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Truth in Lending: 34(a)(5)(i) Certification of counseling required.

Editor’s Note410

Editor’s Note411

1. HUD-approved counselor.412 For purposes of § 1026.34(a)(5), counselors approved by the Secretary of the U.S. Department of Housing and Urban Development are homeownership counselors certified pursuant to section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)), or as otherwise determined by the Secretary.

Truth in Lending: 34(a)(5)(ii) Timing of counseling.

Editor’s Note417

1. Disclosures for open-end credit plans.418 Section 1026.34(a)(5)(ii) permits receipt of either the disclosure required by section 5(c) of RESPA or the disclosures required under § 1026.40 to allow counseling to occur. Pursuant to 12 CFR 1024.7(h), the disclosures required by § 1026.40 can be provided for open-end plans in lieu of the usual disclosure required by section 5(c) of RESPA.

Truth in Lending: 34(a)(5)(v) Counseling fees.

Editor’s Note424

1. Financing.425 Section 1026.34(a)(5)(v) does not prohibit a creditor from financing the counseling fee as part of the transaction for a high-cost mortgage, if the fee is a bona fide third-party charge as provided by § 1026.32(b)(5)(i).

Truth in Lending: 34(a)(5)(vi) Steering prohibited.

Editor’s Note426

1. An example of an action that constitutes steering would be when a creditor repeatedly highlights or otherwise distinguishes the same counselor in the notices the creditor provides to consumers pursuant to § 1026.34(a)(5)(vii).427

Truth in Lending: 9.3.2.2 Coverage

Coverage under the CFPB’s rule is the same as under the prior FRB rule. All loan originators, as defined in the rule, whether an in-house loan officer or a mortgage broker are covered.53 Closed-end credit secured by a dwelling is covered, including closed-end reverse mortgages, but excepting timeshares.

Truth in Lending: Appendix J Annual Percentage Rate Computations for Closed-End Credit Transactions

1. Use of appendix J. Appendix J sets forth the actuarial equations and instructions for calculating the annual percentage rate in closed-end credit transactions. While the formulas contained in this appendix may be directly applied to calculate the annual percentage rate for an individual transaction, they may also be utilized to program calculators and computers to perform the calculations.

Truth in Lending: 13.1.2 Structure of the Act

The CLA is one of five “parts” of the Truth in Lending Act,1 which in turn is the first of six “subchapters” of the Consumer Credit Protection Act.2 While the CLA is part E of Subchapter 1 (Truth in Lending), the CLA remedies are not found in part E, but rather in part B of Subchapter 1. When part B refers to remedies for “this subchapter,” the reference is not just to TILA’s credit provisions, but to all five TILA parts, including the CLA.

Truth in Lending: 10.4.4.1 General

Violations of the requirements governing the notice of right to rescind constitute the second category of “trigger” violations giving rise to the extended rescission right.602 The integrity and accuracy of the notice of right to rescind should be protected so as not to undermine the consumer’s rights.

Truth in Lending: 10.9.1 Overview

If the creditor refuses to acknowledge the consumer’s rescission of the transaction, the consumer can sue for rescission in either federal or state court.1399 A declaratory judgment1400 or a quiet title action1401 may be appropriate.

Truth in Lending: 11.7.10.1 Overview

This subsection focuses on liability for statutory damages of an originator (e.g., loan broker), servicer, assignee, or settlement agent where that entity violates the TILA requirement. This subsection also reviews an assignee’s TILA liability for the actions of its agent, the servicer.

Truth in Lending: 11.7.10.5.1 General

When a servicer fails to meet its responsibilities under TILA, consumers may pursue the holder of the debt for the servicer’s misconduct. Holding the creditor or assignee liable likely results in an offset against any debt owed by the homeowner and may save the home from foreclosure. It can also simplify litigation by reducing the number of parties.

Truth in Lending: 11.5.2.5.7 Where consumer has “independent” TILA claims

The Supreme Court made clear in Exxon that the Rooker-Feldman doctrine does not apply if a federal plaintiff presents a claim that is independent from the state court action.558 The decision notes that a claim can be independent even if it “denies a legal conclusion that a state court has reached in a case to which [the federal plaintiff] was a party.”559

Truth in Lending: 11.5.2.5.1 Definition of the doctrine

If a related state proceeding has concluded with a final judgment, the Rooker-Feldman doctrine is another potential impediment to relief in federal court. Under this doctrine, a federal court lacks subject matter jurisdiction over a case that is the functional equivalent of an appeal from a state court judgment.528 If the Rooker-Feldman doctrine applies, it prevents the federal court from exercising subject matter jurisdiction over the claim.529

Truth in Lending: 5.15.2.1.1 General requirements

When a creditor renegotiates the debt on a loan, the TILA definition of a refinancing comes into play. Only if the renegotiation meets the TILA definition of a refinancing will the creditor be required to provide TILA disclosures. New transactions, with a different creditor, require new disclosures.1544 But when the original creditor modifies or refinances a loan, new disclosures are only required if the transaction meets the parameters of section 1026.20(a) of Regulation Z.

Truth in Lending: 5.15.9.1 General Rule

Like refinancings, assumptions represent a modification of the original credit obligation. Unlike refinancings (which by definition must involve the same consumer and the same creditor as the original transaction), assumptions involve a new consumer who essentially takes over a credit obligation from the original consumer. The classic example of an assumption arises when a consumer sells his or her home. The purchaser, instead of obtaining a new mortgage, may “assume” the payments on the seller’s mortgage.

Truth in Lending: 5.13.2.1 Coverage

For any consumer credit ARM (including open-end credit) secured by the consumer’s dwelling and entered into after December 9, 1987, in which the interest rate may increase after consummation, Regulation Z requires creditors to disclose the maximum interest rate that may be imposed during the term of the obligation.1264 This change in Regulation Z implements the Competitive Equality Banking Act of 1987,1265 which provides that “[a]ny adjustable rate mortgage loan . . .

Truth in Lending: 5.15.1 General Rule

Generally, events occurring subsequent to the delivery of the required disclosures that render the original disclosures inaccurate do not violate the Act.1537 This rule is based upon certain assumptions.

Truth in Lending: 9.8.2.1 Introduction

The calculation of points and fees under the Dodd-Frank Act discussed in this section is used both to determine whether a loan is a “high-cost” loan under HOEPA and whether the loan meets the definition of a qualified mortgage.