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Truth in Lending: 4.4.7.4 TILA-RESPA Integrated Closing Disclosure

Effective October 3, 2015, the creditor must ensure that the consumer receives the closing disclosures no later than three business days before consummation for mortgage loans to which the TILA-RESPA integrated disclosure rules apply.429 In the context of the closing disclosure, “business day” is defined to mean all calendar days except Sundays and the legal public holidays.430 In a rescindable transaction, each consumer who has a right to rescind must be given a copy of the closing disclosu

Automobile Fraud: 5.6.4.5 Exemption for Transfers of New Cars to Dealers

The NHTSA regulations exempt from the odometer disclosure requirements transfers of a new vehicle until its first transfer to a person intending to use the vehicle for a purpose other than for resale, in other words, before its first transfer to someone intending to use the vehicle.150 A transfer from a manufacturer to a dealer does not trigger the disclosure requirement. Neither does the transfer of a new vehicle from one dealer to another (unless the second dealer intends to retain the vehicle for its own use).

Automobile Fraud: 5.6.4.6 Exemption for Heavy Vehicles

The NHTSA regulations exempt vehicles with a gross vehicle weight rating in excess of 16,000 pounds from the disclosure requirements.152 How this rating is calculated is set out in federal regulations.153 As a practical matter, this exemption applies to large trucks and large motor homes, but not to sports utility vehicles, campers, or small motor homes.

Automobile Fraud: 5.6.5.1 Introduction

The Federal Act specifies a standard method for making disclosures when a used car is transferred, on the assignment section of the vehicle’s existing title. The state, when printing the title, creates standardized language in the assignment section that facilitates disclosure when that title is subsequently transferred.

Automobile Fraud: 5.6.5.2 Disclosure Procedure for New Cars

When a purchaser is the first such purchaser for retail use, odometer disclosures cannot be on an old title, because there is no old title. The vehicle is transferred with only the manufacturer’s statement of origin. The first title is issued only when that retail purchaser applies for a title. Transfers from the manufacturer to a dealer or from one dealer to another dealer do not generate titles.

Automobile Fraud: 5.6.5.3 Used Car Transfers Typically Make Odometer Disclosures on the Old Title

When title to a used car is transferred, the transferor makes odometer disclosures on the assignment section of the transferor’s existing title (“old title”), which is a document issued by the state using a secure printing process.164 Both parties sign the assignment section of the old title and then the old title is submitted to the state as part of the transferee’s application for a new title; obtaining a new title is a condition of a transferee being able to use the vehicle on the state’s roads.165

Automobile Fraud: 5.6.5.4 Use of Additional Disclosure Form in Transfer of Used Vehicle

Dealers may provide consumers purchasing used cars with separate odometer disclosures in addition to, or instead of, those they must make on the old title. A separate disclosure statement cannot substitute for disclosures made on the title, but nothing prevents the dealer from supplying an accurate separate disclosure statement in addition to the disclosure on the title.171

Automobile Fraud: 5.6.5.5 Dealer to Dealer Transfers and the Use of Reassignment Forms

When a used vehicle is transferred to a dealer, the dealer may obtain a new title in its own name. But, with certain exceptions created by state law, the dealer need not do so, because the dealer is not purchasing for use but for resale. Instead, the original owner’s transfer to the dealer can be documented on the original owner’s title, with the original owner and dealer completing the assignment block information on that title. The dealer then retains this old title to transfer to the next transferee, be it another dealer or a consumer.

Automobile Fraud: 5.6.5.6.1 When powers of attorney are allowed

When a consumer trades in a car to a dealer, but the title is physically held by the consumer’s lienholder, it is awkward for the consumer to make disclosures to the dealer on the old title—the lienholder will not physically release the title until paid. The car first will be traded in to the dealer, the dealer then pays the lienholder the balance due on the vehicle, and the lienholder then produces the title, typically sending it to the dealer.

Automobile Fraud: 5.6.5.6.2 Requirements for “first” powers of attorney

The “first” power of attorney is the power of attorney that a transferor provides to a transferee to sign the title for the transferor. A common example is when a consumer trading in a vehicle gives the dealer a first power of attorney to sign the title for the consumer as transferor at a later date when the dealer obtains the title from the consumer’s lienholder.

Automobile Fraud: 5.6.5.6.3 Requirements for “second” powers of attorney

A dealer that has been given a “first” power of attorney may wish to resell the vehicle before the dealer has a chance to obtain the transferor’s old title, and also may wish to avoid the necessity of the subsequent buyer returning to the dealer’s place of business to sign the old title as transferee once the dealer obtains that title. NHTSA provides the dealer with a convenient method to accomplish this goal, referred to here as a “second” power of attorney.

Automobile Fraud: 5.6.5.6.4 Subsequent purchaser’s access to first power of attorney

A subsequent purchaser who grants a “second” power of attorney to a dealer will receive a copy of the power of attorney that includes not only Part B (the dealer’s disclosures to the subsequent purchaser), but also Part A (the prior seller’s disclosures when it transferred the vehicle to the dealer).213 On the other hand, if only a “first” power of attorney is used, anyone purchasing that vehicle from the dealer will not see the prior seller’s power of attorney, and will not be able to check if the dealer properly transferred the disclosure f

Automobile Fraud: 5.6.5.7.2 Prior NHTSA state approvals

Before NHTSA developed these standards for state electronic titling and disclosure systems, NHTSA had authority to approve alternative methods of odometer disclosure proposed by a state, provided that the proposal was consistent with the purposes of the Act’s disclosure requirements.226 Florida and Oregon’s requests in the 1990s were denied,227 but starting in 2009 NHTSA approved requests by Florida, New York, Texas, Virginia, and Wisconsin to adapt their method of making odometer disclosures to

Automobile Fraud: 5.6.6.1 General

The content of the required mileage disclosures is essentially the same, whether made on the title, on a power of attorney, on a reassignment document, on a separate disclosure statement, or electronically.236 Model disclosure forms for these different situations are found in Appendices B, C, and E of the National Highway Traffic Safety Administration (NHTSA) regulations, reprinted in

Automobile Fraud: 5.6.6.2 Disclosure When Odometer Has “Turned Over”

Since at least 2000, car odometers have had six digits, so that an odometer will not “turn over” (that is, exceed its mechanical limits) until a million miles are reached. But, for older cars, odometers contained only five digits, so that the odometer would turn over at 100,000 miles. As these cars from the 1990s are exempt from disclosure requirements because of their age, the disclosure that an odometer has turned over is today only applicable when a transferor waives the exemption by making the disclosure.246

Automobile Fraud: 5.6.6.4 Dealer Must Have Sufficient Basis to Claim That Odometer Is Not Accurate

Some dealers, in an apparent attempt to avoid liability under the Act, routinely mark all their disclosure forms to indicate that the odometer reading is not the actual mileage. In a series of opinion letters dating back to 1976, NHTSA has taken the position that such disclosures violate the regulation.261 A NHTSA opinion states: “[T]he practice of routinely certifying that the odometer reading is not the actual mileage and should not be relied upon, significantly inhibits enforcement of the federal odometer law.

Automobile Fraud: 5.6.6.6 Cars Sold for Salvage

NHTSA originally took the position that when vehicles were sold for parts or salvage no odometer disclosure need be made.278 The determination that a vehicle was sold for parts or salvage depended on the good faith of the transferor. NHTSA then discovered that vehicles declared a total loss and sold for salvage were sometimes repaired and resold for use on the road.

Automobile Fraud: 5.6.6.7 When a Used Vehicle Is Assembled from Parts or Restored

To minimize the possibility of fraud, NHTSA requires that the actual mileage be disclosed even when a major part, such as an engine, has been replaced.284 When a vehicle has been reconstructed from several parts, the odometer should be set to that of the major mechanical or structural part with the highest mileage, if that is known, or to the mileage on the chassis.285 The Arkansas state odometer act has been interpreted even more strictly, requiring mileage disclosures not only for the front pa

Automobile Fraud: 5.6.6.8 When a Repair Shop Resets the Odometer

The Act requires that, after servicing, if the odometer does not reflect the same mileage as before, then the odometer must be adjusted to zero, and a written notice must be attached to the left door frame specifying the date of service and the mileage before service.289 In that case a transferor, in disclosing the mileage at transfer, does not indicate the sum of the mileage on the door frame sticker and the mileage on the odometer.290 The transferor instead discloses the mileage shown on the r

Automobile Fraud: 5.6.6.9 When Vehicles Have Been Towed

Owners of large recreational vehicles taking long trips may tow automobiles behind them to use while the recreational vehicles are parked at campgrounds. Some commercially available towing devices cause the odometers on the towed cars not to register. In fact, the disconnection of the odometer is advertised as a feature of these devices.