Truth in Lending Act
Section 226.25 - Record retention.
Section 226.26 - Use of annual percentage rate
in oral disclosures.
Section 226.27 - Spanish language disclosures.
Section 226.28 - Effect on state laws.
Section 226.29 - State exemptions.
Section 226.30 - Limitation on rates.
Sec. 226.25 Record retention.
(a) General rule. A creditor shall retain
evidence of compliance with this regulation (other than advertising
requirements under Secs. 226.16 and 226.24) for 2 years after
the date disclosures are required to be made or action is required
to be taken. The administrative agencies responsible for enforcing
the regulation may require creditors under their jurisdictions
to retain records for a longer period if necessary to carry out
their enforcement responsibilities under section 108 of the act.
(b) Inspection of records. A creditor
shall permit the agency responsible for enforcing this regulation
with respect to that creditor to inspect its relevant records
Sec. 226.26 Use of annual percentage
rate in oral disclosures.
(a) Open-end credit. In an oral response
to a consumer's inquiry about the cost of open-end credit, only
the annual percentage rate or rates shall be stated, except that
the periodic rate or rates also may be stated. If the annual percentage
rate cannot be determined in advance because there are finance
charges other than a periodic rate, the corresponding annual percentage
rate shall be stated, and other cost information may be given.
(b) Closed-end credit. In an oral response
to a consumer's inquiry about the cost of closed-end credit, only
the annual percentage rate shall be stated, except that a simple
annual rate or periodic rate also may be stated if it is applied
to an unpaid balance. If the annual percentage rate cannot be
determined in advance, the annual percentage rate for a sample
transaction shall be stated, and other cost information for the
consumer's specific transaction may be given.
Sec. 226.27 Spanish language disclosures.
All disclosures required by this regulation
shall be made in the English language, except in the Commonwealth
of Puerto Rico, where creditors may, at their option, make disclosures
in the Spanish language. If Spanish disclosures are made, English
disclosures shall be provided on the consumer's request, either
in substitution for or in addition to the Spanish disclosures.
This requirement for providing English disclosures on request
shall not apply to advertisements subject to Secs. 226.16 and
226.24 of this regulation.
Sec. 226.28 Effect on State laws.
(a) Inconsistent disclosure requirements.
(1) Except as provided in paragraph (d) of this section, State
law requirements that are inconsistent with the requirements contained
in chapter 1 (General Provisions), chapter 2 (Credit Transactions),
or chapter 3 (Credit Advertising) of the act and the implementing
provisions of this regulation are preempted to the extent of the
inconsistency. A State law is inconsistent if it requires a creditor
to make disclosures or take actions that contradict the requirements
of the Federal law. A State law is contradictory if it requires
the use of the same term to represent a different amount or a
different meaning than the Federal law, or if it requires the
use of a term different from that required in the Federal law
to describe the same item. A creditor, State, or other interested
party may request the Board to determine whether a State law requirement
is inconsistent. After the Board determines that a State law is
inconsistent, a creditor may not make disclosures using the inconsistent
term or form.
(2)(i) State law requirements are inconsistent
with the requirements contained in sections 161 (Correction of
billing errors) or 162 (Regulation of credit reports) of the Act
and the implementing provisions of this regulation and are preempted
if they provide rights, responsibilities, or procedures for consumers
or creditors that are different from those required by the Federal
law. However, a State law that allows a consumer to inquire about
an open-end credit account and imposes on the creditor an obligation
to respond to such inquiry after the time allowed in the Federal
law for the consumer to submit written notice of a billing error
shall not be preempted in any situation where the time period
for making written notice under this regulation has expired. If
a creditor gives written notice of a consumer's rights under such
State law, the notice shall state that reliance on the longer
time period available under State law may result in the loss of
important rights that could be preserved by acting more promptly
under Federal law; it shall also explain that the State law provisions
apply only after expiration of the time period for submitting
a proper written notice of a billing error under the Federal law.
If the State disclosures are made on the same side of a page as
the required Federal disclosures, the State disclosures shall
appear under a demarcation line below the Federal disclosures,
and the Federal disclosures shall be identified by a heading indicating
that they are made in compliance with Federal law.
(ii) State law requirements are inconsistent
with the requirements contained in chapter 4 (Credit billing)
of the Act (other than section 161 or 162) and the implementing
provisions of this regulation and are preempted if the creditor
cannot comply with State law without violating Federal law.
(iii) A State may request the Board to
determine whether its law is inconsistent with chapter 4 of the
Act and its implementing provisions.
(b) Equivalent disclosure requirements.
If the Board determines that a disclosure required by state law
(other than a requirement relating to the finance charge, annual
percentage rate, or the disclosures required under Sec. 226.32)
is substantially the same in meaning as a disclosure required
under the act or this regulation, creditors in that state may
make the state disclosure in lieu of the federal disclosure. A
creditor, State, or other interested party may request the Board
to determine whether a State disclosure is substantially the same
in meaning as a Federal disclosure.
(c) Request for determination. The procedures
under which a request for a determination may be made under this
section are set forth in appendix A.
(d) Special rule for credit and charge
cards. State law requirements relating to the disclosure of credit
information in any credit or charge card application or solicitation
that is subject to the requirements of section 127(c) of chapter
2 of the act (Sec. 226.5a of the regulation) or in any renewal
notice for a credit or charge card that is subject to the requirements
of section 127(d) of chapter 2 of the act (Sec. 226.9(e) of the
regulation) are preempted. State laws relating to the enforcement
of section 127 (c) and (d) of the act are not preempted.
Sec. 226.29 State exemptions.
(a) General rule. Any State may apply
to the Board to exempt a class of transactions within the State
from the requirements of chapter 2 (Credit transactions) or chapter
4 (Credit billing) of the Act and the corresponding provisions
of this regulation. The Board shall grant an exemption if it determines
(1) The State law is substantially similar
to the Federal law or, in the case of chapter 4, affords the consumer
greater protection than the Federal law; and
(2) There is adequate provision for enforcement.
(b) Civil liability. (1) No exemptions
granted under this section shall extend to the civil liability
provisions of sections 130 and 131 of the Act.
(2) If an exemption has been granted,
the disclosures required by the applicable State law (except any
additional requirements not imposed by Federal law) shall constitute
the disclosures required by this Act.
(c) Applications. The procedures under
which a State may apply for an exemption under this section are
set forth in appendix B.
Sec. 226.30 Limitation on rates.
A creditor shall include in any consumer
credit contract secured by a dwelling and subject to the act and
this regulation the maximum interest rate that may be imposed
during the term of the obligation 50 when:
50 Compliance with
this section will constitute compliance with the disclosure requirements
on limitations on increases in footnote 12 to Secs. 226.6(a)(2)
and 226.18(f)(2) until October 1, 1988.
(a) In the case of closed-end credit,
the annual percentage rate may increase after consummation, or
(b) In the case of open-end credit, the
annual percentage rate may increase during the plan.
SubPart A - General
SubPart B - Open-End Credit
- (Large File - May Load Slowly)
SubPart C - Closed-End Credit
Subpart E - Special Rules
for Certain Home Mortgage Transactions
Appendices A - L
Credit And Banking