Home > 104th Congressional Public Laws > Pub.L. 104-290 To amend the Federal securities laws in order to promote efficiency and ...Pub.L. 104-290 To amend the Federal securities laws in order to promote efficiency and ...
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Public Law 104-29
104th Congress
An Act
To amend the Truth in Lending Act to clarify the intent of such Act and
to reduce burdensome regulatory requirements on creditors. <<NOTE: Sept.
30, 1995 - [H.R. 2399]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: Truth in Lending
Act Amendments of 1995.>>
SECTION 1. SHORT TITLE. <<NOTE: 15 USC 1601 note.>>
This Act may be cited as the ``Truth in Lending Act Amendments of
1995''.
SEC. 2. CERTAIN CHARGES.
(a) Third Party Fees.--Section 106(a) of the Truth in Lending Act
(15 U.S.C. 1605(a)) is amended by adding after the 2d sentence the
following new sentence: ``The finance charge shall not include fees and
amounts imposed by third party closing agents (including settlement
agents, attorneys, and escrow and title companies) if the creditor does
not require the imposition of the charges or the services provided and
does not retain the charges.''.
(b) Borrower-Paid Mortgage Broker Fees.--
(1) Inclusion in finance charge.--Section 106(a) of the
Truth in Lending Act (15 U.S.C. 1605(a)) is amended by adding at
the end the following new paragraph:
``(6) Borrower-paid mortgage broker fees, including fees
paid directly to the broker or the lender (for delivery to the
broker) whether such fees are paid in cash or financed.''.
(2) <<NOTE: 15 USC 1605 note.>> Effective date.--The
amendment made by paragraph (1) shall take effect on the earlier
of--
(A) 60 days after the date on which the Board of
Governors of the Federal Reserve System issues final
regulations under paragraph (3); or
(B) the date that is 12 months after the date of the
enactment of this Act.
(3) <<NOTE: 15 USC 1605 note.>> Regulations implementing
borrower-paid mortgage broker fees.--The Board of Governors of
the Federal Reserve System shall promulgate regulations
implementing the amendment made by paragraph (1) by no later
than 6 months after the date of the enactment of this Act.
(c) Taxes on Security Instruments or Evidences of Indebtedness.--
Section 106(d) of the Truth in Lending Act (15 U.S.C. 1605(d)) is
amended by adding at the end the following new paragraph:
``(3) Any tax levied on security instruments or on documents
evidencing indebtedness if the payment of such taxes is a
precondition for recording the instrument securing the evidence
of indebtedness.''.
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(d) Preparation of Loan Documents.--Section 106(e)(2) of the Truth
in Lending Act (15 U.S.C. 1605(e)(2)) is amended to read as follows:
``(2) Fees for preparation of loan-related documents.''.
(e) Fees Relating to Pest Infestations, Inspections, and Hazards.--
Section 106(e)(5) of the Truth in Lending Act (15 U.S.C. 1605(e)(5)) is
amended by inserting ``, including fees related to any pest infestation
or flood hazard inspections conducted prior to closing'' before the
period.
(f) <<NOTE: 15 USC 1605 note.>> Ensuring Finance Charges Reflect
Cost of Credit.--
(1) Report.--
(A) In general.--Not later than 6 months after the
date of the enactment of this Act, the Board of
Governors of the Federal Reserve System shall submit to
the Congress a report containing recommendations on any
regulatory or statutory changes necessary--
(i) to ensure that finance charges imposed in
connection with consumer credit transactions more
accurately reflect the cost of providing credit;
and
(ii) to address abusive refinancing practices
engaged in for the purpose of avoiding rescission.
(B) Report requirements.--In preparing the report
under this paragraph, the Board shall--
(i) consider the extent to which it is
feasible to include in finance charges all charges
payable directly or indirectly by the consumer to
whom credit is extended, and imposed directly or
indirectly by the creditor as an incident to the
extension of credit (especially those charges
excluded from finance charges under section 106 of
the Truth in Lending Act as of the date of the
enactment of this Act), excepting only those
charges which are payable in a comparable cash
transaction; and
(ii) consult with and consider the views of
affected industries and consumer groups.
(2) <<NOTE: Federal Register, publication.>> Regulations.--
The Board of Governors of the Federal Reserve System shall
prescribe any appropriate regulation in order to effect any
change included in the report under paragraph (1), and shall
publish the regulation in the Federal Register before the end of
the 1-year period beginning on the date of enactment of this
Act.
SEC. 3. TOLERANCES; BASIS OF DISCLOSURES.
(a) Tolerances for Accuracy.--Section 106 of the Truth in Lending
Act (15 U.S.C. 1605) is amended by adding at the end the following new
subsection:
``(f) Tolerances for Accuracy.--In connection with credit
transactions not under an open end credit plan that are secured by real
property or a dwelling, the disclosure of the finance charge and other
disclosures affected by any finance charge--
``(1) shall be treated as being accurate for purposes of
this title if the amount disclosed as the finance charge--
``(A) does not vary from the actual finance charge
by more than $100; or
``(B) is greater than the amount required to be
disclosed under this title; and
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``(2) shall be treated as being accurate for purposes of
section 125 if--
``(A) except as provided in subparagraph (B), the
amount disclosed as the finance charge does not vary
from the actual finance charge by more than an amount
equal to one-half of one percent of the total amount of
credit extended; or
``(B) in the case of a transaction, other than a
mortgage referred to in section 103(aa), which--
``(i) is a refinancing of the principal
balance then due and any accrued and unpaid
finance charges of a residential mortgage
transaction as defined in section 103(w), or is
any subsequent refinancing of such a transaction;
and
``(ii) does not provide any new consolidation
or new advance;
if the amount disclosed as the finance charge does not
vary from the actual finance charge by more than an
amount equal to one percent of the total amount of
credit extended.''.
(b) Basis of Disclosure for Per Diem Interest.--Section 121(c) of
the Truth in Lending Act (15 U.S.C. 1631(c)) is amended by adding at the
end the following new sentence: ``In the case of any consumer credit
transaction a portion of the interest on which is determined on a per
diem basis and is to be collected upon the consummation of such
transaction, any disclosure with respect to such portion of interest
shall be deemed to be accurate for purposes of this title if the
disclosure is based on information actually known to the creditor at the
time that the disclosure documents are being prepared for the
consummation of the transaction.''.
SEC. 4. LIMITATION ON LIABILITY.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by adding at the end the following new section:
``SEC. 139. CERTAIN LIMITATIONS ON LIABILITY. <<NOTE: 15 USC 1649.>>
``(a) Limitations on Liability.--For any consumer credit transaction
subject to this title that is consummated before the date of the
enactment of the Truth in Lending Act Amendments of 1995, a creditor or
any assignee of a creditor shall have no civil, administrative, or
criminal liability under this title for, and a consumer shall have no
extended rescission rights under section 125(f) with respect to--
``(1) the creditor's treatment, for disclosure purposes,
of--
``(A) taxes described in section 106(d)(3);
``(B) fees described in section 106(e)(2) and (5);
``(C) fees and amounts referred to in the 3rd
sentence of section 106(a); or
``(D) borrower-paid mortgage broker fees referred to
in section 106(a)(6);
``(2) the form of written notice used by the creditor to
inform the obligor of the rights of the obligor under section
125 if the creditor provided the obligor with a properly dated
form of written notice published and adopted by the Board or a
comparable written notice, and otherwise complied with all the
requirements of this section regarding notice; or
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``(3) any disclosure relating to the finance charge imposed
with respect to the transaction if the amount or percentage
actually disclosed--
``(A) may be treated as accurate for purposes of
this title if the amount disclosed as the finance charge
does not vary from the actual finance charge by more
than $200;
``(B) may, under section 106(f)(2), be treated as
accurate for purposes of section 125; or
``(C) is greater than the amount or percentage
required to be disclosed under this title.
``(b) Exceptions.--Subsection (a) shall not apply to--
``(1) any individual action or counterclaim brought under
this title which was filed before June 1, 1995;
``(2) any class action brought under this title for which a
final order certifying a class was entered before January 1,
1995;
``(3) the named individual plaintiffs in any class action
brought under this title which was filed before June 1, 1995; or
``(4) any consumer credit transaction with respect to which
a timely notice of rescission was sent to the creditor before
June 1, 1995.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 138 the following new item:
``139. Certain limitations on liability.''.
SEC. 5. LIMITATION ON RESCISSION LIABILITY.
Section 125 of the Truth in Lending Act (15 U.S.C. 1635) is further
amended by adding at the end the following new subsection:
``(h) Limitation on Rescission.--An obligor shall have no rescission
rights arising solely from the form of written notice used by the
creditor to inform the obligor of the rights of the obligor under this
section, if the creditor provided the obligor the appropriate form of
written notice published and adopted by the Board, or a comparable
written notice of the rights of the obligor, that was properly completed
by the creditor, and otherwise complied with all other requirements of
this section regarding notice.''.
SEC. 6. CALCULATION OF DAMAGES.
Section 130(a)(2)(A) of the Truth in Lending Act (15 U.S.C.
1640(a)(2)(A)) is amended--
(1) by striking ``or (ii)'' and inserting ``(ii)''; and
(2) by inserting before the semicolon at the end the
following: ``, or (iii) in the case of an individual action
relating to a credit transaction not under an open end credit
plan that is secured by real property or a dwelling, not less
than $200 or greater than $2,000''.
SEC. 7. ASSIGNEE LIABILITY.
(a) Violations Apparent on the Face of Transaction Documents.--
Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is amended by
adding at the end the following new subsection:
``(e) Liability of Assignee for Consumer Credit Transactions Secured
by Real Property.--
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``(1) In general.--Except as otherwise specifically provided
in this title, any civil action against a creditor for a
violation of this title, and any proceeding under section 108
against a creditor, with respect to a consumer credit
transaction secured by real property may be maintained against
any assignee of such creditor only if--
``(A) the violation for which such action or
proceeding is brought is apparent on the face of the
disclosure statement provided in connection with such
transaction pursuant to this title; and
``(B) the assignment to the assignee was voluntary.
``(2) Violation apparent on the face of the disclosure
described.--For the purpose of this section, a violation is
apparent on the face of the disclosure statement if--
``(A) the disclosure can be determined to be
incomplete or inaccurate by a comparison among the
disclosure statement, any itemization of the amount
financed, the note, or any other disclosure of
disbursement; or
``(B) the disclosure statement does not use the
terms or format required to be used by this title.''.
(b) Servicer Not Treated as Assignee.--Section 131 of the Truth in
Lending Act (15 U.S.C. 1641) is further amended by adding after
subsection (e) (as added by subsection (a) of this section) the
following new subsection:
``(f) Treatment of Servicer.--
``(1) In general.--A servicer of a consumer obligation
arising from a consumer credit transaction shall not be treated
as an assignee of such obligation for purposes of this section
unless the servicer is or was the owner of the obligation.
``(2) Servicer not treated as owner on basis of assignment
for administrative convenience.--A servicer of a consumer
obligation arising from a consumer credit transaction shall not
be treated as the owner of the obligation for purposes of this
section on the basis of an assignment of the obligation from the
creditor or another assignee to the servicer solely for the
administrative convenience of the servicer in servicing the
obligation. Upon written request by the obligor, the servicer
shall provide the obligor, to the best knowledge of the
servicer, with the name, address, and telephone number of the
owner of the obligation or the master servicer of the
obligation.
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