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Cuce Study > Consumer Lending Regs Truth In Lending Act Reg Z > Flashcards

Consumer Lending Regs Truth In Lending Act Reg Z Flashcards

1
Q

When was truth in lending act enacted?

A

1968

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2
Q

What is the purpose of truth in lending act?

A

To promote the informed use of consumer credit by requiring disclosures about its terms and cost

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3
Q

Who has the authority to supervise and enforce the compliance of the truth in lending act?

A

CFPB consumer financial protection bureau

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4
Q

Penalty of $500-$5000+
Actual damages+
Costs of attorney fees
These are examples of possible _____ for violations of truth in lending act

A

Penalties… what you may be liable for

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5
Q

True or false if you take corrective action with in 60 days of discovering an error, you notify the borrower and you make adjustments to the account there is no liability?

A

True
Must discover error before borrower though

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6
Q

Sub part A- general
Sub part B-open end credit
Sub part C-closed end credit
Subpart D- miscellaneous
Subpart E- special rules for certain home mortgage transactions
Subpart F- special rules for private education loans
Subpart G- special rules applicable to credit card accounts and open end credit offered to college students
Appendix G and H- open end and closed end model forms and clauses
Supplement I- official staff commentary
These all make up what regulation?

A

Reg Z

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7
Q

Subpart A general applies to both open end and closed end credit true or false?

A

True

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8
Q

Credit extended primarily for a business, commercial or agricultural purpose
An extension of credit to a borrower other than a natural person
Credit over $66,400 for 202: that is not secured by real property or a dwelling
Government insured or guaranteed student loans
These are examples of what?

A

Things regulation Z does not apply to.

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9
Q

The loan amount reg Z doesn’t apply changes every year true or false?

A

True

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10
Q

True or false you can decide to have all your consumer credit covered by Reg Z?

A

True
Most entities decide to do it this way because it’s easier

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11
Q

Match the word to the definition:
A day ok which the creditors offices are open to the public for carrying on all of its business functions:
Business day
Consummation
Dwelling
Open end credit
Closed end credit

A

Business day

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12
Q

Match the word to the definition:
The time that a consumer becomes contractually obligated on a credit transaction:
Business day
Consummation
Dwelling
Open end credit
Closed end credit

A

Consummation

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13
Q

Match the word to the definition:
A residential structure that contains 1 to 4 units whether or not the structure is attached to real property. Includes an individual condominium unit, cooperative unit mobile home or trailer if it is used as a residence.
Business day
Consummation
Dwelling

A

Dwelling

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14
Q

Consumer credit extended by creditor under a plan on which
Creditor reasonably contemplates repeated transactions
Creditor may impose a finance charge from time to time on and outstanding balance and
The amount of credit that may be extended to the consumer during the term of the plan is generally made available to the extent that any outstanding balance is repaid
Is this open end credit or closed end credit

A

Open end credit

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15
Q

What is an example of a kind of open end credit?

A

Credit card
Line of credit

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16
Q

What is an example of a closed end credit?

A

Auto loan

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17
Q

A measure of the cost of consumer credit as a dollar amount is a_____

A

Finance charge

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18
Q

Charges payable directly or indirectly by the consumer and
Imposed directly or indirectly by the creditor incident to or as a condition of the extension of credit
Fees and amounts charged by someone other than the creditor if the creditor requires the use of 3rd parties as a condition of credit, or retains a portion of the 3rd party charge to the extent of the portion retained
These are charges included in _____

A

Finance charges

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19
Q

Examples of things that can be excluded from finance charges?

A

Application fee
Late payment fees
Over the limit fees
Participation fees

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20
Q

You can exclude credit life, disability debt cancellation from finance charge if____

A

It is not required to get the loan and this fact is disclosed
Premium is disclosed (open end=unit cost, closed end= total cost)
Member signs or initials to request coverage

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21
Q

Property insurance can be excluded from finance charge if_____

A

Borrower must obtain from any provider acceptable to credit Union
If buying from credit Union the premium is disclosed

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22
Q

Interest
Service, transaction and activity charges
Borrowers points, including loan fees, assumption fees and finder fees
Credit report fees are included for most loans but are excluded for mortgage loans
These are all examples of ______

A

Finance charges

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23
Q

The measure of the cost of credit measured as a yearly rate is called the______

A

Annual percentage rate

24
Q

The amount financed
The finance charge
The payment schedule
These all effect the

A

APR

25
Q

APR is considered accurate if it is disclosed at____

A

1/8th of 1% above or below the actual Apr
This is called the tolerance

26
Q

For open end credit if relationships changes change in term notice must be sent how many days before the change comes into effect

A

45 days

27
Q

True or false the tolerance for finance charge on closed end loans is either 5 or 10 dollars depending on the amount financed

A

True
5 for 1000.00 or less
10 for amount financed of 1000 or more

28
Q

The key to closed end loans is___

A

That the amount to borrow is a set amount
And has a set term

It is a one time transaction

29
Q

An example of closed end credit is

A

Car loan

30
Q

Actually available terms
No misleading terms
Trigger terms require additional disclosures
These are the general rules of _____

A

Advertising

31
Q

For open end credit what’s some examples of trigger terms for advertising

A

Finance charge
Apr
Fees

32
Q

Any minimum fixed, transaction activity or similar charge
Any periodic rate that may be applied, expressed as an APR
Any membership or participation fee
If these are mentioned in advertising for open end credit you are required to do whay____

A

Provide additional disclosures

33
Q

Amount or percentage of any down payment
Number of payments or repayment term
Amount of any payment
Amount of finance charge
These are examples of ______ for closed end credit

A

Trigger terms

34
Q

True or false APR is a trigger term for open end credit but not for closed end credit

A

True

35
Q

Credit card application disclosures should be provided on or with the credit card application true or false?

A

True

36
Q

What ways can you provide credit card application disclosures?

A

Via direct mail- have to be accurate as of mailing date
Available to general public- must state effective date and contact information
In person-
Telephone- either have to provide full disclosure orally or within 30 days so they get them before they could start accumulating fees on the card
Electronic- like direct mail accurate as of date they were sent

37
Q

Clear and conspicuous
In writing
In a form the member can keep

Account opening table
Disclosures below the table
All charges
Rates
These are the required components of____

A

Open end credit account opening disclosures

38
Q

When should we give a statement of billing rights to members? Open end credit

A

With the account opening disclosures and either
In long form notice provided annually
Or summary notice on or with every periodic statement

Has to be sent at least annually

39
Q

Information specific to members account
Provided with the account agreement
These are requirements for the ______

A

Account opening disclosure

40
Q

Clear and conspicuous, in writing in a form member can keep
Finance charge and annual percentage rate must be more conspicuous when used with a number… like bold
Must be given before consummation
Based on actual terms
Can not contain unrelated information
These are requirements for____

A

Closed end credit disclosures

41
Q

When should you provide a change in terms notice to members for open end credit?

A

When there is a significant change in terms or minimum payment is increased
Apr change on non variable rate account increased fees
Change to grace period
Change to balance calculation method

42
Q

Who must you provide change in term notices to?

A

Each affected member

43
Q

Change in credit limit
Suspension of future Credit privileges
Skip a pay programs
If properly disclosed at account opening
These are examples of when a _____ is not required for open end credit

A

Change in term notice

44
Q

Previous balance
Transactions
Credit
Periodic rates
Balance on which finance charge was computed
Charges imposed
Change in terms
Increased penalty rate
Grace period
Address for notice of billing errors
Closing date of billing cycle
New balance
Due date
Late payment costs
This is information that has to be on_____

A

Open end credit periodic statement

45
Q

How should notice of billing error be done?
Within how many days should the notice of billing error be received?

A

In writing

Within 60 days of periodic statement that showed the error

46
Q

What should the member include in their notice of billing error?

A

Information that allows the credit Union to identify member and account

Information on why the member thinks there was an error, the date, type of transaction and the amount

47
Q

What steps should the credit Union take in response to a notice of billing error?

A

Send written acknowledgment of notice to member within 30 days
Resolve error within 2 billing cycles or 90 days
Discontinue collection efforts for the amount being disputed

48
Q

Can the member withhold payment on disputed amount until the error is resolved?

A

Yes

49
Q

Can a credit Union send adverse reporting to credit reporting agency for the disputed amount?

A

No

50
Q

If a member tries to dispute the same transaction after you investigate and provide notice that no error occurred do you have to do anything?

A

You have no obligation to investigate again and notify again

51
Q

Correct
Notify
These are steps credit Union should take if investigations showed an error. True or false

A

True

52
Q

If no error occurred you notify member and provide documentation to show no error occurred and you notify member of amount due and give them additional time to pay… true or false

A

True

53
Q

If credit union receives payments in excess of minimum payment the payment must be applied to the highest Apr and then the next highest in descending order
True or false

A

True

54
Q

How long should a credit Union retain records of compliance with reg z for

A

2 years after the date disclosures were required to be made

55
Q

If you discover an unintentional error on complying with Reg Z requirements what corrective action must you take?

A

Notify the affected members
Make appropriate adjustments within 60 days of discovery of error
And before any legal action has begun or member gives written notice of the error

56
Q

What are examples of charges that are considered components of a finance charge?

A

Interest
Service fees, transaction fees, activity charges, carrying charges
Appraisal fees, investigation fees, credit report fees
Premiums or other charges for any guarantee or insurance thay protects your credit union against member defaults
Charges your credit Union pays to another person for purchasing or accepting a loan

57
Q

The special rules for credit cards allow the member to withhold payment of up to the full amount of the transaction plus any finance charge imposed on that amount when there is a unresolved dispute between the member and a merchant. What three conditions must be met before this rule can apply?

A

The member has made attempt to resolve the dispute
The amount involved is greater than $50
The transaction occurs in the members state or within 100 miles of the members current address

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