Topic: Truth in Lending Act (TILA)
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Should we include vehicle registration fees in the finance charge calculation?
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We agree that a fee paid to the Secretary of State for securing your lien on a vehicle’s certificate of title would not be considered a finance charge. The Illinois Vehicle Code provides that the exclusive method of perfecting a lien in a vehicle, by “delivery to the Secretary of State of the existing certificate…
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Are residential mortgage loans exempted from the right of rescission?
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Regulation Z generally exempts all “residential mortgage transactions” from its requirements, including the right of rescission. 12 CFR 1026.15(f)
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In closing a mortgage loan, what documents need to be signed by a spouse who does not have title in the property being mortgaged (the non-titled spouse)?
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We do not believe that you would have to provide the TIL disclosure or the rescission disclosure to a spouse who is not receiving credit and who does not own the property securing the transaction. Regulation Z requires that banks provide all the required disclosures to “the consumer.” 12 CFR 1026.5, 1026.17. For purposes of…
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Does Illinois law require that we mail out loan maturity or payoff notices?
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For open-end credit, Regulation Z requires that you include any loan payments on periodic statements. 12 CFR 1026.7(a)(3). Otherwise, we are not aware of any federal or Illinois laws that would require you to send a notice when a loan matures or when a customer makes a payment on a loan. We do recommend that…
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If we want to start automatically sending customers with multiple accounts combined account statements, rather than separate statements for each account, must we provide those customers with notice of the change?
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We are not aware of any laws or regulations that would require a notice to customers when converting to combined account statements. Needless to say, you should be sensitive to a number of related issues, such as the accounts being owned by exactly the same customer or customers, and that statements for each of the…
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We are thinking about charging a “coupon book fee” to customers that request a coupon book for loan payments. Would this be considered a finance charge? Would we have to rebate the fee if the customer prepays the loan before the end of its term?
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We believe that the fee for providing a coupon book would be considered a finance charge, as it would not be charged in a comparable cash transaction and does not fall into any of the categories that are exempted from the definition of a finance charge. 12 CFR 1026.4(a). Whether it is a prepaid finance…
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Is a closing protection letter fee considered a prepaid finance charge?
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We believe that a closing protection letter fee charged by a title insurance company should not be considered to be a prepaid finance charge for purposes of the Truth in Lending Act (TILA). Regulation Z specifically exempts certain real-estate related fees from the scope of finance charges, including an exemption for fees for title insurance…
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Is it possible that an interest rate and APR on a dealer loan can be the same? Are Electronic Registration and Titling (ERT) and “doc fees” considered prepaid finance charges?
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If either of the fees charged, the ERT fee or the “doc fee,” are considered finance charges, then it is likely that the dealer did not calculate the APR correctly. The ERT program fee is probably not a finance charge, as it is usually charged in comparable cash transactions. 12 CFR 1026.4(a)
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Is there a requirement to put the creditor’s name at the top of all loan applications?
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While you may be required to disclose the creditor’s name to customers, we are not aware of any requirement that a creditor would have to disclose its name on loan applications. For example, if the Truth in Lending Act applies to a loan, Regulation Z requires every creditor to disclose its identity on closed-end credit…