§ 1639. Requirements for certain mortgages
(a)
Disclosures
(1)
Specific disclosures
In addition to other disclosures required under this subchapter, for each mortgage referred to in section
1602
(aa) of this title, the creditor shall provide the following disclosures in conspicuous type size:
(2)
Annual percentage rate
In addition to the disclosures required under paragraph (1), the creditor shall disclose—
(A)
in the case of a credit transaction with a fixed rate of interest, the annual percentage rate and the amount of the regular monthly payment; or
(B)
in the case of any other credit transaction, the annual percentage rate of the loan, the amount of the regular monthly payment, a statement that the interest rate and monthly payment may increase, and the amount of the maximum monthly payment, based on the maximum interest rate allowed pursuant to section
3806 of title
12.
(b)
Time of disclosures
(1)
In general
The disclosures required by this section shall be given not less than 3 business days prior to consummation of the transaction.
(2)
New disclosures required
(A)
In general
After providing the disclosures required by this section, a creditor may not change the terms of the extension of credit if such changes make the disclosures inaccurate, unless new disclosures are provided that meet the requirements of this section.
(3)
Modifications
The Board may, if it finds that such action is necessary to permit homeowners to meet bona fide personal financial emergencies, prescribe regulations authorizing the modification or waiver of rights created under this subsection, to the extent and under the circumstances set forth in those regulations.
(c)
No Prepayment penalty
(2)
Exception
Notwithstanding paragraph (1), a mortgage referred to in section
1602
(aa) of this title may contain a prepayment penalty (including terms calculating a refund by a method that is not prohibited under section
1615
(b) of this title for the transaction in question) if—
(A)
at the time the mortgage is consummated—
(i)
the consumer is not liable for an amount of monthly indebtedness payments (including the amount of credit extended or to be extended under the transaction) that is greater than 50 percent of the monthly gross income of the consumer; and
(ii)
the income and expenses of the consumer are verified by a financial statement signed by the consumer, by a credit report, and in the case of employment income, by payment records or by verification from the employer of the consumer (which verification may be in the form of a copy of a pay stub or other payment record supplied by the consumer);
(B)
the penalty applies only to a prepayment made with amounts obtained by the consumer by means other than a refinancing by the creditor under the mortgage, or an affiliate of that creditor;
(d)
Limitations after default
A mortgage referred to in section
1602
(aa) of this title may not provide for an interest rate applicable after default that is higher than the interest rate that applies before default. If the date of maturity of a mortgage referred to in subsection [1] 1602(aa) of this title is accelerated due to default and the consumer is entitled to a rebate of interest, that rebate shall be computed by any method that is not less favorable than the actuarial method (as that term is defined in section
1615
(d) of this title).
(h)
Prohibition on extending credit without regard to payment ability of consumer
A creditor shall not engage in a pattern or practice of extending credit to consumers under mortgages referred to in section
1602
(aa) of this title based on the consumers’ collateral without regard to the consumers’ repayment ability, including the consumers’ current and expected income, current obligations, and employment.
(i)
Requirements for payments under home improvement contracts
A creditor shall not make a payment to a contractor under a home improvement contract from amounts extended as credit under a mortgage referred to in section
1602
(aa) of this title, other than—
(j)
Consequence of failure to comply
Any mortgage that contains a provision prohibited by this section shall be deemed a failure to deliver the material disclosures required under this subchapter, for the purpose of section
1635 of this title.
(l)
Discretionary regulatory authority of Board
(1)
Exemptions
The Board may, by regulation or order, exempt specific mortgage products or categories of mortgages from any or all of the prohibitions specified in subsections (c) through (i) of this section, if the Board finds that the exemption—
(m)
Civil penalties in Federal Trade Commission enforcement actions
For purposes of enforcement by the Federal Trade Commission, any violation of a regulation issued by the Federal Reserve Board pursuant to subsection (l)(2) of this section shall be treated as a violation of a rule promulgated under section
57a of this title regarding unfair or deceptive acts or practices.
[1] So in original. Probably should be “section”.