Truth in Lending: 6.6.5.2 Requirements for Rate Disclosures Outside of the Account-Opening Table
The issuer must disclose the following, but not in the account-opening table:1005
The issuer must disclose the following, but not in the account-opening table:1005
In certain cases, a creditor will provide the account-opening disclosures in person to the consumer in connection with financing of goods or services. If a creditor imposes APRs that vary by state or creditworthiness, the creditor has two options for disclosing the APR.
Variable rates exist when changes in the APR are part of the plan and are tied to an index and formula.1015 When the index increases or decreases, the consumer’s interest rate rises and falls in tandem. Some card issuers will use a variable rate for purchases but a fixed rate (usually much higher) for other transactions, such as cash advances.1016 Over 90% of general purpose credit cards have variable APRs.1017
If an account is subject to a variable rate, the creditor will be required to disclose in the account-opening table that the rate is variable and how the rate is determined.1023 The issuer must identify the type of index or formula that is used in setting the rate; however, creditors are prohibited from disclosing in the account-opening table the current value of the index and the amount of the margin that are used to calculate the variable rate.1024 Thus, for example, the issuer must disclo
Regulation Z requires creditors that use variable rates to make certain detailed disclosures. These disclosures are to be made outside of the account-opening table and include:1029
Disclosure of the circumstances under which the rate may increase should include factors such as an increase in the index to which the rate is tied.1034 The disclosure must also reveal when the increase takes effect.1035 For example, the increase may be scheduled to take effect simultaneously with changes in the index; it may take effect periodically on a date in the billing cycle or a specified periodic date; or the rate increase may take effect only when the index has changed a set amount.
For open-end credit that is not secured by a dwelling, the creditor must disclose any cap that exists on interest rate increases.1043 The official interpretations give as examples of rate increase limitations that must be disclosed:
If there is an introductory rate that is not variable, followed by a regular or “post-promotional” rate after the introductory period that is variable, the creditor must disclose:1045
Creditors must make certain disclosures about introductory rates outside of the account-opening table. Regulation Z consolidates the disclosures for introductory and penalty rates outside of the required table. Thus, for APR changes that are specifically set forth in the account agreement and not tied to an index or formula, the creditor must disclose:1063
This new appendix does not appear in the printed treatise.
Source
Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z)
Final Rule, Effective October 3, 2015
78 Fed. Reg. 79,730 (Dec. 31, 2013)
If the interest rate may increase after consummation, the “Adjustable Interest Rate (AIR) Table” must appear next in the “Additional Information About This Loan” part of the closing disclosure form.1162 This table must include the same information as required in the loan estimate form. See § 5.11.2.7.6.6, supra.
The availability of statutory damages eliminates the need to put a value on a consumer’s injury, but it does not eliminate the constitutional requirement for an injury in fact. Article III, section 2 of the United States Constitution limits the judicial power of federal courts to cases and controversies. Article III standing when seeking statutory damages under a federal consumer protection statute, such as TILA, has become an important issue since the Supreme Court’s 2016 decision in Spokeo, Inc. v.
An assignee will not be held liable under the Act when it “demonstrates, by a preponderance of the evidence, that a reasonable person exercising ordinary due diligence” could not have determined that the loan was a HOEPA loan.1017 Due diligence requires that the lender examine all documentation required by TILA and HOEPA, the itemization of the amount financed and other disclosures of disbursements.1018 In addition, the assignee should be responsible for any other information that is act
The mere existence of a parallel state proceeding is not ordinarily a reason for a federal court to refuse to reach the merits of a Truth in Lending Act action.449 However, several issues complicate federal courts’ ability to issue declaratory and injunctive relief when there is a related state proceeding.
This section addresses general issues related to the identity of the person raising a TILA claim. This includes issues involving co-obligors and forgery victims. The last subsection describes standing and judicial estoppel issues in bankruptcy court.
In general, the TILA rules discussed in this section apply to residential mortgage loans, which are defined to include closed-end, dwelling-secured loans (although timeshares are excluded from many provisions).137 However, the loan affordability and income verification rule has some additional scope applications.
With few exceptions,1 violations of Truth in Lending Act (TILA) requirements give rise to several remedies: actual damages, individual statutory damages, class action statutory damages, and attorney fees.
The failure to provide accurate preconsummation disclosures could easily cause a monetary injury. Absent proper disclosure, consumers could sign contracts they might not otherwise sign. The same violation could also interfere with a consumer’s attempt to shop for a better price. The consumer might decline to shop, thinking the disclosed price was reasonable and affordable, or the consumer might reject better offers. The end result is that the consumer owes money that would not otherwise be owed, and this is a concrete injury.110
The Supreme Court has made it clear that a small harm is sufficient to create standing: even “an identifiable trifle is enough for standing.”198 For example, temporary deprivation of money will likely be sufficient, even if the amount is small.199 Courts have held that the drain on a cell phone’s battery from receipt of a single call or text message,200 or the wasted ink, toner, or paper caused by receipt of an unwanted fax,
There is only one mention of an effective date for the TILA provisions in the Dodd-Frank Act’s title XIV. If that effective date does not apply to a title XIV provision, then the default effective date of July 22, 2010 would apply. This one mention of an effective date for title XIV provisions is found at Dodd-Frank § 1400(c):
(c) Regulations; Effective Date-
Truth in Lending is available as either a digital subscription or a combined digital and print subscription. Print revisions are released every few years and the digital version is updated on a more frequent basis, with all changes integrated into the text.
This Appendix contains the current version of the Truth in Lending Act. Appendix A.1 is a table showing corresponding United States Code section numbering for each Truth in Lending Act section number. Appendix A.2 is the Act.