15 USC 1615 - Prohibition on use of “Rule of 78’s” in connection with mortgage refinancings and other consumer loans

U.S Code last checked for updates: Nov 22, 2024

§ 1615.

Prohibition on use of “Rule of 78’s” in connection with mortgage refinancings and other consumer loans

(a)

Prompt refund of unearned interest required

(1)

In general

(2)

Exception for refund of de minimus 1

 So in original. Probably should be “de minimis”.

amount

(3)

Applicability to refinanced transactions and acceleration by the creditor

This subsection shall apply with respect to any prepayment of a consumer credit transaction described in paragraph (1) without regard to the manner or the reason for the prepayment, including—

(A)

any prepayment made in connection with the refinancing, consolidation, or restructuring of the transaction; and

(B)

any prepayment made as a result of the acceleration of the obligation to repay the amount due with respect to the transaction.

(b)

Use of “Rule of 78’s” prohibited

(c)

Statement of prepayment amount

(1)

In general

Before the end of the 5-day period beginning on the date an oral or written request is received by a creditor from a consumer for the disclosure of the amount due on any precomputed consumer credit account, the creditor or assignee shall provide the consumer with a statement of—

(A)

the amount necessary to prepay the account in full; and

(B)

if the amount disclosed pursuant to subparagraph (A) includes an amount which is required to be refunded under this section with respect to such prepayment, the amount of such refund.

(2)

Written statement required if request is in writing

(3)

1 free annual statement

(4)

Additional statements subject to reasonable fees

(d)

Definitions

For the purpose of this section—

(1)

Actuarial method

(2)

Consumer, credit

(3)

Creditor

The term “creditor”—

(A)

has the meaning given to such term in section 1602 of this title; and

(B)

includes any assignee of any creditor with respect to credit extended in connection with any consumer credit transaction and any subsequent assignee with respect to such credit.

(Pub. L. 102–550, title IX, § 933, Oct. 28, 1992, 106 Stat. 3891.)

cite as: 15 USC 1615