Rhode Island General Laws 6-27-11. Additional disclosures
In the case of any open-end consumer credit plan secured by a consumer’s principal residence, the following provisions shall apply:
(1) The disclosures required by subdivisions (2) and (3) of this section shall be provided to the consumer on a separate document on or before the closing date.
(2) The following information shall be disclosed:
(i) The annual percentage rate that will be in effect when credit is first extended in connection with the loan or a description of the manner in which the rate will be computed;
(ii) The manner in which any changes in the annual percentage rate of interest will be made, and the timing of any changes, including any index or other rate of interest to which the changes in rates are related;
(iii) Any fee imposed for the availability of the account, including but not limited to, annual fees, application fees, and the fees commonly designated as “points”;
(iv) In the case of a variable rate, the maximum annual percentage rate that may be imposed at any time under the plan and the maximum amount by which the annual percentage rate may change in any one-year period. If no limit exists, that fact shall be disclosed;
(v) The maximum interest payment for a thirty-day (30)period at the highest interest rate permitted under the terms of the open-end plan and based on the maximum amount of credit available under the plan;
(vi) A statement that the plan is secured by the consumer’s dwelling and, in the event of any default, the consumer risks the loss of the home;
(vii) If applicable, a statement that the disclosures are good-faith estimates of the terms and conditions applicable to the plan, and are subject to change before the plan is opened;
(viii) If applicable, a statement that the creditor has the right to change the terms and conditions during the plan, including the index and margin used to determine the interest rate and payment amount, at any time; and
(ix) If applicable, a statement that although interest-only payments may be less on a monthly basis, they retire no principal, prolong the obligation, and result in greater total expenses over the life of the loan.
(3)(i) In addition to the requirements of this chapter, any advertisement to aid, promote, or assist, directly or indirectly, the extension of consumer credit through an open-end credit plan secured by the consumer’s principal dwelling that states a specific monthly payment based on a variable rate of interest shall state all of the following terms:
(A) Any maximum or fixed amount that could be imposed; and
(B) The periodic rates expressed as annual percentage rates.
(ii) If any advertisement described in subdivision (3)(i) contains a statement that any interest expense incurred with respect to a plan is or may be tax deductible, the advertisement shall include a clear and conspicuous statement that the interest expense may not be completely deductible for all taxpayers.
(iii) No advertisement described in subdivision (3)(i) with respect to any home equity loan may refer to the loan as “free money or easy money.”
History of Section.
P.L. 1988, ch. 246, § 1; P.L. 2014, ch. 528, § 17.
Terms Used In Rhode Island General Laws 6-27-11
- Annual percentage rate: The cost of credit at a yearly rate. It is calculated in a standard way, taking the average compound interest rate over the term of the loan so borrowers can compare loans. Lenders are required by law to disclose a card account's APR. Source: FDIC
- Credit: means any loan, mortgage, deed of trust, advance, or discount; any conditional sales contract; any contract to sell, or sale or contract of sale of property or services either for present or future delivery, under which part or all of the price is payable subsequent to the making of the sale or contract and the creditor imposes a finance charge; any contract or arrangement for the hire, bailment, or leasing of property in connection with which the creditor imposes a finance charge; any option, demand, lien, pledge, or other claim against or for the delivery of property or money; any purchase, or other acquisition of, or any credit upon the security of, any obligation or claim arising out of any of the foregoing; and any transaction or series of transactions having a similar purpose or effect. See Rhode Island General Laws 6-27-3
- Creditor: means any person engaged in the business of extending credit, including any person who as a regular business practice makes loans or sells or rents property or services on a time, credit, or installment basis, either as principal or as agent, who requires, as an incident to the extension of credit, the payment of a finance charge. See Rhode Island General Laws 6-27-3
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Open-end credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or revolving credit.) Source: OCC
- Variable Rate: Having a "variable" rate means that the APR changes from time to time based on fluctuations in an external rate, normally the Prime Rate. This external rate is known as the "index." If the index changes, the variable rate normally changes. Also see Fixed Rate.