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Truth in Lending: 9.10.5.3.3 Fees prohibited for high-cost mortgages

Fees for providing a payoff statement for a high-cost mortgage are generally prohibited, with two exceptions.1341 If the payoff statement is provided by fax or courier, a fee may be charged.1342 In that case, the fee must be comparable to that charged in non-high-cost mortgage transactions,1343 and the servicer must disclose that payoff statements are available for free via another method.1344

Truth in Lending: 9.10.7.1 Overview

In the case of residential mortgages, the creditor’s policy on the acceptance of partial payments must be disclosed both before closing, with the other residential mortgage disclosures, and at any subsequent point in time when there is a “new creditor” (presumably by accepting assignment of the obligation from the existing holder or by purchasing the loan).1375

Truth in Lending: 9.10.7.2 Person Subject to the Notice Requirement

Regarding the partial payment disclosure upon transfer of the loan, the person required to provide this information is the person that becomes the owner of an existing mortgage loan by acquiring legal title to the debt obligation through purchase, assignment, or other transfer.1377 A servicer that holds title solely for the administrative convenience of the servicer in servicing the obligation is not the owner for purposes of providing the partial payment notice.1378 The rules addressing

Truth in Lending: 9.10.7.3 Content

The covered person must disclose its policy by stating that it (i.e., the “lender,” using that word) accepts periodic payments that are less than the full payment or it does not.1381 If it accepts partial payments but does not apply them to the consumer’s loan until the remainder of the full amount is due, the lender must inform the consumer that it will hold partial payments in a separate account until the remainder is paid.1382 At that point, the lender must apply the full payment to t

Truth in Lending: 9.10.7.5 Remedies

Violations of these rules trigger actual and statutory damages, attorney fees, and costs because the partial payment provision appears in section 1639c, so is a “requirement imposed under this part,” that is, part B of TILA.1389 Since the disclosure requirements apply to assignees, as owners of the debt obligation, the question may arise as to whether section 1640(a) creates liability for the assignee’s own failure to comply (as opposed to being derivatively liable for disclosure violations of the original creditor).

Truth in Lending: 5.15.10.5 Timing

When the consumer requests cancellation, the creditor or servicer must ensure that the consumer receives the cancellation notice no later than three business days before the closure of the account.1680 The official interpretations provide an example.1681 If the creditor or servicer initiates the closure, that person must ensure that the consumer receives the cancellation disclosure no later than thirty business days before the closure.1682 If

Truth in Lending: 5.15.10.6 Remedies

Violations of these rules trigger actual and statutory damages, attorney fees, and costs because the escrow cancellation provision appears in section 1639d, so is a “requirement imposed under this part,” that is, part B of TILA.1684 The disclosure requirements apply to creditors or servicers. Creditors clearly are subject to liability under section 1640(a).

Truth in Lending: 3.1.1 Overview; Purpose of the Finance Charge Disclosure

The disclosure of the finance charge is at the heart of Truth in Lending.1 An accurately calculated finance charge is a necessary precondition to an accurately disclosed APR.2 The APR is derived from the relationship between the finance charge and the amount financed,3 in light of the repayment schedule.4 The finance charge is the cost of credit as a dollar amount, and the APR reflects that co

Truth in Lending: 3.3 Finance Charge As a Trigger to Coverage Under TILA

A consumer credit transaction is subject to Truth in Lending only when there is a written agreement to pay the debt in four or more installments or when “a finance charge is or may be required.”62 In most credit transactions, it is quite clear that a finance charge is part of the deal. But occasionally lenders or sellers try to disguise the presence of a finance charge in order to avoid making TILA disclosures.

Truth in Lending: 3.4 Statutory Construction of TILA’s Finance Charge Rules

TILA is remedial legislation, designed to redress an inherently unequal balance of knowledge and power, and thus must be liberally construed in favor of borrowers.67 Given the central importance of the APR and finance charge disclosures, and the goal of providing a standardized, bottom-line cost disclosure, the courts have held that the exclusions authorized by TILA and Regulation Z must be narrowly construed.68

Truth in Lending: 3.6.1.1 General Definition

The first part of Regulation Z § 1026.4(a)’s definition of a finance charge is that there must be a “charge.”78 This term is not specifically defined. In most cases, it is intuitively obvious.79 Usually, a charge will be in the form of a cost added on to the borrower’s obligation.