Federal Laws
Adjustable-Rate Mortgage Loans
Adjustable-rate mortgage loans are covered
by regulations that require, at a minimum, disclosure of the circumstances
under which the rate may increase, any limitations on the increase,
the effects of an increase and an example of the payment terms that
would result from an increase.
Community Reinvestment Act
The Community Reinvestment Act requires
federal agencies to encourage depository financial institutions to
help meet the credit needs of their communities, including low- and
moderate- income neighborhoods. The regulatory agencies assess the
institutions' records of meeting those credit needs by preparing a
written evaluation of the institutions and assigning a rating with
facts supporting the conclusions. Such ratings shall be disclosed
to the public for examinations beginning July 1, 1990. The Act also
requires regulatory agencies to consider an institution's record of
helping to meet community credit needs when evaluating certain corporate
applications, such as permission to establish a branch, to relocate
a branch or home office, or to merge.
Consumer Leasing Act
The Consumer Leasing Act requires disclosure
of information that helps consumers compare the cost and terms of
various leases and the cost and terms of buying on credit versus cash.
The Act does not apply to real estate leases or to leases of four
months or less.
Credit Practices Rule
The Credit Practices Rule prohibits
lenders from using certain remedies, such as confessions of judgment;
wage assignments; and nonpossessory, non purchase money, security interests
in household goods. The rule also prohibits lenders from misrepresenting
a cosigner's liability and requires that lenders provide cosigners
with a notice explaining their credit obligation as a cosigner. It
also prohibits the pyramiding of late charges.
Electronic Fund Transfer Act
The Electronic Fund Transfer Act provides
consumer protection for all transactions using a debit card or electronic
means to debit or credit an account. It also limits a consumer's liability
for unauthorized electronic fund transfers.
Equal Credit Opportunity Act
The Equal Credit Opportunity Act prohibits
discrimination against an applicant for credit because of age, sex,
marital status, religion, race, color, national origin, or receipt
of public assistance. It also prohibits discrimination because of
a good faith exercise of any rights under the federal consumer credit
laws. If a consumer has been denied credit, the law requires notification
of the denial in writing. The consumer may request, within 60 days,
that the reason for denial be provided in writing.
Expedited Funds Availability Act
The Expedited Funds Availability Act
requires all banks, savings and loan associations, savings banks,
and credit unions to make funds deposited into checking, share draft
and NOW accounts available according to specified time schedules and
to disclose their funds availability policies to their customers.
The law does not require an institution to delay the customer's use
of deposited funds but instead limits how long any delay may last.
The regulation also establishes rules designed to speed the return
of unpaid checks.
Fair Credit and Charge Card Disclosure Act
The Fair Credit and Charge Card Disclosure
Act requires new disclosures on credit and charge cards, whether issued
by financial institutions, retail stores or private companies. Information
such as APRs, annual fees and grace periods
must be provided in tabular form along with applications and pre approved
solicitations for cards. The regulations also require card issuers
that impose an annual fee to provide disclosures before annual renewal.
Card issuers that offer credit insurance must inform customers of
any increase in rate or substantial decrease in coverage should the
issuer decide to change insurance providers.
Fair Credit Billing Act
The Fair Credit Billing Act establishes
procedures for the prompt correction of errors on open-end credit
accounts. It also protects a consumer's credit rating while the consumer
is settling a dispute.
Fair Credit Reporting
Act
The Fair Credit Reporting Act establishes
procedures for correcting mistakes on a person's credit record and
requires that a consumer's record only be provided for legitimate
business needs. It also requires that the record be kept confidential.
A credit record may be retained seven years for judgments, liens,
suits, and other adverse information except for bankruptcies, which
may be retained ten years. If a consumer has been denied credit, a
cost-free credit report may be requested within 30 days of denial.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act
is designed to eliminate abusive, deceptive and unfair debt collection
practices. It applies to third party debt collectors or those who
use a name other than their own in collecting consumer debts. Very
few commercial banks, savings banks, savings and loan associations,
or credit unions are covered by this Act, since they usually collect
only their own debts. Complaints concerning debt collection practices
should generally be filed with the Federal Trade
Commission.
Fair Housing Act
The Fair Housing Act prohibits discrimination
on the basis of race, color, sex, religion, handicap, familial status
or national origin in the financing, sale or rental of housing.
The Federal Trade Commission Act
The Federal Trade Commission Act requires
federal financial regulatory agencies to maintain a consumer affairs
division to assist in resolving consumer complaints against institutions
they supervise. This assistance is given to help get necessary information
to consumers about problems they are having in order to address complaints
concerning acts or practices which may be unfair or deceptive.
Home Equity Loan Consumer Protection Act
The Home Equity Loan Consumer Protection
Act requires lenders to disclose terms, rates and conditions (APRs,
miscellaneous charges, payment terms, and information about variable
rate features) for home equity lines of credit with the applications
and before the first transaction under the home equity plan. If the
disclosed terms change, the consumer can refuse to open the plan and
is entitled to a refund of fees paid in connection with the application.
The Act also limits the circumstances under which creditors may terminate
or change the terms of a home equity plan after it is opened.
Home Mortgage Disclosure Act Aggregation Project
Using loan data collected from each
covered institution, the Federal Financial Institutions Examination
Council (FFIEC) prepares disclosure statements and various reports
for individual institutions in each MSA, showing lending patterns
by location, age of housing stock, income level, sex and racial characteristics.
The disclosure statements and reports are made available to the public
at central depositories located in each MSA. Requests for the list
of central depositories should be forwarded to the FFIEC.
Federal Financial Institutions Examination
Council
2100 Pennsylvania Ave, NW
Suite 200
Washington, DC 20037
Home Mortgage Disclosure Act (HMDA)
The Home Mortgage Disclosure Act (HMDA)
requires certain lending institutions to report annually on their
originations and purchases of home purchase and home improvement loans
as well as applications for such loans. The type of loan, location
of the property, race or national origin, sex and income of the applicant
or borrower is reported. Institutions are required to make information
regarding their lending available to the public and must post a notice
of availability in their public lobby. Disclosure statements are also
available at central depositories in metropolitan areas. This information
can help the public determine how well institutions are serving the
housing credit needs of their neighborhoods and communities.
National Flood Insurance Act
National Flood Insurance is available
to any property holder whose local community participates in the national
program by adopting and enforcing flood plain management. Federally
regulated lenders are required to compel borrowers to purchase flood
insurance in certain designated areas. Lenders also must disclose
to borrowers if their structure is located in a flood hazard area.
Real Estate Settlement Procedures Act
The Real Estate Settlement Procedures
Act requires that a consumer be given advance information about the
services and costs involved in the closing of a residential mortgage.
It also limits the amount that can be collected for mortgage escrow.
Rights to Financial Privacy Act
The Right to Financial Privacy Act provides
that customers of financial institutions have a right to expect that
their financial activities will have a reasonable amount of privacy
from federal government scrutiny. The Act establishes specific procedures
and exemptions concerning the release of the financial records of
customers and imposes limitations on and requirements of financial
institutions prior to the release of such information to the federal
government.
Savings and Time Deposits
Savings and time deposits are covered
by regulations that prohibit inaccurate or misleading advertising.
Truth in Lending Act
The Truth in Lending Act requires disclosure
of the "finance charge" and the "annual percentage
rate"--and certain other costs and terms of credit--so that a
consumer can compare the prices of credit from different sources.
It also limits liability on lost or stolen credit cards.
State Laws
Many State Laws also provide rights
and remedies in consumer financial transactions. Unless a state law
conflicts with a particular federal law, the state law usually will
apply. Some states have usury laws, which establish maximum rates
of interest that creditors can charge for loans or credit sales. The
maximum interest rates vary from state to state and depend upon the
type of credit transaction involved.
Complaint Filing Process
If the consumer has a complaint against
a financial institution, the first step is to contact an officer of
the institution and attempt to resolve the complaint directly. Financial
institutions value their customers and most will be helpful. If the
consumer is unable to resolve the complaint directly, the financial
institution's regulatory agency may be contacted for assistance.
The agency will usually acknowledge
receipt of a complaint letter within a few days. If the letter is
referred to another agency, the consumer will be advised of this fact.
When the appropriate agency investigates the complaint the financial
institution may be given a copy of the complaint letter.
The complaint should be submitted in
writing and should include the following:
Complainant's name, address, telephone number;
The
institution's name and address;
Type
of account involved in the complaint--checking, savings, or loan--and
account numbers, if applicable;
Description
of the complaint, including specific dates and the institution's actions
(copies of pertinent information or correspondence are also helpful);
Date
of contact and the names of individuals contacted at the institution
with their responses;
Complainant's
signature and the date the complaint is being submitted to the regulatory
agency.
The regulatory agencies will be able
to help resolve the complaint if the financial institution has violated
a banking law or regulation. They may not be able to help where the
consumer is not satisfied with an institutions's policy or practices,
even though no law or regulation was violated. Additionally, the regulatory
agencies do not resolve factual or most contractual disputes.
The following information will help
in determining which agency to contact.
National Bank
The Word "National" appears
in the bank's name, or the initials N.A. appear after the bank's name.
Agency to Contact: Comptroller of the Currency
State-Chartered Bank, Member of the Federal Reserve System
Two signs will be prominently displayed
on the door of the bank or in the lobby. One will say "Member,
Federal Reserve System." The other will indicate deposits are
insured by the Federal Deposit Insurance Corporation and/or "Deposits
Federally Insured to $100,000--Backed by the Full Faith and Credit
of the United States Government." The word "National"
does not appear in the name; the initials N.A. do not appear after
the name.
Agency to Contact: Federal Reserve Board for federal laws; State
Banking Department for state laws.
State Non-Member Bank or State-Chartered
Savings Bank, Federally Insured
A sign will be prominently displayed
at each teller station that indicates that deposits are insured by
the Federal Deposit Insurance Corporation and/or "Deposits Federally
Insured to $100,000--Backed by the Full Faith and Credit of the United
States Government." There will not be a sign saying "Member,
Federal Reserve System." The word "National" or the
initials N.A. will not appear in the name.
Agency to Contact: Federal Deposit Insurance Corporation for federal
laws; State Banking Department for state laws.
Federal Savings and Loan Association
or Federal Savings Association, Federally Insured
Generally, the work "Federal"
appears in the name of the savings and loan association or its name
includes initials such as "FA" which indicate its status
as a federal savings and loan association. A sign will be prominently
displayed at each teller station that says "Deposits Federally
Insured to $100,000--Backed by the Full Faith and Credit of the United
States Government."
Agency to Contact: Office of Thrift Supervision
Federal Savings Bank, Federally Insured
Generally, the work "Federal"
appears in the name of the savings bank or its name includes the initials
such as "FSB" which indicate its status as a federal savings
bank. A sign will prominently displayed at each teller station that
says "Deposits Insured to $100,000--Backed by the Full Faith
and Credit of the United States Government."
Agency to Contact: Office of Thrift Supervision
State-Chartered Federally Insured
Savings Institution
There will be a sign prominently displayed
at each teller station that says "Deposits Federally Insured
to $100,000--Backed by the Full Faith and Credit of the United States
Government."
Agency to Contact: Office of Thrift Supervision.
State Chartered Banks or Savings
Institutions without Federal Deposit Insurance
Institution has none of the above described
characteristics.
Agency to Contact: State Banking Department for state laws; Federal
Trade Commission for federal laws.
Federally Chartered Credit Union
The term "Federal credit union"
appears in the name of the credit union.
Agency to Contact: National Credit Union Administration
State-Chartered, Federally Insured
Credit Union
A sign will be displayed by stations
or windows where deposits are accepted indicating that deposits are
insured by NCUA. The term "Federal credit union" does not
appear in the name.
Agency to Contact: State Agency that regulates credit unions or Federal
Trade Commission.
State-Chartered Credit Unions without
Federal Insurance
The term "Federal credit union"
does not appear in the name.
Agency to Contact: State Agency that regulates credit unions or Federal
Trade Commission.
Complaints
Complaints should be mailed to the appropriate
agency with copies of all relevant documents. Original documents or
currency should not be sent. Addresses for the federal agencies are:
Board of Governors of the Federal Reserve
System
Division of Consumer and Community Affairs
20th & Constitution Avenue, NW
Washington, DC 20551
Federal Deposit Insurance Corporation
Office of Consumer Affairs
550 Seventeenth Street, NW
Washington, DC 20429
Office of Thrift Supervision
Consumer Affairs
1700 G Street, NW
Washington, DC 20552
National Credit Union Administration
1775 Duke Street
Alexandria, Virginia 22314-3428
Office of the Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street
Suite 3710
Houston, TX 77010
Federal Trade Commission
Bureau of Consumer Protection
Office of Credit Practices
Washington, DC 20580
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