Reg M Flashcards

1
Q

Why was Reg M enacted?

A

to ensure that consumers would receive meaningful, accurate, disclosures of the terms of leases for consumer goods

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2
Q

Regulation M was enacted as part of the ___________ and enacted the _________.

A

Truth in Lending Act

Consumer Leasing Act

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3
Q

Reg M requires disclosures to consumers before _________.

A

consummation of the lease agreement

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4
Q

What are the requirements of a lease to be covered by Reg M?

A

* have a duration of more than four months

* are for an amount under the annually adjusted threshold

* are made by a natural person

* involve personal property used primarily for personal, family, or household purposes

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5
Q

Are credit sales under Regulation Z covered by Reg M?

A

NO

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6
Q

What are the 4 form requirements for Reg M disclosures?

A

* clear, conspicuous, and in a form the customer can keep

* dated

* identify the lessor and lessee

* if made in another language, must be provided in English upon request

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7
Q

What are the 2 format options for Reg M disclosures?

A

* can be on the contract itself or in a separate statement that identifies the transaction (this includes certain required segregated disclosures)

* multiple items of property can be described in separate statements

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8
Q

As one of the required Reg M segregated items, amount due at lease signing or delivery must be _____________.

A

itemized by type and amount, including

  • refundable security deposit
  • advance monthly or other periodic payment
  • capitalized cost reduction
  • an itemization of how the amount due will be paid, by type and amount, using model form (only required in motor vehicle leases)
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9
Q

One of the required Reg M segregated items is: the total amount of other charges payable to the lessor that are not _____________.

A

included in the periodic payments (itemized by type and amount)

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10
Q

Early termination notices must include:

A

* a warning to the customer that a substantial charge may result from early termination (required only for motor vehicle leases)

* the amount of any penalty or other charge for early termination (the penalty must be reasonable)

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11
Q

If there is more than one lessee, Reg M requires that disclosures be given _______________.

A

to the lessee primarily liable on the lease

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12
Q

Reg M allows lessors to use reasonable estimates for ______________________.

A

amounts unknown or unavailable

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13
Q

With limited exceptions, any lease that is ______________ is considered to be a new lease.

A

renegotiated or extended by longer than 6 months

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14
Q

What are the trigger terms for Reg M?

A

* the amount of any payment or

* any capitalized cost reduction or

* other payment

required before or at consummation or by delivery (or that no payment is required)

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15
Q

If a percentage rate is used in a lease ad, it cannot be ____________________, except for _________________.

A

more prominent than any other disclosure

the warning regarding the limitation of the rate as a measure of cost

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16
Q

What are the Reg M record retention requirements?

A

all records (evidence of compliance) must be kept for 2 years after the date of the required disclosures or a required action

17
Q

If the lessee decides to purchase the leased property and is unhappy with the lessor’s fair market value assessment at the end of the lease what can they do?

A

The lessee can hire an independent appraiser and both parties agree to be bound by the appraisal.

18
Q

Must the option to purchase the property and the purchase price be included in the initial disclosures?

A

YES

If the lessor allows the lessee to purchase the property.

19
Q

If a lease is extended to month-to-month, must the lessor provide new disclosures?

A

not at the time of the extension however, if the month-to-month lease goes past 6 month, new disclosures are required

20
Q

Must a bank disclose all specific information and amounts at the time of the lease consummation?

A

NO

if specific amounts are unknown, the bank may estimate the amounts if they note the information is estimated

21
Q

T or F

A lessor must develop and provide wear and use standards on leased property?

A

DEPENDS

For most leased property, a lessor is not required to set wear and use standards. If it does set such standards, however, they must be disclosed and be reasonable. A statement regarding wear and use standards is required on motor vehicle leases.

22
Q

T or F

A lessee’s option to extend the lease is not required to be included in the initial disclosures?

A

TRUE

23
Q

What are the required insurance disclosures for leased property?

A

If provided by the lessor, the disclosure must include the types, amounts, and cost to the lessee. If not provided by the lessor, the type and amount must be disclosed.