Adjustable-Rate
Mortgage Loans
Adjustable-rate mortgage
loans are covered by regulations that
require, at a minimum, disclosure of the
circumstances under which the rate may
increase, any limitations on the increase,
the effects of an increase and an example
of the payment terms that would result
from an increase.
Community
Reinvestment Act
The Community Reinvestment
Act requires federal agencies to encourage
depository financial institutions to help
meet the credit needs of their communities,
including low- and moderate- income neighborhoods.
The regulatory agencies assess the institutions'
records of meeting those credit needs
by preparing a written evaluation of the
institutions and assigning a rating with
facts supporting the conclusions. Such
ratings shall be disclosed to the public
for examinations beginning July 1, 1990.
The Act also requires regulatory agencies
to consider an institution's record of
helping to meet community credit needs
when evaluating certain corporate applications,
such as permission to establish a branch,
to relocate a branch or home office, or
to merge.
Consumer Leasing
Act
The Consumer Leasing Act
requires disclosure of information that
helps consumers compare the cost and terms
of various leases and the cost and terms
of buying on credit versus cash. The Act
does not apply to real estate leases or
to leases of four months or less.
Credit Practices
Rule
The Credit Practices Rule
prohibits lenders from using certain remedies,
such as confessions of judgment; wage
assignments; and nonpossessory, nonpurchase
money, security interests in household
goods. The rule also prohibits lenders
from misrepresenting a cosigner's liability
and requires that lenders provide cosigners
with a notice explaining their credit
obligation as a cosigner. It also prohibits
the pyramiding of late charges.
Electronic Fund
Transfer Act
The Electronic Fund Transfer
Act provides consumer protection for all
transactions using a debit card or electronic
means to debit or credit an account. It
also limits a consumer's liability for
unauthorized electronic fund transfers.
Equal Credit Opportunity
Act
The Equal Credit Opportunity
Act prohibits discrimination against an
applicant for credit because of age, sex,
marital status, religion, race, color,
national origin, or receipt of public
assistance. It also prohibits discrimination
because of a good faith exercise of any
rights under the federal consumer credit
laws. If a consumer has been denied credit,
the law requires notification of the denial
in writing. The consumer may request,
within 60 days, that the reason for denial
be provided in writing.
Expedited Funds
Availability Act
The Expedited Funds Availability
Act requires all banks, savings and loan
associations, savings banks, and credit
unions to make funds deposited into checking,
share draft and NOW accounts available
according to specified time schedules
and to disclose their funds availability
policies to their customers. The law does
not require an institution to delay the
customer's use of deposited funds but
instead limits how long any delay may
last. The regulation also establishes
rules designed to speed the return of
unpaid checks.
Fair Credit and
Charge Card Disclosure Act
The Fair Credit and Charge
Card Disclosure Act requires new disclosures
on credit and charge cards, whether issued
by financial institutions, retail stores
or private companies. Information such
as APRs, annual fees and grace periods
must be provided in tabular form along
with applications and preapproved solicitations
for cards. The regulations also require
card issuers that impose an annual fee
to provide disclosures before annual renewal.
Card issuers that offer credit insurance
must inform customers of any increase
in rate or substantial decrease in coverage
should the issuer decide to change insurance
providers.
Fair Credit Billing
Act
The Fair Credit Billing
Act establishes procedures for the prompt
correction of errors on open-end credit
accounts. It also protects a consumer's
credit rating while the consumer is settling
a dispute.
Fair Credit Reporting
Act
The Fair Credit Reporting
Act establishes procedures for correcting
mistakes on a person's credit record and
requires that a consumer's record only
be provided for legitimate business needs.
It also requires that the record be kept
confidential. A credit record may be retained
seven years for judgments, liens, suits,
and other adverse information except for
bankruptcies, which may be retained ten
years. If a consumer has been denied credit,
a cost-free credit report may be requested
within 30 days of denial.
Fair Debt Collection
Practices Act
The Fair Debt Collection
Practices Act is designed to eliminate
abusive, deceptive and unfair debt collection
practices. It applies to third party debt
collectors or those who use a name other
than their own in collecting consumer
debts. Very few commercial banks, savings
banks, savings and loan associations,
or credit unions are covered by this Act,
since they usually collect only their
own debts. Complaints concerning debt
collection practices should generally
be filed with the Federal Trade Commission.
Fair Housing Act
The Fair Housing Act prohibits
discrimination on the basis of race, color,
sex, religion, handicap, familial status
or national origin in the financing, sale
or rental of housing.
The Federal Trade
Commission Act
The Federal Trade Commission
Act requires federal financial regulatory
agencies to maintain a consumer affairs
division to assist in resolving consumer
complaints against institutions they supervise.
This assistance is given to help get necessary
information to consumers about problems
they are having in order to address complaints
concerning acts or practices which may
be unfair or deceptive.
Home Equity Loan
Consumer Protection Act
The Home Equity Loan Consumer
Protection Act requires lenders to disclose
terms, rates and conditions (APRs, miscellaneous
charges, payment terms, and information
about variable rate features) for home
equity lines of credit with the applications
and before the first transaction under
the home equity plan. If the disclosed
terms change, the consumer can refuse
to open the plan and is entitled to a
refund of fees paid in connection with
the application. The Act also limits the
circumstances under which creditors may
terminate or change the terms of a home
equity plan after it is opened.
Home Mortgage Disclosure
Act Aggregation Project
Using loan data collected
from each covered institution, the Federal
Financial Institutions Examination Council
(FFIEC) prepares disclosure statements
and various reports for individual institutions
in each MSA, showing lending patterns
by location, age of housing stock, income
level, sex and racial characteristics.
The disclosure statements and reports
are made available to the public at central
depositories located in each MSA. Requests
for the list of central depositories should
be forwarded to the FFIEC.
Federal Financial Institutions
Examination Council
2100 Pennsylvania Ave, NW
Suite 200
Washington, DC 20037
Home Mortgage Disclosure
Act (HMDA)
The Home Mortgage Disclosure
Act (HMDA) requires certain lending institutions
to report annually on their originations
and purchases of home purchase and home
improvement loans as well as applications
for such loans. The type of loan, location
of the property, race or national origin,
sex and income of the applicant or borrower
is reported. Institutions are required
to make information regarding their lending
available to the public and must post
a notice of availability in their public
lobby. Disclosure statements are also
available at central depositories in metropolitan
areas. This information can help the public
determine how well institutions are serving
the housing credit needs of their neighborhoods
and communities.
National Flood Insurance
Act
National Flood Insurance
is available to any property holder whose
local community participates in the national
program by adopting and enforcing flood
plain management. Federally regulated
lenders are required to compel borrowers
to purchase flood insurance in certain
designated areas. Lenders also must disclose
to borrowers if their structure is located
in a flood hazard area.
Real Estate Settlement
Procedures Act
The Real Estate Settlement
Procedures Act requires that a consumer
be given advance information about the
services and costs involved in the closing
of a residential mortgage. It also limits
the amount that can be collected for mortgage
escrow.
Rights to Financial
Privacy Act
The Right to Financial Privacy
Act provides that customers of financial
institutions have a right to expect that
their financial activities will have a
reasonable amount of privacy from federal
government scrutiny. The Act establishes
specific procedures and exemptions concerning
the release of the financial records of
customers and imposes limitations on and
requirements of financial institutions
prior to the release of such information
to the federal government.
Savings and Time
Deposits
Savings and time deposits
are covered by regulations that prohibit
inaccurate or misleading advertising.
Truth in Lending
Act
The Truth in Lending Act
requires disclosure of the "finance
charge" and the "annual percentage
rate"--and certain other costs and
terms of credit--so that a consumer can
compare the prices of credit from different
sources. It also limits liability on lost
or stolen credit cards. |
