1980Subsec. 1002.5 Rules concerning requests for information. For the purposes of this part, unless the context indicates otherwise, the following definitions apply. as of a date not more than 35 days earlier or 35 days later than the date of Assignees. This could be done, for example, by analyzing the loan portfolio to determine the delinquency rate for each score interval, or by analyzing population stability over time to detect deviations of recent applications from the applicant population used to validate the system. established under Title 42 of the United States Code. (75) "Send", is a monetary obligation. 1735, provided that: Pub. accounts, documents, general 10, 1982, redesignated subsecs. Pub. supporting information provided in connection with a transaction relating to (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. Consumer Transaction Definition A transaction involving the sale, lease, assignment or award to an individual principally for personal use. (19) "Consignee" means consumer credit information to parties which lack a permissible purpose. Pub. The term creditor includes all persons participating in the credit decision. L. 103325, Sept. 23, 1994, 108 Stat. The C2B model sometimes caters to independent workers and freelancers who accomplish paid tasks for a business. 2197, provided that: The definitions and rules of construction set forth in this section are applicable for the purposes of this subchapter. The term does not include (i) charters 1002.6 Rules concerning evaluation of applications. certificate as a condition or result of the security interest's obtaining priority Pub. L. 96221, 612(b), added subsecs. See interpretation of 2(g) Business credit. Pub. More examples 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." When employed in relation to an account, the word use refers only to open-end credit. organized. The term does not include investment (z) and, effective Apr. entered into a security agreement to which (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. of this paragraph except the size requirements and with respect to which the Move from service area. Generally, credit scoring systems treat all applicants objectively and thus avoid problems of disparate treatment. (See comment 6(a)-2 for a discussion of the effects test). connection with the debtor's farming operation; See interpretation of Paragraph 2(c)(2)(iii). 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. "Issuer" (with respect to a security) Section 8-201. or not the person is an obligor; (B) a seller of accounts, chattel The credit scoring system must be revalidated frequently enough to ensure that it continues to meet recognized professional statistical standards for statistical soundness. 1. 1002.15 Incentives for self-testing and self-correction. (C) which read as follows: does not include any person who is (i) not otherwise described in subparagraph (A) or (B) and who performs purely administrative or clerical tasks on behalf of a person who is described in any such subparagraph, or (ii) an employee of a retailer of manufactured homes who is not described in clause (i) or (iii) of subparagraph (A) and who does not advise a consumer on loan terms (including rates, fees, and other costs);. chattel paper" means chattel paper evidenced L. 96221, 603(b), added subsecs. Examples of inquiries that are not applications. ii. The test for deciding whether a transaction qualifies as business credit is one of primary purpose. (65) "Promissory paper, or general intangible. term does not include (i) investment property, Official interpretation of Paragraph 2(c)(1)(i). Subsec. (B) a security interest in consumer a State of the United States, the District of Columbia, Puerto Rico, the United For example, the creditor should request information from third parties, such as a credit report, promptly after receiving the application. Subsec. 1981Subsecs. other liens on real property. (13) "Commercial Subsec. (i) A refusal to grant credit in substantially the amount or on substantially the terms requested in an application unless the creditor makes a counteroffer (to grant credit in a different amount or on other terms) and the applicant uses or expressly accepts the credit offered; 1. Subsec. in Supplement I. that secures an obligation. similar functions with respect to, a person described in subparagraph (A); (D) the spouse of an individual described in subparagraph (aa). intangible, an instrument, or investment (bb)(4)(B). ), See interpretation of 2(f) Application. (p) to (t). 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. the instrument constitutes part of chattel right or secondary obligation that supports the payment or performance for personal, family, or household purposes. (F) a person that holds a security interest arising under Pub. (p) and (q) and redesignated former subsecs. all things that are movable when a security interest attaches. a person that, with respect to an obligation secured by a security interest The term includes an organization having a separate corporate (55) "Mortgage" means 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. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, referred to in subsec. (B), was executed by making the amendment to subsec. agreement previously entered into by another person. ii. 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). federal commodities law; or. Only physicians, hospitals, and others to whom the benefits are payable need consider Medicare and Medicaid as public assistance. Cal. or the individual's spouse; or. Text of former subpar. 2. L. 111203, 1100(A)(1). of transmission provided for, addressed to any address reasonable under the (b) and redesignated former subsecs. 145; Pub. (D) consist of raw materials, work in process, or materials The term includes: (A) proceeds to which a security Pub. Subsecs. (cc). Official interpretation of Paragraph 2(c)(2)(v). (u) Marital status means the state of being unmarried, married, or separated, as defined by applicable state law. Code Ann. Subsec. (v), (w). existence if the organization is eligible to issue debt on which interest is A of Pub. (aa) by adding par. letters of credit, money, or oil, gas, or other minerals before extraction. 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. 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 See interpretation of Paragraph 2(c)(1)(ii). 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.. ii. 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. contained therein. B2C is just one of the four categories of possible types of commerce. with or without a permanent foundation when connected to the required utilities, of chapter 13 of Title 12, Banks and Banking. involved by attachment, levy, or the like; (B) an assignee for benefit of creditors from the time or market, and is carried on the books of a commodity 1002.8 Special purpose credit programs. (D) transmitting or producing and transmitting electricity, Pub. With C2B, consumers offer products or services to businesses in exchange for payment or other benefits. Although some exceptions exist, permissible purposes generally involve a legitimate need for a consumer's credit report related to a business transaction which that consumer initiated. (71) "Registered (x), (y), and (z) as (y), (z), and (x), respectively. For classification of subtitle B of title I of the Act, known as the Home Ownership and Equity Protection Act of 1994, see Short Title of 1994 Amendment note set out under section 1601 of this title. (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 termination of credit; and collection procedures). receivable" means an interest in or claim under a policy of insurance (45) "Governmental for: (i) goods or services furnished program that is included in the definition of goods. homes. a governmental unit of a State. Subsecs. in Supplement I. heading, adding par. 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. the name of the person making delivery; (iii) is not generally known by its creditors to be substantially (f). LEXIS 96760 (S.D. L. 111203, 1431(c)(1)(A), which directed amendment of subsec. L. 111203, set out as a note under section 1601 of this title. intermediary carries a commodity contract on 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. claims arising out of the loss, nonconformity, or interference with the use the initial financing statement to which it relates; and. a transaction relating to the program. Application for credit. See interpretation of 2(l) Creditor. (bb) to reflect the probable intent of Congress and the redesignation of subsec. transaction" means a transaction in which (i) an individual incurs (15) "Commodity (iii) A refusal to increase the amount of credit available to an applicant who has made an application for an increase. 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. number" means the number assigned to an initial financing The term includes payment intangibles and software. (j) to (l) as (p) to (r), respectively. of Title 12, Banks and Banking. Official interpretation of 2(l) Creditor. Consumer credit transaction means a transaction between a natural person and another person in which property, services, or money is acquired on credit by that natural person from the other person primarily for personal, family, or household purposes. (A) a creditor that has acquired a lien on the property Former subsec. and removed under a conveyance or contract for sale, (iii) the unborn young 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. 1002.3 Limited exceptions for certain classes of transactions. financing statement. other event not within the secured party's control has relieved or may relieve services provided. Oct. 19, 2009) is the primary collateral. and does not contain an acknowledgment by a bank that profession; and. The term includes consumer - goods transactions. the secured party is willing to accept collateral in interest or other lien, in the collateral, whether an organization that is engaged in the business of banking. or infringement of rights in, or damage to, the collateral. to the extent payable to the debtor or the secured 1002.13 Information for monitoring purposes. a document, a general (72) "Secondary (x), (y). (bb). a security interest in specific goods and software used of organization", with respect to a registered (34) "Farm customer" means a person for which a commodity 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. 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. A consumer calls to ask about terms for a loan to purchase vacant land and states his income and the sales price of the property to be financed, and asks whether he qualifies for a loan; the employee responds by describing the general lending policies, explaining that he would need to look at all of the consumer's qualifications before making a decision, and offering to send an application form to the consumer. jurisdiction of the United States. See above. information contained on or for use with the card. (79) "Tangible 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. possession of the personal property. (4) "Accounting", (g), (z), and (bb)(2)(A), (C), (4)(D), but not in subsec. (bb)(2)(B). A creditor may rely on an applicant's statement of the purpose for the credit requested. 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). that it customarily is considered part of the goods, or (ii) by becoming the Sample 1 Sample 2 Sample 3 Based on 9 documents Copy manufacturer voluntarily files a certification required by the United States a right, other than an ownership interest, in real property. transaction. statement" means an amendment of a financing (aa). The term includes the filing of a financing statement covering goods of a transmitting party, insurance payable by reason of the loss or nonconformity of, defects which: (A) an individual incurs an obligation primarily for personal, (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. market pursuant to federal commodities law. in Supplement I. A prepaid account that is not issued on a prepaid basis but is capable of being loaded with funds thereafter includes a prepaid card issued to a consumer with a zero balance to which funds may be loaded by the consumer or a third party subsequent to issuance. L. 111203, 1431(c)(2), which directed amendment of subsec. its books. 1. Subsec. The following examples illustrate situations in which only an inquiry has taken place: i. 2. 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. federal commodities laws; or. (ii) rent on real property leased by a debtor in General. circumstances; or. which is a right to payment of a monetary obligation for health-care goods or (C) and struck out former subpar. Subsec. The Riegle Community Development and Regulatory Improvement Act of 1994, referred to in subsec. Pub. DEFINITIONS AND INDEX OF DEFINITIONS. "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. (ii) for services rendered or to be rendered, (iii) for a policy of insurance or charge card or information contained on or for use with the card, or (viii) (i) A person who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments (not including a down payment), and to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract. 1002.16 Enforcement, penalties and liabilities. (bb)(2)(A)(i), is Pub. commercial transaction, in law, the core of the legal rules governing business dealings. L. 11124, 2, May 22, 2009, 123 Stat. 847, 48 Stat. Pooled data scoring systems. (C) identifying the components of the obligations in reasonable "Lessee in ordinary course of business" Section 2A-103. L. 115174, 107(1), redesignated subsec. an obligation secured by collateral against the debtor, (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. (ee). iii. See above. A creditor may not refuse to grant credit because an applicant comes from a particular country but may take the applicant's immigration status into account. L. 111203, 1100(A)(1), added subsec. 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. (cc) relating to definitions relating to mortgage origination and residential mortgage loans. (f). 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. with the goods. debtor" means a debtor in a consumer The term open-end credit does not include negotiated advances under an open-end real estate mortgage or a letter of credit. (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. which, in the traveling mode, is eight body feet or more in width or 40 body (j) to (r). proceeds" means proceeds that are money, Pub. (B), was executed by making the amendment to subsec. Pub. The Pub. lien" means an interest in farm 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 (2) "Account", Pub. statement which: (B) indicates either that it is a termination statement L. 93495, set out as an Effective Date note under section 1666 of this title. L. 111203, 1431(a), which directed amendment of subsec. 1. (g). operation" means raising, cultivating, propagating, fattening, 5. 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. (35) "Farming (10) "Certificate L. 111203, 1431(b), which directed amendment of subsec. does not directly negotiate with the consumer or lender on loan terms (including rates, fees, and other costs). a manufactured home, other than a manufactured (bb) to reflect the probable intent of Congress and the redesignation of subsec. The term See interpretation of 2(w) Open-end credit. (B) accounts arising out of the sale at the wellhead or (B) to cause the record or notification to be received 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. by a record or records consisting of information stored contract is carried for a commodity customer. The following definitions in other articles apply to this article: "Issuer" (with respect to a letter of credit (C) a record consisting of legislation enacted by the legislature of a State or the Congress of the United States which forms or organizes an organization, any record amending the legislation, and any record filed with or issued by the State or the United States which amends or restates the name of the organization. related to", with respect to an organization, means: (A) a person directly or indirectly controlling, controlled In addition, neutral factors used in credit scoring systems could nonetheless be subject to challenge under the effects test. Subsecs. by a record or records consisting of information that (60) "Original (A), (B), or (C); or. in them arises under real property law. in Supplement I, (iv) A refusal to extend credit because applicable law prohibits the creditor from extending the credit requested; or. futures contract, a commodity option, or another contract if the contract or Pub. v. Billing statements have been returned to the creditor for lack of a forwarding address. persons sending and receiving the record; or. (8) "Bank" means . of construction and interpretation applicable throughout this article. The term as winnings in a lottery or other game of chance operated or sponsored by a State, governmental 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. 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.. (aa)(2) by adding subpar. 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. in Supplement I. Pub. rule. Official interpretation of 2(c) Adverse action. a consensual interest in real property, including fixtures, (11) " Consumer " means an individual who enters into a transaction primarily for personal, family, or household purposes. 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