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 This booklet provides background information and optional expanded examination procedures for the Truth in Lending Act (TILA) and Regulation Z, which implements the TILA.
Examiners will select from the procedures those that are necessary after completing a compliance core assessment. For guidance in completing a core assessment, refer to the “Community Bank Supervision,” “Large Bank Supervision,” and “Internal and External Audits” booklets in the Comptroller’s Handbook and the “Compliance Management System” booklet in the Comptroller’s Handbook for Consumer Compliance. Complaint information received by the Office of the Ombudsman, Customer Assistance Group, may also be useful in completing the assessment.
Background and Summary
The TILA, 15 USC 1601 et seq., was enacted on May 29, 1968, as title I of the Consumer Credit Protection Act (Public Law 90-321). The TILA, implemented by Regulation Z (12 CFR 226), became effective July 1, 1969.
The TILA was first amended in 1970 to prohibit unsolicited credit cards. Additional major amendments to the TILA and Regulation Z were made by the Fair Credit Billing Act of 1974, the Consumer Leasing Act of 1976, the Truth in Lending Simplification and Reform Act of 1980, the Fair Credit and Charge Card Disclosure Act of 1988, the Home Equity Loan Consumer Protection Act of 1988, the Home Ownership and Equity Protection Act of 1994 (HOEPA), the TILA Amendments of 1995, and the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA).
Regulation Z also was amended to implement section 1204 of the Competitive Equality Banking Act of 1987, and in 1988, to include adjustable rate mortgage (ARM) loan disclosure requirements. All consumer leasing provisions were deleted from Regulation Z in 1981 and transferred to Regulation M (12 CFR 213).
The HOEPA imposed new disclosure requirements and substantive limitations on certain closed-end mortgage loans bearing rates or fees above a certain percentage or amount. The law also included new disclosure requirements to assist consumers in comparing the costs and other material considerations of a reverse mortgage transaction and authorized the Board of Governors of the Federal Reserve System (Board) to prohibit specific acts and practices in connection with mortgage transactions. Regulation Z was amended in 2001 to implement these legislative changes to TILA.
The TILA Amendments of 1995 dealt primarily with tolerances for real estate secured credit. Regulation Z was amended on September 14, 1996 to incorporate changes to the TILA that limit lenders’ liability for disclosure errors in loans secured by real estate consummated after September 30, 1995. The EGRPRA amendments were made to simplify and improve disclosures related to credit transactions. ...
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Consumer Compliance Examination
Comptroller of the Currency
Administrator of National Banks
Table of Contents
Introduction
Background and Summary
Determination of Finance Charge and APR
Subpart G—Special Rules Applicable to Credit Card Accounts and
Specific Requirements for Underage Consumers
General Prohibition on Applying Increased Rates to Existing
Fees for Transactions That Exceed the Credit Limit
Format of Regulation Z
Subpart A—General
Purpose of the TILA and Regulation Z
Summary of Coverage [Sections 226.1 and 226.2]
Exempt Transactions [Section 226.3]
Subpart B—Open-End Credit
Time of Disclosures (Open-End Credit) [Section 226.5(b)]
Finance Charge (Open-End Credit) [Section 226.6(a)]
Determining the Balance and Computing the Finance Charge
Finance Charge Resulting From Two or More Periodic Rates
Annual Percentage Rate (Open-End Credit)
Minimum Payments [Section 226.7(b)(12)]
Timely Settlement of Estates [Section 226.11(c)]
Open-End Credit Offered to College Students
Evaluation of the Consumer’s Ability to Pay [Section 226.51]
[Section 226.51(b)(1)]
Limitations of Fees [Section 226.52(a)]
Payment Allocation [Section 226.53]
Double-Cycle Billing and Partial Grace Period [Section 226.54]
Balances [Section 226.55]
[Section 226.56]
Special Rules for Marketing to Students [Section 226.57]
Online Disclosure of Credit Card Agreements [Section 226.58]
Open-End Advertising [Section 226.16]
Subpart C—Closed-End Credit
Finance Charge (Closed-End Credit) [Section 226.17(a)]
Annual Percentage Rate (Closed-End Credit) [Section 226.22]
Amount Financed [Section 226.18(b)]
Required Deposit [Section 226.18(r)]
Calculating the Amount Financed
Prohibited Acts or Practices in Connection With Credit Subject to
Prohibited Acts or Practices in Connection with Credit Secured
Notification of Sale or Transfer of Mortgage Loans
Special Disclosure Requirements for Private Education Loans
Rescission Rights (Open-End and Closed-End Credit) [Sections 226.15
Other Calculations
Closed-End Credit APR and Finance Charge Tolerance Charts
Refinancings [Section 226.20]
Closed-End Advertising [Section 226.24]
Subpart D—Miscellaneous
Civil Liability [TILA Sections 130 and 131]
Criminal Liability [TILA Section 112]
Administrative Actions [TILA Section 108]
Relationship to State Law [TILA Section 111]
Subpart E—Special Rules for Certain Home Mortgage Transactions
General Rules [Section 226.31]
Closed-End Home Mortgages Subject to Section 32
(HOEPA Loans)
Section 226.32 (HOEPA Loans)
Reverse Mortgages [Section 226.33]
Higher-Priced Mortgage Loans [Section 226.35]
by a Consumer's Principal Dwelling [Section 226.36]
[Section 226.39]
Subpart F—Special Rules for Private Education Loans
[Section 226.46]
Content of Disclosures [Section 226.47]
Limitations on Private Educational Loans [Section 226.48]
Specific Defenses [TILA Sections 108 and 130]
Defense Against Civil, Criminal, and Administrative Actions
Additional Defenses Against Civil Actions
Statute of Limitations [TILA Sections 108 and 130]
and 226.23]
Interagency Administrative Enforcement Policy
Enforcement Policy Applicability to Indirect Paper
Adjustable Rate Mortgages
OCC’s ARM Regulation
History and Requirements
Examination Objectives
Examination Procedures
General Instructions and Worksheet Guidance
Appendix
Summary of the TILA Worksheets by Transaction Type
Worksheet #1—Closed-End Credit Advertising
Worksheet #2—Open-End/Home Equity Line of
Credit Advertising
Worksheet #3—Closed-End Credit Forms Review
Worksheet #4—Closed-End Credit—Adjustable Rate Mortgage
Forms Review
Worksheet #5—Closed-End Credit File Review
Worksheet #6—Closed-End Credit—Adjustable Rate Mortgage
File Review
Worksheet #7—Right of Rescission File Review
Worksheet #8—Open-End Not Home-Secured Credit
Forms Review
Worksheet #9—Open-End Home-Secured Credit Forms Review 122
Worksheet #10—Credit and Charge Card Forms Review
Worksheet #11—Open-End Credit File Review
Worksheet #12—Home Equity Line of Credit File Review
Worksheet #13—Special Rules for Certain Home Mortgage
Transactions (High-Cost Mortgages, Reverse Mortgages,
Higher-Priced Mortgages, and Credit Secured by
Consumer’s Principal Dwelling) File Review
Worksheet #14—Periodic Billing Statements
Worksheet #15—High-Cost Mortgages [226.32]
Worksheet #16—Special Credit Card Rules
Coverage Considerations Under Regulation Z
Finance Charge Chart
Instructions for the Finance Charge Chart
Closed-End Credit: Finance Charge Accuracy Tolerances
Closed-End Credit: Accuracy and Reimbursement Tolerances for
Understated Finance Charges
Closed-End Credit: Accuracy Tolerances for Overstated
Finance Charges
Closed-End Credit: Accuracy Tolerances for Overstated APRs
Closed-End Credit: Accuracy and Reimbursement Tolerances for
Understated APRs
Summary of Coverage Rules for ARMs
Joint Policy Statement on Administrative Enforcement of the Truth in Lending Act—Restitution ... 202
Questions and Answers—Interagency Guidance Regarding Joint Interagency Statement of Policy for Administrative Enforcement of the Truth in Lending Act—Reimbursement Issued by the FFIEC on July 11, 1980, and Revised October 1998 (Approved July 22, 1999).... 209
References .... 227
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