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Truth in Lending: 13.5.5.2 Rebate of Third-Party Charges

Leases may include within the monthly lease payment certain third-party charges that should be rebated on early termination, such as service contracts, credit insurance, and GAP insurance. These third-party charges are earned over the full term of the lease, and early termination should result in a partial rebate.

Truth in Lending: 11.2.4.2.5 Failure to timely credit a payment

TILA requires servicers and creditors to timely credit payments on home loans, credit cards, and other forms of open-end credit.145 There are a number of possible analogues for the injuries resulting from this violation. The violation could easily result in monetary harm, such as late fees, interest, and other charges. The injury is also analogous to the harm resulting from the common law torts of conversion and trespass to chattels.

Truth in Lending: 11.2.4.2.6 Violations related to the right to cancel a mortgage

Under TILA, certain mortgage borrowers are entitled to cancel their mortgage transaction within three days after receiving the material disclosures required by TILA and Regulation Z.153 If the disclosures—including notice of the right to cancel—are not timely provided, the right to cancel continues until they are provided, for up to three years.

Truth in Lending: 11.2.4.2.9 Confusion

Confusion is a likely downstream consequence of inaccurate disclosures. But the majority of courts have held that confusion is insufficient for standing.

Truth in Lending: 11.2.4.2.10 Emotional distress

Although the most common injuries from TILA violations will be monetary and informational, consumers may suffer emotional distress as well. There are strong reasons to treat emotional distress as a concrete harm that meets Article III’s requirements. The obvious common law analogue is the tort of intentional infliction of emotional distress.185 And the Restatement (Second) of Torts provides more generally: “Compensatory damages that may be awarded without proof of pecuniary loss include compensation . . .

Truth in Lending: 3.9.6.4.2 The CFPB TILA-RESPA Integrated Disclosure forms

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.1006 The CFPB finalized the forms and the accompanying regulations on December 31, 2013.1007 The new regime commenced on October 3, 2015 for loan applications received on or after that date.

Truth in Lending: 11.2.3.1 The Factual Background of Ramirez

In 2021, the Supreme Court issued a second major decision, TransUnion L.L.C. v. Ramirez,37 about the application of Article III to claims under federal consumer protection laws. The case arose when TransUnion, one of the “Big Three” nationwide consumer reporting agencies, issued a report identifying a car buyer, Sergio Ramirez, as a potential terrorist.

Truth in Lending: 11.2.3.4 When Does Harm Have a Close Relationship to Harm Traditionally Recognized As a Basis for a Lawsuit?

Ramirez provides more detail about one of the two alternative tests for Article III standing articulated in Spokeo: that the harm the plaintiff suffered has a “close relationship” to a harm traditionally recognized as providing a basis for a lawsuit in American courts.52 In practice, this will most often mean looking for a “common-law analogue.”53 But this does not mean a plaintiff must match every element of a common law cause of action: Ramirez states that Ar

Truth in Lending: 11.2.3.7 Is the Risk of Harm a Concrete Injury?

Ramirez appears to cut back on the principle that Spokeo seemed to adopt that “the risk of real harm” can be a concrete injury in a suit seeking money damages.79 Where there is only a risk of harm, the majority opinion in Ramirez states that standing is confined to suits seeking prospective relief, such as an injunction.80 This statement appears to be dicta, because the Court concluded on the facts that the plaintiffs had not established a risk of harm

Truth in Lending: 11.2.3.9 Private Rights vs. Public Rights

In Spokeo, Justice Thomas, while concurring in the majority opinion, had proposed a different conceptual framework, founded on a distinction between “private rights” and “public rights.” Quoting Blackstone, he defined private rights as those “belonging to individuals, considered as individuals,” including rights of personal security, property rights, and contract rights.

Truth in Lending: 11.7.3.5 Special Statutory Damages for Violation of Dodd-Frank Property Appraisal Requirements

The Dodd-Frank Act added new requirements for appraisals when a creditor extends credit in the form of a “higher-risk mortgage.”862 The statute includes a special statutory damage award for violations:

In addition to any other liability to any person under this title, a creditor found to have willfully failed to obtain an appraisal as required in this section shall be liable to the applicant or borrower for the sum of $2,000.863

Truth in Lending: 9.5.2 Annual Percentage Rate Trigger for Higher-Priced Loan Protections

A first-lien loan secured by the consumer’s principal dwelling meets the APR trigger for HPMLs if its APR exceeds the average prime offer rate for a comparable transaction by 1.5 or more percentage points.488 For “jumbo loans,” loans (those with a principal amount exceeding the maximum loan size authorized for Fannie Mae and Freddie Mac), the rate trigger is 2.5 percentage points.489 The APR on a subordinate-lien loan must exceed the average prime offer rate for a comparable transaction by 3

Truth in Lending: 9.5.4.1 Overview

Regulation Z imposes four restrictions on loans meeting the APR trigger for higher-priced mortgages:

  • • Ability-to-repay restrictions;
  • • Limits on prepayment penalties;
  • • Escrow requirements; and
  • • A prohibition on evading these restrictions by structuring the loan as open-end credit.

Truth in Lending: 9.5.4.6.1 General

TILA, as amended by Dodd-Frank, prohibits creditors from making “higher-risk mortgages” without obtaining a written appraisal that meets certain requirements.529 When the CFPB and other federal banking regulators adopted a regulation implementing this requirement, they decided to use the existing term “higher-priced mortgage loan,” rather than creating a separate definition for “higher-risk mortgages.”530 The appraisal rule requires creditors to use a licensed or certified appraiser who prep

Truth in Lending: 2.2.2.6 Obligations to Pay That Are Conditional, for Indeterminate Amounts, or Are Repaid Only Through an Assignment or Security Can Still Be Debts

A related argument to the claim that a “non-recourse” transaction is not credit is the claim that there is no obligation to repay and thus no debt because repayment is to be taken solely from an assignment of, or a security in, the consumer’s money or assets, with no independent or contractual obligation to repay if that security is insufficient. Similarly, lenders may claim that there is no debt if the obligation to repay is contingent on an event that may not happen or the amount of repayment is uncertain. None of these arguments stands up.

Truth in Lending: 2.2.1 Definition of Credit

Consumer credit is defined as credit offered or extended to a consumer primarily for personal, family, or household purposes.41 The following subsections discuss two of the three prongs of this definition—consumer and creditor.

Truth in Lending: 11.7.3.4.2 Open-end credit

For both open-end and closed-end credit, statutory damages are based on twice the finance charge. Closed-end calculations always use the full finance charge assessed over the life of the loan, in accord with the statutory language.853 But computing the finance charge in an open-end credit transaction is more complicated. Unlike closed-end credit, the finance charge is not pre-determined. Finance charges will depend on the amount of credit extended in the future, how much the consumer pays and when, and changes in the interest rate.