Skip to main content

Search

Truth in Lending: Amendment History

[65 Fed. Reg. 17,132 (Mar. 31, 2000); 65 Fed. Reg. 70,465 (Nov. 24, 2000); 66 Fed. Reg. 57,849 (Nov. 19, 2001); 66 Fed. Reg. 65,620 (Dec. 20, 2001); 67 Fed. Reg. 16,982 (Apr. 9, 2002); 67 Fed. Reg. 61,769 (Oct. 2, 2002); 68 Fed. Reg. 16,190 (Apr. 3, 2003); 68 Fed. Reg. 50,965 (Aug. 25, 2003); 69 Fed. Reg. 16,769 (Mar. 31, 2004); 69 Fed. Reg. 50,298 (Aug. 16, 2004); 70 Fed. Reg. 46,067 (Aug. 9, 2005); 71 Fed. Reg. 46,388 (Aug. 14, 2006); 72 Fed. Reg. 44,033 (Aug. 7, 2007); 73 Fed. Reg. 44,610 (July 30, 2008); 73 Fed. Reg. 46,191 (Aug. 8, 2008); 74 Fed. Reg. 40,478 (Aug. 12, 2009); 75 Fed.

Truth in Lending: 33(a) Definition.

1. Nonrecourse transaction. A nonrecourse reverse mortgage transaction limits the homeowner’s liability to the proceeds of the sale of the home (or any lesser amount specified in the credit obligation). If a transaction structured as a closed-end reverse mortgage transaction allows recourse against the consumer, and the annual percentage rate or the points and fees exceed those specified under § 1026.32(a)(1), the transaction is subject to all the requirements of § 1026.32, including the limitations concerning balloon payments and negative amortization.

Truth in Lending: 33(c)(1) Costs to Consumer.

1. Costs and charges to consumer—relation to finance charge. All costs and charges to the consumer that are incurred in a reverse mortgage transaction are included in the projected total cost of credit, and thus in the total annual loan cost rates, whether or not the cost or charge is a finance charge under § 1026.4.

Truth in Lending: 33(c)(2) Payments to Consumer.

1. Payments upon a specified event. The projected total cost of credit should not reflect contingent payments in which a credit to the outstanding loan balance or a payment to the consumer’s estate is made upon the occurrence of an event (for example, a “death benefit” payable if the consumer’s death occurs within a certain period of time). Thus, the table of total annual loan cost rates required under § 1026.33(b)(2) would not reflect such payments.

Truth in Lending: 33(c)(3) Additional Creditor Compensation.

1. Shared appreciation or equity. Any shared appreciation or equity that the creditor is entitled to receive pursuant to the legal obligation must be included in the total cost of a reverse mortgage loan. For example, if a creditor agrees to a reduced interest rate on the transaction in exchange for a portion of the appreciation or equity that may be realized when the dwelling is sold, that portion is included in the projected total cost of credit.

Truth in Lending: 33(c)(4) Limitations on Consumer Liability.

1. In general. Creditors must include any limitation on the consumer’s liability (such as a nonrecourse limit or an equity conservation agreement) in the projected total cost of credit. These limits and agreements protect a portion of the equity in the dwelling for the consumer or the consumer’s estate. For example, the following are limitations on the consumer’s liability that must be included in the projected total cost of credit:

Truth in Lending: 34(a)(1) Home-Improvement Contracts.

Paragraph 34(a)(1)(i)

1. Joint payees. If a creditor pays a contractor with an instrument jointly payable to the contractor and the consumer, the instrument must name as payee each consumer who is primarily obligated on the note.

Truth in Lending: 34(a)(2) Notice to Assignee.

1. Subsequent sellers or assignors. Any person, whether or not the original creditor, that sells or assigns a mortgage subject to § 1026.32 must furnish the notice of potential liability to the purchaser or assignee.

2. Format. While the notice of potential liability need not be in any particular format, the notice must be prominent. Placing it on the face of the note, such as with a stamp, is one means of satisfying the prominence requirement.

Truth in Lending: 34(a)(3) Refinancings Within One-Year Period.

1. In the borrower’s interest. The determination of whether or not a refinancing covered by § 1026.34(a)(3) is in the borrower’s interest is based on the totality of the circumstances, at the time the credit is extended. A written statement by the borrower that “this loan is in my interest” alone does not meet this standard.

i. A refinancing would be in the borrower’s interest if needed to meet the borrower’s “bona fide personal financial emergency” (see generally § 1026.23(e) and § 1026.31(c)(1)(iii)).

Truth in Lending: 34(a)(4)(i) Mortgage-Related Obligations.

1. Mortgage-related obligations.406 A creditor must include in its repayment ability analysis the expected property taxes and premiums for mortgage-related insurance required by the creditor as set forth in § 1026.35(b), as well as similar mortgage-related expenses. Similar mortgage-related expenses include homeowners’ association dues and condominium or cooperative fees.

Truth in Lending: 34(a)(4)(ii) Verification of Repayment Ability.

1. Income and assets relied on. A creditor must verify the income and assets the creditor relies on to evaluate the consumer’s repayment ability. For example, if a consumer earns a salary and also states that he or she is paid an annual bonus, but the creditor only relies on the applicant’s salary to evaluate repayment ability, the creditor need only verify the salary.

Truth in Lending: 34(a)(4)(iii) Presumption of Compliance.

1. In general.408 A creditor is presumed to have complied with § 1026.34(a)(4) if the creditor follows the three underwriting procedures specified in paragraph 34(a)(4)(iii) for verifying repayment ability, determining the payment obligation, and measuring the relationship of obligations to income.

Truth in Lending: 34(a)(5)(i) Certification of counseling required.

Editor’s Note410

Editor’s Note411

1. HUD-approved counselor.412 For purposes of § 1026.34(a)(5), counselors approved by the Secretary of the U.S. Department of Housing and Urban Development are homeownership counselors certified pursuant to section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)), or as otherwise determined by the Secretary.

Truth in Lending: 34(a)(5)(ii) Timing of counseling.

Editor’s Note417

1. Disclosures for open-end credit plans.418 Section 1026.34(a)(5)(ii) permits receipt of either the disclosure required by section 5(c) of RESPA or the disclosures required under § 1026.40 to allow counseling to occur. Pursuant to 12 CFR 1024.7(h), the disclosures required by § 1026.40 can be provided for open-end plans in lieu of the usual disclosure required by section 5(c) of RESPA.

Truth in Lending: 34(a)(5)(v) Counseling fees.

Editor’s Note424

1. Financing.425 Section 1026.34(a)(5)(v) does not prohibit a creditor from financing the counseling fee as part of the transaction for a high-cost mortgage, if the fee is a bona fide third-party charge as provided by § 1026.32(b)(5)(i).

Truth in Lending: 34(a)(5)(vi) Steering prohibited.

Editor’s Note426

1. An example of an action that constitutes steering would be when a creditor repeatedly highlights or otherwise distinguishes the same counselor in the notices the creditor provides to consumers pursuant to § 1026.34(a)(5)(vii).427

Truth in Lending: Appendix J Annual Percentage Rate Computations for Closed-End Credit Transactions

1. Use of appendix J. Appendix J sets forth the actuarial equations and instructions for calculating the annual percentage rate in closed-end credit transactions. While the formulas contained in this appendix may be directly applied to calculate the annual percentage rate for an individual transaction, they may also be utilized to program calculators and computers to perform the calculations.

Consumer Bankruptcy Law and Practice: Table of Contents

TITLE 28—JUDICIAL ADMINISTRATION

CHAPTER I—DEPARTMENT OF JUSTICE

PART 58—REGULATIONS RELATING TO THE BANKRUPTCY REFORM ACTS OF 1978 AND 1994

28 C.F.R. § 58.1 Authorization to establish panels of private trustees.

28 C.F.R. § 58.2 Authorization to appoint standing trustees.

28 C.F.R. § 58.3 Qualification for membership on panels of private trustees.

28 C.F.R. § 58.4 Qualifications for appointment as standing trustee and fiduciary standards.

28 C.F.R. § 58.5 Non-discrimination in appointment.

Consumer Bankruptcy Law and Practice: Introductory Materials

Guide to Judiciary Policy

Vol. 4: Court and Case Management

Ch. 8: Bankruptcy Case Policies

§ 810 Overview

§ 815 Applicability

§ 820 Chapter 7 Fee Waiver Procedures

§ 820.10 Filing Fee Waiver Application and Initiation of the Chapter 7 Case

§ 820.20 Judicial Determination of Filing Fee Waiver Applications

§ 820.30 Developments in the Case

§ 820.40 Waiver of Additional Individual Debtor Fees

§ 830 Guidance for Protection of Tax Information

Consumer Credit Regulation: 1.3.3 The Development of “Special” Usury Laws

Consumer credit as we know it today did not exist, for practical purposes, prior to the twentieth century.33 Pawn broking, of course, had been around for millennia, and personal loans secured by real estate were not unknown. Yet the vast majority of credit transactions were commercial. The total amount of credit available in the nineteenth century United States was limited, and most of it was directed towards industrial development where the profits available were higher and the risks lower than for individual loans.