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[Table of Contents]
6500 - Consumer Protection CHAPTER 2—CREDIT TRANSACTIONS Sec.
121.
General requirement of disclosure.
§ 121. General requirement of disclosure (a) 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) 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 Board shall by regulation specify which creditor or lessor shall make the disclosures. (c) The Board 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) The Board 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 Board 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] § 122. Form of disclosure; additional information (a) Information required by this title shall be disclosed clearly and conspicuously, in accordance with regulations of the Board. 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 Board 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) 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 Board 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 Board shall require that the disclosure of such information shall, to the extent the Board 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) BOARD DISCRETION IN PRESCRIBING ORDER AND WORDING OF TABLE.--In prescribing the form of the table under subparagraph (A), the Board 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". [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] § 123. Exemption for State-regulated transactions The Board 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] § 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) 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 Board, of his intention to do so. The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Board, 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 Board, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section. (b) 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) 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) The Board 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) 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) 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) 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 Board 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] § 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) 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 Board. (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 Board 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 Board determines is not described in any other paragraph of this subsection. (b) 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 Board 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 Board, 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) In the case of an open end credit plan that requires a minimum monthly payment of not more than 4 percent of the balance on which finance charges are accruing, the following statement, located on the front of the billing statement, disclosed clearly and conspicuously: "Minimum Payment Warning: Making only the minimum payment will increase the interest you pay and the time it takes to repay your balance. For example, making only the typical 2% minimum monthly payment on a balance of $1,000 at an interest rate of 17% would take 88 months to repay the balance in full. For an estimate of the time it would take to repay your balance, making only minimum payments, call this toll-free number: ____________________________________________ (the blank space to be filled in by the creditor)." (B) In the case of an open and credit plan that requires a minimum monthly payment of more than 4 percent of the balance on which finance charges are accruing, the following statement, in a prominent location on the front of the billing statement, disclosed clearly and conspicuously: "Minimum Payment Warning: Making only the required minimum payment will increase the interest you pay and the time it takes to repay your balance. Making a typical 5% minimum monthly payment on a balance of $300 at an interest rate of 17% would take 24 months to repay the balance in full. For an estimate of the time it would take to repay your balance, making only minimum monthly payments, call the toll-free number: ____________________________________________ (the blank space to be filled in by the creditor)." (C) Notwithstanding subparagraphs (A) and (B), in the case of a creditor with respect to which compliance with this title is enforced by the Federal Trade Commission, the following statement, in a prominent location on the front of the billing statement, disclosed clearly and conspicuously: "Minimum Payment Warning: Making only the required minimum payment will increase the interest you pay and the time it takes to repay your balance. For example, making only the typical 5% minimum monthly payment on a balance of $300 at an interest rate of 17% would take 24 months to repay the balance in full. For an estimate of the time it would take to repay your balance, making only minimum monthly payments, call the Federal Trade Commission at this toll-free number: ____________________________________________ (the blank space to be filled in by the creditor)." A creditor who is subject to this subparagraph shall not be subject to subparagraph (A) or (B). (D) Notwithstanding subparagraph (A), (B), or (C), in complying with any such subparagraph, a creditor may substitute an example based on an interest rate that is greater than 17 percent. Any creditor that is subject to subparagraph (B) may elect to provide the disclosure required under subparagraph (A) in lieu of the disclosure required under subparagraph (B). (E) The Board shall, by rule, periodically recalculate, as necessary, the interest rate and repayment period under subparagraphs (A), (B), and (C). (F)(i) The toll-free telephone number disclosed by a creditor or the Federal Trade Commission under subparagraph (A), (B), or (G), as appropriate, may be a toll-free telephone number established and maintained by the creditor or the Federal Trade Commission, as appropriate, or may be a toll-free telephone number established and maintained by a third party for use by the creditor or multiple creditors or the Federal Trade Commission, as appropriate. The toll-free telephone number may connect consumers to an automated device through which consumers may obtain information described in subparagraph (A), (B), or (C), by inputting information using a touch-tone telephone or similar device, if consumers whose telephones are not equipped to use such automated device are provided the opportunity to be connected to an individual from whom the information described in subparagraph (A), (B), or (C), as applicable, may be obtained. A person that receives a request for information described in subparagraph (A), (B), or (C) from an obligor through the toll-free telephone number disclosed under subparagraph (A), (B), or (C), as applicable, shall disclose in response to such request only the information set forth in the table promulgated by the Board under subparagraph (H)(i). (ii)(I) The Board shall establish and maintain for a period not to exceed 24 months following the effective date of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a toll-free telephone number, or provide a toll-free telephone number established and maintained by a third party, for use by creditors that are depository institutions (as defined in section 3 of the Federal Deposit Insurance Act), including a Federal credit union or State credit union (as defined in section 101 of the Federal Credit Union Act), with total assets not exceeding $250,000,000. The toll-free telephone number may connect consumers to an automated device through which consumers may obtain information described in subparagraph (A) or (B), as applicable, by inputting information using a touch-tone telephone or similar device, if consumers whose telephones are not equipped to use such automated device are provided the opportunity to be connected to an individual from whom the information described in subparagraph (A) or (B), as applicable, may be obtained. A person that receives a request for information described in subparagraph (A) or (B) from an obligor through the toll-free telephone number disclosed under subparagraph (A) or (B), as applicable, shall disclose in response to such request only the information set forth in the table promulgated by the Board under subparagraph (H)(i). The dollar amount contained in this subclause shall be adjusted according to an indexing mechanism established by the Board. (II) Not later than 6 months prior to the expiration of the 24-month period referenced in subclause (I), the Board shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the program described in subclause (I). (G) The Federal Trade Commission shall establish and maintain a toll-free number for the purpose of providing to consumers the information required to be disclosed under subparagraph (C). (H) The Board shall-- (i) establish a detailed table illustrating the approximate number of months that it would take to repay an outstanding balance if a consumer pays only the required minimum monthly payments and if no other advances are made, which table shall clearly present standardized information to be used to disclose the information required to be disclosed under subparagraph (A), (B), or (C), as applicable; (ii) establish the table required under clause (i) by assuming-- (I) a significant number of different annual percentage rates; (II) a significant number of different account balances; (III) a significant number of different minimum payment amounts; and (IV) that only minimum monthly payments are made and no additional extensions of credit are obtained; and (iii) promulgate regulations that provide instructional guidance regarding the manner in which the information contained in the table established under clause (i) should be used in responding to the request of an obligor for any information required to be disclosed under subparagraph (A), (B), or (C). (I) The disclosure requirements of this paragraph do not apply to any charge card account, the primary purpose of which is to require payment of charges in full each month. (J) A creditor that maintains a toll-free telephone number for the purpose of providing customers with the actual number of months that it will take to repay the customer's outstanding balance is not subject to the requirements of subparagraph (A) or (B). (K) A creditor that maintains a toll-free telephone number for the purpose of providing customers with the actual number of months that it will take to repay an outstanding balance shall include the following statement on each billing statement: "Making only the minimum payment will increase the interest you pay and the time it takes to repay your balance. For more information, call this toll-free number:. (12) If a late payment fee is to be imposed due to the failure of the obligor to make payment on or before a required payment due date, the following shall be stated clearly and conspicuously on the billing statement: (A) The date on which that payment is due or, if different, the earliest date on which a late payment fee may be charged. (B) The amount of the late payment fee to be imposed if payment is made after such date. (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 Board, 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 Board shall define and name not more than the 5 balance calculation methods determined by the Board 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 conspicuously (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 BOARD.--The Board 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. (d) DISCLOSURE PRIOR TO RENEWAL.-- (1) IN GENERAL.--Except as provided in paragraph (2), a card issuer 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) SPECIAL RULE FOR CERTAIN DISCLOSURES.-- (A) IN GENERAL.--The disclosures required by this subsection may be provided-- (i) prior to posting a fee described in subsection (c)(1)(A)(ii)(I) or (c)(4)(A)(i) to the account, or (ii) with the periodic billing statement first disclosing that the fee has been posted to the account. (B) LIMITATION ON USE OF SPECIAL RULE.--Disclosures may be provided under subparagraph (A) only if-- (i) the consumer is given a 30-day period to avoid payment of the fee or to have the fee recredited to the account in any case where the consumer does not wish to continue the availability of the credit; and (ii) the consumer is permitted to use the card during such period without incurring an obligation to pay such fee. (3) SHORT-TERM RENEWALS.--The Board 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. [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] § 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 Board 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 Board. (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 Board 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 Board. [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 Board] § 128. Consumer credit not under open end credit plans (a) 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 Board. 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 Board 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 Board, 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. (b)(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 Board 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 Board. Prior to issuing any rules pursuant to this clause, the Board 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 Board; (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 Board 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. (c)(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) 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 Board 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 Board 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 Board 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) BOARD REGULATIONS.--In issuing regulations under this subsection, the Board 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 Board, in consultation with the Secretary of Education, provide to the covered educational institution such information as the Board 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). [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] § 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 Board 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) EXCEPTION.--Notwithstanding paragraph (1), a mortgage referred to in section 103(aa) may contain a prepayment penalty (including terms calculating a refund by a method that is not prohibited under section 933(b) of the Housing and Community Development Act of 1992 for the transaction in question) if-- (A) at the time the mortgage is consummated-- (i) the consumer is not liable for an amount of monthly indebtedness payments (including the amount of credit extended or to be extended under the transaction) that is greater than 50 percent of the monthly gross income of the consumer; and (ii) the income and expenses of the consumer are verified by a financial statement signed by the consumer, by a credit report, and in the case of employment income, by payment records or by verification from the employer of the consumer (which verification may be in the form of a copy of a pay stub or other payment record supplied by the consumer); (B) the penalty applies only to a prepayment made with amounts obtained by the consumer by means other than a refinancing by the creditor under the mortgage, or an affiliate of that creditor; (C) the penalty does not apply after the end of the 5-year period beginning on the date on which the mortgage is consummated; and (D) the penalty is not prohibited under other applicable law. (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.--A mortgage referred to in section 103(aa) having a term of less than 5 years may not include terms under which the aggregate amount of the regular periodic payments would not fully amortize the outstanding principal balance. (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) 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. (k) 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. (l) DISCRETIONARY REGULATORY AUTHORITY OF BOARD.-- (1) EXEMPTIONS.--The Board 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 Board 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 Board, by regulation or order, shall prohibit acts or practices in connection with-- (A) mortgage loans that the Board finds to be unfair, deceptive, or designed to evade the provisions of this section; and (B) refinancing of mortgage loans that the Board finds to be associated with abusive lending practices, or that are otherwise not in the interest of the borrower. [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] SEC. 129A. FIDUCIARY DUTY OF SERVICERS OF POOLED RESIDENTIAL MORTGAGES. (a) IN GENERAL.--Except as may be established in any investment contract between a servicer of pooled residential mortgages and an investor, a servicer of pooled residential mortgages-- (1) owes any duty to maximize the net present value of the pooled mortgages in an investment to all investors and parties having a direct or indirect interest in such investment, not to any individual party or group of parties; and (2) shall be deemed to act in the best interests of all such investors and parties if the servicer agrees to or implements a modification or workout plan, including any modification or refinancing undertaken pursuant to the HOPE for Homeowners Act of 2008, for a residential mortgage or a class of residential mortgages that constitute a part or all of the pooled mortgages in such investment, provided that any mortgage so modified meets the following criteria: (A) Default on the payment of such mortgage has occurred or is reasonably foreseeable. (B) The property securing such mortgage is occupied by the mortgagor of such mortgage. (C) The anticipated recovery on the principal outstanding obligation of the mortgage under the modification or workout plan exceeds, on a net present value basis, the anticipated recovery on the principal outstanding obligation of the mortgage through foreclosure. (b) DEFINITION.--As used in this section, the term "servicer" means the person responsible for servicing of a loan (including the person who makes or holds a loan if such person also services the lone). [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] § 130. Civil liability (a) 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 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 $100 nor greater than $1,000, or (iii) 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 $500,000 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, 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, section 127(a), or of paragraph (4), (5), (6), (7), (8), (9), or (10) of section 127(b) or for failing to comply with disclosure requirements under State law for any term or item which the Board 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 those paragraphs 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 Board 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) 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) 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) 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) 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. 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 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) 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 Board, or in conformity with any interpretation or approval by an official or employee of the Federal Reserve System duly authorized by the Board to issue such interpretations or approvals under such procedures as the Board 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) 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) 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 Board 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)). [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] § 131. Liability of assignees (a) 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) 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) 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 Board. (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. [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] § 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)(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) 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) 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) 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 card (a) 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) 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) 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) 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) 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) 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 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 (a) The Board 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 Board, the annual percentage rates charged for representative types of nonsale credit by creditors in such areas. For the purpose of this section, the Board is authorized to require creditors in such areas to furnish information necessary for the Board to collect, publish, and disseminate such information. (b) CREDIT CARD PRICE AND AVAILABILITY INFORMATION.-- (1) COLLECTION REQUIRED.--The Board 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 Board 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 Board in accordance with such regulations or orders as the Board may prescribe. (4) PUBLIC AVAILABILITY OF COLLECTED INFORMATION, REPORT TO CONGRESS.--The Board 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) The Board 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] § 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) BOARD CATEGORIZATION. --The Board 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] § 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 Board, 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 Board 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] § 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 Board 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] § 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. [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]
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