)
14
2.5.5
Payday Loans/Check Advancement Loans
15
2.5.6
Refund Anticipation Loans
15
2.5.7
Bank Overdraft Loans
15
2.5.7.1
What Is an Overdraft Loan?
15
2.5.7.2
Overdraft Loans Are "Credit"
15
2.5.7.4
ATM and Debit Cards that Access Overdraft Loans
15
2.6
State Disclosure Law
16
2.6.1
Introduction
16
2.6.2
Exemptions
16
2.6.3
Preemption
16
2.7
Miscellaneous: Use of Rule of 78 Prohibited
16
Chapter 3
Finance Charge
3.1
Introduction
17
3.1.1
Overview; Purpose of the Finance Charge Disclosure
17
3.2
A Primer on the Finance Charge
17
3.2.1
The General Concepts Underlying TILA's Definition
17
3.2.2
Allocating the Components of the Debt: Finance Charge or Amount Financed?
17
3.2.3
Distinctions: TIL Finance Charge and Interest; TIL APR and Interest Rate; TIL Amount Financed and Loan Principal
18
3.5
Basic Definition of Finance Charge: 15 U.S.C. § 1605(a); Reg. Z § 226.4(a)
18
3.6
Elements of the Basic Definition
18
3.6.1
Any Charge
18
3.6.1.1
General
18
3.6.1.2
Required Debt Consolidations or Reaffirmations; Collateral Purchases
18
3.6.2
Charges Payable Directly or Indirectly by the Consumer; Creditor's Costs of Doing Business
19
3.6.3
Charge Imposed Directly or Indirectly by the Creditor
19
3.6.3.1
Charges Need Not Be Retained by the Creditor to Be "Imposed by the Creditor"
19
3.6.3.3
Charges Incurred by Settlement Agents
19
3.6.3.4
Car Dealers---Packing in the Extras
19
3.6.4
Incident to or a Condition of the Extension of Credit
20
3.6.5
Charges Payable in a Comparable Cash Transaction
20
3.6.5.2
Examples: Document Fees, Service Contracts, Notary Fees, and Sundry Other Items
20
3.7
Examples of Finance Charges: 15 U.S.C. § 1605(a); Reg. Z § 226.4(a) and (b)
20
3.7.2
Interest; the Time-Price Differential
20
3.7.2.1
The Basic Interest Cost
20
3.7.2.2
Failure to Rebate Unearned Charges: When Refinancing Creates Finance Charge in the New Loan
21
3.7.2.2.2
Practical tips: determining whether there are unearned charges in a refinanced pay-off balance
21
3.7.2.2.3
Federal rebate law prescribes method of calculating unearned interest in long-term transactions
21
3.7.3
Service, Transaction, Activity, and Carrying Charges
21
3.7.3.1
General
21
3.7.3.2
Checking Account Charges
22
3.7.4
Brokers Fees
22
3.7.4.1
Overview of Roles Played by Brokers
22
3.7.4.2
Current Rule and Impact of 1995 Amendments
22
3.7.4.3
Pre-1995 Amendments: Mortgage and Non-Mortgage Broker Fee Analysis
24
3.7.5
Points, Loan Fees, Assumption Fees, and Finder's Fees
24
3.7.5.1
General
24
3.7.5.2
Exception for Seller's Points
24
3.7.8
Assignment Fee or Discount
24
3.7.10
Debt Cancellation Coverage; GAP Insurance
24
3.7.11
Discounts and Surcharges
24
3.8
Prepaid Finance Charges
24
3.8.1
Overview; Definition
24
3.8.3
Practice Tip: Working Examples
25
3.9
TILA's "Exclusionary" Rules: Taking Charges Out of the Finance Charge: 15 U.S.C. § 1605(a)-(e); Reg. Z § 226.4(a)(1) & (2), (c)-(e)
25
3.9.3
Late Charges, Over-the-Limit Fees, and Other Delinquency Charges
25
3.9.3.2
Over-the-Limit Fees
25
3.9.3.3
Overdraft Loan Fees
25
3.9.3.4
When Late Charges Are Finance Charges; Late Charges As a Finance Charge Triggering TIL Coverage
25
3.9.4
Credit Insurance
25
3.9.4.1
Overview
25
3.9.4.2
Relationship of TILA to McCarran-Ferguson Act; State Laws Regulating Credit Insurance
25
3.9.4.3
Credit Insurance and Non-Credit Insurance Distinguished
26
3.9.4.4
Credit Insurance "Written in Connection with a Credit Transaction": Preexisting Policies and Post-Consummation Policies; Force Placed Insurance
26
3.9.4.4.1
General
26
3.9.4.4.2
Force placed insurance
26
3.9.4.5
Loss of Income Insurance: Credit Life, Accident, Health, and Unemployment Insurance
26
3.9.4.5.1
General
26
3.9.4.5.2
Coverage must not be required
27
3.9.4.5.2.1
Voluntariness disclosure
27
3.9.4.5.2.2
Voluntariness may be a factual issue
27
3.9.4.5.2.3
Of parol evidence; proof of coercion
27
3.9.4.5.4
Term disclosure
28
3.9.4.5.5
Affirmative written request for insurance
28
3.9.4.6
Credit Property Insurance
28
3.9.4.6.1
General
28
3.9.4.6.3
Premium cost disclosures
28
3.9.4.7
GAP Insurance; Debt Cancellation and Suspension Agreements
28
3.9.4.8
Single Interest Insurance (VSI)
29
3.9.5
Third Party and Closing Agent Charges: 15 U.S.C.§ 1605(a); Regulation Z. § 226.4(a)(1) & (2)
29
3.9.6
Real Estate and Residential Mortgage Transaction Charges: 15 U.S.C. § 1605(e); Reg. Z § 226.4(c)(7)
29
3.9.6.1
General
29
3.9.6.2
Classes of Real Estate Closing Charges
29
3.9.6.2.2
Real property, title-related fees
29
3.9.6.2.3
Document fees
30
3.9.6.2.5
Notary, appraisal, and credit report fees
30
3.9.6.2.6
Escrow costs
30
3.9.6.2.7
Fees for post-consummation services
31
3.9.6.3
The Charges Must Be Bona Fide and Reasonable
31
3.9.6.3.1
Definition of "bona fide and reasonable"
31
3.9.6.3.2
How much of the fee is part of the finance charge?
33
3.9.6.4
Identifying Finance Charges from the Settlement Statement
34
3.9.7
Security Interest Charges; Filing and Recording Fees: 15 U.S.C. § 1605(d); Reg. Z § 226.4(e)
35
3.9.7.2
Taxes; Recording and Filing Fees Prescribed by Law
35
3.9.7.3
Nonfiling Fees
35
3.10
Hidden Finance Charges in the Cash Price of Goods or Services
36
3.11
Using This Chapter: Walking Through a Case
36
3.11.2
Checking the Papers
36
3.11.2.1
Level One
36
3.11.2.2
Level Two
36
3.11.3
Looking Behind the Papers
36
Chapter 4
Closed-End Credit Disclosures
4.1
Introduction
37
4.1.1
The Scope of This Chapter and Sources of Law
37
4.1.3
Who Is Required to Make Closed-End Disclosures?
37
4.2
Form of Disclosures
37
4.2.2
Model Forms
37
4.2.3
Meaningful Disclosures
37
4.2.4
Clear and Conspicuous
38
4.2.5
Additional Inconsistent Information
40
4.2.6
More Conspicuous: Annual Percentage Rate and Finance Charge
41
4.2.7
Written Disclosures in a Form the Consumer May Keep
41
4.2.7.1
General Standards
41
4.2.7.2
Effect of Written Acknowledgment of Receipt
41
4.2.8
Segregating the Disclosures: The Federal Box
42
4.2.9
Electronic Disclosures
42
4.2.9.1
Overview
42
4.2.9.2
Authority of Agencies to Interpret Electronic Disclosure Standards and Establish Exceptions
43
4.2.9.3
Interim Rule
43
4.2.9.4
Final Rule
45
4.2.9.4.1
Differences between interim rule and final rule
45
4.2.9.4.2
Open-end credit
46
4.2.9.4.3
Closed-end credit
46
4.2.9.5
E-Sign's Requirements for Consumer Consent to Receive Electronic Disclosures
46
4.2.9.6
E-Sign's Effect on TIL Requirement That Disclosures Be Made in a Form That the Consumer May Keep
47
4.2.9.7
E-Sign's Effect on TIL Timing Requirements
48
4.2.9.8
E-Sign's Effect on TIL Format Requirements
49
4.2.9.9
Manner of Transmitting Electronic Notices
49
4.2.9.10
Penalties for Violation of Electronic Disclosure Safeguards
50
4.2.10
Advertising Rules for Closed-End Loans
50
4.2.10.1
General Requirements
50
4.2.10.2
Tax Deductibility Disclosures
51
4.2.10.3
Special Advertising Rules for Closed-End Credit Secured by a Dwelling
51
4.2.10.3.1
General rules
51
4.2.10.3.2
Prohibited misleading acts or practices in advertising
52
4.2.10.4
Remedies
52
4.3
Timing of Disclosures
53
4.3.1
General
53
4.3.2
Consummation Defined
54
4.3.4
Timing Rules for Residential Mortgage Transactions Subject to RESPA
55
4.3.4.1
Coverage
55
4.3.4.2
Early Disclosures
56
4.3.4.2.1
Time when early disclosures must be provided
56
4.3.4.2.2
Format of early disclosures
57
4.3.4.2.3
Fees
57
4.3.4.3
Redisclosure
57
4.3.4.4
Waiver
58
4.3.4.5
Remedies for Violations of the Early Disclosures
59
4.3.5
Timing Rules for Variable Rate Transactions Secured by the Consumer's Principal Dwelling
59
4.3.6
Timing Issues in Car Sales
60
4.3.7
Timing Issues in Student Loans
61
4.4
Basis of Disclosures
61
4.4.1
Disclosures Reflect the Legal Obligation
61
4.4.5
"Yo-Yo" or "Spot Delivery" Car Sales
62
4.4.7
Estimated Disclosures
62
4.4.8
Effect of Subsequent Events on Early Disclosures: When Do New Disclosures Have to Be Made?
62
4.4.10
Demand Obligations
63
4.4.10.2
Tax Refund Loans As Demand Obligations
63
4.6
Disclosures Tied to Special Consumer Relief
63
4.6.1
Introduction
63
4.6.2
Disclosure of the Amount Financed
63
4.6.2.2
Disclosures for Down Payments and Trade-Ins
63
4.6.2.3
Negative Equity
63
4.6.2.4
Pickup Payments
64
4.6.3
Disclosure of the Finance Charge
64
4.6.3.1
General Disclosure Rules
64
4.6.3.2
Tolerance Levels for Amount Disclosed
64
4.6.3.2.1
General
64
4.6.3.2.3
Tolerance for rescission in foreclosure defense
64
4.6.3.2.4
Tolerances for real-estate-secured transactions consummated after September 30, 1995
64
4.6.3.2.6
Effect of finance charge tolerances on related disclosures
65
4.6.3.2.7
Padded fees
65
4.6.4
Annual Percentage Rate Disclosure
65
4.6.4.1
General Disclosure Rule
65
4.6.4.2
More Conspicuous Than Other Disclosures
65
4.6.4.3
Calculation of the Annual Percentage Rate for Fixed Rate Transactions
65
4.6.4.4
Calculation of the Annual Percentage Rate in Variable Rate Transactions
66
4.6.4.4.1
Introduction
66
4.6.4.4.2
Calculation of interest rate changes in variable rate transactions
66
4.6.4.4.3
Rate at origination or the fully indexed rate
67
4.6.4.4.4
Composite APR
67
4.6.4.4.5
Tools for calculating the composite APR
68
4.6.4.5
Calculation of the APR in Single-Advance Single-Payment Transactions
68
4.6.4.6
Accuracy of the Annual Percentage Rate
68
4.6.4.6.1
General rules on tolerance
68
4.6.4.6.3
Other accuracy rules
68
4.6.4.7
Proving the Accurate APR in Litigation
68
4.6.5
Disclosure of the Payment Schedule
69
4.6.5.3
Amounts Included in Payment Schedule
69
4.6.5.3.1
General definition and examples
69
4.6.5.3.2
Mortgage insurance premiums
69
4.6.5.5
Timing of Payments
70
4.6.5.8
Payment Schedule for Variable Rate Transactions
70
4.6.6
Disclosure of the Total of Payments
72
4.6.6.1
General Disclosure Requirements
72
4.6.7
Disclosure of Security Interests
72
4.6.7.2
Definition of Security Interest
72
4.7
Disclosure Requirements Tied to Actual Damage Relief Only
72
4.7.3
Itemization of the Amount Financed
72
4.7.3.1
General
72
4.7.3.4
Any Amounts Paid to Other Persons by the Creditor on the Consumer's Behalf
72
4.7.3.4.1
General
72
4.7.3.2
Car dealer mark-ups and commissions
72
4.7.5
Disclosure of the Total Sale Price
72
4.7.6
Prepayment Disclosures
73
4.7.6.1
General
73
4.7.6.3
Precomputed Transactions
73
4.7.6.4
Prepaid Finance Charge
73
4.7.8
Disclosure of Insurance Charges and Debt Cancellation Agreements
73
4.8.1
Introduction
73
4.8.1.1
Overview
73
4.8.1.2
Definitions
74
4.8.2
Variable Rate Disclosures for Adjustable-Rate Mortgages (ARMs)
74
4.8.2.1
Overview
74
4.8.2.2
Rate Cap Disclosure
75
4.8.2.2.1
Coverage
75
4.8.2.2.2
Maximum Interest Rate
76
4.8.2.3
Early Disclosures for ARMs with Terms of More Than One Year Secured by the Consumer's Principal Dwelling
77
4.8.2.3.1
General
77
4.8.2.3.2
ARM brochure
78
4.8.2.3.3
The interest rate calculation: the index, margin, and resulting payment
78
4.8.2.3.4
Disclosure of negative amortization
79
4.8.2.3.5
Worst case scenario on a $10,000 loan
79
4.8.2.3.5.1
Overview
79
4.8.2.3.5.2
Historical loan payments example
79