Consumer Lending Regs Truth In Lending Act Reg Z Flashcards
When was truth in lending act enacted?
1968
What is the purpose of truth in lending act?
To promote the informed use of consumer credit by requiring disclosures about its terms and cost
Who has the authority to supervise and enforce the compliance of the truth in lending act?
CFPB consumer financial protection bureau
Penalty of $500-$5000+
Actual damages+
Costs of attorney fees
These are examples of possible _____ for violations of truth in lending act
Penalties… what you may be liable for
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?
True
Must discover error before borrower though
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?
Reg Z
Subpart A general applies to both open end and closed end credit true or false?
True
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?
Things regulation Z does not apply to.
The loan amount reg Z doesn’t apply changes every year true or false?
True
True or false you can decide to have all your consumer credit covered by Reg Z?
True
Most entities decide to do it this way because it’s easier
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
Business day
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
Consummation
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
Dwelling
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
Open end credit
What is an example of a kind of open end credit?
Credit card
Line of credit
What is an example of a closed end credit?
Auto loan
A measure of the cost of consumer credit as a dollar amount is a_____
Finance charge
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 _____
Finance charges
Examples of things that can be excluded from finance charges?
Application fee
Late payment fees
Over the limit fees
Participation fees
You can exclude credit life, disability debt cancellation from finance charge if____
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
Property insurance can be excluded from finance charge if_____
Borrower must obtain from any provider acceptable to credit Union
If buying from credit Union the premium is disclosed
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 ______
Finance charges
The measure of the cost of credit measured as a yearly rate is called the______
Annual percentage rate
The amount financed
The finance charge
The payment schedule
These all effect the
APR
APR is considered accurate if it is disclosed at____
1/8th of 1% above or below the actual Apr
This is called the tolerance
For open end credit if relationships changes change in term notice must be sent how many days before the change comes into effect
45 days
True or false the tolerance for finance charge on closed end loans is either 5 or 10 dollars depending on the amount financed
True
5 for 1000.00 or less
10 for amount financed of 1000 or more
The key to closed end loans is___
That the amount to borrow is a set amount
And has a set term
It is a one time transaction
An example of closed end credit is
Car loan
Actually available terms
No misleading terms
Trigger terms require additional disclosures
These are the general rules of _____
Advertising
For open end credit what’s some examples of trigger terms for advertising
Finance charge
Apr
Fees
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____
Provide additional disclosures
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
Trigger terms
True or false APR is a trigger term for open end credit but not for closed end credit
True
Credit card application disclosures should be provided on or with the credit card application true or false?
True
What ways can you provide credit card application disclosures?
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
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____
Open end credit account opening disclosures
When should we give a statement of billing rights to members? Open end credit
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
Information specific to members account
Provided with the account agreement
These are requirements for the ______
Account opening disclosure
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____
Closed end credit disclosures
When should you provide a change in terms notice to members for open end credit?
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
Who must you provide change in term notices to?
Each affected member
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
Change in term notice
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_____
Open end credit periodic statement
How should notice of billing error be done?
Within how many days should the notice of billing error be received?
In writing
Within 60 days of periodic statement that showed the error
What should the member include in their notice of billing error?
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
What steps should the credit Union take in response to a notice of billing error?
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
Can the member withhold payment on disputed amount until the error is resolved?
Yes
Can a credit Union send adverse reporting to credit reporting agency for the disputed amount?
No
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?
You have no obligation to investigate again and notify again
Correct
Notify
These are steps credit Union should take if investigations showed an error. True or false
True
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
True
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
True
How long should a credit Union retain records of compliance with reg z for
2 years after the date disclosures were required to be made
If you discover an unintentional error on complying with Reg Z requirements what corrective action must you take?
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
What are examples of charges that are considered components of a finance charge?
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
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?
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
