Truth in Lending

1. Truth in Lending A really, really brief overview

2. Introduction • Full and fair disclosure of credit terms • Most commonly violated regulation • Has evolved beyond being a disclosure regulation • Enormous Scope

3. Exemptions • Non-consumer credit • Amount financed is more than $50,000 (except real property) • Certain student loans

4. Key Definitions • Annual Percentage Rate • Business Day • Closed-end Credit • Open-end Credit • Finance Charge

5. Open-End Credit

6. Timing of Open-End Disclosures • At application • Before first transaction or at consummation • After consummation

7. Disclosures • General • Clear, conspicuous, in writing, in a form the member may keep • Model forms required • Initial Disclosures • Finance charge • Other charges • Voluntary Credit Insurance, Debt Cancellation, or Debt Suspension Premiums • Security interests • Statement of billing rights

8. HELOC Disclosures • Plan termination or change • Payment information • Negative amortization • Transaction requirements • Tax implications • APR only includes interest • Variable rate disclosure and example

9. Table Disclosures (non-Heloc) • APRs • Annual or other periodic fees • Fixed finance charges • Transaction charges • Grace period • Balance computation method • Fees • Required insurance, debt cancellation or debt suspension • FRB Website • Billing error rights reference

10. Rescission • Give required disclosures • Give rescission notice • Delay line access and deed recording for three business days

11. Periodic Statement – All Accounts • Previous balance • Identification of transactions • Credits • Periodic rates • Balance on which finance charge computed • Amount of finance charge and other charges • Grace period • Address for notice of billing errors • Closing date of billing cycle • New balance

12. Periodic Statement – Non-Heloc • Formatting requirements • Change-in-terms and increased penalty rate • Deferred interest or similar transactions

13. Periodic Statement – Credit Cards • Due date and late payment costs • Repayment disclosures

14. Change in terms • 15 days for HELOCs • 45 days for non-HELOC accounts (formatting requirements apply)

15. CARD Act Requirements • Limitations on increasing APRs, fees, and charges • Opt-in for over-the-limit charges • Fee limitations • Special rules for marketing to college students • Special rules for handling payments • Evaluation of consumer’s ability to pay • Allocation of payments • Internet posting of credit card agreements • Reevaluation of rate increases

16. Marketing and Advertising • Clear and conspicuous • Legible • Reasonably understandable • Actually available terms

17. Trigger terms • A description of the circumstances under which a finance charge will be imposed, or how it is to be determined • APR • Periodic rate • Grace period • The amounts of any other charges • Security Interest • Billing Rights • Home equity plan information

18. Additional disclosures Required • Any minimum, fixed, transaction, activity, or similar charge • Any periodic rate that may apply, expressed as an annual percentage rate • Variable rate information • Membership or participation fees

19. Misleading Terms • APRs referred to as “fixed” unless a time period is also mentioned • “Free Money” • Promotional rates must list a time period

20. HELOC Additional Disclosures • Fees • The periodic rate, if any, used to compute the finance charge, expressed as an annual percentage rate. • The maximum annual percentage rate that may be charged if it is a variable-rate plan. • Special variable rate information if the ad contains an introductory rate not based on the index and margin used to determine future rate changes • Balloon Payment information • Tax Implications • Promotional Rate information • Alternative Disclosures for Television or Radio Advertisements

21. Closed-end credit

22. Form of disclosures • Clearly and conspicuously • In writing • In a form that the consumer may keep • Grouped together • Segregated from everything else • Before consummation of a loan • Early disclosures required for certain mortgage loans

23. Contents • Demand feature • Prepayment • Late payment • Security interest • Certain security interest charges • Contract reference • Assumption policy • Required deposit • Maximum interest disclosure for variable-rate mortgage loans • Identity of the creditor • The amount financed • Itemization of the Amount Financed • Finance Charge • Annual Percentage Rate • Variable-Rate Information • Payment Schedule • Total of payments • Total sales price

24. Special Disclosures • Reverse mortgage loans • High-rate, high-fee mortgage loans (Section 32 loans) • Mortgage Disclosure Improvement Act (rules for mortgages) • Notice of purchase, assignment or transfer (mortgages) • Loan originator compensation and steering (mortgages) • Private education loans

25. Rescission • Give required disclosures • Give rescission notice • Delay loan funding and deed recording for three business days

26. Marketing and Advertising • Terms advertised must be actually available • The “annual percentage rate” (or APR) must be used whenever a rate is disclosed • Disclosures must be legible and reasonably understandable TRIGGER TERMS: • The amount or percentage of any down payment • The number of payments or the period of repayment • The amount of any payment • The amount of any finance charged • The amounts of any other charges you might • The fact that the credit union will take a security interest in any asset

27. Additional Disclosures • The amount or percentage of the down payment • The terms of repayment • The “annual percentage rate,” using that term • For an APR that may be increased after consummation, a statement to that effect.