Safe National Bank has a variety of consumer lending products. Among them are debt cancellation contracts that allow for the cancellation of a consumer's debt if certain events happen. The bank solicits sales for these contracts when the consumer makes an in-person loan application. What does Safe National have to do at the time of the application and solicitation?
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A. B. C. D.B
The correct answer is C. Safe National Bank is required to give the customer the short-form disclosures in writing at the time of the application and solicitation.
The Truth in Lending Act (TILA) and its implementing regulation, Regulation Z, require that creditors disclose the terms and conditions of consumer credit transactions. Specifically, TILA and Regulation Z require that creditors provide certain disclosures to consumers before the consummation of the credit transaction.
One of the required disclosures is the "debt cancellation contract disclosures." These disclosures must be provided to the consumer if the creditor offers a debt cancellation contract in connection with a credit transaction. The disclosures must be clear and conspicuous and must be provided in writing. The disclosures must include the following:
The short-form disclosures are a summary of the debt cancellation contract disclosures. The short-form disclosures must be provided to the consumer orally or in writing at the time of application and solicitation.
The long-form disclosures are a more detailed version of the debt cancellation contract disclosures. The long-form disclosures must be provided to the consumer in writing before the consumer becomes obligated on the debt cancellation contract.
In this case, Safe National Bank solicits sales for debt cancellation contracts when the consumer makes an in-person loan application. Therefore, at the time of the application and solicitation, Safe National Bank is required to provide the short-form disclosures to the consumer in writing. Option A is incorrect because disclosures are required at the time of application and solicitation. Option B is incorrect because the short-form disclosures can be provided orally or in writing, but in this case, the question specifically asks what Safe National Bank must do, and the correct answer is to provide the short-form disclosures in writing. Option D is incorrect because the long-form disclosures are not required at the time of application and solicitation, but rather before the consumer becomes obligated on the debt cancellation contract.