PRACTICE INVOLVING AN
ARBITRATION NOTICE ON
Under Regulation Z, a contract or other agreement for
a consumer credit transaction
secured by a dwelling (
including a home equity line of credit
secured by the consumer’s principal dwelling) may not include
terms that require arbitration or
any other non-judicial procedure
to resolve any controversy or settle any claims arising out of the
Despite this prohibition,
at one or more entities examiners identified template language for certain residential loan
document(s) containing a notice
that the note is subject to arbitration. Supervision concluded
that use of the arbitration-relat-ed notice constitutes a deceptive
act or practice since it is likely to
mislead a reasonable consumer
into believing that a claim arising under the residential loan
document must be submitted to
arbitration. After having viewed
the notice, a consumer would
have been more likely to agree
to post-dispute arbitration or to
fail to pursue judicial remedies
under the mistaken belief that
23 12 CFR 1026.19(e)( 3)(i), (ii).
24 12 CFR 1026.25(c)(1).
25 12 CFR 1026.19(e)(2)(i)(A),
26 12 CFR 1026.19(f)(1)(iv).
27 12 CFR 1026.19(e)(1)(vi)(c).
28 12 CFR 1026.37(c)(2)(iii), . 38(c)(1).
29 12 CFR 1026.37(a)( 13)(ii).
30 12 CFR 1026.38(f)(2), (f)( 5), (h)(2),
31 12 CFR 1026.36(h)(1).
arbitration was required. Supervision directed one or more of
the entities to cease further use
of the template.
Get the most out of
your marketing budget.
Mortgage Compliance Magazine.
THREE WAYS TO ADVERTISE
A Look Back
(and Forward) on
Social Media 30
The Website NewsLINES