TRUTH IN LENDING AND REGULATION Z Flashcards
If you discover an unintentional error in complying with Reg Z requirements, what corrective action must you take?
You must: 1) notify the affected members and 2) make appropriate adjustments within 60 days after discovering the error and before any legal action has begun or any member gives written notice of the error.
Reg Z defines “finance charge” as the cost of consumer credit in a dollar amount. The regulation provides a list of the types of charges that must be
considered as components of the finance charge. Name four of those charges
Interest, service transaction and activity charges, borrower’s points including loan fees, assumption fees, and finder fees, credit report fees are finance charges except for mortgage loans.
Reg Z provides specific accuracy requirements for APRs in both open- and closed-end credit. What are those requirements?
For both open- and closed-end credit the APR must be within 1/8 of a percentage point above or below the determined APR. However, for irregular transactions on closed-end credit, the percentage can be 1/4 of a percentage point above or below.
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 an unresolved dispute between the member and a merchant. What three conditions must be met before this rule can apply?
This rule applies when: 1) the member has made a good-faith attempt to resolve the dispute; 2) the amount involved is greater than $50; and 3) the transaction occurs in the member’s state or within 100 miles of the member’s current address.
When a member notifies the credit union, in writing, of a billing error on an openend credit plan, what are the three steps the credit union must take per Reg Z?
The credit union must: 1) send the member a written acknowledgment of receipt of the claim with 30 days; 2) resolve the claim within the allowable time frame (within 2 billing cycles or 90 days);
and 3) avoid certain actions (such as trying to collect the amount, imposing a finance charge on the amount, report it to a credit-reporting agency, or restrict or close the account).
Regulation Z requires credit unions to promptly credit payments made on openend credit accounts. What are two of the four rules governing this?
Prompt crediting of payment rules: 1) credit as of day of receipt; 2) provide payment specifications on or with the periodic statement; 3) adjust for failure to
credit the payment timely; and 4) handle credit balances as required.
If a member reasserts a billing error claim after the initial investigation has been completed, what is the credit union’s duty?
The credit union is not obligated to reinvestigate the claim. However, if the account has been reported to a credit reporting agency, the credit union must:
1) inform the agency the amount is in dispute; 2) provide the member with the name and address of the agencies notified; and 3) promptly report any
resolutions to those agencies.
There are three general disclosure requirements for open-end credit disclosures. One is that the disclosures be made in a clear and conspicuous manner. What are the other two?
They must be: 1) in writing and 2) in a form the member may keep
Reg Z requires credit unions to provide periodic statements to members with open-end credit for each billing cycle that a finance charge is imposed or there is a debit or credit balance of $1.00. These statements must be provided at least quarterly. Name four of the required items for this statement.
Required information for periodic statements (as applicable): (1) previous balance; (2) identification of transactions; (3) credits to the account; (4)
periodic rates; (5) balance for computing finance charge; (6) finance charge; (7) annual percentage rate; (8) other charges; (9) closing date; (10) new balance; (11) grace period; (12) address for billing error notice; and (13) liability notice for credit card plans.
When you change an account term or condition that is required to be disclosed under Reg Z or increase a minimum payment requirement and that change is
not one of the exceptions provided in the regulation, what is the notification requirement for the change?
You must mail or deliver written notice of the change at least 45 days before its effective date.
Credit unions are required to provide members an initial billing rights statement when they establish their account as well as an annual billing rights disclosure. What is the alternative to this annual mailing provided in Reg Z?
Credit unions can include a shortened form of the billing rights notice on or with each periodic statement mailed or delivered to the member. The regulation provides a sample statement as Appendix G.
Does disclosing the APR in an advertisement act as a trigger term for both openand closed-end credit?
Yes OR No
No, disclosing the APR in an advertisement is only considered a trigger term for open-end loans.
In order to be considered “prominently located,” where must Schumer box disclosures appear?
The disclosures must be provided on or with the solicitation or application.
Where must the APR for cash advances and balance transfers appear?
In the Schumer box or table.
A special interest rate disclosure rule applies to variable-rate loans. What is that rule?
The credit union must disclose the maximum interest rate that can be charged during the term of the loan.
