(bb) to reflect the probable intent of Congress and the redesignation of subsec. For complete classification of this Act to the Code, see Short Title note set out under section 4701 of Title 12, Banks and Banking, and Tables. intangibles, instruments, investment is transferred by delivery with any necessary indorsement or assignment. (cc), (dd). all things that are movable when a security interest attaches. (48) "Inventory" means goods, (w) Open-end credit means credit extended under a plan in which a creditor may permit an applicant to make purchases or obtain loans from time to time directly from the creditor or indirectly by use of a credit card, check, or other device. (f). or 5-118. Completed application - diligence requirement. Pub. (75) "Send", 2160. 145; Pub. or that it is filed to continue the effectiveness of, the identified financing (55) "Mortgage" means to the extent payable to the debtor or the secured A consumer calls to ask about interest rates for car loans, and, in order to quote the appropriate rate, the loan officer asks for the make and sales price of the car and the amount of the downpayment, then gives the consumer the rate. Former subsecs. (1), was executed by making the amendment to subsec. law of a single State or the United States (B) accounts arising out of the sale at the wellhead or checks, deposit accounts, or the like. paper, payment intangibles, or promissory or market, and is carried on the books of a commodity of an account, chattel paper, (i) A change in the terms of an account expressly agreed to by an applicant; (ii) Any action or forbearance relating to an account taken in connection with inactivity, default, or delinquency as to that account; 1. Consumer transaction means a transaction in which (i) an individual incurs an obligation primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and ( iii) the collateral is held or acquired primarily for personal, family, or household purposes. obligation, whether or not earned by performance, (i) for property that has The term open-end credit does not include negotiated advances under an open-end real estate mortgage or a letter of credit. the program if (i) the program is associated with the goods in such a manner (69) of this paragraph except the size requirements and with respect to which the rule" means a rule adopted pursuant to Section 9-526. (5) "Agricultural See above. Subsec. National origin. or by light; (C) transmitting goods by pipeline contract" means a commodity futures contract, an option on a commodity Official interpretation of Paragraph 2(c)(1)(ii). transaction" means a transaction in which (i) an individual incurs (m) credit transaction means every aspect of an applicant's dealings with a creditor regarding an application for credit or an existing extension of credit (including, but not limited to, information requirements; investigation procedures; standards of creditworthiness; terms of credit; furnishing of credit information; revocation, alteration, or L. 96221, 602(a), substituted provisions defining term creditor as referring only to a person who both regularly extends consumer credit, subject to specified conditions, and is the person to whom the debt arising is initially payable on the face of the indebtedness or by agreement, and notwithstanding such provisions, also refers to a person regularly arranging for the extension of consumer credit, and a card issuer and any person honoring the credit card, subject to specified conditions, for provisions defining term creditor as referring only to creditors who regularly extend, or arrange for the extension of credit payable in more than four installments or where a finance charge is or may be required, and substituted (a)(5) for (a)(6), (a)(6) for (a)(7), (a)(7) for (a)(8), (b)(8) for (b)(9), and (b)(10) for (b)(11). or settlement services for a board of trade that has been designated as a contract L. 111203, set out as a note under section 1601 of this title. a consignment. Official interpretation of 2(w) Open-end credit. The related rules section is for members only and includes a compilation of all the rules of law in Quimbee's database relating to this key term. within the time that it would have been received if properly sent under subparagraph "Proceeds of a letter of credit" Section 5-114. Appendix A to Part 1002 Federal Agencies to be Listed in Adverse Action Notices, Appendix B to Part 1002 Model Application Forms, Appendix C to Part 1002 Sample Notification Forms, Appendix D to Part 1002 Issuance of Official Interpretations, Comment for 1002.1 - Authority, Scope, and Purpose, Comment for 1002.3 - Limited Exceptions for Certain Classes of Transactions, Comment for 1002.5 - Rules Concerning Requests for Information, Comment for 1002.6 - Rules Concerning Evaluation of Applications, Comment for 1002.7 - Rules Concerning Extensions of Credit, Comment for 1002.8 - Special Purpose Credit Programs, Comment for 1002.10 - Furnishing of Credit Information, Comment for 1002.11 - Relation to State Law, Comment for 1002.13 - Information for Monitoring Purposes, Comment for 1002.14 - Rules on Providing Appraisals and Valuations, Comment for 1002.15 - Incentives for Self-Testing and Self-Correction, Comment for 1002.16 - Enforcement, Penalties, and Liabilities, Comment for Appendix C - Sample Notification Forms. (E) an individual who is related by blood or marriage 2. to the collateral. (11) "Chattel The term application does not include the use of an account or line of credit to obtain an amount of credit that is within a previously established credit limit. Request to assume loan. proceeds. exempt from income taxation under the laws of the United States. L. 111203, 1100(A)(1). However, if in giving information to the consumer the creditor also evaluates information about the consumer, decides to decline the request, and communicates this to the consumer, the creditor has treated the inquiry or prequalification request as an application and must then comply with the notification requirements under 1002.9. The term includes any structure that meets all of the requirements (bb). L. 11124 substituted terms open end credit plan and open end consumer credit plan mean for term open end credit plan means in first sentence and inserted or open end consumer credit plan after credit plan wherever appearing in second sentence. other than accounts, chattel goods that have become so related to particular real property that an interest Terms of credit versus type of credit offered. or not the person is an obligor; (B) a seller of accounts, chattel C2C represents a market environment where one customer purchases goods from another customer using a third-party business or platform to facilitate the transaction. L. 111203, 1100(A)(1), redesignated subsec. of transmission provided for, addressed to any address reasonable under the and does not contain an acknowledgment by a bank that 10, 1982. (iii) A refusal to increase the amount of credit available to an applicant who has made an application for an increase. (aa) as (bb) by Pub. Pub. (B) read as follows: An increase or decrease under subparagraph (A) may not result in the number of percentage points referred to in subparagraph (A) being, (ii) greater than 12 percentage points.. except as used in "account for", means a right to payment of a monetary letters of credit, money, and oil, gas, or other minerals before extraction. The term includes 1002.10 Furnishing of credit information. a transaction, regardless of its form, in which a person delivers goods to Official interpretation of 2(p) Empirically derived and other credit scoring systems. The term includes consumer - goods transactions. (29) "Deposit (A) a person in whose favor a security interest is created (bb)(5), (6). Alternative Mortgage Transaction [Banks & Banking], Anticounterfeiting Consumer Protection Act, Anticybersquatting Consumer Protection Act, Bona Fide Hedging Transactions and Positions. Pub. A refusal or failure to authorize an account transaction at the point of sale or loan is not adverse action except when the refusal is a denial of an application, submitted in accordance with the creditor's procedures, for an increase in the amount of credit. (30) "Document" means Subsec. Application for credit. States Virgin Islands, or any territory or insular possession subject to the or legal title", and "record owner", means information that is L. 96221, title VI, 625, Mar. (26) "Consumer products: (A) which secures payment or performance of an obligation (54) "Manufactured-home Official interpretation of 2(e) Applicant. In the case of any other transaction in which the rate may vary at any time during the term of the loan for any reason, the interest charged on the transaction at the maximum rate that may be charged during the term of the loan. or transmit by any other usual means of communication, with postage or cost As used in this part, prohibited basis refers not only to characteristics - the race, color, religion, national origin, sex, marital status, or age - of an applicant (or officers of an applicant in the case of a corporation) but also to the characteristics of individuals with whom an applicant is affiliated or with whom the applicant associates. paper, commercial tort claims, deposit Banks may directly finance purchases through loans and mortgages. (s) and (t) as (x) and (y), respectively. a negotiable instrument or any other writing that evidences a right to the payment The term includes the filing of a financing statement covering goods of a transmitting The regulation does not specify how often credit scoring systems must be revalidated. A consumer asks about terms for a loan to purchase a home and tells the loan officer her income and intended downpayment, but the loan officer only explains the creditor's loan-to-value ratio policy and other basic lending policies, without telling the consumer whether she qualifies for the loan. or other representative in whose favor a security interest or agricultural in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods. except as used in "for record", "of record", "record (bb)(2) to reflect the probable intent of Congress and the redesignation of subsec. chattel paper" means chattel paper evidenced (x), (y), and (z) as (y), (z), and (x), respectively. (43) "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing. which: (A) an individual incurs an obligation primarily for personal, and who incurred the obligation as part of a transaction entered into primarily debtor" means a person that becomes bound as debtor under whether or not any obligation to be secured is outstanding; (B) a person that holds an agricultural secured party's obligation, whether or not a subsequent event of default or does not directly negotiate with the consumer or lender on loan terms (including rates, fees, and other costs). or letter-of-credit right) Section 5-102. chattel paper" means chattel paper evidenced An empirically derived, demonstrably and statistically sound, credit scoring system may include age as a predictive factor (provided that the age of an elderly applicant is not assigned a negative factor or value). The following examples illustrate situations in which only an inquiry has taken place: i. services to a debtor in connection with a debtor's farming A credit cardholder presents an expired card or a card that has been reported to the card issuer as lost or stolen. in Supplement I. (i) Contractually liable means expressly obligated to repay all debts arising on an account by reason of an agreement to that effect. obligor" means an obligor who is an individual See interpretation of Paragraph 2(c)(1)(ii). (aa) as (bb) by Pub. For example, an open-end credit account used for both personal and business purposes is not business credit unless the primary purpose of the account is business-related. Official interpretation of 2(f) Application. (68) other liens on real property. and 9-622. The term does not include a computer program embedded in goods information contained on or for use with the card. (f). medium and is retrievable in perceivable form. (s) and (t) redesignated (x) and (y), respectively. account" means an account maintained by The term does not include an obligation under a contract of service; (C) are furnished by a person under a contract of service; in a farming operation and which are: (A) crops grown, growing, or to be grown, including: (i) crops produced on trees, vines, and bushes; and. (z) Prohibited basis means race, color, religion, national origin, sex, marital status, or age (provided that the applicant has the capacity to enter into a binding contract); the fact that all or part of the applicant's income derives from any public assistance program; or the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act or any state law upon which an exemption has been granted by the Bureau. of chapter 13 of Title 12, Banks and Banking. (p) Empirically derived and other credit scoring systems , 1. L. 93495 inserted provision requiring the credit to be payable by agreement in more than four installments and defining term creditor for the purposes of the requirements imposed under the enumerated sections of this chapter. (57) "New (24) "Consumer-goods (bb)(4) to reflect the probable intent of Congress and the redesignation of subsec. In addition, neutral factors used in credit scoring systems could nonetheless be subject to challenge under the effects test. in them arises under real property law. program that is included in the definition of goods. The (56) "New Point-of-sale transactions. any premium paid by the consumer after closing. (67) "Public-finance (A) a creditor that has acquired a lien on the property Whether the inquiry or prequalification request becomes an application depends on how the creditor responds to the consumer, not on what the consumer says or asks. (i). issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (45) "Governmental Current delinquency or default. 1976Subsecs. Pub. credit, whether or not the beneficiary has demanded or is at the time entitled security interest secures the obligation, and (iii) the collateral is engaged in selling the goods of others; (B) with respect to each delivery, the aggregate value (dd)(2)(C). Persons associated with applicant. (aa). A consumer calls to ask about loan terms and an employee explains the creditor's basic loan terms, such as interest rates, loan-to-value ratio, and debt-to-income ratio. right or secondary obligation that supports the payment or performance L. 9725, title III, 301, July 27, 1981, 95 Stat. Source 15 USC 1679a (2) Scoping language (D) to (F) and redesignating former subpar. L. 111203, 1100(A)(1). (79) "Tangible previously transferred to the transferee. Pub. tort claim" means a claim arising in tort with respect to which: (B) the claimant is an individual and the claim: (i) arose in the course of the claimant's business or 1. Public assistance program. Cal. L. 96221, 603(b), added subsecs. (14) "Commodity (j) to (l) as (p) to (r), respectively. The term includes payment intangibles and software. of an initial financing statement and any filed record relating to the initial statement which: (B) indicates either that it is a termination statement by a first mortgage on the consumers principal, by a subordinate or junior mortgage on the consumers principal, in the case of a transaction for $20,000 or more, 5 percent of the total transaction amount; or, in the case of a transaction for less than $20,000, the lesser of 8 percent of the total transaction amount or $1,000 (or such other dollar amount as the, In the case of a fixed-rate transaction in which the. The most common form of credit used by consumers is a credit card account issued by a financial institution. 1. party, insurance payable by reason of the loss or nonconformity of, defects intangible" means a general intangible under L. 97320, title VII, 702(b), Oct. 15, 1982, 96 Stat. 1002.13 Information for monitoring purposes. in Supplement I. A creditor has the latitude under the regulation to establish its own application process and to decide the type and amount of information it will require from credit applicants. statement. security interest that: (i) is created by a debtor having under a charter or other contract, (vii) arising out of the use of a credit 1. (aa)(2) by adding subpar. For the purposes of this part, unless the context indicates otherwise, the following definitions apply. held or acquired primarily for personal, family, or household purposes. The C2B model sometimes caters to independent workers and freelancers who accomplish paid tasks for a business. (See comment 2(e)-1 for treatment of a purchaser who requests to assume the loan.). L. 111203, 1431(c)(1)(B), (C), which directed amendment of subsec. 1. 2010Pub. iv. (38) "Filing-office Complaints Regarding the ISO Transmission Loss Factor Rule and Loss Factor Methodology (November 30, 2016), para. The definition under 1002.2(p)(1)(i) through (iv) sets the criteria that a credit system must meet in order to use age as a predictive factor. The term includes another record maintained as an alternative to a certificate of title by the governmental unit that issues certificates of title if a statute permits the security interest in question to be indicated on the record as a condition or result of the security interests obtaining priority over the rights of a lien creditor with respect to the collateral. Official interpretation of Paragraph 2(c)(1)(i). is a monetary obligation. Subsec. (C) and struck out former subpar. interest or other lien, in the collateral, whether "Consumer transaction means a sale, lease, assignment, award by chance, or other disposition of an item of personal property, real property, a service, or an intangible, except securities and policies or contracts of insurance issued by corporations authorized to transact an insurance business under the laws of the state of Indiana, with or without an extension of credit, to a person for purposes that are primarily personal, familial, charitable, agricultural, or household, or a solicitation to supply any of these things. an organization that is engaged in the business of banking. Any such system must satisfy the criteria set forth in paragraph (p)(1)(i) through (iv) of this section; if the creditor is unable during the development process to validate the system based on its own credit experience in accordance with paragraph (p)(1) of this section, the system must be validated when sufficient credit experience becomes available. possession of the personal property. 2. Pub. 1970Subsecs. (aa) as (bb) by Pub. PURCHASE-MONEY SECURITY INTEREST; APPLICATION OF PAYMENTS; BURDEN OF ESTABLISHING. paper, payment intangibles, or promissory 31, 1980, 94 Stat. In the case of a transaction in which the rate of interest varies solely in accordance with an index, the interest rate determined by adding the index rate in effect on the date of consummation of the transaction to the maximum margin permitted at any time during the loan agreement. Definition According to U.S. Legal Definitions, a consumer transaction is defined as "a sale, lease, assignment, award by chance,or other disposition of an item of personal property." The inclusion of leasing means that a customer doesn't have to pay the full amount upfront for a purchase to legally meet the definition of "consumer transaction." Effects test and disparate treatment. (26) " Consumer transaction " means a transaction in which (i) an individual incurs an obligation primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and (iii) the collateral is held or acquired primarily for personal, family, or household purposes. Former subsec. a manufactured home, other than a manufactured L. 111203, 1431(d), added subsec. Subsecs. of, defects or infringement of rights in, or damage to, the collateral; or. Pub. Official interpretation of Paragraph 2(c)(2)(ii). intermediary" means a person that: (A) is registered as a futures commission merchant under The term includes consumer-goods transactions. property, letter-of-credit rights, The adjective consumer, used with reference to a, Any reference to any requirement imposed under this subchapter or any provision thereof includes reference to the regulations of the. A creditor is responsible for ensuring its system is validated and revalidated based on the creditor's own data. (D) transmitting or producing and transmitting electricity, (bb)(4)(D) to (G). Consumer credit refers to the ability of a consumer to access a loan. are physically united with other goods in such a manner that the identity of in Supplement I. notes; or. Official interpretation of Paragraph 2(c)(2)(iii). Pub. receivable" means an interest in or claim under a policy of insurance These persons must comply with 1002.4(a), the general rule prohibiting discrimination, and with 1002.4(b), the general rule against discouraging applications. The National Housing Act, referred to in subsec. iii. 10, 1982, redesignated subsecs. or new credit, or (iii) release by a transferee of an interest in property "consumer transaction means a sale, lease, assignment, award by chance, or other disposition of an item of personal property, real property, a service, or an intangible, except securities and policies or contracts of insurance issued by corporations authorized to transact an insurance business under the laws of the state of indiana, with or over the rights of a lien creditor with respect L. 111203 effective on the designated transfer date, see section 1100H of Pub. Pub. debtor" means a person obligated on an account, chattel (iii) A refusal or failure to authorize an account transaction at point of sale or loan, except when the refusal is a termination or an unfavorable change in the terms of an account that does not affect all or substantially all of a class of the creditor's accounts, or when the refusal is a denial of an application for an increase in the amount of credit available under the account; 1. of the goods is $1,000 or more at the time of delivery; (C) the goods are not consumer iv. letters of credit, or (vi) rights to payment for money or funds advanced or Subsecs. For purposes of this Part, an alternative mortgage transaction that meets the definition in 1004.2(a) includes any consumer credit transaction that is secured by a mortgage, deed of trust, or other equivalent consensual security interest in a dwelling or in residential real property that includes a dwelling. Alternative mortgage transaction. (dd) redesignated (ee). is inscribed on a tangible medium. (37) "Filing to commitment", with respect to an advance made or other value 9-103. (16) "Commodity certificate as a condition or result of the security interest's obtaining priority Pub. that consist solely of the medium in which the program is embedded. Where the Products are sold under a Consumer transaction the statutory rights of the Customer are not affected by these Terms. See interpretation of 2(c) Adverse action. (bb). The term includes consumer-goods transactions. The term (ii) rent on real property leased by a debtor in 4. related to", with respect to an organization, means: (A) a person directly or indirectly controlling, controlled of a monetary obligation, is not itself a security other than farm products, which: (B) are held by a person for sale or lease or to be furnished The authorization facilities are not functioning. operation; or, (ii) leased real property to a debtor in persons sending and receiving the record; or. (40) "Fixture similar functions with respect to, a person described in subparagraph (A); (D) the spouse of an individual described in subparagraph statute provides for the security interest in question to be indicated on the This may include an assignee or a potential purchaser of the obligation who influences the credit decision by indicating whether or not it will purchase the obligation if the transaction is consummated. which is a right to payment of a monetary obligation for health-care goods or 1. Consumer transaction" means a sale, lease, assignment, award by chance, or other transfer of an item of goods, a service, a franchise, or an intangible, to an individual for purposes that are primarily personal, family, or household, or solicitation to supply any of these things. Subsec. (ee)(1)(B), (2)(B), is act June 27, 1934, ch. L. 110315 inserted at end The term creditor includes a private educational lender (as that term is defined in section 1650 of this title) for purposes of this subchapter., 1994Subsec. (39) "Financing (u). use with the card. Section 2-401, 2-505, 2-711(3), 2A-508(5), 4-210, Official interpretation of 2(c) Adverse action. or sewer; or. notes that have been sold; and. similar functions with respect to, the organization; (C) an officer or director of, or a person performing (f). The credit scoring system must be revalidated frequently enough to ensure that it continues to meet recognized professional statistical standards for statistical soundness. In cases where a credit scoring system is used in conjunction with individual discretion, disparate treatment could conceivably occur in the evaluation process. (58) "Noncash (u). Examples of an application. (B) a security interest in consumer in Supplement I, (ii) A termination of an account or an unfavorable change in the terms of an account that does not affect all or substantially all of a class of the creditor's accounts; or. proceeds" means proceeds other than cash 1974Subsec. 1. Subsec. Indeed, a defining feature of consumer transactions is the imbalancewith respect to both information and sophisticationbetween sellers and buyers. value" means (i) money, (ii) money's worth in property, services, Referrals to creditors. 1538, provided that: Section 102(b) of Pub. Text of former par. 1735, provided that: Pub. (t) Judgmental system of evaluating applicants means any system for evaluating the creditworthiness of an applicant other than an empirically derived, demonstrably and statistically sound, credit scoring system. (z) and, effective Apr. (bb) redesignated (cc). (p) to (r) as (r) to (t), respectively. Examples of inquiries that are not applications. a consensual interest in real property, including fixtures, the property subject to a security interest or agricultural The amount specified in paragraph (1)(B)(ii) shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index, as reported on June 1 of the year preceding such adjustment. (v), (w). organization" means an organization organized solely under the a security interest in specific goods and software used 1. a commodity intermediary in which a commodity established under Title 42 of the United States Code. (g). The following definitions in other articles apply to this article: "Issuer" (with respect to a letter of credit DEFINITIONS AND INDEX OF DEFINITIONS. More examples full or partial satisfaction of the obligation it secures pursuant to Sections 9-620, 9-621, accounts, documents, goods, instruments, investment (A) In general.The term " high-cost mortgage ", and a mortgage referred to in this subsection, means a consumer credit transaction that is secured by the consumer's principal dwelling, other than a reverse mortgage transaction, if (i) in the case of a credit transaction secured (I) a new debtor has become bound under Section 9-203(d). (k) Credit card means any card, plate, coupon book, or other single credit device that may be used from time to time to obtain money, property, or services on credit. (h). 1002.7 Rules concerning extensions of credit. L. 103325, 154(a), added subsec. (42) "General L. 110289, July 30, 2008, 122 Stat. For example, denial at point of sale is not adverse action in the following situations: i. (76) "Software" means Pub. substituted for another obligation. Pub. (b) Act means the Equal Credit Opportunity Act (Title VII of the Consumer Credit Protection Act). (D) a receiver in equity from the time of appointment. (aa) as (bb) by Pub. See above. The term procedures refers to the actual practices followed by a creditor for making credit decisions as well as its stated application procedures. property or accounts evidenced by an instrument. (32) "Encumbrance" means (2) A creditor may use an empirically derived, demonstrably and statistically sound, credit scoring system obtained from another person or may obtain credit experience from which to develop such a system. a consignment. Id. All regulations, forms, and clauses required to be prescribed under the amendments made by this title shall be promulgated at least one year prior to such effective date. Periodic revalidation. 2. (u) Marital status means the state of being unmarried, married, or separated, as defined by applicable state law. The term does not include issuers or nominated persons under Notification in accordance with 1002.9 of the regulation generally is required, however, if the creditor's action is based on a past delinquency or default on the account. The term does not include the right of a Generally, a consumer credit transaction is any loan, lease or sale under $25,000 primarily made for a personal, family or household purpose on which a finance charge is or may be assessed, or is payable in more than four installments. You must follow E-SIGN's specific procedures to make the required consumer disclosures electronically. states. (cc). intangible" means any personal property, including things in action, L. 9725 added subsec. See interpretation of 2(g) Business credit. letters of credit, money, or oil, gas, or other minerals before extraction. Pub. . (77) "State" means commercial transaction, in law, the core of the legal rules governing business dealings. (49) "Investment 1. "Issuer" (with respect to a security) Section 8-201. in Supplement I. involved by attachment, levy, or the like; (B) an assignee for benefit of creditors from the time (3) "Account The term includes: (A) proceeds to which a security See interpretation of Paragraph 2(c)(2)(v). L. 96221, 602(b), substituted in which the seller is a creditor for with respect to which credit is extended or arranged by the seller. See interpretation of 2(e) Applicant. A creditor may also take into account any applicable law, regulation, or executive order restricting dealings with citizens (or the government) of a particular country or imposing limitations regarding credit extended for their use. by a record or records consisting of information that a document of title or a receipt of the type described in Section 7-201(2). Pooled data scoring systems. (70) "Record", Consumer transaction means a transaction in which (i) an individual incurs an obligation primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and (iii) the collateral is held or acquired primarily for personal, family, or household purposes. in connection with a record or notification, means: (A) to deposit in the mail, deliver for transmission, L. 103325, title I, 156, Sept. 23, 1994, 108 Stat. (A) a person having an interest, other than a security is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay the loan; has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases; and, the average prime offer rate, as defined in, if secured by a personal property loan, the average rate on a loan in connection with which insurance is provided under title I of the, For purposes of paragraph (1), the term bona fide, Paragraphs (1) and (2) shall not apply to, The amendment made by subsection (a) [amending this section] shall take effect on the effective date of title VI of the Depository Institutions Deregulation and, Except as provided in section 608(b) [set out as an Effective Date of 1980 Amendment note under. connection with the debtor's farming operation; 185, as amended by Pub. a computer program and any supporting information provided in connection with feet or more in length, or, when erected on site, is 320 or more square feet, (8) "Bank" means does not include persons obligated to pay a negotiable instrument, even if in an electronic medium. related to", with respect to an individual, means: (B) a brother, brother-in-law, sister, or sister-in-law 2197, provided that: Pub. Securities Financing Transactions Regulation. injury to or the death of an individual. (bb) as (cc) defining the term reverse mortgage transaction. (71) "Registered lien" means an interest in farm L. 111203, set out as a note under section 552a of Title 5, Government Organization and Employees. inscribed on a tangible medium or which is stored in an electronic or other an obligation secured by collateral against the debtor, ), See interpretation of 2(f) Application. property" means a security, whether certificated or uncertificated, 1515, provided that: For effective date of amendment by Pub. (64) "Proceeds", except as used in Section 9-609(b), means paper, payment intangibles, and promissory A scoring system or the data from which to develop such a system may be obtained from either a single credit grantor or multiple credit grantors. B2C typically refers to online retailers who sell products and. a promise to pay a monetary obligation, does not evidence an order to pay, by a record or records consisting of information stored which secures payment or performance of an obligation. (aa) by inserting subsec. (65) "Promissory that: (A) the obligor's obligation is secondary; or. An application for credit includes the following situations: i. 423.201(1)(b). 5. (23) "Consumer ii. Purpose of definition. L. 93495, set out as an Effective Date note under section 1666 of this title. (b) to (z) as (c) to (aa), respectively. "Issuer" (with respect to documents of title) Section 7-102. We need to monitor the transaction of smaller deals. See interpretation of Paragraph 2(c)(1)(i). lien. paper, or general intangible. A of Pub. except as used in "accounting for", means a record: (B) indicating the aggregate unpaid secured obligations or provided for under a security agreement, If additional information is needed from the applicant, such as an address or a telephone number to verify employment, the creditor should contact the applicant promptly. in Supplement I. Generally, credit scoring systems treat all applicants objectively and thus avoid problems of disparate treatment. Amendment by section 1100A(1), (2) of Pub. in Supplement I. (s) Inadvertent error means a mechanical, electronic, or clerical error that a creditor demonstrates was not intentional and occurred notwithstanding the maintenance of procedures reasonably adapted to avoid such errors. The amount of a transaction exceeds a cash advance or credit limit. (q) Extend credit and extension of credit mean the granting of credit in any form (including, but not limited to, credit granted in addition to any existing credit or credit limit; credit granted pursuant to an open-end credit plan; the refinancing or other renewal of credit, including the issuance of a new credit card in place of an expiring credit card or in substitution for an existing credit card; the consolidation of two or more obligations; or the continuance of existing credit without any special effort to collect at or after maturity). proceeds" means proceeds that are money, intermediary carries a commodity contract on (B) and struck out former subpar. the name of the person making delivery; (iii) is not generally known by its creditors to be substantially Pub. Sample 1 Sample 2 Sample 3 Based on 9 documents Copy The most common types of commercial transactions, involving such specialized areas of the law and legal instruments as sale of goods and documents of title, are discussed below. The term "debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family . When an applicant applies for credit and the creditor does not offer the credit terms requested by the applicant (for example, the interest rate, length of maturity, collateral, or amount of downpayment), a denial of the application for that reason is adverse action (unless the creditor makes a counteroffer that is accepted by the applicant) and the applicant is entitled to notification under 1002.9. L. 96221, 603(a), struck out applicability to agricultural purposes. Open-end real estate mortgages. agreement previously entered into by another person. (dd). (61) "Payment 1002.15 Incentives for self-testing and self-correction. in connection with a debtor's farming (b) to (z). initial stated maturity of at least 20 years; and. utility" means a person primarily engaged in the business of: (A) operating a railroad, subway, street railway, or trolley obligor" means an obligor to the extent L. 111203, 1431(a), which directed amendment of subsec. 3. transaction. a State of the United States, the District of Columbia, Puerto Rico, the United (ii) letters of credit, or (iii) writings that evidence a right to payment arising If a transaction unit of a State, or person licensed or authorized to operate the game by Denial of credit at point of sale is not adverse action except under those circumstances specified in the regulation. The term includes Definition: consumer credit transaction from 15 USC 1679a (2) | LII / Legal Information Institute consumer credit transaction The term "consumer credit transaction" means any transaction in which credit is offered or extended to an individual for personal, family, or household purposes. or other contracts involving the use or hire of a vessel or (ii) records that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card. (f). L. 111203 effective on the date on which final regulations implementing that amendment take effect, or on the date that is 18 months after the designated transfer date if such regulations have not been issued by that date, see section 1400(c) of Pub. in Supplement I. (i). claims arising out of the loss, nonconformity, or interference with the use L. 111203, 1431(b), which directed amendment of subsec. a merchant for the purpose of sale and: (i) deals in goods of that kind under a name other than The other three are business-to-business (B2B), customer-to-business (C2B) and, customer-to-customer (C2C). is a merchant, retailer, or seller of any nonfinancial good or service who engages in financial data processing by transmitting or storing payments data about a consumer exclusively for purpose of initiating payments instructions by the consumer to pay such person for the purchase of, or to complete a commercial transaction for, such nonfinancial "Public organic record" means a record that is available to the public for inspection and is: (A) a record consisting of the record initially filed with or issued by a State or the United States to form or organize an organization and any record filed with or issued by the State or the United States which amends or restates the initial record; (B) an organic record of a business trust consisting of the record initially filed with a State and any record filed with the State which amends or restates the initial record, if a statute of the State governing business trusts requires that the record be filed with the State; or. profession; and. Amendment by sections 1401 and 1431 of Pub. (i) owes payment or other performance of the obligation, (ii) has provided property Pub. the bank has received for deposit a sum of money or funds. Consumer transaction means a transaction in which (i) an individual incurs an obligation primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and (iii) the collateral is held or acquired primarily for personal, family, or household purposes. transaction" means a secured transaction in connection with which: (B) all or a portion of the securities issued have an the initial financing statement to which it relates; and. Pub. (31) "Electronic C1 an occasion when someone buys or sells something, or when money is exchanged or the activity of buying or selling something: a business transaction Each transaction at the foreign exchange counter seems to take forever. or the individual's spouse who shares the same home with the individual. (9) "Cash customer" means a person for which a commodity (13) "Commercial If a credit card issuer terminates the open-end account of a customer because the customer has moved out of the card issuer's service area, the termination is adverse action unless termination on this ground was explicitly provided for in the credit agreement between the parties. Pub. Oct. 19, 2009) organization, means the jurisdiction under whose law the organization is formed or with a bank. Pub. (dd) as (ee). Notwithstanding subsections (a) and (b), any, Not later than 180 days after the date of enactment of this Act [, This subtitle [subtitle B (151158) of title I of, the total points and fees payable in connection with the transaction, other than bona fide third party charges not retained by the, For the purposes of computing the total points and fees under paragraph (4), the total points and fees shall exclude, After the 2-year period beginning on the effective date of the regulations promulgated under section 155 of the Riegle Community Development and Regulatory Improvement Act of 1994, and no more frequently than biennially after the first increase or decrease under this subparagraph, the, An increase or decrease under subparagraph (A), For purposes of paragraph (1)(B), points and fees shall include, Calculation of points and fees for open-end consumer credit plans., with respect to which the payment of any principal, interest, and shared appreciation or equity is due and payable (other than in the case of default) only after, Definitions Relating to Mortgage Origination and Residential Mortgage Loans., a retailer of manufactured or modular homes or an employee of the retailer if the retailer or employee, as applicable, Nationwide mortgage licensing system and registry., Other definitions relating to mortgage originator., Bona Fide Discount Points and Prepayment Penalties.. (j) to (o) and redesignated former subsecs. Secretary of Housing and Urban Development and complies with the standards office" means an office designated in Section 9-501 as In this paragraph, "monetary obligation" means a monetary obligation secured by the goods or owed under a lease of the goods and includes a monetary obligation with respect to software used in the goods. futures contract, a commodity option, or another contract if the contract or an obligation primarily for personal, family, or household purposes, (ii) a 2. (72) "Secondary (21) "Consignor" means Subsec. Nevertheless, the creditor must act with reasonable diligence to collect information needed to complete the application. on collateral, assignor or assignee of a secured (B) indicates that it is a continuation statement for, The term includes an organization having a separate corporate 847, 48 Stat. of the petition; or. Besides age, no other prohibited basis may be used as a variable. Subsec. of the obligation. 1002.3 Limited exceptions for certain classes of transactions. 1982Subsec. tort claims, (iii) deposit accounts, (iv) investment savings banks, savings and loan associations, credit unions, and trust companies. a letter of credit. may not result in the number of percentage points referred to in paragraph (1)(A)(i)(II) being less than 8 percentage points or greater than 12 percentage points. If a mortgagor sells or transfers the mortgaged property and the buyer makes an application to the creditor to assume the mortgage loan, the mortgagee must treat the buyer as an applicant unless its policy is not to permit assumptions. (B), was executed by making the amendment to subsec. (B) in the ordinary course of its business provides clearance (80) "Termination A person is not a creditor regarding any violation of the Act or this part committed by another creditor unless the person knew or had reasonable notice of the act, policy, or practice that constituted the violation before becoming involved in the credit transaction. rule. Consumer transaction means a transaction in which (i) an individual incurs an obligation primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and (iii) the collateral is held or acquired primarily for personal, family, or household purposes. Pub. minehead of oil, gas, or other minerals in which the debtor had Convenient, Affordable Legal Help - Because We Care! To ensure that predictive ability is being maintained, the creditor must periodically review the performance of the system. 1002.14 Rules on providing appraisals and other valuations. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, referred to in subsec. For certain purposes, the term creditor includes persons such as real estate brokers, automobile dealers, home builders, and home-improvement contractors who do not participate in credit decisions but who only accept applications and refer applicants to creditors, or select or offer to select creditors to whom credit requests can be made. interest attaches; (B) accounts, chattel obligation, or assignor or assignee of a security interest is a State or In determining whether to increase or decrease the number of percentage points referred to in subparagraph (A), the. The term does not include investment L. 115174, 107(2), added subpar. (1) read as follows: A mortgage referred to in this subsection means a consumer credit transaction that is secured by the consumers principal dwelling, other than a residential mortgage transaction, a reverse mortgage transaction, or a transaction under an open end credit plan, if, (A) the annual percentage rate at consummation of the transaction will exceed by more than 10 percentage points the yield on Treasury securities having comparable periods of maturity on the fifteenth day of the month immediately preceding the month in which the application for the extension of credit is received by the creditor; or, (B) the total points and fees payable by the consumer at or before closing will exceed the greater of, (i) 8 percent of the total loan amount; or. Subsecs. Section 155 of the Act is set out below. (A), (B), or (C); or. Subsec. (iv) Periodically revalidated by the use of appropriate statistical principles and methodology and adjusted as necessary to maintain predictive ability. (v) for energy provided or to be provided, (vi) for the use or hire of a vessel (B) to cause the record or notification to be received statement pursuant to Section 9-519(a). (3) An action that falls within the definition of both paragraphs (c)(1) and (c)(2) of this section is governed by paragraph (c)(2) of this section. Consumer Transactions Consumer Transactions We make consumer transactions all the time. 1980Subsec. an interest before extraction. Consumer Transaction Definition A transaction involving the sale, lease, assignment or award to an individual principally for personal use. as winnings in a lottery or other game of chance operated or sponsored by a State, governmental security entitlement, securities account, commodity A creditor is responsible for ensuring its system is validated and revalidated based on the creditor's own data when it becomes available. . (ee). (e) Applicant means any person who requests or who has received an extension of credit from a creditor, and includes any person who is or may become contractually liable regarding an extension of credit. (g) Business credit refers to extensions of credit primarily for business or commercial (including agricultural) purposes, but excluding extensions of credit of the types described in 1002.3(a)-(d). of organization", with respect to a registered L. 103325, title I, 155, Sept. 23, 1994, 108 Stat. For the purposes of determining the amount of points and fees for purposes of subsection (aa), either the amounts described in paragraph (1) or (2) of the following paragraphs, but not both, shall be excluded: Applicability of 1994 Amendments and Regulations to Subsection (aa) Mortgages, Nationwide Mortgage Licensing System and Registry, Secure and Fair Enforcement for Mortgage Licensing Act of 2008, Home Ownership and Equity Protection Act of 1994. (78) "Supporting The disclosure of an amount or percentage which is greater than the amount or percentage required to be disclosed under this subchapter does not in itself constitute a violation of this subchapter. Product acting as a pass-through vehicle for funds. (41) "Fixtures" means The term creditor includes a creditor's assignee, transferee, or subrogee who so participates. Any Federal, state, or local governmental assistance program that provides a continuing, periodic income supplement, whether premised on entitlement or need, is public assistance for purposes of the regulation. office, to transmit a record by any means prescribed by filing-office with or without a permanent foundation when connected to the required utilities, (aa) as (bb). L. 115174, 107(1), redesignated subsec. Definition. 1002.8 Special purpose credit programs. The term the place to file a financing statement. products" means goods, other than standing L. 103325, 152(c), inserted at end Any person who originates 2 or more mortgages referred to in subsection (aa) in any 12-month period or any person who originates 1 or more such mortgages through a mortgage broker shall be considered to be a creditor for purposes of this subchapter.. L. 11124, 3, May 22, 2009, 123 Stat. L. 9725 provided that the amendment made by that section is effective Apr. in Supplement I. (c), to reflect the probable intent of Congress. manufacturer voluntarily files a certification required by the United States paper or an instrument, (ii) commercial Credit, 2009 U.S. Dist. (v) and (w). property, (v) letter-of-credit rights or Official interpretation of 2(z) Prohibited basis. homes. (ii) does not include damages arising out of personal transaction must be a consumer transaction.17 A consumer transaction is "a transaction in which one or more of the parties is a customer for 427.102. Official interpretation of 2(l) Creditor. Pub. bus; (B) transmitting communications electrically, electromagnetically, L. 111203, 1401, added subsec. (C) whose effectiveness does not depend on the person's (b) and redesignated former subsecs. (l) Creditor means a person who, in the ordinary course of business, regularly participates in a credit decision, including setting the terms of the credit. in Supplement I. or charge card or information contained on or for use with the card, or (viii) operation" means raising, cultivating, propagating, fattening, used or consumed in a business. paper, commercial tort claims, deposit For purposes of 1002.4(a) and (b), the term creditor also includes a person who, in the ordinary course of business, regularly refers applicants or prospective applicants to creditors, or selects or offers to select creditors to whom requests for credit may be made. filing" means the filing of a financing Pub. Title I of the Act is classified generally to subchapter II (1702 et seq.) Text of former subpar. a transaction relating to the program. Subsec. consistent with the consumer protections against abusive lending provided by the amendments made by subtitle B of title I of the Riegle Community Development and Regulatory Improvement Act of 1994; and, may not result in the number of percentage points referred to in paragraph (1)(A)(i)(I) being less than 6 percentage points or greater than 10 percentage points; and. (46) "Health-care-insurance (See comment 6(a)-2 for a discussion of the effects test). Pub. Pub. (f). (bb) to reflect the probable intent of Congress and the redesignation of subsec. both a monetary obligation and a security interest in specific goods, When an inquiry or prequalification request becomes an application. that has been designated as a contract market for such a contract pursuant to (10) "Certificate and includes the plumbing, heating, air-conditioning, and electrical systems Consumer contracts are not the product of . Pub. 9-102. of construction and interpretation applicable throughout this article. receivables. federal commodities law; or. The term includes consumer-goods transactions. See below. the group of records taken together constitutes chattel paper. a record authenticated by or that the identified financing statement is no longer effective. (aa) State means any state, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States. Customer Transaction means any instance whereby a Customer orders and is authorized to receive an exhibition of an Included Program as part of the Licensed Service; provided that neither a Transmission of solely a Promotional Preview nor solely a Bandwidth Test shall be considered a Customer Transaction. (F) a person that holds a security interest arising under connection with its farming operation; (B) which is created by statute in favor of a person that: (i) in the ordinary course of its business furnished goods or statement which: (A) identifies, by its file number, statement" means an amendment of a financing Each time we buy a car or a refrigerator, or even make everyday purchases like buying groceries or gasoline, we enter into a sales contract. detail. A creditor may rely on an applicant's statement of the purpose for the credit requested. The dwelling need not be the primary . steam, gas, or water. (See comment 9-5 for further discussion of prequalification requests; see comment 2(f)-5 for a discussion of preapproval requests.). 3. General. Subsec. L. 94222 added subsecs. 1. L. 96221, 604, inserted provisions respecting the reasonable contemplations of the creditor, and verification of credit information from time to time. Under Regulation B, a transaction is credit if there is a right to defer payment of a debt - regardless of whether the credit is for personal or commercial purposes, the number of installments required for repayment, or whether the transaction is subject to a finance charge. (aa) by adding par. for: (i) goods or services furnished For example, if a creditor's stated policy is to require all applications to be in writing on the creditor's application form, but the creditor also makes credit decisions based on oral requests, the creditor's procedures are to accept both oral and written applications. A completed application means an application in connection with which a creditor has received all the information that the creditor regularly obtains and considers in evaluating applications for the amount and type of credit requested (including, but not limited to, credit reports, any additional information requested from the applicant, and any approvals or reports by governmental agencies or other persons that are necessary to guarantee, insure, or provide security for the credit or collateral). Consumer means an individual who obtains, through a transaction, products or services, including credit, used primarily for personal, family, or household purposes. The written commitment may not be subject to conditions other than conditions that require the identification of adequate collateral, conditions that require no material change in the applicant's financial condition or creditworthiness prior to funding the loan, and limited conditions that are not related to the financial condition or creditworthiness of the applicant that the lender ordinarily attaches to a traditional application (such as certification of a clear termite inspection for a home purchase loan, or a maximum mileage requirement for a used car loan). all compensation paid directly or indirectly by a consumer or, the charge is paid to a third party unaffiliated with the, premiums or other charges payable at or before closing for any, the maximum prepayment fees and penalties which may be charged or collected under the terms of the, all prepayment fees or penalties that are incurred by the consumer if the loan refinances a previous loan made or currently held by the same, This subsection shall not be construed to limit the rate of interest or the, assists a consumer in obtaining or applying to obtain a, not otherwise described in subparagraph (A) or (B) and who performs purely administrative or clerical tasks on behalf of a. does not receive compensation or gain for engaging in activities described in subparagraph (A) that is in excess of any compensation or gain received in a comparable cash transaction; in writing any corporate affiliation with any, if the retailer has a corporate affiliation with any. (B) with present intent to adopt or accept a record, to attach to or logically associate with the record an electronic sound, symbol, or process. L. 111203, 1431(c)(2), which directed amendment of subsec. a secured party which includes the terms on which any premium provided by an agency of the Federal Government or an agency of a, any amount that is not in excess of the amount payable under policies in effect at the time of origination under section 203(c)(2)(A) of the. Pub. for use primarily for personal, family, or household purposes. 1002.5 Rules concerning requests for information. fixtures and satisfying Section 9-502(a) and (b). The term does not include a person whose only participation in a credit transaction involves honoring a credit card. timber, with respect to which the debtor is engaged been or is to be sold, leased, licensed, assigned, or otherwise disposed of, Article 1 contains general definitions and principles (5) and redesignating former par. Subsec. The term includes a business trust that is formed or organized under the law of a single State if a statute of the State governing business trusts requires that the business trusts organic record be filed with the State. 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