15 U.S.C. § 1615

Prohibition on use of “Rule of 78’s” in connection with mortgage refinancings and other consumer loans

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(a) Prompt refund of unearned interest required(1) In general

If a consumer prepays in full the financed amount under any consumer credit transaction, the creditor shall promptly refund any unearned portion of the interest charge to the consumer.

(2) Exception for refund of de minimus 11 So in original. Probably should be “de minimis”. amount

No refund shall be required under paragraph (1) with respect to the prepayment of any consumer credit transaction if the total amount of the refund would be less than $1.

(3) Applicability to refinanced transactions and acceleration by the creditorThis subsection shall apply with respect to any prepayment of a consumer credit transaction described in paragraph (1) without regard to the manner or the reason for the prepayment, including—(A) any prepayment made in connection with the refinancing, consolidation, or restructuring of the transaction; and(B) any prepayment made as a result of the acceleration of the obligation to repay the amount due with respect to the transaction.(b) Use of “Rule of 78’s” prohibited

For the purpose of calculating any refund of interest required under subsection (a) for any precomputed consumer credit transaction of a term exceeding 61 months which is consummated after September 30, 1993, the creditor shall compute the refund based on a method which is at least as favorable to the consumer as the actuarial method.

(c) Statement of prepayment amount(1) In generalBefore the end of the 5-day period beginning on the date an oral or written request is received by a creditor from a consumer for the disclosure of the amount due on any precomputed consumer credit account, the creditor or assignee shall provide the consumer with a statement of—(A) the amount necessary to prepay the account in full; and(B) if the amount disclosed pursuant to subparagraph (A) includes an amount which is required to be refunded under this section with respect to such prepayment, the amount of such refund.(2) Written statement required if request is in writing

If the customer’s request is in writing, the statement under paragraph (1) shall be in writing.

(3) 1 free annual statement

A consumer shall be entitled to obtain 1 statement under paragraph (1) each year without charge.

(4) Additional statements subject to reasonable fees

Any creditor may impose a reasonable fee to cover the cost of providing any statement under paragraph (1) to any consumer in addition to the 1 free annual statement required under paragraph (3) if the amount of the charge for such additional statement is disclosed to the consumer before furnishing such statement.

(d) DefinitionsFor the purpose of this section—(1) Actuarial method

The term “actuarial method” means the method of allocating payments made on a debt between the amount financed and the finance charge pursuant to which a payment is applied first to the accumulated finance charge and any remainder is subtracted from, or any deficiency is added to, the unpaid balance of the amount financed.

(2) Consumer, credit

The terms “consumer” and “creditor” have the meanings given to such terms in section 1602 of this title.

(3) CreditorThe term “creditor”—(A) has the meaning given to such term in section 1602 of this title; and(B) includes any assignee of any creditor with respect to credit extended in connection with any consumer credit transaction and any subsequent assignee with respect to such credit.(Pub. L. 102–550, title IX, § 933, Oct. 28, 1992, 106 Stat. 3891.)Editorial NotesCodification

Section was enacted as part of the Housing and Community Development Act of 1992, and not as part of the Consumer Credit Protection Act which comprises this chapter.

Notes of Decisions

Cited in 18 cases (11 in the last 5 years), 1997–2025 · leading case: Richardson v. Capital One, N.A., 839 F. Supp. 2d 197 (D.D.C. 2012).

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Richardson v. Capital One, N.A., 839 F. Supp. 2d 197 (D.D.C. 2012). · cites it 7× “He then brought this pro se action alleging that the Bank had violated 15 U.S.C. § 1615 by using a method of calculating interest called the Rule of 78s and, in so doing, failed to refund Richardson excess interest he was properly owed when he refinanced.”

Wiskup v. Liberty Buick Co., Inc., 953 F. Supp. 958 (N.D. Ill. 1997). · cites it 2× “” 15 U.S.C. § 1615 (b) (added to the TILA in 1993).”

Vallies v. Sky Bank, 591 F.3d 152 (3rd Cir. 2009). “There is also no inconsistency between the detrimental reliance requirement and other TILA provisions that govern the refund of prohibited prepayment penalties, 15 U.S.C. § 1615 , provide a borrower a right to rescind certain credit transactions until all required material…”

In Re McMurray, 218 B.R. 867 (Bankr. E.D. Tenn. 1998). · cites it 2× “” 15 U.S.C. § 1615 (a)(1). Paragraph (3) of that subsection makes clear that this obligation applies "with respect to any prepayment of a consumer credit transaction described in paragraph (1) without regard to the manner or the reason for prepayment, including — (A) any…”

Davis v. Pac. Capital Bank, NA, 550 F.3d 915 (9th Cir. 2008). · cites it 2× “HAWKINS, Circuit Judge: Must a creditor who imposes a flat finance charge that does not vary with the term of a Refund Anticipation Loan refund a portion of the charge as “unearned interest” under 15 U.S.C. § 1615 when the loan *916 is repaid earlier than anticipated in the loan…”

Richardson v. Capital One, N.A., 544 F. App'x 3 (D.C. Cir. 2013). “Pursuant to Federal Rule of Civil Procedure 12(b)(6), the District Court properly dismissed Richardson’s claim under 15 U.S.C. § 1615 because the complaint fails to state a claim upon which relief can be granted.”

Linwood v. Anderson (C.D. Ill. 2021). · cites it 4× “In the affidavit attached to her complaint, in addition to restating the claims listed above, Plaintiff further alleges that Defendants have not provided her with the refund she is owed from the consumer credit transaction under 15 U.”

Thomas v. Wells Fargo Bank (S.D. Ala. 2024). · cites it 4× “8, 2024) (where bank did not accept plaintiff’s attempt to pay off his credit card account balance by mailing a payment coupon on which he had written that payment of his entire balance should be made “on demand,” and plaintiff subsequently asserted claims against the bank that…”

Slocum v. Zen Realty (E.D.N.C. 2024). · cites it 3× “Plaintiff repeats these references in opposition to defendant’s motion to dismiss, along with the assertion that 15 U.S.C. § 1615 requires unearned interest “shall be charged back to the consumer.”

Arnold v. Santander Consum. USA (D. Conn. 2025). · cites it 3× “The Court must also dismiss Plaintiff’s claim under 15 U.S.C. § 1615 . Citing this provision of the Truth in Lending Act (“TILA”), Plaintiff “demands the return of the unearned interest to the principal.”

Hernandez v. Capital One (W.D. Okla. 2025). · cites it 2× “” 15 U.S.C. § 1615 (a)(1). Plaintiff’s Amended Complaint lacks allegations that he prepaid in full the financed amount.”

Davis v. Pac. Capital Bank (9th Cir. 2008). · cites it 2× “OPINION HAWKINS, Circuit Judge: Must a creditor who imposes a flat finance charge that does not vary with the term of a Refund Anticipation Loan refund a portion of the charge as “unearned interest” under 15 U.S.C. §1615 when the loan is repaid earlier than anticipated in the…”

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