III. LEAST SOPHISTICATED OR UNSOPHISTICATED CONSUMER STANDARD
Most courts have held that whether a communication or other conduct violates the
FDCPA is to be determined by analyzing it from the perspective of the "least sophisticated
debtor." Clomon v. Jackson, 988 F.2d 1314 (2d Cir. 1993); Taylor v. Perrin, Landry, de Launay
& Durand, 103 F.3d 1232 (5th Cir. 1997); Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir.
1991); Smith v. Transworld Systems, Inc., 953 F.2d 1025, 1028-29 (6th Cir. 1992); Swanson v.
Southern Oregon Credit Service, Inc., 869 F.2d 1222, 1225-26 (9th Cir. 1988); Jeter v. Credit
Wednesday, May 9, 2007
“Any false representation of material facts made with knowledge
“Any false representation of material facts made with knowledge of falsity and with intent that it shall be acted on by another in entering into contract, and which is so acted upon, constitutes ‘fraud,’ and entitles party deceived to avoid contract or recover damages.” Barnsdall Refining Corn. v. Birnam wood Oil Co., 92 F 2d 817.
“In the federal courts, it is well established that a national bank has not power to lend its credit to another by becoming surety, indorser, or guarantor for him.” Farmers and Miners Bank v. Bluefield Nat ‘l Bank, 11 F 2d 83, 271 U.S. 669.
“A national bank has no power to lend its credit to any person or corporation.” Bowen v. Needles Nat. Bank, 94 F 925, 36 CCA 553, certiorari denied in 20 S.Ct 1024, 176 US 682, 44 LED 637.
“Mr. Justice Marshall said: The doctrine of ultra vires is a most powerful weapon to keep private corporations within their legitimate spheres and to punish them for violations of their corporate charters, and it probably is not invoked too often . . . Zinc Carbonate Co. v. First National Bank, 103 Wis 125, 79 NW 229.” American Express Co. v. Citizens State Bank, 194 NW 430.
“It has been settled beyond controversy that a national bank, under federal law being limited in its powers and capacity, cannot lend its credit by guaranteeing the debts of another. All such contracts entered into by its officers are ultra vires . . .” Howard & Foster Co. v. Citizens Nat’l Bank of Union, 133 SC 202, 130 SE).
“It is not within those statutory powers for a national bank, even though solvent, to lend its credit to another in any of the various ways in which that might be done.” Federal Intermediate Credit Bank v. L ‘Herrison, 33 F 2d 841,).
“A bank can lend its money, but not its credit.” First National Bank of Tallapoosa v. Monroe, 135 Ga 614, 69 SE 1124, 32 LRA (NS) 550.
“. . . the bank is allowed to lend money upon personal security; but it must be money that it loans, not its credit.” Seligman v. Charlottesville Nat. Bank, 3 Hughes 647, Fed Case No.12, 642, 1039.
“The contract is void if it is only in part connected with the illegal transaction and the promise single or entire.” Guardian Agency v. Guardian Mutual. Savings Bank, 227 Wis 550, 279 NW 83.
"Banking Associations from the very nature of their business are prohibited from lending credit." St. Louis Savings Bank vs. Parmalee 95 U. S. 557
Case Law (The Truth In Lending Act)
Case Law (The Truth In Lending Act)
Purpose of Truth in Lending Act is for customers to be able to make informed decisions. Truth in Lending Act Section 102, 15 U.S.C. Section 1601. Griggs v. Provident Consumer Discount Co. 680 F.2d 927, certiarari granted, vacated 103 S.Ct. 400, 459 U.S. 56, 74 L.Ed,2d 225, on remand 699 F,2d 642,
Truth in Lending Act is strictly liability statute liberally construed in favor of consumers. Truth in Lending Act Section 102 et seq., 15 U.S.C. Section 1601 et seq. Brophv v. Chase Manhattan Mortgage Co, 947 F.Supp. 879.
Truth in Lending Act should be construed liberally to ensure achievement of goal of aiding unsophisticated consumers so that consumers are not easily misled as to total costs of financing. Truth in Lending Act, Sections 102 et seq, 102(a), 105 as amended, I5 U.S.C. Sections 1601 et seq., 1601(a), 1604; Truth in Lending Regulations, Regulation Z, Sections 226.1 et seq., 226.18, 15 U.S.C. Section 1700, Basile v. H&R Block. Jlt(L. 897 F.Supp. 194.
Truth in Lending Act must be strictly construed and liability imposed for any violation, no matter how technical. Truth in Lending Act Section 102 et seq., as amended, 15 U.S.C. Section 1601 et seq, Abele v. Mid-Penn Consumer Discount. 77 B.R. 460, affirmed S45 F.2d 1009.
Truth in Lending Act must be liberally construed to effectuate remedial purposes of protecting consumer against inaccurate and unfair credit billing and credit card practices and of promoting intelligent comparison shopping by consumers contemplating the use of credit by full disclosure of terms and conditions of credit card charges, Truth in Lending Act Section 102 et seq, as amended, 15 U.S.C. Section 1601 et seq Lifschitz v. American Exp. Co. 560 F.Supp. 458
To qualify for protection of Truth in Lending Act [15 U.S.C. Section 1601 et seq.], plaintiff must show that disputed transaction was a consumer credit transaction not a business transaction, Truth b Lending Act, Section 102 et seq., 15 U.S.C. Section 1601 et seq. Quino v. A-I CredjlCom. 635 F.Supp. 151
Requirements of Truth in Lending Act are highly technical, but full compliance is required; even minor violations of Act cannot be ignored, Truth in Lending Act, Section 102 et seq. as amended, 15 U.S.C. Section 1601 et seq.; Truth in Lending Act Regulations, Regulation Z Section 226.1 et seq., 15 U.S.C. foil. Section 1700. Griggs v. Providence Consumer Discount Co. 503 F.Supp. 246, appeal dismissed 672 F2d 903, appeal after remand 680 F.2d 927, certiorari granted, vacated 103 S.Ct, 400, 459 U.S. 56, 74 L.Ed.2d 225, on remand 699 F,2d 642.
A valid rescission of a "credit sale" contract does not render inoperative the disclosure requirements of the Truth in Lending Act, as creditor's obligations to make specific disclosures arises prior to consummation of transaction. Truth in Lending Act Section 102 et seq., 15 U.S.C. Section 1601 et seq.; Truth in Lending Regulations, Regulation Z, Sections 226.2(c) 226.8(a), 15 U.S.C., following section 1700. O'Neil 484 F.Supp. 18.
Under truth in lending regulation providing that disclosure of consumer credit loan shall not be "stated, utilized or placed so as to mislead or confuse" consumer, placement of disclosures is to be considered along with their statement and use. Truth in Lending Regulations, Regulation Z, Section 226.6(c), 15 U.S.C. following section 1700. Geimuso v. Commercial Bank & Trust Co. 566 F.2d 437.
Any violation of the Truth in Lending Act, regardless of technical nature, must result in finding of liability against lender. Truth in Lending Regulations, Regulation Z Section 226.1 et seq., 15 U.S.C. Section 1700; Truth in Lending Act Section 130 (a, e), IS U.S.C. Section 1640 (a, e). In Re Steinbrecher. 110 BR. 155, 116 A.L.R. Fed. 881.
Question of whether lender's Truth in Lending Act disclosures are inaccurate, misleading or confusing ordinarily will be for fact finder; however, where confusing, misleading and inaccurate character of disputed disclosure is so clear that it cannot reasonably be disputed, summary judgment for plaintiff is appropriate Truth in Lending Act Section 102 et seq-; Truth in Lending Regulations, Regulation Z, Section 226.1 et seq., 15 U.S.C. Section 1700. Griggs v. Provident Consumer Discount Co. 503 F, Supp 246, appeal dismissed 672 F.2d 903, appeal after remand 680 F.2d 927, certiorari granted, vacated 103 S.Ct, 400, 459 U.S. 56, 74 L.Ed.2d 225, on remand 699 E2d 642.
Pursuant to regulations promulgated under Truth in Lending Act, violator of disclosure requirements is held to standard of strict liability, and therefore, borrower need not show that creditor in fact deceived biro by making substandard disclosures. Truth in Lending Act, Sections 102-186, as amended, 15 U.S.C. Section 1601-1667(e); Truth in
Lending Regulations, Regulation Z, Section 226,8(b-d), 15 U.S.C. Section 1700 Soils v. Fidelity Consumer Discount Co., 58 B.R. 983,
Once a creditor violates the Truth In Lending Act, no matter how technical violation appears, unless one of statutory defenses applies, Court has no discretion in imposing liability Truth in Lending Act, Sections 102-186 as amended, 15 U.S.C. Section 1601-1667e. Solis v. Fidelity Consumer Discount Co. 58 BR, 983.
“It is not necessary for recession of a contract that the party making the misrepresentation should have known that it was false, but recovery is allowed even though misrepresentation is innocently made, because it would be unjust to allow one who made false representations, even innocently, to retain the fruits of a bargain induced by such representations.” Whipp v. Iverson, 43 Wis 2d 166.
“If any part of the consideration for a promise be illegal, or if there are several considerations for an unseverable promise one of which is illegal, the promise, whether written or oral, is wholly void, as it is impossible to say what part or which one of the considerations induced the promise.” Menominee River Co. v. Augustus Spies L & C Co., 147 Wis 559, 572; 132 NW 1122
"When an instrument [notes] lacks an unconditional promise to pay a sum certain at a fixed and determined time, it is only an acknowledgement of the debt and statutory presumptions like the presence of a valuable consideration, are not applicable." Bader vs. Williams, 61 A 2d 637
“Any false representation of material facts made with knowledge of falsity and with intent that it shall be acted on by another in entering into contract, and which is so acted upon, constitutes ‘fraud,’ and entitles party deceived to avoid contract or recover damages.” Barnsdall Refining Corn. v. Birnam wood Oil Co., 92 F 2d 817.
“In the federal courts, it is well established that a national bank has not power to lend its credit to another by becoming surety, indorser, or guarantor for him.” Farmers and Miners Bank v. Bluefield Nat ‘l Bank, 11 F 2d 83, 271 U.S. 669.
“A national bank has no power to lend its credit to any person or corporation.” Bowen v. Needles Nat. Bank, 94 F 925, 36 CCA 553, certiorari denied in 20 S.Ct 1024, 176 US 682, 44 LED 637.
“Mr. Justice Marshall said: The doctrine of ultra vires is a most powerful weapon to keep private corporations within their legitimate spheres and to punish them for violations of their corporate charters, and it probably is not invoked too often . . . Zinc Carbonate Co. v. First National Bank, 103 Wis 125, 79 NW 229.” American Express Co. v. Citizens State Bank, 194 NW 430.
“It has been settled beyond controversy that a national bank, under federal law being limited in its powers and capacity, cannot lend its credit by guaranteeing the debts of another. All such contracts entered into by its officers are ultra vires . . .” Howard & Foster Co. v. Citizens Nat’l Bank of Union, 133 SC 202, 130 SE 759(1926).
The remedy: Truth In Lending Act
The remedy:
The Truth In Lending Act
You can use The Truth In Lending Act ("TILA") as a legal remedy to recover TILA violation fines and possibly void the lenders security interest in the property. The Act is in Title I of the Consumer Credit Protection Act and is implemented by the Federal Reserve Board via The Act is in Title I of the Consumer Regulation Z (12 C.F.R. Part 226).The Regulation has effect and force of federal law.
"TILA is to be liberally construed in favor of consumers, with creditors who fail to comply with TILA in any respect becoming liable to consumer regardless of nature of violation or creditors' intent."
If your loan was after September 30, 1995 (that’s when the teeth were put into TILA) and never consummated you can rescind your loan Pursuant to the Federal Truth in Lending Act (“TILA”), You have the right to rescind the transaction within 3 days of receipt (The rescission period clock never starts ticking until the transaction is consummated) of his/her notice of his/her right of rescission and all other material disclosures required by TILA and the regulations therein.
(15 U.S.C. §1635(a).
What is the right of rescission?
Truth-in-Lending Act (TILA) Consumer Credit Protection Act passed in 1969.
Truth in lending act -- Regulation Z
The Truth in Lending Act (TILA), Title I of the Consumer Credit Protection Act, is aimed at promoting the informed use of consumer credit by requiring disclosures about its terms and costs. In general, this applies to each individual or business that offers or extends credit when the credit is offered or extended to consumers; the credit is subject to a finance charge or is payable by a written agreement in more than four installments; the credit is primarily for personal, family or household purposes; and the loan balance equals or exceeds $25,000.00 or is secured by an interest in real property or a dwelling. TILA is intended to enable the customer to compare the cost of cash versus credit transaction and the difference in the cost of credit among different lenders. The regulation also requires a maximum interest rate to be stated in variable rate contracts secured by the borrower's dwelling, imposes limitations on home equity plans that are subject to the requirements of certain sections of the Act and requires a maximum interest that may apply during the term of a mortgage loan. TILA also establishes disclosure standards for advertisements that refer to certain credit terms. In addition to financial disclosure, TILA provides consumers with substantive rights in connection with certain types of credit transactions to which it relates, including a right of rescission in certain real estate lending transactions, regulation of certain credit card practices and a means for fair and timely resolution of credit billing disputes. This discussion will be limited to those provisions of TILA that relate specifically to the mortgage lending process, including:
1) Early and final Regulation Z disclosure requirements
2) Disclosure requirements for ARM loans
3) Right of rescission
4) Advertising disclosure requirements
TILA requires lenders to make certain disclosures on loans subject to the Real Estate Settlement Procedures Act (RESPA) within three business days after their receipt of a written application. This early disclosure statement is partially based on the initial information provided by the consumer. A final disclosure statement is provided at the time of loan closing. The disclosure is required to be in a specific format and include the following information:
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Name and address of creditor
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Amount financed
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Itemization of amount financed (optional, if Good Faith Estimate is provided)
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Finance charge
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Annual percentage rate (APR)
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Variable rate information
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Payment schedule
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Total of payments
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Demand feature
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Total sales price
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Prepayment policy
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Late payment policy
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Security interest
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Insurance requirements
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Certain security interest charges
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Contract reference
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Assumption policy
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Required deposit information
Disclosure Requirements for ARM Loans:
If the annual percentage rate on a loan secured by the consumer's principal dwelling may increase after consummation and the term of the loan exceeds one year, TILA requires additional adjustable rate mortgage disclosures to be provided, including:
o The booklet titled Consumer Handbook on Adjustable Rate Mortgages, published by the Board and the Federal Home Loan Bank Board or a suitable substitute.
o A loan program disclosure for each variable-rate program in which the consumer expresses an interest. The loan program disclosure shall contain the necessary information as prescribed by Regulation Z.
TILA requires servicers to provide subsequent disclosure to consumers on variable rate transactions in each month an interest rate adjustment takes place.
The Right of Rescission:
In a credit transaction in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership is or will be subject to the security interest has the right to rescind the transaction. Lenders are required to deliver two copies of the notice of the right to rescind and one copy of the disclosure statement to each consumer entitled to rescind. The notice must be on a separate document that identifies the rescission period on the transaction and must clearly and conspicuously disclose the retention or acquisition of a security interest in the consumer's principal dwelling; the consumer's right to rescind the transaction; and how the consumer may exercise the right to rescind with a form for that purpose, designating the address of the lender's place of business.
In order to exercise the right to rescind, the consumer must notify the creditor of the rescission by mail, telegram or other means of communication. Notice is considered given when mailed, filed for telegraphic transmission or sent by other means, when delivered to the lender's designated place of business. The consumer may exercise the right to rescind until midnight of the third business day following consummation of the transaction; delivery of the notice of right to rescind; or delivery of all material disclosures, whichever occurs last. When more than one consumer in a transaction has the right to rescind, the exercise of the right by one consumer shall be effective for all consumers.
Notice to Cease Communications
Cease and Desist Communications Letter
Certified Mail/Confirmation of Delivery/Validation Notice # (Enter Number)
From:
(Your Full Name)
(Street Address),
(City, State & Zip)
To:
(Name of Debt Collector)
(Street Address)
(City, State & Zip)
Date:
Re: (Account Number)
Notice to Cease Communications
Dear Sirs:
This is to advise you that pursuant to the Fair Debt Collection Practices Act (FDCPA) 15 USC §1692c(c), you are hereby notified to immediately terminate any contact with me, or any members of my family or household, regarding any matter concerning the collection of an alleged debt you attempting to collect. This notice shall include, but is not limited to written correspondence, as well as telephone communication.
You are harassing me by calling numerous times.
You are harassing me calling numerous times and leaving messages.
I do expressly request that you cease any communication to me pursuant to the FDCPA §1692c.
Be advised that since I reside at the above address, you are warned that any contact with a neighbor or other person will not be "locator" information and will be considered grounds for legal action against you.
Please also be advised that you may not contact me at my place of employment because my employer prohibits me from receiving such communications.
I simply wish you to cease all communication (mail, phone calls or other) with me or any member of my household. This includes my place of employment. I do not admit or deny liability on the debt. I just want you to stop contacting me.
I intend to keep a log of any contacts you make with me after you receive this letter. I am aware that further communications by you will make you liable for $1,000.00 per communication, plus actual damages and attorney fees.
You may contact me by mail to tell me that you are ceasing communications.
Sincerely:
________________________________
(your signature)
Certified Mail/Confirmation of Delivery/Validation Notice # (Enter Number)
Note: This request can be at made any time, but it must be made in writing. It is always recommended that you send the request by certified mail (PS Form 3811) and keep a copy. This copy will be proof of your request should you need to sue the creditor. Once the collector receives your letter, they can only contact you to inform you of any action it intends to take or to tell you that it is terminating its efforts to collect the debt.
This letter is enough to stop further contact or dunning letters.
Make sure you save the return receipt form because you may use this as evidence that you sent the letter and that the debt collector received it.
§ 1692g. Validation of debts
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§ 1692g. Validation of debts | |
| How Current is This? | |
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(a) Notice of debt; contents Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing— (3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector; (4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and (b) Disputed debts If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. |
FDCPA Validation of debts and Sample Validation Request Form
Validation of debts and Sample Validation Request Form
The FDCPA provides that debts that are pursued by a debt collector be validated. Validation of the debt is every debtor's right. You don't need a reason. The fact that you request validation is quite enough to evoke to protection of the FDCPA. The Act provides that (paraphrasing, within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall (unless already provided in the initial contact), send the consumer a written notice containing -
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector; and
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt is disputed, the debt collector will obtain verification of the debt.
This means that if you write a debt validation request, a sample of which is available upon request, all communications and enforcement must stop until the debt is validated. Yes, that means lawsuits also.
What happens if the collector refuses to validate the debt?
You should only be so lucky. If after a validation request under the FDCPA, the creditor refuses to cooperate, then the creditor may not legally collect the debt. If the collector does, then the law is violated and a suit for damages may be brought.
Such a suit was brought in federal court in New Jersey against MRS Associates, debt collectors for a company going by the name of Lake Cook Partners. Lake Cook engages in, what is known in the business as, "bottom feeding." Bottom feeding is a term used to mean the acquisition of "dead" or written off debts. Lake Cook purchases the debts from credit card companies (and perhaps other companies) for pennies on the dollar. Lake Cook then uses MRS Associates to make a debtor's life a living hell.
What if the debt collector ignores the request and collects the debt anyway?
That happened with MRS Associates. MRS was requested to validate a debt alleged owed by a husband of a client who received a bankruptcy discharge. The husband claimed that his wife had applied for the card, not him. Not that it would matter anyway; the husband was entitled to validation under the law. If validation was not forthcoming, too bad for the collector. MRS believed that the burden was on the debtor since the card had been open for "21 years."
Note: MRS stated that the debtor had the account for 21 years, the fact that it "is highly improbable" that MRS would have been able to get a copy of a document that the debtor signed 20 years ago did not excuse MRS from obtaining what validation that they could get. In this case, MRS did not even attempt to get anything. Perhaps MRS did not want to be bothered to comply with federal law. I guess it's easier that way.
Outcome: The foregoing message was in large part the reason that MRS settled with the debtor for $4,500. Needless to say, the debt was never validated. The debtor would have been forced to pay over $10, 000. You can see a copy of the complaint here.
Lake Cook (continued)
Not even two weeks after the $4,500 payment, the same client was contacted by Creditor's Interchange, Inc., ("CI") a debt collection outfit in Buffalo, NY. The collector calls this office and this is what transpires: A collection agent by the name of Richard Kerns who says he works for CI calls.
We answer the phone saying "law offices" as is called for by our business procedure.
Kerns asked for the debtor (name withheld for privacy).
I identified myself as "Mr. (debtor's) attorney.
Kerns says, "I did not know he had an attorney."
Kerns is assured by me that I represent the debtor for all purposes.
Kerns asks if I am an attorney.
I tell him that I am and ask for debt validation.
Kerns then demands payment from the client.
l say, "we are requesting validation of that debt."
Kerns states, "Validation? What validation? He owes a debt!"
Kerns then states, "Listen smart guy. You know what? I'm going to call your client!"
He does.
I learn that Kerns is collecting the same debt that MRS was trying to collect. As a matter of fact, the same creditor, Lake Cook, is now collecting under a different corporate name, Hilco Receivables.
Outcome: CI & Hilco settle the next case for $5,000 for one phone call. That is $9,500 in settlements paid to the same client on the same debt.
Damages Under the FDCPA
The FDCPA provides for a private right of action against violators. This means that you can get a lawyer and sue for damages. A partial list of damages that are awardable are:
Statutory damages up to $1,000 for each case. This means that the violator can be charged even though there are no other damages (see below).
Attorney's fees. You can make the violator pay for your lawyer. This is big advantage; lawyers are expensive!
Actual damages including:
Stress related injuries:
Heart attack, angina, chest constrictions;
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Miscarriage;
Ulcers, diabetic flare-up;
Shock;
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Loss of appetite;
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Crying;
Nightmares; insomnia, night sweats;
Emotional paralysis;
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Inability to think or function at work;
Headaches;
Shortness of breath;
Anxiety, nervousness; fear and worry;
Hypertension (elevation of blood pressure);
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Stress to children;
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Irritability;
Hysteria;
Embarrassment, humiliation;
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Indignation and pain and suffering.
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And this is just a partial list!
Monetary damages:
Payment of a debt barred by the statute of limitations;
Taking one's property unlawfully or intimidating a debtor to return property by violating the FDCPA, e.g. "If you do not return your DVD player to the store, we will bring criminal charges!"
Long distance telephone charges for phone calls to a collector who states that you must call him back.
Attorney's fees to defend a prior suit brought in violation of the FDCPA;
Damages for intentional infliction of emotional distress generally (see above).
Your attorney may use medical (psychiatric/psychological) testimony, but does not need to. Damages for emotional distress can be claimed even without medical support. This does not mean they will always be believed, of course. It is up to the judge or jury to decide if the plaintiff is telling the truth. Anyway, the plaintiff in the FDCPA lawsuit starts with a tremendous advantage.
You Can Stop Foreclosure
You Can Stop Foreclosure
and Put the Lender on the Defense.
Step One: Answer the Foreclosure Lawsuit
Foreclosure Filing Schedule:
You receive a Summons and Complaint...
(The plaintiff--bank, lender or other creditor--starts the foreclosure by having a marshal serve the defendant--owner or borrower--with a Summons and Complaint.) You can check the foreclosure rules in your
Within 2 days of the Return Date on the Summons...
File an Appearance
Within 15 days of the Return Date on the Summons...
File and send an Answer. Be sure to put a certification of service at the end of your answer, and that you have sent your Answer to everyone who has Appeared in the case. You will need to sign the certification separately from your signature on the Answer.
If you choose foreclosure by sale, file a Motion for Foreclosure by Sale
Step Two: The Lender Must Prove Existence of the Note.
To recover on a promissory note, the plaintiff (the Lender in the case of foreclosure) must prove:(1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note in due course; and (4) that a certain balance is due and owing on the note.
Trial court erred when it did not proceed to take testimony before it entered default judgment (see definition below) for the plaintiff; the unsworn statement of plaintiff's (plaintiff is the lender) attorney could not support default judgment rendered.”
It is also true, in mortgage foreclosures, prove up of the claim requires presentment of the "original" promissory note and general account and ledger statement. Claim of damages, to be admissible as evidence, must incorporate records such as a general ledger and accounting of an alleged unpaid promissory note, the person responsible for preparing and maintaining the account general ledger must provide a complete accounting which must be sworn to and dated by the person who maintained the ledger.
To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note in due course; and (4) that a certain balance is due and owing on the note.
1) the existence of the note in question
2) If the "ORIGINAL" note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then your defense is as follows:
3) the "named" Plaintiff is not the 'holder in due course" of the note and only an agent or nominee for the true beneficial owners and holders in due course;
4) there may be fraud upon the court in that the named Plaintiff may not have ANY interest to the note and that the supposedly lost note is not lost, but may have been intentionally destroyed due to missing assignments on the note which may have made it void and a legal nullity, thus they have exploited key and vital evidence;
5) there is no proof that the named Plaintiff ever held the note or took possession of the note and thus has no claim or right to bringing about the foreclosure;
6) there is no proof, without the note, that a proper chain of assignments took place and that the lien positions were properly perfected;
7) other unnamed and disclosed real parties in interest may have a claim to the note and be the rightful beneficial owners to the note and must be identified and brought before the court;
8) there may be several unnamed and disclosed real parties in interest may have a claim to the note and be the rightful beneficial owners of the note;
9) that the party sued signed the note
10) If the "ORIGINAL" note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then you need to notify me and also put on affirmative defenses that:
11) the note in question is not the note you signed and executed in ink and only the one you signed in ink that presumably contains your fingerprints can be relied upon by your handwriting analysis expert;
12) in an electronic age, it is a simple matter to place someone's signature or image upon a document and that it is very difficult to imagine such a valuable negotiable instrument being lost or missing without a nefarious motive.
13) that the plaintiff is the owner or holder of the note in due course;
14) If the "ORIGINAL" note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then you need put on affirmative defenses that:
a) the mortgage industry, investors, and GSE's such as Fannie Mae, Freddie Mac, and FHLBs etc. have a requirement that the last endorsement to them be undated and "blank" leaving the payee line blank and making the negotiable instrument a sort of "bearer bond" and instrument. as such, any party finding or stealing the note can place their name on the payee line, claim ownership of the note, and sell the note to others who may make a demand upon you in the future. as such, you require money to be deposited in an escrow account or with the court in an amount equal to the amount claimed owed on the note, until such missing note is found or upon your death. notes have a life of their own...
b) if the note was destroyed or lost intentionally (the industry maintains this practice) then they may be trying to hide the beneficial owners and shield them from any assignee liability arising from the actions of the servicer who they hire, supervise and most importantly authorize to foreclose upon you. without the note, since subsequent endorsements are not recorded to avoid payment of taxes and t hide true and real beneficial interests, there is no possible way to determine who ever held a rightful interest in the note and who you may have claims or counter claims against and who should be presently before the court as a real party in interest.
c) Furthermore, if there are missing assignments of the original note and the assignment went from Lender A to Lender B to Lender D without an intervening assignment from Lender B to Lender C and From Lender C to Lender D, then the note may be void and a legal nullity in your state.
d) It is industry practice to not name the GSE, investor, or real party in interest in foreclosure and to use as a front for the Plaintiff:
i) The very original lender who may or may not even be in business any more or sold their interest in the note long ago, only to have a claim made upon them for repurchase;
ii) A Servicer of even "special servicer" who is acting as an agent for the investors, GSE's or real party in interest, but has no beneficial ownership in the note since they are only being paid to collect and foreclosure by the real parties in interest
iii) A "nominee" such as MERS who has no legal authority to foreclose upon you and do business in your state and who according to their own written documents and verbal assurances never hold the note or own "any" beneficial interest in the note!!!!!
e) Notes are pledged, sold, bifurcated, and traded in various derivative transactions like bubblegum baseball cards and their transfers, sales, pledges etc. Are not publicly recorded. As such, only possession of the actual original note can prove the actual owner and holder in due course of the note and who you can make an offer of payment to for purchase of the note by yourself, another family member or partner. You have a right to know the rightful owner of the note so an offer for payment of the note at a discount and at fair market value can be made. If the note has been pledged and encumbered, then that party must be made aware of the foreclosure and your right to negotiate with them a payment and release of the note by you, other lien holders or private parties;
f) Notes are traded often and you need to inspect the physical note to see who the real prior parties were that held and endorsed your note since you may have counter and cross claims against them and need to bring them before the court for the action, since they may have improperly inflated your principal balance, amount owed or escrow account by not applying your payments correctly; adding fees not legally owed by you to the principal balance; miscalculating the interest and not properly amortizing your loan; fraudulent selling your loan or misreporting you on your credit report.
g) Federal Circuit Courts have ruled that the only way to prove the perfection of any security [including promissory note] is by actual possession of the security. Current or prior possession must be proved up.
(h) that a certain balance is due and owing on the note.
15) You must have the master transaction histories and general ledgers for the account since a "dump," "summary," or redacted record cannot be relied upon to determine the rightful amounts owed by having a complete audit of your account. In order to conduct a proper audit, master records and all prior records must be compiled, reviewed, analyzed, and reconciled. In is not you responsibility to prove each payment was made. It is your responsibility to say a payment was made and provide evidence, including your word that it was made. It is the note holder's duty and responsibility to validate the claims being made on the note and the amount owed. If they have the master records or claim that the records of prior servicers are missing, then there is no rightful way for anyone to prove up the balances and amounts they claim are owed!!!! Furthermore, you must claim:
a) That the principal balance claimed owed, is not owed, and is the wrong amount.
b) That the loan has not been properly credited and amortized;
c) That the current servicer cannot be relied upon to testify and certify that prior amounts, transactions, credits, debits, charges and fees added by prior servicers were indeed proper and correct and that the account they were transferred was properly amortized and credited. As such, the person holding the ledgers at the prior servicer must come and testify as to the amounts owed on the note.
d) dumps and summaries of amounts owed cannot be relied upon and only original ledgers and master records and the keeper of those records cant testify as to the amounts claimed owed and due.
Supporting Case Law
Where the complaining party cannot prove the existence of the note, then there is no note.
See Pacific Concrete F.C.U. V. Kauanoe, 62 Haw. 334, 614 P.2d), GE Capital Hawaii, Inc. v. Yonenaka 25 P.3d 807, 96 Hawaii 32, (Hawaii App 2001).
Siwooganock Bank in Lancaster NH, in alleged foreclosure suit, failed or refused to produce the actual note which Siwooganock alleges Eva J. Lovejoy owed.
To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note; and (4) that a certain balance is due and owing on the note. See In Re: SMS Financial LLC. v. Abco Homes, Inc. No.98-50117 February 18, 1999 (5th Circuit Court of Appeals.)
Volume 29 of the New Jersey Practice Series, Chapter 10 Section 123, page 566, emphatically states, “...; and no part payments should be made on the bond or note unless the person to whom payment is made is able to produce the bond or note and the part payments are endorsed thereon. It would seem that the mortgagor would normally have a Common law right to demand production or surrender of the bond or note and mortgage, as the case may be. See Restatement, Contracts S 170(3), (4) (1932); C.J.S. Mortgages S 469, in Carnegie Bank v, Shalleck 256 N.J. Super 23 (App. Div 1992), the Appellate Division held, “When the underlying mortgage is evidenced by an instrument meeting the criteria for negotiability set forth in N.J.S. 12A:3-104, the holder of the instrument shall be afforded all the rights and protections provided a holder in due course pursuant to N.J.S. 12A:3-302"
Since no one is able to produce the “instrument” there is no competent evidence before the Court that any party is the holder of the alleged note or the true holder in due course. New Jersey common law dictates that the plaintiff prove the existence of the alleged note in question, prove that the party sued signed the alleged note, prove that the plaintiff is the owner and holder of the alleged note, and prove that certain balance is due and owing on any alleged note. Federal Circuit Courts have ruled that the only way to prove the perfection of any security is by actual possession of the security.
Supporting Case Law
Unequivocally the Court’s rule is that in order to prove the “instrument”, possession is mandatory.
See Matter of Staff Mortg. & Inv. Corp., 550 F.2d 1228 (9th Cir 1977). “Under the Uniform Commercial Code, the only notice sufficient to inform all interested parties that a security interest in instruments has been perfected is actual possession by the secured party, his agent or bailee.” Bankruptcy Courts have followed the Uniform Commercial Code. In Re Investors & Lenders, Ltd. 165 B.R. 389 (Bankruptcy.D.N.J.1994), “Under the New Jersey Uniform Commercial Code (NJUCC), promissory note is “instrument,” security interest in which must be perfected by possession.
Predatory Lending Claims Available to Borrowers in Foreclosure
Predatory Lending Claims Available to Borrowers in Foreclosure
In handling mortgage foreclosure cases around the country, attorneys and paralegals should be aware that in addition to your state mortgage foreclosure laws, which is the main statute that is relied on by attorneys defending a foreclosure suit, a variety of defenses exist at both at federal and state levels. These statutes, however, focus more on the lending practice of the lender rather than on the ability of the client to pay. Volunteers should therefore pay attention to the nuances between laws listed below and figure out whether the mortgage company has engaged in illegal lending practices.
The available federal and state statutes are:
Truth in Lending Act (TILA). This Act attempts to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms and avoid uninformed use of credit. It also aims to protect the consumer against inaccurate and unfair credit billing and credit card practice.
Home Ownership and Equity Protection Act (HOEPA). This Act is an amendment to TILA. It is enacted to deal with substantive abuses of creditors offering alternative, typically high interest rate, home loans to residents in certain geographic areas. It purports to afford consumers most vulnerable to abuse a safety net without impeding the flow of credit altogether.
Real Estate Settlement Procedures Act (RESPA). This Act aims to effect more effective disclosure to home buyers and sellers of settlement costs. It also seeks to eliminate kickbacks or referral fees and reduce the required amount to be put in escrow by homeowners to insure the payment of real estate taxes and insurance.
Equal Credit Opportunity Act (ECOA). This Act is created to prohibit discriminatory treatment by lenders. Its credit notification provision protects consumers from bait-and-switch tactics.
Violations of the Truth in Lending Act
Violations of the Truth in Lending Act
Creditors are liable for violation of the disclosure requirements, regardless of whether the consumer was harmed by the nondisclosure, UNLESS:
The creditor corrects the error within 60
days of discovery and prior to written suit or written notice from the consumer, or
The error is the result of bona fide error. The creditor bears the burden of proving by a preponderance of the evidence that:
If the violation was unintentional.
The error occurred notwithstanding compliance with procedures reasonably adapted to avoid such error. (Error of legal judgment with respect to creditor's TILA obligations not a bona fide error.)
Civil remedies for failure to comply with TILA requirements:
Action may be brought in any U.S. district court or in any other competent court within one year from the date on which the violation occurred ( we take our cases to federal court). This limitation does not apply when TILA violations are asserted as a defense, set-off, or counterclaim, except as otherwise provided by state law.
Private remedies - applicable to violations of provisions regarding credit transactions, credit billing, and consumer leases.
Actual damages in all cases.
Attorneys' fees and court costs for successful enforcement and rescission actions.
Statutory damages.
For individual actions, double the correctly calculated finance charge but not less than $200 or more than $2,000 for individual actions.
For class actions, an amount allowed by the court with no required minimum recovery per class member to a maximum of $500,000 or 1% of the creditor's net worth, whichever is less.
Damages can be imposed on creditors who fail to comply with specified TILA disclosure requirements, with the right of rescission, with the provisions concerning credit cards, or with the fair credit billing requirements.
old from 2003 but basic idea fed deislosure§ 226.29 12 CFR Ch. II (1–1–03 Edition
§ 226.29 12 CFR Ch. II (1–1–03 Edition)
provisions of this regulation are preempted
to the extent of the inconsistency.
A State law is inconsistent if it
requires a creditor to make disclosures
or take actions that contradict the requirements
of the Federal law. A State
law is contradictory if it requires the
use of the same term to represent a different
amount or a different meaning
than the Federal law, or if it requires
the use of a term different from that
required in the Federal law to describe
the same item. A creditor, State, or
other interested party may request the
Board to determine whether a State
law requirement is inconsistent. After
the Board determines that a State law
is inconsistent, a creditor may not
make disclosures using the inconsistent
term or form.
(2)(i) State law requirements are inconsistent
with the requirements contained
in sections 161 (Correction of
billing errors) or 162 (Regulation of
credit reports) of the Act and the implementing
provisions of this regulation
and are preempted if they provide
rights, responsibilities, or procedures
for consumers or creditors that are different
from those required by the Federal
law. However, a State law that allows
a consumer to inquire about an
open-end credit account and imposes
on the creditor an obligation to respond
to such inquiry after the time allowed
in the Federal law for the consumer
to submit written notice of a
billing error shall not be preempted in
any situation where the time period for
making written notice under this regulation
has expired. If a creditor gives
written notice of a consumer’s rights
under such State law, the notice shall
state that reliance on the longer time
period available under State law may
result in the loss of important rights
that could be preserved by acting more
promptly under Federal law; it shall
also explain that the State law provisions
apply only after expiration of the
time period for submitting a proper
written notice of a billing error under
the Federal law. If the State disclosures
are made on the same side of a
page as the required Federal disclosures,
the State disclosures shall appear
under a demarcation line below
the Federal disclosures, and the Federal
disclosures shall be identified by a
heading indicating that they are made
in compliance with Federal law.
(ii) State law requirements are inconsistent
with the requirements contained
in chapter 4 (Credit billing) of
the Act (other than section 161 or 162)
and the implementing provisions of
this regulation and are preempted if
the creditor cannot comply with State
law without violating Federal law.
(iii) A State may request the Board
to determine whether its law is inconsistent
with chapter 4 of the Act and
its implementing provisions.
(b) Equivalent disclosure requirements.
If the Board determines that a disclosure
required by state law (other than
a requirement relating to the finance
charge, annual percentage rate, or the
disclosures required under § 226.32) is
substantially the same in meaning as a
disclosure required under the act or
this regulation, creditors in that state
may make the state disclosure in lieu
of the federal disclosure. A creditor,
State, or other interested party may
request the Board to determine whether
a State disclosure is substantially
the same in meaning as a Federal disclosure.
(c) Request for determination. The procedures
under which a request for a determination
may be made under this
section are set forth in appendix A.
(d) Special rule for credit and charge
cards. State law requirements relating
to the disclosure of credit information
in any credit or charge card application
or solicitation that is subject to
the requirements of section 127(c) of
chapter 2 of the act (§ 226.5a of the regulation)
or in any renewal notice for a
credit or charge card that is subject to
the requirements of section 127(d) of
chapter 2 of the act (§ 226.9(e) of the
regulation) are preempted. State laws
relating to the enforcement of section
127 (c) and (d) of the act are not preempted.
[Reg. Z, 46 FR 20892, Apr. 7, 1981, as amended
at 54 FR 13867, Apr. 6, 1989; 54 FR 32954, Aug.
11, 1989; 60 FR 15471, Mar. 24, 1995]
§ 226.29 State exemptions.
(a) General rule. Any State may apply
to the Board to exempt a class of transactions
within the State from the requirements
of chapter 2 (Credit transactions)
or chapter 4 (Credit billing) of
VerDate Dec<13>2002 10:49 Mar 04, 2003 Jkt 200035 PO 00000 Frm 00292 Fmt 8010 Sfmt 8010 Y:\SGML\200035T.XXX 200035TFederal Reserve System § 226.31
50 Compliance with this section will constitute
compliance with the disclosure requirements
on limitations on increases in
footnote 12 to §§ 226.6(a)(2) and 226.18(f)(2)
until October 1, 1988.
the Act and the corresponding provisions
of this regulation. The Board
shall grant an exemption if it determines
that:
(1) The State law is substantially
similar to the Federal law or, in the
case of chapter 4, affords the consumer
greater protection than the Federal
law; and
(2) There is adequate provision for
enforcement.
(b) Civil liability. (1) No exemptions
granted under this section shall extend
to the civil liability provisions of sections
130 and 131 of the Act.
(2) If an exemption has been granted,
the disclosures required by the applicable
State law (except any additional requirements
not imposed by Federal
law) shall constitute the disclosures required
by this Act.
(c) Applications. The procedures under
which a State may apply for an exemption
under this section are set forth in
appendix B.
[46 FR 20892, Apr. 7, 1981; 46 FR 29246, June 1,
1981]
§ 226.30 Limitation on rates.
A creditor shall include in any consumer
credit contract secured by a
dwelling and subject to the act and this
regulation the maximum interest rate
that may be imposed during the term
of the obligation 50 when:
(a) In the case of closed-end credit,
the annual percentage rate may increase
after consummation, or
(b) In the case of open-end credit, the
annual percentage rate may increase
during the plan.
[52 FR 43181, Nov. 9, 1987]
Subpart E—Special Rules for Certain
Home Mortgage Transactions
SOURCE: Reg. Z, 60 FR 15471, Mar. 24, 1995,
unless otherwise noted.
§ 226.31 General rules.
(a) Relation to other subparts in this
part. The requirements and limitations
of this subpart are in addition to and
not in lieu of those contained in other
subparts of this part.
(b) Form of disclosures. (1) General.
The creditor shall make the disclosures
required by this subpart clearly and
conspicuously in writing, in a form
that the consumer may keep.
(2) Electronic communication. For rules
governing the electronic delivery of
disclosures, including a definition of
electronic communication, see § 226.36.
(c) Timing of disclosure—(1) Disclosures
for certain closed-end home mortgages.
The creditor shall furnish the disclosures
required by § 226.32 at least three
business days prior to consummation
of a mortgage transaction covered by
§ 226.32.
(i) Change in terms. After complying
with paragraph (c)(1) of this section
and prior to consummation, if the creditor
changes any term that makes the
disclosures inaccurate, new disclosures
shall be provided in accordance with
the requirements of this subpart.
(ii) Telephone disclosures. A creditor
may provide new disclosures by telephone
if the consumer initiates the
change and if, at consummation:
(A) The creditor provides new written
disclosures; and
(B) The consumer and creditor sign a
statement that the new disclosures
were provided by telephone at least
three days prior to consummation.
(iii) Consumer’s waiver of waiting period
before consummation. The consumer
may, after receiving the disclosures required
by paragraph (c)(1) of this section,
modify or waive the three-day
waiting period between delivery of
those disclosures and consummation if
the consumer determines that the extension
of credit is needed to meet a
bona fide personal financial emergency.
To modify or waive the right,
the consumer shall give the creditor a
dated written statement that describes
the emergency, specifically modifies or
waives the waiting period, and bears
the signature of all the consumers entitled
to the waiting period. Printed
forms for this purpose are prohibited,
except when creditors are permitted to
provisions of this regulation are preempted
to the extent of the inconsistency.
A State law is inconsistent if it
requires a creditor to make disclosures
or take actions that contradict the requirements
of the Federal law. A State
law is contradictory if it requires the
use of the same term to represent a different
amount or a different meaning
than the Federal law, or if it requires
the use of a term different from that
required in the Federal law to describe
the same item. A creditor, State, or
other interested party may request the
Board to determine whether a State
law requirement is inconsistent. After
the Board determines that a State law
is inconsistent, a creditor may not
make disclosures using the inconsistent
term or form.
(2)(i) State law requirements are inconsistent
with the requirements contained
in sections 161 (Correction of
billing errors) or 162 (Regulation of
credit reports) of the Act and the implementing
provisions of this regulation
and are preempted if they provide
rights, responsibilities, or procedures
for consumers or creditors that are different
from those required by the Federal
law. However, a State law that allows
a consumer to inquire about an
open-end credit account and imposes
on the creditor an obligation to respond
to such inquiry after the time allowed
in the Federal law for the consumer
to submit written notice of a
billing error shall not be preempted in
any situation where the time period for
making written notice under this regulation
has expired. If a creditor gives
written notice of a consumer’s rights
under such State law, the notice shall
state that reliance on the longer time
period available under State law may
result in the loss of important rights
that could be preserved by acting more
promptly under Federal law; it shall
also explain that the State law provisions
apply only after expiration of the
time period for submitting a proper
written notice of a billing error under
the Federal law. If the State disclosures
are made on the same side of a
page as the required Federal disclosures,
the State disclosures shall appear
under a demarcation line below
the Federal disclosures, and the Federal
disclosures shall be identified by a
heading indicating that they are made
in compliance with Federal law.
(ii) State law requirements are inconsistent
with the requirements contained
in chapter 4 (Credit billing) of
the Act (other than section 161 or 162)
and the implementing provisions of
this regulation and are preempted if
the creditor cannot comply with State
law without violating Federal law.
(iii) A State may request the Board
to determine whether its law is inconsistent
with chapter 4 of the Act and
its implementing provisions.
(b) Equivalent disclosure requirements.
If the Board determines that a disclosure
required by state law (other than
a requirement relating to the finance
charge, annual percentage rate, or the
disclosures required under § 226.32) is
substantially the same in meaning as a
disclosure required under the act or
this regulation, creditors in that state
may make the state disclosure in lieu
of the federal disclosure. A creditor,
State, or other interested party may
request the Board to determine whether
a State disclosure is substantially
the same in meaning as a Federal disclosure.
(c) Request for determination. The procedures
under which a request for a determination
may be made under this
section are set forth in appendix A.
(d) Special rule for credit and charge
cards. State law requirements relating
to the disclosure of credit information
in any credit or charge card application
or solicitation that is subject to
the requirements of section 127(c) of
chapter 2 of the act (§ 226.5a of the regulation)
or in any renewal notice for a
credit or charge card that is subject to
the requirements of section 127(d) of
chapter 2 of the act (§ 226.9(e) of the
regulation) are preempted. State laws
relating to the enforcement of section
127 (c) and (d) of the act are not preempted.
[Reg. Z, 46 FR 20892, Apr. 7, 1981, as amended
at 54 FR 13867, Apr. 6, 1989; 54 FR 32954, Aug.
11, 1989; 60 FR 15471, Mar. 24, 1995]
§ 226.29 State exemptions.
(a) General rule. Any State may apply
to the Board to exempt a class of transactions
within the State from the requirements
of chapter 2 (Credit transactions)
or chapter 4 (Credit billing) of
VerDate Dec<13>2002 10:49 Mar 04, 2003 Jkt 200035 PO 00000 Frm 00292 Fmt 8010 Sfmt 8010 Y:\SGML\200035T.XXX 200035TFederal Reserve System § 226.31
50 Compliance with this section will constitute
compliance with the disclosure requirements
on limitations on increases in
footnote 12 to §§ 226.6(a)(2) and 226.18(f)(2)
until October 1, 1988.
the Act and the corresponding provisions
of this regulation. The Board
shall grant an exemption if it determines
that:
(1) The State law is substantially
similar to the Federal law or, in the
case of chapter 4, affords the consumer
greater protection than the Federal
law; and
(2) There is adequate provision for
enforcement.
(b) Civil liability. (1) No exemptions
granted under this section shall extend
to the civil liability provisions of sections
130 and 131 of the Act.
(2) If an exemption has been granted,
the disclosures required by the applicable
State law (except any additional requirements
not imposed by Federal
law) shall constitute the disclosures required
by this Act.
(c) Applications. The procedures under
which a State may apply for an exemption
under this section are set forth in
appendix B.
[46 FR 20892, Apr. 7, 1981; 46 FR 29246, June 1,
1981]
§ 226.30 Limitation on rates.
A creditor shall include in any consumer
credit contract secured by a
dwelling and subject to the act and this
regulation the maximum interest rate
that may be imposed during the term
of the obligation 50 when:
(a) In the case of closed-end credit,
the annual percentage rate may increase
after consummation, or
(b) In the case of open-end credit, the
annual percentage rate may increase
during the plan.
[52 FR 43181, Nov. 9, 1987]
Subpart E—Special Rules for Certain
Home Mortgage Transactions
SOURCE: Reg. Z, 60 FR 15471, Mar. 24, 1995,
unless otherwise noted.
§ 226.31 General rules.
(a) Relation to other subparts in this
part. The requirements and limitations
of this subpart are in addition to and
not in lieu of those contained in other
subparts of this part.
(b) Form of disclosures. (1) General.
The creditor shall make the disclosures
required by this subpart clearly and
conspicuously in writing, in a form
that the consumer may keep.
(2) Electronic communication. For rules
governing the electronic delivery of
disclosures, including a definition of
electronic communication, see § 226.36.
(c) Timing of disclosure—(1) Disclosures
for certain closed-end home mortgages.
The creditor shall furnish the disclosures
required by § 226.32 at least three
business days prior to consummation
of a mortgage transaction covered by
§ 226.32.
(i) Change in terms. After complying
with paragraph (c)(1) of this section
and prior to consummation, if the creditor
changes any term that makes the
disclosures inaccurate, new disclosures
shall be provided in accordance with
the requirements of this subpart.
(ii) Telephone disclosures. A creditor
may provide new disclosures by telephone
if the consumer initiates the
change and if, at consummation:
(A) The creditor provides new written
disclosures; and
(B) The consumer and creditor sign a
statement that the new disclosures
were provided by telephone at least
three days prior to consummation.
(iii) Consumer’s waiver of waiting period
before consummation. The consumer
may, after receiving the disclosures required
by paragraph (c)(1) of this section,
modify or waive the three-day
waiting period between delivery of
those disclosures and consummation if
the consumer determines that the extension
of credit is needed to meet a
bona fide personal financial emergency.
To modify or waive the right,
the consumer shall give the creditor a
dated written statement that describes
the emergency, specifically modifies or
waives the waiting period, and bears
the signature of all the consumers entitled
to the waiting period. Printed
forms for this purpose are prohibited,
except when creditors are permitted to
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