Consumer Lending regs Flashcards
What is the purpose of Reg Z?
Promote the informed use of consumer credit by requiring disclosures about terms and cost
How does credit union prevent liability for reg z violations?
Discover before consumer, take corrective action within 60 days of discovering error, notify borrower, and make adjustments to the account
What is subpart A of reg z
General
What is subpart b of reg z
Open end credit
What is subpart C of reg z
Closed end credit
What is subpart d of reg z
Miscellaneous
What is subpart g of reg z
Special rules applicable to credit card accounts and open end credit offered to college students
Where are model forms and clauses located in reg z
Appendix G and H
Does reg z subpart A apply to both open end and closed end credit?
Yes
Does reg z apply to credit extended primarily for business, commercial, or agricultural purposes?
No
Does reg z apply to extension of credit to a borrower other than a natural person?
No
What is the highest credit amount (for 2023) a consumer loan (not secured by real property or dwelling) can be before stops being covered by reg z
$66,400
Are private student loans covered by reg z?
Yes (but not government insured loan)
What is reg z definition of consummation
The time that a consumer borrower becomes contractually obligated on a credit transaction (varies state to state)
What is reg z definition of a dwelling
A residential structure that contains 1 to 4 units, whether or not that structure is attached to real property
What makes a loan open end credit
Creditor reasonably contemplates repeated transactions; creditor may impose a finance charge from time to time on an outstanding unpaid balance; and the amount of credit that may be extended to the consumer during the term of the plan (up to any limit set by the creditor) is generally made available to the extent that any outstanding balance is repaid
What is closed end credit
All credit other than open end
Does a title fee fall under finance charge
No
Finance charge includes charges that….
Are payable directly or indirectly by the consumer and are imposed directly or indirectly by the creditor incident to or as a condition of the extension of credit
Finance charge include fees and amounts that….
Are charged by someone other than the creditor if the creditor requires the use of a third party as a condition of or incident to the extension of credit, even if the consumer can choose the third party (or) requires a portion of the third party charge to the extent of the portion retained
What does finance charge directly exclude?
Application fees, late payment fee, over the limit fees, and participation fees
What three things are needed to exclude credit life, disability, debt cancellation insurance from finance charge
It’s not required to get the loan (and this is disclosed), the premium is disclosed, and member signs or initials to request coverage
How is credit life, disability , debt cancellation insurance premium disclosed for open end loans?
Unit cost
How is credit life, disability, debt cancellation insurance premium disclosed for closed end loans
Total cost
How can property insurance be excluded from finance charge
If member can obtain from any provider acceptable to the credit union (and) if buying from credit union, the premium is disclosed
Is interest considered a finance charge?
Yes
What is definition of APR
The measure of the cost of credit, expressed as a yearly rate
What is the tolerance for accuracy of APR?
1/8th of 1% above or below (same for open and closed end)
What is tolerance of accuracy of finance charge for closed end credit
$5 for amt financed $1000 or less, and $10 for amt financed more than $1000
What is needed for advertising?
Actually available terms, no misleading terms, and trigger terms require additional disclosures
What are trigger terms for open end loans
Anything required by initial disclosures
What are trigger terms for advertising closed end
Amount or percentage of any down payment, number of payments or repayment period, amount of any repayment, and amount of any finance charge
Is APR a trigger term for closed end?
No, only trigger term for open end
What are general requirements for open end disclosures
Account opening table, disclosures below the table, all charges imposed as part of plan, rates, (clear conspicuous, in writing, can keep)
When is statement of billing rights required?
At account opening (and)
Annually as long form notice or summary notice on or with periodic statement every time
What act created reg V
FACT Act
What are the two options for notifying members when furnishing negative information to a CRA?
Notice to member before furnishing info to CRAs (or) notice to member within 30 days after furnishing info to CRAs
When credit score is used in connection with mortgage application, what needs included in the notice to home loan applicant
Consumers credit score, range of possible scores, date score was created, key factors influencing score
How long do criteria for prescreening need to be retained?
Three years
Does risk based pricing notice apply to business
No
Who is covered by military lending relief act
Active military members and dependants
When is military lending relief act applicable
At point or origination
What is cap for military lending relief act
36% MAPR cap
Who is over mla
DoD
Who is covered by SCRA
Active military members and dependants (indirectly)
When is SCRA applicable
Existing debt
Who is over scra
Cfpb
How long does member have to notify about scra
180 after their release
Are guarantors also protected by scra
Yes
Generally no default judgment against active duty?
True
When scra period ends and rate going back up, what does TILA require?
Sending a change in terms notice to member (45 days before)
Can MLA be waived
No (scra can be waived by member)
What is included when calculating MAPR cap
Cannot exceed: finance charges (under reg z), most application fees, premiums for credit insurance, fees for debt cancellation contracts, fees for “credit related ancillary products”
