15 U.S.C. § 1647 — Home equity plans

Page 1530 TITLE 15—COMMERCE AND TRADE § 1647 1 So in original. Probably should be ‘‘paragraph’’. § 1647. Home equity plans (a) Index requirement In the case of extensions of credit under an open end consumer credit plan which are subject to a variable rate and are secured by a con- sumer’s principal dwelling, the index or other rate of interest to which changes in the annual percentage rate are related shall be based on an index or rate of interest which is publicly avail- able and is not under the control of the creditor. (b) Grounds for acceleration of outstanding bal- ance A creditor may not unilaterally terminate any account under an open end consumer credit plan under which extensions of credit are secured by a consumer’s principal dwelling and require the immediate repayment of any outstanding bal- ance at such time, except in the case of— (1) fraud or material misrepresentation on the part of the consumer in connection with the account; (2) failure by the consumer to meet the re- payment terms of the agreement for any out- standing balance; or (3) any other action or failure to act by the consumer which adversely affects the credi- tor’s security for the account or any right of the creditor in such security. This subsection does not apply to reverse mort- gage transactions. (c) Change in terms (1) In general No open end consumer credit plan under which extensions of credit are secured by a consumer’s principal dwelling may contain a provision which permits a creditor to change unilaterally any term required to be disclosed under section 1637a(a) of this title or any other term, except a change in insignificant terms such as the address of the creditor for billing purposes. (2) Certain changes not precluded Notwithstanding the provisions of sub- section 1 (1), a creditor may make any of the following changes: (A) Change the index and margin applica- ble to extensions of credit under such plan if the index used by the creditor is no longer available and the substitute index and mar- gin would result in a substantially similar interest rate. (B) Prohibit additional extensions of credit or reduce the credit limit applicable to an account under the plan during any period in which the value of the consumer’s principal dwelling which secures any outstanding bal- ance is significantly less than the original appraisal value of the dwelling. (C) Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which the cred- itor has reason to believe that the consumer will be unable to comply with the repayment requirements of the account due to a mate- rial change in the consumer’s financial cir- cumstances. (D) Prohibit additional extensions of cred- it or reduce the credit limit applicable to the account during any period in which the consumer is in default with respect to any material obligation of the consumer under the agreement. (E) Prohibit additional extensions of credit or reduce the credit limit applicable to the account during any period in which— (i) the creditor is precluded by govern- ment action from imposing the annual per- centage rate provided for in the account agreement; or (ii) any government action is in effect which adversely affects the priority of the creditor’s security interest in the account to the extent that the value of the credi- tor’s secured interest in the property is less than 120 percent of the amount of the credit limit applicable to the account. (F) Any change that will benefit the con- sumer. (3) Material obligations Upon the request of the consumer and at the time an agreement is entered into by a con- sumer to open an account under an open end consumer credit plan under which extensions of credit are secured by the consumer’s prin- cipal dwelling, the consumer shall be given a list of the categories of contract obligations which are deemed by the creditor to be mate- rial obligations of the consumer under the agreement for purposes of paragraph (2)(D). (4) Consumer benefit (A) In general For purposes of paragraph (2)(F), a change shall be deemed to benefit the consumer if the change is unequivocally beneficial to the borrower and the change is beneficial through the entire term of the agreement. (B) Bureau categorization The Bureau may, by regulation, determine categories of changes that benefit the con- sumer. (d) Terms changed after application If any term or condition described in section 1637a(a) of this title which is disclosed to a con- sumer in connection with an application to open an account under an open end consumer credit plan described in such section (other than a variable feature of the plan) changes before the account is opened, and if, as a result of such change, the consumer elects not to enter into the plan agreement, the creditor shall refund all fees paid by the consumer in connection with such application. (e) Additional requirements relating to refunds and imposition of nonrefundable fees (1) In general No nonrefundable fee may be imposed by a creditor or any other person in connection with any application by a consumer to estab- lish an account under any open end consumer credit plan which provides for extensions of credit which are secured by a consumer’s prin- cipal dwelling before the end of the 3-day pe- riod beginning on the date such consumer re- Page 1531 TITLE 15—COMMERCE AND TRADE § 1649 ceives the disclosure required under section 1637a(a) of this title and the pamphlet required under section 1637a(e) of this title with respect to such application. (2) Constructive receipt For purposes of determining when a non- refundable fee may be imposed in accordance with this subsection if the disclosures and pamphlet referred to in paragraph (1) are mailed to the consumer, the date of the re- ceipt of the disclosures by such consumer shall be deemed to be 3 business days after the date of mailing by the creditor. (Pub. L. 90–321, title I, § 137, as added Pub. L. 100–709, § 3, Nov. 23, 1988, 102 Stat. 4731; amended Pub. L. 103–325, title I, § 154(c), Sept. 23, 1994, 108 Stat. 2197; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.) Editorial Notes AMENDMENTS 2010—Subsec. (c)(4)(B). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’ in heading and text. 1994—Subsec. (b). Pub. L. 103–325 inserted at end ‘‘This subsection does not apply to reverse mortgage transactions.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. EFFECTIVE DATE For effective date of section, see Regulations; Effec- tive Date note below. REGULATIONS; EFFECTIVE DATE For provisions relating to promulgation of regula- tions to implement amendment by Pub. L. 100–709 [en- acting this section], and effective date of such amend- ment in connection with those regulations, see section 7 of Pub. L. 100–709, set out as a note under section 1637a of this title. § 1648. Reverse mortgages (a) In general In addition to the disclosures required under this subchapter, for each reverse mortgage, the creditor shall, not less than 3 days prior to con- summation of the transaction, disclose to the consumer in conspicuous type a good faith esti- mate of the projected total cost of the mortgage to the consumer expressed as a table of annual interest rates. Each annual interest rate shall be based on a projected total future credit exten- sion balance under a projected appreciation rate for the dwelling and a term for the mortgage. The disclosure shall include— (1) statements of the annual interest rates for not less than 3 projected appreciation rates and not less than 3 credit transaction periods, as determined by the Bureau, including— (A) a short-term reverse mortgage; (B) a term equaling the actuarial life ex- pectancy of the consumer; and (C) such longer term as the Bureau deems appropriate; and (2) a statement that the consumer is not ob- ligated to complete the reverse mortgage transaction merely because the consumer has received the disclosure required under this section or has signed an application for the re- verse mortgage. (b) Projected total cost In determining the projected total cost of the mortgage to be disclosed to the consumer under subsection (a), the creditor shall take into ac- count— (1) any shared appreciation or equity that the lender will, by contract, be entitled to re- ceive; (2) all costs and charges to the consumer, in- cluding the costs of any associated annuity that the consumer elects or is required to pur- chase as part of the reverse mortgage trans- action; (3) all payments to and for the benefit of the consumer, including, in the case in which an associated annuity is purchased (whether or not required by the lender as a condition of making the reverse mortgage), the annuity payments received by the consumer and fi- nanced from the proceeds of the loan, instead of the proceeds used to finance the annuity; and (4) any limitation on the liability of the con- sumer under reverse mortgage transactions (such as nonrecourse limits and equity con- servation agreements). (Pub. L. 90–321, title I, § 138, as added Pub. L. 103–325, title I, § 154(b), Sept. 23, 1994, 108 Stat. 2196; amended Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.) Editorial Notes AMENDMENTS 2010—Subsec. (a)(1). Pub. L. 111–203 substituted ‘‘Bu- reau’’ for ‘‘Board’’ in two places. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. § 1649. Certain limitations on liability (a) Limitations on liability For any closed end consumer credit trans- action that is secured by real property or a dwelling, that is subject to this subchapter, and that is consummated before September 30, 1995, a creditor or any assignee of a creditor shall have no civil, administrative, or criminal liabil- ity under this subchapter for, and a consumer shall have no extended rescission rights under section 1635(f) of this title with respect to— (1) the creditor’s treatment, for disclosure purposes, of— (A) taxes described in section 1605(d)(3) of this title; (B) fees described in section 1605(e)(2) and (5) of this title; (C) fees and amounts referred to in the 3rd sentence of section 1605(a) of this title; or