US Laws, Codes, Statutes & Cases

From the U.S. Code Online via GPO Access
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[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
  January 24, 2002 and December 19, 2002]
[CITE: 15USC1615]

 
                      TITLE 15--COMMERCE AND TRADE
 
                 CHAPTER 41--CONSUMER CREDIT PROTECTION
 
              SUBCHAPTER I--CONSUMER CREDIT COST DISCLOSURE
 
                       Part A--General Provisions
 
Sec. 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

        If a consumer prepays in full the financed amount under any 
    consumer credit transaction, the creditor shall promptly refund any 
    unearned portion of the interest charge to the consumer.

            (2) Exception for refund of de minimus amount

        No refund shall be required under paragraph (1) with respect to 
    the prepayment of any consumer credit transaction if the total 
    amount of the refund would be less than $1.

          (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

    For the purpose of calculating any refund of interest required under 
subsection (a) of this section for any precomputed consumer credit 
transaction of a term exceeding 61 months which is consummated after 
September 30, 1993, the creditor shall compute the refund based on a 
method which is at least as favorable to the consumer as the actuarial 
method.

(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

        If the customer's request is in writing, the statement under 
    paragraph (1) shall be in writing.

                     (3) 1 free annual statement

        A consumer shall be entitled to obtain 1 statement under 
    paragraph (1) each year without charge.

        (4) Additional statements subject to reasonable fees

        Any creditor may impose a reasonable fee to cover the cost of 
    providing any statement under paragraph (1) to any consumer in 
    addition to the 1 free annual statement required under paragraph (3) 
    if the amount of the charge for such additional statement is 
    disclosed to the consumer before furnishing such statement.

(d) Definitions

    For the purpose of this section--

                        (1) Actuarial method

        The term ``actuarial method'' means the method of allocating 
    payments made on a debt between the amount financed and the finance 
    charge pursuant to which a payment is applied first to the 
    accumulated finance charge and any remainder is subtracted from, or 
    any deficiency is added to, the unpaid balance of the amount 
    financed.

                        (2) Consumer, credit

        The terms ``consumer'' and ``creditor'' have the meanings given 
    to such terms in section 1602 of this title.

                            (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, Sec. 933, Oct. 28, 1992, 106 Stat. 3891.)

                          Codification

    Section was enacted as part of the Housing and Community Development 
Act of 1992, and not as part of the Consumer Credit Protection Act which 
comprises this chapter.

                  Section Referred to in Other Sections

    This section is referred to in section 1639 of this title.