§2199 — Title 12 Banks and Banking | U.S. Code

Summary

Qualified lenders must give borrowers clear information by the time the loan closes for loans not covered by the Truth in Lending Act. They must state the current interest rate. For adjustable loans they must say how much and how often the rate can change, or say if there are no limits, and list the factors used to set rate changes (such as cost of funds, operating expenses, and loan loss reserves). They must show, with an example, how fees or buying stock or participation certificates affect the effective interest rate. They must notify borrowers of any rate change within a reasonable time after it happens. They must also say that purchased stock is at risk unless guaranteed under section 2162, and explain the different loan options, their terms, and borrowers’ rights. If a lender offers more than one interest rate, a borrower can ask for a review. The lender must check the rate, explain in writing why that rate was charged, and explain in writing how the borrower could improve credit to get a lower rate.

Title 12, §2199

Banks and Banking — Source: USLM XML via OLRC

(a)In accordance with regulations of the Farm Credit Administration, qualified lenders shall provide to borrowers, for all loans that are not subject to the Truth in Lending Act (15 U.S.C. 1601 et seq.), meaningful and timely disclosure not later than the time of the loan closing, of—

(1)the current rate of interest on the loan;

(2)in the case of an adjustable or variable rate loan, the amount and frequency by which the interest rate can be increased during the term of the loan or, if there are no such limitations, a statement to that effect, and the factors (including the cost of funds, operating expenses, and provision for loan losses) that will be taken into account by the qualified lender in determining adjustments to the interest rate;

(3)the effect, as shown by a representative example or examples, of any loan origination charges or purchases of stock or participation certificates on the effective rate of interest;

(4)any change in the interest rate applicable to the borrower’s loan, and notice to the borrower of a change in the interest rate applicable to the loan of the borrower may be made within a reasonable time after the effective date of an increase or decrease in the interest rate;

(5)except with respect to stock guaranteed under section 2162 of this title, a statement indicating that stock that is purchased is at risk; and

(6)a statement indicating the various types of loan options available to borrowers, with an explanation of the terms and borrowers’ rights that apply to each type of loan.

(b)A qualified lender offering more than one rate of interest to borrowers shall, at the request of a borrower of a loan—

(1)provide a review of the loan to determine if the proper interest rate has been established;

(2)explain to the borrower in writing the basis for the interest rate charged; and

(3)explain to the borrower in writing how the credit status of the borrower may be improved to receive a lower interest rate on the loan.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Truth in Lending Act, referred to in subsec. (a), is title I of Pub. L. 90–321, May 29, 1968, 82 Stat. 146, which is classified generally to subchapter I (§ 1601 et seq.) of chapter 41 of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see

Short Title

note set out under section 1601 of Title 15 and Tables.

Prior Provisions

A prior section 4.13 of Pub. L. 92–181, title IV, Dec. 10, 1971, 85 Stat. 613, was renumbered section 4.13B by Pub. L. 99–205, title III, § 301(a), Dec. 23, 1985, 99 Stat. 1707, and is classified to section 2201 of this title.

Amendments

1996—Subsec. (a)(4). Pub. L. 104–105 inserted before semicolon at end “, and notice to the borrower of a change in the interest rate applicable to the loan of the borrower may be made within a reasonable time after the

Effective Date

of an increase or decrease in the interest rate”. 1988—Pub. L. 100–233, § 109, designated existing provisions as subsec. (a), inserted heading, and added subsec. (b). Pub. L. 100–233, § 103, amended section generally, substituting introductory provisions and cls. (1) to (6) for former subsecs. (a) and (b).

Statutory Notes and Related Subsidiaries

Effective Date

Section effective thirty days after Dec. 23, 1985, see section 401 of Pub. L. 99–205, set out as an

Effective Date

of 1985 Amendment note under section 2001 of this title.

§2199 Disclosure

Summary

Title 12, §2199

Notes & Related Subsidiaries

Editorial Notes

References in Text

Short Title

Prior Provisions

Amendments

Effective Date

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata