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Truth in Lending: 10.3.3.5 Rescission by Recoupment Where Consumer Attempted to Exercise Rescission Within the Three-Year Period

In some cases, careful investigation may reveal that the consumer made some efforts to rescind or cancel the transaction within the three-year period.436 For example, the consumer may have included a request for cancellation in a letter that the creditor ignored.437 Courts were split on whether anything short of a lawsuit is sufficient to exercise the right of rescission for purposes of the three-year limit in section 1635(f).438 The Su

Truth in Lending: 9.10.2.1 General

The Helping Families Save Their Homes Act of 2009 (hereinafter the 2009 Act) amended TILA to require that borrowers be notified whenever ownership of their mortgage loan is transferred.1145 The Act applies to all mortgages secured by the consumer’s principal dwelling.1146 This includes loans secured by manufactured homes that are a consumer’s principal dwelling.

Truth in Lending: 5.11.2.8.7.3 “Adjustable Payment (AP) Table” subsection

If the periodic principal and interest payments may change after consummation but the change is not due to an adjustment of the interest rate (or if the product is a seasonal payment product), the “Adjustable Payment (AP) Table” subsection must appear next in the “Additional Information About This Loan” part of the closing disclosure form.1164 The creditor must answer yes or no whether the transaction includes interest only payments, optional payment amounts (payments in an amount other than the scheduled payment), step payments, or seasona

Truth in Lending: 5.11.2.7.6.6 “Adjustable Interest Rate (AIR) Table” subsection

If the interest rate may increase after consummation, a separate “Adjustable Interest Rate (AIR) Table” subsection must appear under the “Closing Cost Details” master heading.957 If the legal obligation does not allow the interest rate to change, the creditor must not include this table in the loan estimate.958 This table must include the following in this sequence:959

Truth in Lending: 13.5.3.1 Introduction

When a lease is terminated early because of a default or early termination, the lessor seeks from the lessee all back unpaid lease payments, and also an additional amount specified in the lease. This chapter will reference this additional amount as the early termination charge whether it is assessed on default or voluntary early termination. This amount has some superficial similarity to a deficiency after a car’s repossession pursuant to a creditor’s security interest. But it is produced by a very different calculation and based on very different principles.

Truth in Lending: 13.5.3.2.1 Reading the formula

Leases specify that the consumer owes any past due lease payments that have not been made, plus any late fees, taxes, and the like. The consumer also owes an early termination charge that typically will be expressed either in terms of an adjusted lease balance or in terms of the remaining lease payments plus the residual value of the leased item. In either case, the lessor will deduct from the consumer’s resulting liability the car’s realized value at early termination.

Truth in Lending: 13.5.3.2.4 Calculations based on remaining lease payments plus the residual value

Other early termination formulas charge the consumer for all the remaining monthly payments plus the residual value less “unearned lease charges” and less the car’s realized value at early termination. Unearned lease charges are rent charges that are due in the months following early termination—that is, the total rent disclosed in the lease less the amount of rent included in the monthly payments up until the early termination date.

Truth in Lending: 11.5 Declaratory and Injunctive Relief

11.5.1 Availability of Declaratory and Injunctive Relief

Injunctive and declaratory relief are not specifically mentioned in TILA, but a number of courts have found such relief available.434 District courts have inherent power to issue equitable relief. In Califano v.

Truth in Lending: 11.9 TILA Class Actions

11.9.1 Background

The Truth in Lending Act explicitly provides for class action relief, comprised of actual damages, statutory damages, and attorney fees.1132 Many Truth in Lending Act violations are unusually well-suited to class action treatment. Violations are often apparent on the face of the written documents and typically are identical for each class member. Proof of reliance, intent, or actual injury is unnecessary in many cases. Statutory damages are available so that individual actual damages need not be proven.

Truth in Lending: 11.8 Remedies for Violations of the Federal Rebate Statute

The federal rebate statute is codified within TILA at 15 U.S.C. § 1615. It mandates that unearned interest be rebated when a consumer credit transaction is prepaid, refinanced or accelerated and forbids use of the Rule of 78s1124 in calculating those rebates for transactions with terms longer than sixty-one months.1125 The rebate statute did not amend TILA: its placement was an administrative decision with no legal significance.1126

Truth in Lending: 9.10.4.1 Coverage

Periodic statements are required as of January 10, 2014, for all closed-end residential mortgage loans secured by a dwelling.1265 Section 1638(g) should apply to Property Assessed Clean Energy (PACE) loans.1266 The issue of whether PACE loans constitute “credit” under TILA is discussed in § 2.7.9.3, supra.

Truth in Lending: 9.6.2.1 General

HOEPA defines a special class of covered mortgage loans, including first and subordinate lien loans626 by setting up triggers (originally two but now three) for the special protections of the law. These triggers are found in the Truth in Lending definition section at 15 U.S.C. § 1602(bb). The original version of HOEPA included just an APR trigger and a points and fees trigger, but the Dodd-Frank Act creates a third trigger based solely on the timing or amount of prepayment penalties.627

Truth in Lending: 9.6.10.1 Introduction

HOEPA includes substantive protections that ban certain terms for covered high-cost loans. In addition to triggering civil liability and special damage remedies,802 inclusion of a prohibited term constitutes a failure to deliver required disclosures for the purposes of rescission under TILA.803 Most of these prohibitions are not absolute. Care should be taken to make sure that where an exception is invoked, the creditor has met the preconditions to the exception.

Truth in Lending: 9.10.8 Pyramiding of Late Fees

Effective January 10, 2014, the CFPB adopted a rule similar to the prior FRB rule (discussed in companion materials), but removed any reference to a “full” payment and instead applied the requirement only to “a periodic payment.”1390 The distinction between the meanings for “full” payment and “periodic” payment intended by this change in the regulations is unclear.

Truth in Lending: 9.5.4.5.1 General

Unless an exemption applies (described below), creditors of higher-priced mortgage loans (HPMLs) must establish an escrow account for the payment of property taxes and insurance.503 The FRB’s original mandatory escrow rule applies to higher-priced mortgage loans if the loan application was received on or after April 1, 2010 (October 1, 2010, for manufactured homes).504 This rule was substantially modified by the FRB, pursuant to the Dodd-Frank Act, by setting a higher threshold for mandatory

Truth in Lending: 9.3.2.4 The Definition of Loan Originator

The CFPB’s rule largely builds off of the FRB’s prior rule, adding detail and exceptions. This subsection only reviews the ways in which the CFPB’s rule differs from the preexisting rule issued by the FRB. Practitioners seeking to understand the scope of the CFPB’s definition of a loan originator should review the discussion of the FRB’s rule in § 9.3.2.4.1 of the archived version of Chapter 9 available online as companion material to this treatise.

Truth in Lending: 5.11.2.1 Overview

In 2010, Congress directed the Consumer Financial Protection Bureau to create “a single, integrated disclosure” form combining the existing HUD-1 settlement statement and TILA disclosure form.758 In 2011, the CFPB embarked on an extensive project to fulfill this Congressional mandate.

Truth in Lending: 5.11.2.7.1 Introduction

Section 1026.19(e) contains the rules governing timing, waiting periods, shopping, a list of providers, predisclosure imposition of fees, the good faith standard, estimates, and changed circumstances, and related rules governing the early disclosures, now named the “Loan Estimate.” These rules are discussed at §§ 4.4.7.2.1,

Truth in Lending: 5.11.2.8.1 Overview; format requirements

Regulation Z § 1026.19(f) contains the rules governing timing, waiting periods, imposition of fees for preparation and delivery of the disclosures, estimates, changed circumstances, and permitted changes between the early and final disclosures, and related rules governing the final disclosures, now named the “Closing Disclosure.” These rules are discussed at §§ 4.4.7.4,

Truth in Lending: 5.12.2.4 General Variable Rate Disclosure Rules

Disclosures in variable rate transactions must be given for the full term of the transaction and must be based on the terms in effect at the time of consummation.1226 However, in a seller buydown that is reflected in the credit contract or in a consumer buydown, the official interpretations give special rules for disclosing a composite annual percentage rate.1227

Truth in Lending: 10.4.1 Overview

The statute501 and Regulation Z502 clearly contemplate that the consumer has an extended right to rescind when required rescission information and forms or the enumerated “material” disclosures503 are not properly delivered.