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A really, really brief overview TRUTH IN LENDING.

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Presentation on theme: "A really, really brief overview TRUTH IN LENDING."— Presentation transcript:

1 A really, really brief overview TRUTH IN LENDING

2  Full and fair disclosure of credit terms  Most commonly violated regulation  Has evolved beyond being a disclosure regulation  Enormous Scope INTRODUCTION

3  Non-consumer credit  Amount financed is more than $50,000 (except real property)  Certain student loans EXEMPTIONS

4  Annual Percentage Rate  Business Day  Closed-end Credit  Open-end Credit  Finance Charge KEY DEFINITIONS


6  At application  Before first transaction or at consummation  After consummation TIMING OF OPEN-END DISCLOSURES

7  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

8  Plan termination or change  Payment information  Negative amortization  Transaction requirements  Tax implications  APR only includes interest  Variable rate disclosure and example HELOC DISCLOSURES

9  APRs  Annual or other periodic fees  Fixed finance charges  Transaction charges  Grace period  Balance computation method  Fees  Required insurance, debt cancellation or debt suspension  FRB Website  Billing error rights reference TABLE DISCLOSURES (NON-HELOC)

10  Give required disclosures  Give rescission notice  Delay line access and deed recording for three business days RESCISSION

11  Previous balance  Identification of transactions  Credits  Periodic rates  Balance on which finance charge computed  Amount of finance charge and other charges  Grace period  Address for notice of billing errors  Closing date of billing cycle  New balance PERIODIC STATEMENT – ALL ACCOUNTS

12  Formatting requirements  Change-in-terms and increased penalty rate  Deferred interest or similar transactions PERIODIC STATEMENT – NON-HELOC

13  Due date and late payment costs  Repayment disclosures PERIODIC STATEMENT – CREDIT CARDS

14  15 days for HELOCs  45 days for non-HELOC accounts (formatting requirements apply) CHANGE IN TERMS

15  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

16  Clear and conspicuous  Legible  Reasonably understandable  Actually available terms MARKETING AND ADVERTISING

17  A description of the circumstances under which a finance charge will be imposed, or how it is to be determined  APR  Periodic rate  Grace period  The amounts of any other charges  Security Interest  Billing Rights  Home equity plan information TRIGGER TERMS

18  Any minimum, fixed, transaction, activity, or similar charge  Any periodic rate that may apply, expressed as an annual percentage rate  Variable rate information  Membership or participation fees ADDITIONAL DISCLOSURES REQUIRED

19  APRs referred to as “fixed” unless a time period is also mentioned  “Free Money”  Promotional rates must list a time period MISLEADING TERMS

20  Fees  The 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 information  Tax Implications  Promotional Rate information  Alternative Disclosures for Television or Radio Advertisements HELOC ADDITIONAL DISCLOSURES


22  Clearly and conspicuously  In writing  In a form that the consumer may keep  Grouped together  Segregated from everything else  Before consummation of a loan  Early disclosures required for certain mortgage loans FORM OF DISCLOSURES

23  Identity of the creditor  The amount financed  Itemization of the Amount Financed  Finance Charge  Annual Percentage Rate  Variable-Rate Information  Payment Schedule  Total of payments  Total sales price  Demand feature  Prepayment  Late payment  Security interest  Certain security interest charges  Contract reference  Assumption policy  Required deposit  Maximum interest disclosure for variable- rate mortgage loans CONTENTS

24  Reverse mortgage loans  High-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

25  Give required disclosures  Give rescission notice  Delay loan funding and deed recording for three business days RESCISSION

26  Terms advertised must be actually available  The “annual percentage rate” (or APR) must be used whenever a rate is disclosed  Disclosures must be legible and reasonably understandable TRIGGER TERMS:  The amount or percentage of any down payment  The number of payments or the period of repayment  The amount of any payment  The amount of any finance charged  The amounts of any other charges you might  The fact that the credit union will take a security interest in any asset MARKETING AND ADVERTISING

27  The amount or percentage of the down payment  The terms of repayment  The “annual percentage rate,” using that term  For an APR that may be increased after consummation, a statement to that effect. ADDITIONAL DISCLOSURES

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