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Truth in Lending: 1.5.2.1 General

The basic source of Truth in Lending law is, of course, the statute itself,207 reprinted at Appendix A to this treatise. As a practical matter, however, the statute will seldom provide quick answers to everyday Truth in Lending Act questions.

Truth in Lending: 1.2.3 1988 Consumer Protection Amendments

The next two major amendments to TILA were driven by changes in consumer credit products and marketing practices. In 1988, the Act was amended to add the Fair Credit and Charge Card Disclosure Act.54 Competition for the extremely profitable credit card business had become more intense, and issuers bombarded consumers with solicitations. (One estimate was that U.S.

Truth in Lending: 1.2.6 The 2005 Bankruptcy Amendments Affecting TILA

On April 20, 2005, the President signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.81 A small portion of this Act amended TILA.82 These amendments create additional disclosure requirements for credit card issuers regarding the effect of paying the minimum payment, teaser or introductory annual percentage rates, late payment deadlines, and internet-based credit card solicitations.

Truth in Lending: 1.5.2.2 The Pre-Simplification Version of TILA

The pre-Simplification Act generally applies to loans made prior to 1982. There are few if any consumer loans still outstanding from the pre-Simplification era, so that law is unlikely to be relevant. However, for some now very old loans, recoupment claims may remain available in the context of bankruptcy or defending against collection.209 These claims may be especially relevant in defending foreclosures of older mortgages. The pre-Simplification law and the regulation implementing it are no longer contained in this treatise.

Truth in Lending: 1.5.3.3.5 The CFPB’s 2019 Sandbox and No Action Letter Policies

In September 2019, the CFPB published final versions of two new policies that purported to shield regulated entities from certain enforcement actions and liabilities. Both policies were applicable to TILA compliance. The two policies were the Compliance Assistance Sandbox Policy (Sandbox Policy)275 and the No Action Letter Policy (NAL Policy).276 Consumer groups and state officials voiced strong opposition to both measures when they were proposed.

Truth in Lending: 1.5.3.4.6 Rulemaking for mortgage loans under the Dodd-Frank Act

In January and February 2013, the CFPB issued a number of major rules, regarding ability to repay, mortgage servicing, HOEPA, appraisal requirements for higher-priced mortgage loans, mortgage loan originator compensation, arbitration, credit insurance, and escrow requirements. The Dodd-Frank requirements for periodic statements, payoff statements, and adjustable rate reset notices were also implemented.

Truth in Lending: Editor’s Note

12 C.F.R. pt. 1026, amended through 88 Fed. Reg. 30,598 (May 11, 2023).

This appendix reproduces the Official Interpretations of Regulation Z, including amendments enacted through May 11, 2023. Footnotes indicating the provisions with recent effective dates have been added where appropriate. Citations to Federal Register notices, beginning in 2000, are added at the end of specific provisions, noting amendments to that provision. The full text of the Federal Register notices are reprinted at this treatise’s digital version under “Primary Sources.”

Truth in Lending: 5.12 Special Disclosures for Variable Rate Loans

5.12.1 Introduction5.12.1.1 Overview

In 1981, Regulation Z was revised to require a few disclosures for all variable rate transactions.1211 Those regulations—which apply only to transactions that are not secured by the consumer’s principal dwelling and to transactions that are secured by the principal dwelling but have a term of one year or less—are discussed at § 5.12.2, in

Truth in Lending: 5.12 Special Disclosures for Variable Rate Loans

5.12.1 Introduction5.12.1.1 Overview

In 1981, Regulation Z was revised to require a few disclosures for all variable rate transactions.1211 Those regulations—which apply only to transactions that are not secured by the consumer’s principal dwelling and to transactions that are secured by the principal dwelling but have a term of one year or less—are discussed at § 5.12.2, in

Truth in Lending: 9.5.4.4 Prepayment Penalty Restrictions

The FRB restrictions on prepayment penalties that were effective from October 9, 2009 to January 9, 2014 are discussed in the archived version of Chapter 9 available online as companion material to this treatise. Effective for applications received by midnight January 9, 2014 or thereafter, the direct limits on prepayment penalties on higher-priced mortgage loans (HPMLs) were abolished.500

Truth in Lending: 5.15.2.2.1 Loan-splitting distinguished from a refinancing

For a variety of reasons (few of which benefit the consumer), a creditor may wish to split what the consumer views as a single transaction into two theoretically distinct ones. The result is that one loan is split into two, signed on the same day or separated from each other by no more than a few days or weeks. In most cases, the homeowner is entitled to get new disclosures on the second loan because it is a new credit transaction. The split between two transactions, however, conceals the true cost and risk of the credit from the consumer.

Truth in Lending: 2.9.4.3 Dodd-Frank’s Preemption Standard

The Dodd-Frank Act rolls back much of this preemption of state consumer laws and sets higher standards for future preemption.942 In addition, Congress created a federal requirement that creditors pay interest on escrow accounts established in closed-end consumer credit transactions secured by a first lien on the consumer’s principal dwelling if prescribed by state or federal law.943 Relying on this provision, the Ninth Circuit ruled that a state statute requiring the payment of interest was not

Truth in Lending: 7.10.2.1 Description of Authorized Users

In the application for a credit card, the card user can specify other persons who are authorized users. These persons may carry a separate card in their own name, or in the cardholder’s name.1221 This frequently occurs in family situations and with business cards.

Truth in Lending: 9.6.11.2.2 Regime for open-end loans post-Dodd-Frank

For transactions for which the creditor received an application on or after January 10, 2014,872 the regulation prohibits a creditor from extending an open-end, high-cost mortgage without regard to the consumer’s repayment ability at account opening. This assessment must include consideration of:

Truth in Lending: 5.15.10.2 Coverage

The escrow cancellation notice must be provided in any closed-end credit transaction secured by a first lien on real property or a dwelling for which an escrow account was established in connection with the transaction.1665 “Real property” includes vacant and unimproved land.1666 “Dwelling” includes vacation and second homes, as well as manufactured homes, boats, and trailers used as residences.1667