15 U.S.C. § 1638 — Transactions other than under an open

Page 1495 TITLE 15—COMMERCE AND TRADE § 1638 ‘‘(1) IN GENERAL.—The Board [of Governors of the Federal Reserve System] shall promulgate regulations implementing the amendments made by this section [amending this section and sections 1638, 1664, and 1665b of this title]. ‘‘(2) EFFECTIVE DATE.—Regulations issued under para- graph (1) shall not take effect until the later of— ‘‘(A) 12 months after the date of enactment of this Act [Apr. 20, 2005]; or ‘‘(B) 12 months after the date of publication of such final regulations by the Board.’’ REGULATIONS; EFFECTIVE DATE Pub. L. 100–709, § 7, Nov. 23, 1988, 102 Stat. 4734, pro- vided that: ‘‘(a) REGULATIONS.—Before the end of the 60-day pe- riod beginning on the date of the enactment of this Act [Nov. 23, 1988], the Board of Governors of the Federal Reserve System shall prescribe such regulations as may be necessary to carry out the proposes [sic] of the amendments made by this Act [enacting this section and sections 1647 and 1665b of this title, amending sec- tions 1632 and 1637 of this title, and enacting provisions set out as notes under this section and section 1601 of this title]. ‘‘(b) EFFECTIVE DATE.—The amendments made by this Act, and the regulations prescribed pursuant to sub- section (a) with respect to such amendments, shall apply to— ‘‘(1) any agreement to open an account under an open end consumer credit plan under which exten- sions of credit are secured by a consumer’s principal dwelling which is entered into after the end of the 5- month period beginning on the date on which the reg- ulations prescribed under subsection (a) become final; and ‘‘(2) any application to open such an account which is distributed by, or received by a creditor, after the end of such 5-month period. ‘‘(c) VOLUNTARY COMPLIANCE.—Notwithstanding sub- section (b), any creditor may comply with the amend- ments made by this Act, in accordance with the regula- tions prescribed by the Board, before the effective date established under such subsection.’’ CONSUMER EDUCATION Pub. L. 100–709, § 4, Nov. 23, 1988, 102 Stat. 4733, pro- vided that: ‘‘The Board of Governors of the Federal Re- serve System shall develop and prepare a pamphlet for distribution to consumers which contains— ‘‘(1) a general description of open end consumer credit plans secured by the consumer’s principal dwelling and the terms and conditions under which such loans are generally extended; and ‘‘(2) a discussion of the potential advantages and disadvantages of such plans, including how to com- pare among home equity plans and between home eq- uity and closed end credit plans.’’ § 1638. Transactions other than under an open end credit plan (a) Required disclosures by creditor For each consumer credit transaction other than under an open end credit plan, the creditor shall disclose each of the following items, to the extent applicable: (1) The identity of the creditor required to make disclosure. (2)(A) The ‘‘amount financed’’, using that term, which shall be the amount of credit of which the consumer has actual use. This amount shall be computed as follows, but the computations need not be disclosed and shall not be disclosed with the disclosures conspicu- ously segregated in accordance with sub- section (b)(1): (i) take the principal amount of the loan or the cash price less downpayment and trade-in; (ii) add any charges which are not part of the finance charge or of the principal amount of the loan and which are financed by the consumer, including the cost of any items excluded from the finance charge pur- suant to section 1605 of this title; and (iii) subtract any charges which are part of the finance charge but which will be paid by the consumer before or at the time of the consummation of the transaction, or have been withheld from the proceeds of the cred- it. (B) In conjunction with the disclosure of the amount financed, a creditor shall provide a statement of the consumer’s right to obtain, upon a written request, a written itemization of the amount financed. The statement shall include spaces for a ‘‘yes’’ and ‘‘no’’ indication to be initialed by the consumer to indicate whether the consumer wants a written itemization of the amount financed. Upon re- ceiving an affirmative indication, the creditor shall provide, at the time other disclosures are required to be furnished, a written itemization of the amount financed. For the purposes of this subparagraph, ‘‘itemization of the amount financed’’ means a disclosure of the following items, to the extent applicable: (i) the amount that is or will be paid di- rectly to the consumer; (ii) the amount that is or will be credited to the consumer’s account to discharge obli- gations owed to the creditor; (iii) each amount that is or will be paid to third persons by the creditor on the con- sumer’s behalf, together with an identifica- tion of or reference to the third person; and (iv) the total amount of any charges de- scribed in the preceding subparagraph (A)(iii). (3) The ‘‘finance charge’’, not itemized, using that term. (4) The finance charge expressed as an ‘‘an- nual percentage rate’’, using that term. This shall not be required if the amount financed does not exceed $75 and the finance charge does not exceed $5, or if the amount financed exceeds $75 and the finance charge does not ex- ceed $7.50. (5) The sum of the amount financed and the finance charge, which shall be termed the ‘‘total of payments’’. (6) The number, amount, and due dates or period of payments scheduled to repay the total of payments. (7) In a sale of property or services in which the seller is the creditor required to disclose pursuant to section 1631(b) of this title, the ‘‘total sale price’’, using that term, which shall be the total of the cash price of the prop- erty or services, additional charges, and the fi- nance charge. (8) Descriptive explanations of the terms ‘‘amount financed’’, ‘‘finance charge’’, ‘‘an- nual percentage rate’’, ‘‘total of payments’’, and ‘‘total sale price’’ as specified by the Bu- reau. The descriptive explanation of ‘‘total Page 1496 TITLE 15—COMMERCE AND TRADE § 1638 1 So in original. The comma probably should not appear. sale price’’ shall include reference to the amount of the downpayment. (9) Where the credit is secured, a statement that a security interest has been taken in (A) the property which is purchased as part of the credit transaction, or (B) property not pur- chased as part of the credit transaction identi- fied by item or type. (10) Any dollar charge or percentage amount which may be imposed by a creditor solely on account of a late payment, other than a defer- ral or extension charge. (11) A statement indicating whether or not the consumer is entitled to a rebate of any fi- nance charge upon refinancing or prepayment in full pursuant to acceleration or otherwise, if the obligation involves a precomputed fi- nance charge. A statement indicating whether or not a penalty will be imposed in those same circumstances if the obligation involves a fi- nance charge computed from time to time by application of a rate to the unpaid principal balance. (12) A statement that the consumer should refer to the appropriate contract document for any information such document provides about nonpayment, default, the right to accel- erate the maturity of the debt, and prepay- ment rebates and penalties. (13) In any residential mortgage transaction, a statement indicating whether a subsequent purchaser or assignee of the consumer may as- sume the debt obligation on its original terms and conditions. (14) In the case of any variable interest rate residential mortgage transaction, in disclo- sures provided at application as prescribed by the Bureau for a variable rate transaction se- cured by the consumer’s principal dwelling, at the option of the creditor, a statement that the periodic payments may increase or de- crease substantially, and the maximum inter- est rate and payment for a $10,000 loan origi- nated at a recent interest rate, as determined by the Bureau, assuming the maximum peri- odic increases in rates and payments under the program, or a historical example illustrating the effects of interest rate changes imple- mented according to the loan program. (15) In the case of a consumer credit trans- action that is secured by the principal dwell- ing of the consumer, in which the extension of credit may exceed the fair market value of the dwelling, a clear and conspicuous statement that— (A) the interest on the portion of the cred- it extension that is greater than the fair market value of the dwelling is not tax de- ductible for Federal income tax purposes; and (B) the consumer should consult a tax ad- viser for further information regarding the deductibility of interest and charges. (16) In the case of a variable rate residential mortgage loan for which an escrow or impound account will be established for the payment of all applicable taxes, insurance, and assess- ments— (A) the amount of initial monthly pay- ment due under the loan for the payment of principal and interest, and the amount of such initial monthly payment including the monthly payment deposited in the account for the payment of all applicable taxes, in- surance, and assessments; and (B) the amount of the fully indexed month- ly payment due under the loan for the pay- ment of principal and interest, and the amount of such fully indexed monthly pay- ment including the monthly payment depos- ited in the account for the payment of all applicable taxes, insurance, and assess- ments. (17) In the case of a residential mortgage loan, the aggregate amount of settlement charges for all settlement services provided in connection with the loan, the amount of charges that are included in the loan and the amount of such charges the borrower must pay at closing, the approximate amount of the wholesale rate of funds in connection with the loan, and the aggregate amount of other fees or required payments in connection with the loan. (18) In the case of a residential mortgage loan, the aggregate amount of fees paid to the mortgage originator in connection with the loan, the amount of such fees paid directly by the consumer, and any additional amount re- ceived by the originator from the creditor. (19) In the case of a residential mortgage loan, the total amount of interest that the consumer will pay over the life of the loan as a percentage of the principal of the loan. Such amount shall be computed assuming the con- sumer makes each monthly payment in full and on-time, and does not make any over-pay- ments. (b) Form and timing of disclosures; residential mortgage transaction requirements (1) Except as otherwise provided in this part, the disclosures required under subsection (a) shall be made before the credit is extended. Ex- cept for the disclosures required by subsection (a)(1) of this section, all disclosures required under subsection (a) and any disclosure provided for in subsection (b), (c), or (d) of section 1605 of this title shall be conspicuously segregated from all other terms, data, or information provided in connection with a transaction, including any computations or itemization. (2)(A) Except as provided in subparagraph (G), in the case of any extension of credit that is se- cured by the dwelling of a consumer, which is also subject to the Real Estate Settlement Pro- cedures Act [12 U.S.C. 2601 et seq.], good faith es- timates of the disclosures required under sub- section (a) shall be made in accordance with reg- ulations of the Bureau under section 1631(c) of this title and shall be delivered or placed in the mail not later than three business days after the creditor receives the consumer’s written appli- cation, which shall be at least 7 business days before consummation of the transaction. (B) In the case of an extension of credit that is secured by the dwelling of a consumer, the disclosures provided under subparagraph (A),1 Page 1497 TITLE 15—COMMERCE AND TRADE § 1638 shall be in addition to the other disclosures re- quired by subsection (a), and shall— (i) state in conspicuous type size and format, the following: ‘‘You are not required to com- plete this agreement merely because you have received these disclosures or signed a loan ap- plication.’’; and (ii) be provided in the form of final disclo- sures at the time of consummation of the transaction, in the form and manner pre- scribed by this section. (C) In the case of an extension of credit that is secured by the dwelling of a consumer, under which the annual rate of interest is variable, or with respect to which the regular payments may otherwise be variable, in addition to the other disclosures required by subsection (a), the dis- closures provided under this subsection shall do the following: (i) Label the payment schedule as follows: ‘‘Payment Schedule: Payments Will Vary Based on Interest Rate Changes’’. (ii) State in conspicuous type size and for- mat examples of adjustments to the regular required payment on the extension of credit based on the change in the interest rates spec- ified by the contract for such extension of credit. Among the examples required to be provided under this clause is an example that reflects the maximum payment amount of the regular required payments on the extension of credit, based on the maximum interest rate al- lowed under the contract, in accordance with the rules of the Bureau. Prior to issuing any rules pursuant to this clause, the Bureau shall conduct consumer testing to determine the ap- propriate format for providing the disclosures required under this subparagraph to con- sumers so that such disclosures can be easily understood, including the fact that the initial regular payments are for a specific time period that will end on a certain date, that payments will adjust afterwards potentially to a higher amount, and that there is no guarantee that the borrower will be able to refinance to a lower amount. (D) In any case in which the disclosure state- ment under subparagraph (A) contains an an- nual percentage rate of interest that is no longer accurate, as determined under section 1606(c) of this title, the creditor shall furnish an additional, corrected statement to the borrower, not later than 3 business days before the date of consummation of the transaction. (E) The consumer shall receive the disclosures required under this paragraph before paying any fee to the creditor or other person in connection with the consumer’s application for an exten- sion of credit that is secured by the dwelling of a consumer. If the disclosures are mailed to the consumer, the consumer is considered to have received them 3 business days after they are mailed. A creditor or other person may impose a fee for obtaining the consumer’s credit report before the consumer has received the disclosures under this paragraph, provided the fee is bona fide and reasonable in amount. (F) WAIVER OF TIMELINESS OF DISCLOSURES.—To expedite consummation of a transaction, if the consumer determines that the extension of cred- it is needed to meet a bona fide personal finan- cial emergency, the consumer may waive or modify the timing requirements for disclosures under subparagraph (A), provided that— (i) the term ‘‘bona fide personal emergency’’ may be further defined in regulations issued by the Bureau; (ii) the consumer provides to the creditor a dated, written statement describing the emer- gency and specifically waiving or modifying those timing requirements, which statement shall bear the signature of all consumers enti- tled to receive the disclosures required by this paragraph; and (iii) the creditor provides to the consumers at or before the time of such waiver or modi- fication, the final disclosures required by paragraph (1). (G)(i) In the case of an extension of credit re- lating to a plan described in section 101(53D) of title 11— (I) the requirements of subparagraphs (A) through (E) shall not apply; and (II) a good faith estimate of the disclosures required under subsection (a) shall be made in accordance with regulations of the Bureau under section 1631(c) of this title before such credit is extended, or shall be delivered or placed in the mail not later than 3 business days after the date on which the creditor re- ceives the written application of the consumer for such credit, whichever is earlier. (ii) If a disclosure statement furnished within 3 business days of the written application (as provided under clause (i)(II)) contains an annual percentage rate which is subsequently rendered inaccurate, within the meaning of section 1606(c) of this title, the creditor shall furnish another disclosure statement at the time of settlement or consummation of the transaction. (3) In the case of a credit transaction described in paragraph (15) of subsection (a), disclosures required by that paragraph shall be made to the consumer at the time of application for such ex- tension of credit. (4) REPAYMENT ANALYSIS REQUIRED TO INCLUDE ESCROW PAYMENTS.— (A) IN GENERAL.—In the case of any con- sumer credit transaction secured by a first mortgage or lien on the principal dwelling of the consumer, other than a consumer credit transaction under an open end credit plan or a reverse mortgage, for which an impound, trust, or other type of account has been or will be established in connection with the trans- action for the payment of property taxes, haz- ard and flood (if any) insurance premiums, or other periodic payments or premiums with re- spect to the property, the information re- quired to be provided under subsection (a) with respect to the number, amount, and due dates or period of payments scheduled to repay the total of payments shall take into ac- count the amount of any monthly payment to such account for each such repayment in ac- cordance with section 10(a)(2) of the Real Es- tate Settlement Procedures Act of 1974 [12 U.S.C. 2609(a)(2)]. (B) ASSESSMENT VALUE.—The amount taken into account under subparagraph (A) for the Page 1498 TITLE 15—COMMERCE AND TRADE § 1638 payment of property taxes, hazard and flood (if any) insurance premiums, or other periodic payments or premiums with respect to the property shall reflect the taxable assessed value of the real property securing the trans- action after the consummation of the trans- action, including the value of any improve- ments on the property or to be constructed on the property (whether or not such construc- tion will be financed from the proceeds of the transaction), if known, and the replacement costs of the property for hazard insurance, in the initial year after the transaction. (c) Timing of disclosures on unsolicited mailed or telephone purchase orders or loan re- quests (1) If a creditor receives a purchase order by mail or telephone without personal solicitation, and the cash price and the total sale price and the terms of financing, including the annual per- centage rate, are set forth in the creditor’s cata- log or other printed material distributed to the public, then the disclosures required under sub- section (a) may be made at any time not later than the date the first payment is due. (2) If a creditor receives a request for a loan by mail or telephone without personal solicitation and the terms of financing, including the annual percentage rate for representative amounts of credit, are set forth in the creditor’s printed ma- terial distributed to the public, or in the con- tract of loan or other printed material delivered to the obligor, then the disclosures required under subsection (a) may be made at any time not later than the date the first payment is due. (d) Timing of disclosure in cases of an addition of a deferred payment price to an existing outstanding balance If a consumer credit sale is one of a series of consumer credit sales transactions made pursu- ant to an agreement providing for the addition of the deferred payment price of that sale to an existing outstanding balance, and the person to whom the credit is extended has approved in writing both the annual percentage rate or rates and the method of computing the finance charge or charges, and the creditor retains no security interest in any property as to which he has re- ceived payments aggregating the amount of the sales price including any finance charges attrib- utable thereto, then the disclosure required under subsection (a) for the particular sale may be made at any time not later than the date the first payment for that sale is due. For the pur- poses of this subsection, in the case of items purchased on different dates, the first purchased shall be deemed first paid for, and in the case of items purchased on the same date, the lowest price shall be deemed first paid for. (e) Terms and disclosure with respect to private education loans (1) Disclosures required in private education loan applications and solicitations In any application for a private education loan, or a solicitation for a private education loan without requiring an application, the pri- vate educational lender shall disclose to the borrower, clearly and conspicuously— (A) the potential range of rates of interest applicable to the private education loan; (B) whether the rate of interest applicable to the private education loan is fixed or variable; (C) limitations on interest rate adjust- ments, both in terms of frequency and amount, or the lack thereof, if applicable; (D) requirements for a co-borrower, includ- ing any changes in the applicable interest rates without a co-borrower; (E) potential finance charges, late fees, penalties, and adjustments to principal, based on defaults or late payments of the borrower; (F) fees or range of fees applicable to the private education loan; (G) the term of the private education loan; (H) whether interest will accrue while the student to whom the private education loan relates is enrolled at a covered educational institution; (I) payment deferral options; (J) general eligibility criteria for the pri- vate education loan; (K) an example of the total cost of the pri- vate education loan over the life of the loan— (i) which shall be calculated using the principal amount and the maximum rate of interest actually offered by the private educational lender; and (ii) calculated both with and without capitalization of interest, if an option ex- ists for postponing interest payments; (L) that a covered educational institution may have school-specific education loan ben- efits and terms not detailed on the disclo- sure form; (M) that the borrower may qualify for Fed- eral student financial assistance through a program under title IV of the Higher Edu- cation Act of 1965 (20 U.S.C. 1070 et seq.), in lieu of, or in addition to, a loan from a non- Federal source; (N) the interest rates available with re- spect to such Federal student financial as- sistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); (O) that, as provided in paragraph (6)— (i) the borrower shall have the right to accept the terms of the loan and consum- mate the transaction at any time within 30 calendar days (or such longer period as the private educational lender may provide) following the date on which the applica- tion for the private education loan is ap- proved and the borrower receives the dis- closure documents required under this sub- section for the loan; and (ii) except for changes based on adjust- ments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender during the period described in clause (i); (P) that, before a private education loan may be consummated, the borrower must ob- tain from the relevant institution of higher education the form required under para- graph (3), and complete, sign, and return such form to the private educational lender; Page 1499 TITLE 15—COMMERCE AND TRADE § 1638 (Q) that the consumer may obtain addi- tional information concerning such Federal student financial assistance from their insti- tution of higher education, or at the website of the Department of Education; and (R) such other information as the Bureau shall prescribe, by rule, as necessary or ap- propriate for consumers to make informed borrowing decisions. (2) Disclosures at the time of private education loan approval Contemporaneously with the approval of a private education loan application, and before the loan transaction is consummated, the pri- vate educational lender shall disclose to the borrower, clearly and conspicuously— (A) the applicable rate of interest in effect on the date of approval; (B) whether the rate of interest applicable to the private education loan is fixed or variable; (C) limitations on interest rate adjust- ments, both in terms of frequency and amount, or the lack thereof, if applicable; (D) the initial approved principal amount; (E) applicable finance charges, late fees, penalties, and adjustments to principal, based on borrower defaults or late payments, including limitations on the discharge of a private education loan in bankruptcy; (F) fees or range of fees applicable to the private education loan; (G) the maximum term under the private education loan program; (H) an estimate of the total amount for re- payment, at both the interest rate in effect on the date of approval and at the maximum possible rate of interest offered by the pri- vate educational lender and applicable to the borrower, to the extent that such max- imum rate may be determined, or if not, a good faith estimate thereof; (I) any principal and interest payments re- quired while the student for whom the pri- vate education loan is intended is enrolled at a covered educational institution and un- paid interest that will accrue during such enrollment; (J) payment deferral options applicable to the borrower; (K) whether monthly payments are grad- uated; (L) that, as provided in paragraph (6)— (i) the borrower shall have the right to accept the terms of the loan and consum- mate the transaction at any time within 30 calendar days (or such longer period as the private educational lender may provide) following the date on which the applica- tion for the private education loan is ap- proved and the borrower receives the dis- closure documents required under this sub- section for the loan; and (ii) except for changes based on adjust- ments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender during the period described in clause (i); (M) that the borrower— (i) may qualify for Federal financial as- sistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), in lieu of, or in addi- tion to, a loan from a non-Federal source; and (ii) may obtain additional information concerning such assistance from their in- stitution of higher education or the website of the Department of Education; (N) the interest rates available with re- spect to such Federal financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); (O) the maximum monthly payment, cal- culated using the maximum rate of interest actually offered by the private educational lender and applicable to the borrower, to the extent that such maximum rate may be de- termined, or if not, a good faith estimate thereof; and (P) such other information as the Bureau shall prescribe, by rule, as necessary or ap- propriate for consumers to make informed borrowing decisions. (3) Self-certification of information (A) In general Before a private educational lender may consummate a private education loan with respect to a student attending an institution of higher education, the lender shall obtain from the applicant for the private education loan the form developed by the Secretary of Education under section 155 of the Higher Education Act of 1965 [20 U.S.C. 1019d], signed by the applicant, in written or elec- tronic form. (B) Rule of construction No other provision of this subsection shall be construed to require a private edu- cational lender to perform any additional duty under this paragraph, other than col- lecting the form required under subpara- graph (A). (4) Disclosures at the time of private education loan consummation Contemporaneously with the consummation of a private education loan, a private edu- cational lender shall make to the borrower each of the disclosures described in— (A) paragraph (2)(A) (adjusted, as nec- essary, for the rate of interest in effect on the date of consummation, based on the index used for the loan); (B) subparagraphs (B) through (K) and (M) through (P) of paragraph (2); and (C) paragraph (7). (5) Format of disclosures (A) Model form Not later than 2 years after August 14, 2008, the Bureau shall, based on consumer testing, and in consultation with the Sec- retary of Education, develop and issue model forms that may be used, at the option of the private educational lender, for the provision of disclosures required under this sub- section. (B) Format Model forms developed under this para- graph shall— Page 1500 TITLE 15—COMMERCE AND TRADE § 1638 2 So in original. Probably should be ‘‘Bureau’’. (i) be comprehensible to borrowers, with a clear format and design; (ii) provide for clear and conspicuous dis- closures; (iii) enable borrowers easily to identify material terms of the loan and to compare such terms among private education loans; and (iv) be succinct, and use an easily read- able type font. (C) Safe harbor Any private educational lender that elects to provide a model form developed under this subsection that accurately reflects the practices of the private educational lender shall be deemed to be in compliance with the disclosures required under this subsection. (6) Effective period of approved rate of interest and loan terms (A) In general With respect to a private education loan, the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within 30 calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education loan is approved and the borrower receives the disclosure documents required under this subsection for the loan, and the rates and terms of the loan may not be changed by the private educational lender during that period. (B) Prohibition on changes Except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender prior to the ear- lier of— (i) the date of acceptance of the terms of the loan and consummation of the trans- action by the borrower, as described in subparagraph (A); or (ii) the expiration of the period described in subparagraph (A). (7) Right to cancel With respect to a private education loan, the borrower may cancel the loan, without pen- alty to the borrower, at any time within 3 business days of the date on which the loan is consummated, and the private educational lender shall disclose such right to the bor- rower in accordance with paragraph (4). (8) Prohibition on disbursement No funds may be disbursed with respect to a private education loan until the expiration of the 3-day period described in paragraph (7). (9) Bureau regulations In issuing regulations under this subsection, the Bureau shall prevent, to the extent pos- sible, duplicative disclosure requirements for private educational lenders that are otherwise required to make disclosures under this sub- chapter, except that in any case in which the disclosure requirements of this subsection dif- fer or conflict with the disclosure require- ments of any other provision of this sub- chapter, the requirements of this subsection shall be controlling. (10) Definitions For purposes of this subsection, the terms ‘‘covered educational institution’’, ‘‘private educational lender’’, and ‘‘private education loan’’ have the same meanings as in section 1650 of this title. (11) Duties of lenders participating in pre- ferred lender arrangements Each private educational lender that has a preferred lender arrangement with a covered educational institution shall annually, by a date determined by the Bureau, in consulta- tion with the Secretary of Education, provide to the covered educational institution such in- formation as the Bureau determines to include in the model form developed under paragraph (5) for each type of private education loan that the lender plans to offer to students attending the covered educational institution, or to the families of such students, for the next award year (as that term is defined in section 481 of the Higher Education Act of 1965 [20 U.S.C. 1088]). (f) Periodic statements for residential mortgage loans (1) In general The creditor, assignee, or servicer with re- spect to any residential mortgage loan shall transmit to the obligor, for each billing cycle, a statement setting forth each of the following items, to the extent applicable, in a con- spicuous and prominent manner: (A) The amount of the principal obligation under the mortgage. (B) The current interest rate in effect for the loan. (C) The date on which the interest rate may next reset or adjust. (D) The amount of any prepayment fee to be charged, if any. (E) A description of any late payment fees. (F) A telephone number and electronic mail address that may be used by the obligor to obtain information regarding the mort- gage. (G) The names, addresses, telephone num- bers, and Internet addresses of counseling agencies or programs reasonably available to the consumer that have been certified or approved and made publicly available by the Secretary of Housing and Urban Develop- ment or a State housing finance authority (as defined in section 1441a–1 of title 12). (H) Such other information as the Board 2 may prescribe in regulations. (2) Development and use of standard form The Board 2 shall develop and prescribe a standard form for the disclosure required under this subsection, taking into account that the statements required may be trans- mitted in writing or electronically. (3) Exception Paragraph (1) shall not apply to any fixed rate residential mortgage loan where the cred- Page 1501 TITLE 15—COMMERCE AND TRADE § 1638 itor, assignee, or servicer provides the obligor with a coupon book that provides the obligor with substantially the same information as re- quired in paragraph (1). (Pub. L. 90–321, title I, § 128, May 29, 1968, 82 Stat. 155; Pub. L. 96–221, title VI, § 614(a)–(c), Mar. 31, 1980, 94 Stat. 178, 179; Pub. L. 104–208, div. A, title II, § 2105, Sept. 30, 1996, 110 Stat. 3009–402; Pub. L. 109–8, title XIII, § 1302(b)(1), Apr. 20, 2005, 119 Stat. 208; Pub. L. 110–289, div. B, title V, § 2502(a), July 30, 2008, 122 Stat. 2855; Pub. L. 110–315, title X, § 1021(a), Aug. 14, 2008, 122 Stat. 3483; Pub. L. 110–343, div. A, title I, § 130(a), Oct. 3, 2008, 122 Stat. 3797; Pub. L. 111–203, title X, § 1100A(2), title XIV, §§ 1419, 1420, 1465, July 21, 2010, 124 Stat. 2107, 2154, 2155, 2185.) Editorial Notes REFERENCES IN TEXT The Real Estate Settlement Procedures Act, referred to in subsec. (b)(2)(A), probably refers to the Real Es- tate Settlement Procedures Act of 1974, Pub. L. 93–533, Dec. 22, 1974, 88 Stat. 1724, which is classified prin- cipally to chapter 27 (§ 2601 et seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see Short Title note set out under section 2601 of Title 12 and Tables. The Higher Education Act of 1965, referred to in sub- sec. (e)(1)(M), (N), (2)(M)(i), (N), is Pub. L. 89–329, Nov. 8, 1965, 79 Stat. 1219. Title IV of the Act is classified generally to subchapter IV (§ 1070 et seq.) of chapter 28 of Title 20, Education. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 20 and Tables. AMENDMENTS 2010—Pub. L. 111–203, § 1100A(2), substituted ‘‘Bureau’’ for ‘‘Board’’ wherever appearing. Subsec. (a)(16) to (19). Pub. L. 111–203, § 1419, added pars. (16) to (19). Subsec. (b)(4). Pub. L. 111–203, § 1465, added par. (4). Subsec. (f). Pub. L. 111–203, § 1420, added subsec. (f). 2008—Subsec. (b)(2). Pub. L. 110–289, § 2502(a)(1), des- ignated existing provisions as subpar. (A). Subsec. (b)(2)(A). Pub. L. 110–343, § 130(a)(1), sub- stituted ‘‘Except as provided in subparagraph (G), in the case’’ for ‘‘In the case’’. Pub. L. 110–289, § 2502(a)(5), (6), struck out ‘‘, whichever is earlier’’ after ‘‘consummation of the transaction’’ and ‘‘If the disclosure statement fur- nished within three days of the written application contains an annual percentage rate which is subse- quently rendered inaccurate within the meaning of sec- tion 1606(c) of this title, the creditor shall furnish an- other statement at the time of settlement or con- summation.’’ at the end. Pub. L. 110–289, § 2502(a)(4), which directed insertion of ‘‘, which shall be at least 7 business days before con- summation of the transaction’’ after ‘‘written applica- tion’’, was executed by making the insertion after ‘‘written application’’ the first place appearing. Pub. L. 110–289, § 2502(a)(2), (3), substituted ‘‘any ex- tension of credit that is secured by the dwelling of a consumer’’ for ‘‘a residential mortgage transaction, as defined in section 1602(w) of this title’’ and ‘‘and’’ for ‘‘before the credit is extended, or’’. Subsec. (b)(2)(B) to (F). Pub. L. 110–289, § 2502(a)(6), added subpars. (B) to (F). Subsec. (b)(2)(G). Pub. L. 110–343, § 130(a)(2), amended subpar. (G) generally. Prior to amendment, subpar. (G) read as follows: ‘‘The requirements of subparagraphs (B), (C), (D) and (E) shall not apply to extensions of credit relating to plans described in section 101(53D) of title 11.’’ Pub. L. 110–289, § 2502(a)(6), added subpar. (G). Subsec. (e). Pub. L. 110–315 added subsec. (e). 2005—Subsec. (a)(15). Pub. L. 109–8, § 1302(b)(1)(A), added par. (15). Subsec. (b)(3). Pub. L. 109–8, § 1302(b)(1)(B), added par. (3). 1996—Subsec. (a)(14). Pub. L. 104–208 added par. (14). 1980—Subsec. (a). Pub. L. 96–221, § 614(a), substituted provisions setting forth required disclosures by the creditor for transactions other than under an open end credit plan, for provisions setting forth required disclo- sures by the creditor for sales not under open end cred- it plans. Subsec. (b). Pub. L. 96–221, § 614(b), designated exist- ing provisions as par. (1), inserted provisions relating to the conspicuous segregation of required disclosures, and struck out provisions authorizing the required in- formation to be disclosed in the signed evidence of in- debtedness, and added par. (2). Subsec. (c). Pub. L. 96–221, § 614(c), designated existing provisions as par. (1), substituted ‘‘total sale’’ for ‘‘de- ferred payment’’, and added par. (2). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by section 1100A(2) of Pub. L. 111–203 ef- fective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employ- ees. Amendment by sections 1419, 1420, and 1465 of Pub. L. 111–203 effective on the date on which final regulations implementing that amendment take effect, or on the date that is 18 months after the designated transfer date if such regulations have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as a note under section 1601 of this title. EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–343, div. A, title I, § 130(b), Oct. 3, 2008, 122 Stat. 3797, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall take effect as if included in the amendments made by section 2502 of the Mortgage Disclosure Improvement Act of 2008 (Public Law 110–289) [amending this section and section 1640 of this title].’’ Pub. L. 110–315, title X, § 1003, Aug. 14, 2008, 122 Stat. 3478, provided that: ‘‘(a) IN GENERAL.—Except as provided in subsection (b) and as otherwise provided in this title [see Short Title of 2008 Amendment note set out under section 1601 of this title], this title and the amendments made by this title shall become effective on the date of enact- ment of this Act [Aug. 14, 2008]. ‘‘(b) EFFECT NOTWITHSTANDING REGULATIONS.—Para- graphs (1), (2), (3), (4), (6), (7), and (8) of section 128(e) [15 U.S.C. 1638(e)] and section 140(c) of the Truth in Lend- ing Act [15 U.S.C. 1650(c)], as added by this title, shall become effective on the earlier of the date on which regulations issued under section 1002 [set out as a note below] become effective [Such regulations were issued effective Sept. 14, 2009, with compliance optional until Feb. 14, 2010. See 74 F.R. 41194.] or 18 months after the date of enactment of this Act [Aug. 14, 2008].’’ Pub. L. 110–289, div. B, title V, § 2502(c), July 30, 2008, 122 Stat. 2857, provided that: ‘‘(1) GENERAL DISCLOSURES.—Except as provided in paragraph (2), the amendments made by subsection (a) [amending this section] shall become effective 12 months after the date of enactment of this Act [July 30, 2008]. ‘‘(2) VARIABLE INTEREST RATES.—Subparagraph (C) of section 128(b)(2) of the Truth in Lending Act (15 U.S.C. 1638(b)(2)(C)), as added by subsection (a) of this section, shall become effective on the earlier of— ‘‘(A) the compliance date established by the Board for such purpose, by regulation; or ‘‘(B) 30 months after the date of enactment of this Act [July 30, 2008].’’ EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases Page 1502 TITLE 15—COMMERCE AND TRADE § 1638a 1 See References in Text note below. commenced under Title 11, Bankruptcy, before such ef- fective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of Title 11. EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–221 effective on expiration of two years and six months after Mar. 31, 1980, with all regulations, forms, and clauses required to be pre- scribed to be promulgated at least one year prior to such effective date, and allowing any creditor to com- ply with any amendments, in accordance with the regu- lations, forms, and clauses prescribed by the Board prior to such effective date, see section 625 of Pub. L. 96–221, set out as a note under section 1602 of this title. REGULATIONS Pub. L. 110–315, title X, § 1002, Aug. 14, 2008, 122 Stat. 3478, provided that: ‘‘Not later than 365 days after the date of enactment of this Act [Aug. 14, 2008], the Board of Governors of the Federal Reserve System shall issue regulations in final form to implement paragraphs (1), (2), (3), (4), (6), (7), and (8) of section 128(e) [15 U.S.C. 1638(e)] and section 140(c) of the Truth in Lending Act [15 U.S.C. 1650(c)], as added by this title, which regula- tions shall become effective not later than 6 months after their date of issuance.’’ § 1638a. Reset of hybrid adjustable rate mort- gages (a) Hybrid adjustable rate mortgages defined For purposes of this section, the term ‘‘hybrid adjustable rate mortgage’’ means a consumer credit transaction secured by the consumer’s principal residence with a fixed interest rate for an introductory period that adjusts or resets to a variable interest rate after such period. (b) Notice of reset and alternatives During the 1-month period that ends 6 months before the date on which the interest rate in ef- fect during the introductory period of a hybrid adjustable rate mortgage adjusts or resets to a variable interest rate or, in the case of such an adjustment or resetting that occurs within the first 6 months after consummation of such loan, at consummation, the creditor or servicer of such loan shall provide a written notice, sepa- rate and distinct from all other correspondence to the consumer, that includes the following: (1) Any index or formula used in making ad- justments to or resetting the interest rate and a source of information about the index or for- mula. (2) An explanation of how the new interest rate and payment would be determined, in- cluding an explanation of how the index was adjusted, such as by the addition of a margin. (3) A good faith estimate, based on accepted industry standards, of the creditor or servicer of the amount of the monthly payment that will apply after the date of the adjustment or reset, and the assumptions on which this esti- mate is based. (4) A list of alternatives consumers may pur- sue before the date of adjustment or reset, and descriptions of the actions consumers must take to pursue these alternatives, including— (A) refinancing; (B) renegotiation of loan terms; (C) payment forbearances; and (D) pre-foreclosure sales. (5) The names, addresses, telephone num- bers, and Internet addresses of counseling agencies or programs reasonably available to the consumer that have been certified or ap- proved and made publicly available by the Secretary of Housing and Urban Development or a State housing finance authority (as de- fined in section 1441a–1 of title 12). (6) The address, telephone number, and Internet address for the State housing finance authority (as so defined) for the State in which the consumer resides. (c) Savings clause The Board may require the notice in para- graph (b) or other notice consistent with this chapter for adjustable rate mortgage loans that are not hybrid adjustable rate mortgage loans. (Pub. L. 90–321, title I, § 128A, as added Pub. L. 111–203, title XIV, § 1418(a), July 21, 2010, 124 Stat. 2153.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (c), was in the original ‘‘this Act’’ meaning Pub. L. 90–321, May 29, 1968, 82 Stat. 146, which is classified principally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 1601 of this title and Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective on the date on which final regula- tions implementing such section take effect, or on the date that is 18 months after the designated transfer date, if such regulations have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under section 1601 of this title. § 1639. Requirements for certain mortgages (a) Disclosures (1) Specific disclosures In addition to other disclosures required under this subchapter, for each mortgage re- ferred to in section 1602(aa) 1 of this title, the creditor shall provide the following disclosures in conspicuous type size: (A) ‘‘You are not required to complete this agreement merely because you have received these disclosures or have signed a loan appli- cation.’’. (B) ‘‘If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obliga- tions under the loan.’’. (2) Annual percentage rate In addition to the disclosures required under paragraph (1), the creditor shall disclose— (A) in the case of a credit transaction with a fixed rate of interest, the annual percent- age rate and the amount of the regular monthly payment; or (B) in the case of any other credit trans- action, the annual percentage rate of the loan, the amount of the regular monthly payment, a statement that the interest rate