§37.3. Prohibited practices.
12 C.F.R. § 37.3
Anti-tying. A national bank may not extend credit nor alter the terms or conditions of an extension of credit conditioned upon the customer entering into a debt cancellation contract or debt suspension agreement with the bank.
Misrepresentations generally. A national bank may not engage in any practice or use any advertisement that could mislead or otherwise cause a reasonable person to reach an erroneous belief with respect to information that must be disclosed under this part.
Prohibited contract terms. A national bank may not offer debt cancellation contracts or debt suspension agreements that contain terms:
Giving the bank the right unilaterally to modify the contract unless—
The modification is favorable to the customer and is made without additional charge to the customer; or
The customer is notified of any proposed change and is provided a reasonable opportunity to cancel the contract without penalty before the change goes into effect; or
Requiring a lump sum, single payment for the contract payable at the outset of the contract, where the debt subject to the contract is a residential mortgage loan.
Notes, amendments, and revision history
Authority
Authority: 12 U.S.C. 1 et seq., 24(Seventh), 93a, 1818.
Source
Source: 67 FR 58976, Sept. 19, 2002, unless otherwise noted.