Truth in Lending (Regulation Z); Consumer Protections for Home Sales Financed Under Contracts for Deed

Publisher lists this guidance as withdrawn/rescinded: Truth in Lending (Regulation Z); Consumer Protections for Home Sales Financed Under Contracts for Deed, 89 FR 68086 (Aug. 23, 2024); withdrawn on May 12, 2025 .

68086 Federal Register/ Vol. 89, No. 164 / Friday, August 23, 2024 / Rules and Regulations
1
85 FR 77987 (Dec. 3, 2020).
2
Consent Order, In re Harbour Portfolio Advisors
et al., CFPB No. 2020–BCFP–0004 (June 23, 2020),
¶ 4.
exemptions,’’ or 10 CFR part 37 Subpart
B, ‘‘Background Investigations and
Access Authorization Program,’’
Subpart C, ‘‘Physical Protection
Requirements During Use,’’ and Subpart
D, ‘‘Physical Protection in Transit,’’
except for violations of 10 CFR 37.43(c),
‘‘General security program
requirements—Training’’; 10 CFR 37.45,
‘‘LLEA coordination’’; 10 CFR 37.49(b),
‘‘Monitoring, detection, and
assessment’’; 10 CFR 37.49(d),
‘‘Response’’; 10 CFR 37.57, ‘‘Reporting
of events’’; and 10 CFR 37.81,
‘‘Reporting of events,’’ involving robust
structures containing category 1 or
category 2 quantities of radioactive
material, or to large components
containing category 1 or 2 quantities of
radioactive material, if the licensee
meets the following conditions:
•The licensee has identified in
writing those large components and
robust structures that contain category 1
or category 2 quantities of radioactive
material for which it is not in
compliance with 10 CFR part 37.
•The licensee has an approved 10
CFR part 73 security plan or a written
10 CFR part 37 security plan that
provides security measures adequate to
detect, assess, and respond to actual or
attempted theft or diversion, as well as
a written analysis that considers the
time needed to accomplish these
activities given the proximity and
mobility of the equipment available for
those large components and robust
structures identified above.
•The licensee has a written analysis
documenting that the measures above
do not decrease the effectiveness of the
10 CFR part 73 security plan.
An enforcement panel is not required
to disposition a noncompliance using
this discretion; however, each time
discretion is granted, an enforcement
action number will be assigned to
document the use of discretion under
this IEP. This discretion is not limited
to the initial inspection identifying a
noncompliance and can be applied to
subsequent inspections, provided that
all the criteria continue to be met.
Licensees must comply with all other
requirements, as applicable, unless
explicitly replaced or amended through
this interim policy.
Licensees can submit a request for a
specific exemption, as described in 10
CFR 37.11(a), for material that may not
be included in the definitions above. If
a licensee submits such a request for a
component weighing 2,000 kilograms or
more that does not contain either
discrete sources or ion-exchange resins,
or for a structure sufficiently robust that
it would take significant time to access
the material inside, and the request is
submitted before the NRC inspects the
licensee’s facility, the NRC will
postpone an enforcement decision until
the NRC staff completes its review of the
exemption request. If the NRC grants the
exemption request, it will also consider
enforcement discretion for any prior
violation remedied by the exemption. If
the NRC denies, or the licensee
withdraws, the exemption request, the
NRC will disposition the violation
through the enforcement process.
This interim policy will remain in
place until the underlying technical
issue is dispositioned through
rulemaking or other regulatory action.
IV. Paperwork Reduction Act
This revision to the Policy does not
contain any new or amended collections
of information subject to the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501
et seq.). Existing collections of
information were approved by the
Office of Management and Budget,
approval numbers 3150–0136 and 3150–
0214.
V. Public Protection Notification
The NRC may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
document requesting or requiring the
collection displays a currently valid
OMB control number.
VI. Congressional Review Act
This policy is a rule as defined in the
Congressional Review Act (5 U.S.C.
801–808). However, the Office of
Management and Budget has not found
it to be a major rule as defined in the
Congressional Review Act.
Dated: August 15, 2024.
For the Nuclear Regulatory Commission.
Carrie Safford,
Secretary of the Commission.
[FR Doc. 2024–18669 Filed 8–22–24; 8:45 am]
BILLING CODE 7590–01–P
CONSUMER FINANCIAL PROTECTION
BUREAU
12 CFR Part 1026
Truth in Lending (Regulation Z);
Consumer Protections for Home Sales
Financed Under Contracts for Deed
AGENCY: Consumer Financial Protection
Bureau.
ACTION: Advisory opinion.
SUMMARY: This advisory opinion affirms
the current applicability of consumer
protections and creditor obligations
under the Truth in Lending Act (TILA)
and its implementing Regulation Z to
transactions in which a consumer
purchases a home under a ‘‘contract for
deed.’’ When a creditor sells a home to
a buyer under a contract for deed, that
transaction will generally meet TILA
and Regulation Z’s definition of credit.
Where the transaction is secured by the
buyer’s dwelling, the buyer will also
generally be entitled to the protections
associated with residential mortgage
loans under TILA.
DATES: This advisory opinion is
applicable as of August 23, 2024.
FOR FURTHER INFORMATION CONTACT:
George Karithanom, Regulatory
Implementation & Guidance Program
Analyst, Office of Regulations, at 202–
435–7700 or at: https://reginquiries.
consumerfinance.gov/. If you require
this document in an alternative
electronic format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION: The
Consumer Financial Protection Bureau
(CFPB) is issuing this advisory opinion
through the procedures for its Advisory
Opinions Policy.
1
Refer to those
procedures for more information.
I. Advisory Opinion
A. Background
The CFPB is issuing this advisory
opinion to affirm the applicability of
certain consumer protections under the
Truth in Lending Act (TILA) and its
implementing Regulation Z to
transactions in which a consumer
purchases a home under a ‘‘contract for
deed.’’ Broadly speaking, TILA protects
consumers engaged in credit
transactions by requiring creditors to
disclose information about the costs and
terms of the credit, and, where the
credit is secured by the consumer’s
dwelling, provides additional
protections. The CFPB has previously
identified certain contracts for deed as
consumer credit under the Consumer
Financial Protection Act (CFPA),
2

which uses a substantially similar
definition of credit. Consistent with that
earlier application of the CFPA, this
advisory opinion clarifies how the CFPB
understands the current application of
TILA and Regulation Z to contracts for
deed.
1. Contract for Deed Overview and
History
A contract for deed is a type of home
loan, alternatively called a ‘‘land
contract,’’ ‘‘land installment contract,’’
‘‘land sales contract,’’ ‘‘bond for deed,’’
VerDate Sep<11>2014 16:00 Aug 22, 2024 Jkt 262001 PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 E:\FR\FM\23AUR1.SGM 23AUR1
khammond on DSKJM1Z7X2PROD with RULES

68087 Federal Register/ Vol. 89, No. 164 / Friday, August 23, 2024 / Rules and Regulations
3
More complex arrangements exist, such as those
where the buyer pays the seller’s agent.
4
See Joint Center for Housing Studies of Harvard
University, The American Dream or Just an
Illusion? Understanding Land Contract Trends in
the Midwest Pre- and Post-Crisis (Aug. 2019),
https://www.jchsharvard.edu/sites/default/files/
media/imp/harvard_jchs_housing_tenure_
symposium_carpenter_george_nelson.pdf.
5
Id.
6
Id.
7
See The Pew Charitable Trusts, Summary of
State Land Contract Statutes (Apr. 30, 2021),
https://www.pewtrusts.org/-/media/assets/2022/02/
summary-of-state-land-contract-statutes.pdf.
8
15 U.S.C. 1601.
9
Truth in Lending Act: Hearings Before the
Subcomm. on Financial Institutions of the S.
Comm. on Banking and Currency, 90th Cong., 1st
Sess. (Apr. 18, 1967) (testimony of Darrel M. Holt,
Mortgage Bankers Association of America).
10
15 U.S.C. 1602(bb), 1639.
11
Public Law 111–203, 124 Stat. 1376 (2010).
12
Sections 1411, 1412, and 1414 of the Dodd-
Frank Act, codified at 15 U.S.C. 1639c; sections
1418, 1420, 1463, and 1464 of the Dodd-Frank Act,
codified at 12 U.S.C. 2605; 15 U.S.C. 1638, 1638a,
1639f, and 1639g. Other protections apply to
servicing practices, such as prompt payment
processing, no pyramiding of late fees, and loan
originator qualification requirements. See 12 CFR
1026.36(c), (d), (f).
13
S. Rept. No. 176, 111th Cong. (2010), at 11, 12.
14
Id. at 9.
15
Id., n.19 (quoting Testimony of Michael Barr,
Assistant Secretary of the Treasury for Financial
Institutions, to the Senate Committee on Banking,
Housing, and Urban Affairs, July 14, 2009).
16
15 U.S.C. 1602(f), 12 CFR 1026.2(a)(14).
Whether a seller is a ‘‘creditor’’ under TILA and
Regulation Z depends on several factors, discussed
below, at section I.B.3.
17
Proposed rule, Truth in Lending (Regulation Z);
Consumer Credit Offered to Borrowers in Advance
of Expected Receipt of Compensation for Work, 89
FR 61358 (July 31, 2024), https://files.consumer
finance.gov/f/documents/cfpb_paycheck-advance-
marketplace_proposed-interpretive-rule_2024-
07.pdf.
18
Debt, Merriam-Webster, https://www.merriam-
webster.com/dictionary/debt (last updated Jan. 30,
2024).
19
Debt, Black’s Law Dictionary (4th ed. 1968)
(defining debt as ‘‘[a] sum of money due by certain
and express agreement; as by bond for a
determinate sum, a bill or note, a special bargain,
or a rent reserved on a lease, where the amount is
fixed and specific, and does not depend upon any
subsequent valuation to settle it’’); Debt, Wex,
https://www.law.cornell.edu/wex/debt (last updated
Sept. 2021).
‘‘agreement for deed,’’ or ‘‘buying on
contract.’’ Home loans commonly
referred to as contracts for deed, which
this advisory opinion refers to as
‘‘contracts for deed,’’ tend to have a few
key features. In a typical contract for
deed, a homebuyer agrees to make
periodic payments to the home seller,
and the seller retains the deed to the
property until the loan is fully repaid.
3

Loan terms vary but often range from 5
to 30 years and may include balloon
payments. Properties are often
purchased ‘‘as is,’’ without inspection or
appraisal, and may have property
condition issues that prevent them from
being suitable for rental or qualifying for
mainstream mortgage financing.
Additionally, because the sales price of
the home may not be tied to appraisal
or other typical market measures, the
sales price may be inflated. During the
repayment period, the buyer has the
exclusive right to occupy the home and
often assumes many of the
responsibilities of homeownership,
including paying for taxes, insurance,
home maintenance, and repairs.
4

Another common feature is a
forfeiture clause that can be triggered if
the borrower fails to meet the terms of
the contract. In these scenarios, the
contract is canceled, the seller retakes
possession of the property, and the
buyer generally forfeits their entire
investment—including their
downpayment, principal payments, and
any increase in home equity, including
home equity that the buyer generated by
making property improvements.
5
In
some contracts, a single missed payment
is enough to trigger these losses.
Forfeiture clauses can also be triggered
by breaches unrelated to payment
status, such as when a borrower fails to
pay taxes, is unable to obtain or
maintain insurance, or does not make
improvements to the property within a
specified timeframe.
6
While some states
restrict forfeiture and require
foreclosure, others have allowed
‘‘virtually unrestricted use of forfeiture
clauses.’’
7

2. TILA Legislative History
Congress first enacted TILA, 15 U.S.C.
1601 et seq., in 1968 intending ‘‘to
assure a meaningful disclosure of credit
terms’’ and ‘‘avoid the uninformed use
of credit, and to protect the consumer
against inaccurate and unfair credit
billing and credit card practices.’’
8
As
industry commenters noted at the time,
TILA’s disclosure regime could help ‘‘a
prospective mortgage borrower [ ]
consider the relative costs of credit
offered by . . . various purchase
arrangements, for example, contract for
deed or an FHA-insured mortgage’’
when purchasing a home.
9

In 1994, Congress amended TILA by
enacting the Home Ownership and
Equity Protection Act (HOEPA) to
require special disclosures and
restrictions for high-cost mortgage loans
secured by the consumer’s principal
dwelling.
10
In the wake of the 2008
financial crisis, in which widespread
mortgage loan defaults produced a wave
of foreclosures and systemic economic
instability, Congress passed the Dodd-
Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act) which
added additional protections to TILA, as
well as establishing the CFPB under the
Consumer Financial Protection Act.
11

New TILA sections added by the
Dodd-Frank Act required creditors to
make good-faith assessments of
consumers’ ability to repay loans
secured by their dwellings, imposed
new standards on mortgage disclosures,
and prohibited certain practices,
including mandatory arbitration clauses
and waivers of Federal causes of action
in consumer credit transactions secured
by a dwelling.
12
The Dodd-Frank Act
also expanded the scope of HOEPA
coverage and protections. In the Senate
Report accompanying the Dodd-Frank
Act, Congress cited the ‘‘proliferation of
poorly underwritten mortgages with
abusive terms,’’ made ‘‘with little or no
regard for a borrower’s understanding of
the terms [ ], or their ability to repay,’’
as precipitators of the financial crisis
and motivation for the Act’s financial
reforms.
13
Congress explained that,
because of failures in consumer
protection, ‘‘millions of Americans have
lost their homes,’’
14
and quoted expert
testimony that ‘‘a plague of abusive and
unaffordable mortgages and exploitative
credit cards . . . cost millions of
responsible consumers their homes,
their savings, and their dignity.’’
15

B. Legal Analysis
1. Because contracts for deed allow
buyers to acquire property and defer the
payment, contracts for deed are
generally ‘‘credit’’ under TILA and
Regulation Z.
a. Credit Under TILA
TILA’s definition of ‘‘credit’’ includes
the typical contract for deed. TILA and
Regulation Z define credit as ‘‘the right
granted [by a creditor to a debtor] to
defer payment of debt or to incur debt
and defer its payment.’’
16
TILA and
Regulation Z do not define debt. Used
infrequently in the statute and the
regulation, ‘‘debt’’ for the most part
appears only in the definition of
‘‘credit.’’ As the CFPB has noted
elsewhere,
17
in the ordinary usage, debt
means simply ‘‘something owed,’’
without any obvious limitation.
18
Legal
dictionaries, including those dating to
the enactment of TILA, similarly
describe debt as a ‘‘sum of money due
by certain and express agreement’’ or ‘‘a
financial liability or obligation owed by
one person, the debtor, to another, the
creditor.’’
19
This understanding of
‘‘debt,’’ as any obligation by a consumer
to pay another party, applies to
contracts for deed in a straightforward
manner.
VerDate Sep<11>2014 16:00 Aug 22, 2024 Jkt 262001 PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 E:\FR\FM\23AUR1.SGM 23AUR1
khammond on DSKJM1Z7X2PROD with RULES

68088 Federal Register/ Vol. 89, No. 164 / Friday, August 23, 2024 / Rules and Regulations
20
This is distinct from lease-based rental
arrangements, even those involving an eventual
right to purchase (often called ‘‘lease-to-own’’),
because the lessee’s legal interest, privileges, and
obligations in the property are more limited in
scope, while the lessor retains both ownership
obligations and title. Many lease-to-own products
also require a separate agreement to effectuate a
purchase option, allowing for complete
performance of the original contract without
necessarily transferring property ownership. In a
typical contract for deed, complete performance
includes the transfer of full legal ownership.
Regardless of how the arrangement is styled, courts
have generally looked to the function of the
transaction and intent of the parties to determine
its nature. See, e.g., Gilliland v. Port Auth. of City
of St. Paul, 270 NW2d 743, 747 (Minn. 1978) (‘‘To
break the transaction into two separate parts, a sale
and a lease, would be to distort its real nature and
to ignore the intent of the parties.’’); In re
Montgomery Ward, L.L.C., 469 B.R. 522, 529 (Bankr.
D. Del. 2012) (‘‘Courts must analyze the ‘economic
reality’ of the agreement at issue to determine its
true nature.’’). Depending on their terms, such
leases, as well as contracts for deed, may be
considered ‘‘credit sales’’ covered under TILA and
Regulation Z. 15 U.S.C. 1602(h); 12 CFR
1026.2(a)(16).
21
In re Restivo Auto Body, Inc., 772 F.3d 168, 177
(4th Cir. 2014) (‘‘upon contracting to buy land, ‘in
equity the vendee becomes the owner of the land,
the vendor of the purchase money’ ’’) (internal
citation omitted); Hauben v. Harmon, 605 F.2d 920,
925 (5th Cir. 1979) (‘‘Under the doctrine of
equitable conversion a purchaser of realty becomes
seized of beneficial title to the property upon
execution of the contract of sale.’’); In re Blanchard,
819 F.3d 981, 985 (7th Cir. 2016) (‘‘Under
Wisconsin’s doctrine of equitable conversion, a
land contract buyer obtains equitable title to the
property, which includes ‘all the incidents of a real
ownership.’ ’’) (internal citation omitted);
Redevelopment Agency of City of Stockton v. BNSF
Ry. Co., 643 F.3d 668, 678 (9th Cir. 2011) (‘‘The
doctrine of equitable conversion generally provides
that when a valid executory land sales contract is
entered into, the purchaser becomes the equitable
owner of the land.’’); In re Hodes, 402 F.3d 1005,
1011 (10th Cir. 2005); SMS Assocs. v. Clay, 868 F.
Supp. 337, 340 (D.D.C. 1994), aff’d, 70 F.3d 638
(D.C. Cir. 1995). Even where some courts have
declined to view a contract for deed as transferring
equitable title, they nonetheless acknowledge that
the purchaser has received possession in exchange
for the promise of payment. See, e.g., In re Wall Tire
Distributors, Inc., 110 B.R. 614, 618 (Bankr. M.D.
Ga. 1990).
22
12 CFR 1026.2(a)(12).
23
12 CFR 1026.2(a)(10).
24
12 CFR 1026.2(a)(20).
25
Consent Order, In re Harbour Portfolio
Advisors et al., CFPB No. 2020–BCFP–0004 (June
23, 2020), ¶ 4.
26
12 U.S.C. 5481(7). A court validated the CFPB’s
authority to investigate the entity’s contracts for
deed as possible credit under the CFPA, noting that
the transactions may be credit because they
‘‘obligate the purchaser to pay a principal sum plus
interest through deferred monthly payments.’’ CFPB
v. Harbour Portfolio Advisors, No. 16–014183, 2017
WL 631914, at *3 (E.D. Mich. Feb. 16, 2017). The
court further characterized an acceleration clause
that ‘‘gives the seller the option to demand the full
purchase price once the purchaser misses a
payment’’ as ‘‘strongly suggest[ing] that
Respondents are supplying ‘credit’ . . . .’’ Id.
27
See, e.g., 15 U.S.C. 1691a(d) (defining ‘‘credit’’
under the Equal Credit Opportunity Act); 12 CFR
pt. 1002 supp. I para. 2(j)–1 (‘‘Regulation B covers
a wider range of credit transactions than Regulation
Z.’’).
28
The CFPA similarly has provisions specifically
addressing loans secured by real estate. See, e.g., 12
U.S.C. 5514(a)(1)(A) (providing supervisory
authority over any covered person who originates
consumer loans ‘‘secured by real estate’’). This
advisory opinion does not assess the applicability
of such provisions beyond TILA, but the CFPB
expects to apply such definitions consistently
across Federal consumer financial laws to the
extent appropriate.
29
See supra, text accompanying notes 13–15.
30
15 U.S.C. 1602(dd)(5).
31
E.g., 12 CFR 1026.43(a). Regulation Z defines a
‘‘dwelling’’ as ‘‘a residential structure that contains
one to four units, whether or not that structure is
attached to real property.’’ 12 CFR 1026.2(a)(19).
32
E.g., 12 CFR 1026.32(a)(1).
33
E.g., 12 CFR 1026.19(e). Under Regulation Z, a
‘‘dwelling’’ does not need to be attached to real
property. 12 CFR 1026.2(a)(19). Thus, there may be
instances where, depending on the transaction, a
contract for deed is secured by a dwelling, but not
real property, or by real property without a
dwelling.
In a typical contract-for-deed
transaction, as discussed above, a debt
is created by the buyer receiving
exclusive possession of the property,
along with certain ownership
obligations, at the outset of the contract
in exchange for the obligation to repay
the agreed-upon value of that property
over time.
20
Courts applying common
law doctrines have broadly recognized
these property-related rights and
obligations under the contract for deed
as constituting a grant of equitable title
to the buyer.
21
In exchange for these
rights granted in the property, the
purchaser agrees to complete payment
on a deferred basis. The contractual
obligation to repay the agreed-upon
value of the property according to the
terms of the contract, therefore,
constitutes a debt under TILA. From the
face of the typical contract for deed, it
will be clear that the seller has granted
to the purchaser ‘‘the right . . . to
defer’’ payment of this debt.
b. Closed-End Credit
Where the property acquired under a
contract for deed is purchased by a
consumer primarily for personal, family,
or household purposes, as it generally is
when a purchaser buys a home using a
contract for deed, the transaction is
‘‘consumer credit’’ under Regulation
Z.
22
Any consumer credit that is not
open-end credit under Regulation Z is
considered ‘‘closed-end credit.’’
23

Because the typical contract for deed is
contemplated as a one-time transaction,
it is not open-end credit.
24
Thus, when
a buyer purchases a personal dwelling
from a creditor under a contract for
deed, that transaction typically meets
the definition of closed-end credit under
TILA and Regulation Z, and is subject
to the applicable requirements of
subpart C of Regulation Z.
c. Consistency With Other Laws
In 2020, the CFPB settled with an
entity selling property under contracts
for deed, requiring penalties for
violations of the CFPA.
25
In doing so,
the CFPB applied the CFPA’s
substantially similar definition of credit,
which is ‘‘the right granted by a person
to a consumer to defer payment of a
debt, incur debt and defer its payment,
or purchase property or services and
defer payment for such purchase.’’
26

This advisory opinion therefore affirms
the consistency with which the CFPB
views and applies these statutory
definitions, when presented with
similar contexts. Although this advisory
opinion does not analyze the
application of other laws, the CFPB
expects that under other consumer
financial laws with similar definitions
of credit, the same considerations will
apply.
27

2. Contracts for deed secured by a
dwelling, generally will be ‘‘residential
mortgage loans’’ under TILA and
Regulation Z.
Several provisions of TILA and
Regulation Z apply specifically to credit
transactions secured by the consumer’s
dwelling or by real property.
28
As
discussed above, Congress amended
TILA through the Dodd-Frank Act with
the recognition that, when consumers
commit to loans secured by possession
of their homes, the stakes are
particularly high.
29
It added to TILA
specific protections that apply to
‘‘residential mortgage loans.’’ Many
States define ‘‘mortgages’’ separately
from their definitions for contracts for
deed, with distinct requirements for
each. However, in TILA Congress
defined ‘‘residential mortgage loan’’ to
include ‘‘any consumer credit
transaction that is secured by a
mortgage, deed of trust, or other
equivalent consensual security interest
on a dwelling or on residential real
property that includes a dwelling, other
than a[n open-end] consumer credit
transaction ....’’
30
Thus, the relevant
consideration for determining whether
contracts for deed are ‘‘residential
mortgage loans’’ under TILA is not
whether State law specifically regards
contracts for deed as ‘‘mortgages,’’ but
only whether the contract for deed is
secured by a mortgage, deed of trust, or
other equivalent consensual security
interest on a dwelling or on residential
real property that includes a dwelling.
Additional protections under Regulation
Z apply to ‘‘any consumer credit
transaction secured’’ by ‘‘a dwelling,’’
31

by ‘‘the consumer’s principal
dwelling,’’
32
or by ‘‘real property.’’
33

Regulation Z defines a ‘‘security
interest’’ as ‘‘an interest in property that
VerDate Sep<11>2014 16:00 Aug 22, 2024 Jkt 262001 PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 E:\FR\FM\23AUR1.SGM 23AUR1
khammond on DSKJM1Z7X2PROD with RULES

68089 Federal Register/ Vol. 89, No. 164 / Friday, August 23, 2024 / Rules and Regulations
34
12 CFR 1026.2(a)(25).
35
Security, Black’s Law Dictionary (11th ed.
2019).
36
See Restatement (Third) of Property
(Mortgages) sec. 3.4 (1997) (‘‘A contract for deed is
a contract for the purchase and sale of real estate
under which the purchaser acquires the immediate
right to possession of the real estate and the vendor
defer delivery of a deed until a later time to secure
all or part of the purchase price. A contract for deed
creates a mortgage.’’).
37
Id. See also Mortgage, Black’s Law Dictionary
(11th ed. 2019) (‘‘A conveyance of title to property
that is given as security for the payment of a debt
or the performance of a duty and that will become
void upon payment or performance according to the
stipulated terms.’’); Restatement (Third) of Property
(Mortgages) sec. 1.1 (1997) (‘‘The function of a
mortgage is to employ an interest in real estate as
security for the performance of some obligation.’’).
38
See, e.g., Florida (Fla. Stat. Ann. sec. 697.01);
Indiana (Ind. Code Ann. sec. 24–4.4–1–301(14));
Oklahoma (Okla. Stat. Ann. tit. 16 sec. 11A).
39
See, e.g., Maine (33 M.R.S. sec. 481); Maryland
(Md. Real Property Code sec. 10–101); Ohio (Ohio
Rev. Code Ann. sec. 5313.01).
40
See, e.g., California (Petersen v. Hartell, 40 Cal.
3d 102, 112, 707 P.2d 232, 239 (1985)); Indiana
(Vic’s Antiques & Uniques, Inc. v. J. Elra Holdingz,
LLC, 143 NE3d 300, 305 (Ind. Ct. App. 2020));
Kentucky (Sebastian v. Floyd, 585 SW2d 381 (Ky.
1979)); Michigan (Barker v. Klingler, 302 Mich. 282,
288, 4 NW2d 596, 599 (1942)); Minnesota (Gagne
v. Hoban, 280 Minn. 475, 479, 159 NW2d 896, 899
(1968)); Nebraska (Mackiewicz v. J.J. & Assocs., 245
Neb. 568, 573, 514 NW2d 613, 618 (1994)); Oregon
(Bedortha v. Sunridge Land Co., 312 Or. 307, 311,
822 P.2d 694, 696 (1991)); Pennsylvania (Anderson
Contracting Co. v. Daugherty, 274 Pa. Super. 13, 21,
417 A.2d 1227, 1231 (1979)); Washington (Lanzce
G. Douglass, Inc. v. Dep’t of Revenue, 25 Wash.
App. 2d 893, 908, 525 P.3d 999, 1007 (2023));
Wisconsin (Larchmont Holdings, LLC v. N. Shore
Servs., LLC, 292 F. Supp. 3d 833, 848–49 (W.D.
Wis. 2017)).
41
12 CFR 1026.2(a)(17).
42
12 CFR 1026.2(a)(17)(i), 1026.4(b).
43
12 CFR 1026.2(a)(17)(i).
44
Further, even if the contract for deed required
less than four installments, often the sales price is
inflated such that the additional profits earned by
the seller meet the requirement for finance charge
under Regulation Z.
45
12 CFR 1026.2(a)(17).
46
12 CFR 1026.2(a)(22).
47
See Ward v. Shad, No. 18–CV–01933 (NEB/
ECW), 2019 WL 1084219, at *3 (D. Minn. Mar. 7,
2019).
48
12 CFR 1026.2(a)(17)(v). The CFPB is aware
that some contract-for-deed transactions may
involve one-time sellers. Where such transactions
are conducted without a broker and/or do not
qualify as ‘‘high-cost’’ mortgages, such one-time
sellers will not be creditors under Regulation Z.
49
Id.
50
Id. (‘‘A person regularly extends consumer
credit only if it extended credit . . . more than 25
times . . . in the preceding calendar year. If a
person did not meet these numerical standards in
the preceding calendar year, the numerical
standards shall be applied to the current calendar
year.’’).
secures performance of a consumer
credit obligation and that is recognized
by State or Federal law.’’
34
While State
and Federal law regarding secured
transactions and contracts for deed will
vary, the CFPB expects that this
definition would be satisfied in many or
most cases. As a matter of general usage,
security is the ‘‘[c]ollateral given or
pledged to guarantee the fulfillment of
an obligation.’’
35
As described earlier,
in a typical contract for deed, the seller
retains legal title to the subject property,
which generally allows the seller to
retake possession of the property should
the purchaser default on the payment
agreement. In function, this retention of
title serves to ensure that the purchaser,
who already has exclusive possession of
the property, fulfills the payment
obligations.
36
The CFPB notes that this
structure is functionally equivalent to
common definitions of ‘‘mortgage,’’
37

and is aware of State laws that expressly
consider such transactions to be
mortgages.
38

The CFPB is additionally aware of
many instances nationwide in which a
seller’s retention of legal title to the
property has been characterized as
securing payment of the contract for
deed, either by State statute
39
or by
courts applying State law and equitable
principles.
40
While this advisory
opinion does not provide any specific
interpretation or application of State
law, the prevalence of similar language
across State law and related
jurisprudence informs the CFPB’s
expectation that contracts for deed will
generally trigger Regulation Z’s
thresholds for mortgage transaction
protections based on the security
interest in the buyer’s home. As noted
above, this is the case whether or not
the relevant State or Federal law regards
a contract for deed generally as a
‘‘mortgage,’’ or its equivalent, including
for the purpose of forfeiture. Similarly,
this advisory opinion’s recognition that
contracts for deed are often ‘‘residential
mortgage loans’’ under TILA and
Regulation Z does not constitute a
determination that they are mortgages
under State or other Federal laws.
3. Creditors selling homes using
contracts for deed must comply with
applicable requirements under TILA
and Regulation Z.
a. TILA Creditors
Contract for deed sellers have
important obligations under TILA and
Regulation Z depending on the nature of
the contract for deed and whether they
are ‘‘creditors.’’
41
For a transaction to be
credit covered under TILA, the seller
must be a creditor, and whether a seller
of a contract for deed is a creditor under
TILA turns not only on whether the
seller extends credit, but on the
characteristics of the credit and
frequency with which the seller engages
in such transactions. First, the credit
extended must be either subject to a
finance charge (such as interest or
implied interest) or be payable by a
written agreement in more than four
installments, not including a
downpayment.
42
Second, the obligation
must be initially payable to the person,
either on the face of the note or contract,
or by agreement when there is no note
or contract, in order for that person to
be considered a creditor.
43
These first
two prongs will typically be satisfied in
a contract-for-deed transaction.
Contracts for deed are generally set up
to require periodic payments during the
term of the contract—often monthly
over the span of years—and thus,
require repayment of more than four
installments.
44
Contracts for deed also
generally are established by a written
agreement that lists the title holder as
the payee.
Third, a creditor is a person that
regularly extends credit.
45
For purposes
of this requirement, a ‘‘person’’ is a
natural person or an organization,
including a corporation, partnership,
proprietorship, association, cooperative,
estate, trust, or government unit.
46
It
may include, for example, business
arrangements where multiple related
subsidiaries of a single organization
each conduct contract-for-deed sales.
47

Whether a person regularly extends
credit will depend on the frequency
with which the person extends credit, as
well as the specific nature of those
credit transactions. As described below,
Regulation Z may require as many as 25
transactions or as few as one to be
deemed a person who regularly extends
credit, depending on the type of
credit.
48
This will, in turn, determine
the seller’s legal obligations under TILA
and Regulation Z.
b. TILA Obligations With Contracts for
Deed
In general, when a person extends
consumer credit more than 25 times, or
more than 5 times for transactions
secured by a dwelling, in the preceding
calendar year, that person is a creditor
under TILA.
49
Thus, in contract-for-
deed sales that are not considered
secured by a dwelling in the relevant
jurisdiction, a seller that extends credit
more than 25 times in the preceding or
current calendar year will qualify as a
TILA creditor, assuming all other
elements of the ‘‘creditor’’ definition are
met.
50
In such a case, the contract-for-
deed sale is closed-end credit, subject to
TILA and Regulation Z’s general
disclosure requirements regarding the
key terms of the loan, including the
VerDate Sep<11>2014 16:00 Aug 22, 2024 Jkt 262001 PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 E:\FR\FM\23AUR1.SGM 23AUR1
khammond on DSKJM1Z7X2PROD with RULES

68090 Federal Register/ Vol. 89, No. 164 / Friday, August 23, 2024 / Rules and Regulations
51
What specific protections and requirement
apply will depend on the particular loan. See 15
U.S.C. 1631, 1632; see also 12 CFR 1026.17–.18.
52
12 CFR 1026.2(a)(17)(v) (the person must
regularly extend credit ‘‘more than 5 times for
transactions secured by a dwelling’’).
53
15 U.S.C. 1631, 1632; 12 CFR 1026.17–.18; see
also 15 U.S.C. 1638; 12 CFR 1026.19(e), 1026.37,
1026.38. Specific disclosure requirements will
depend on whether the dwelling-secured credit is
also secured by real property.
54
15 U.S.C. 1602(dd)(5).
55
12 CFR 1026.43(c); 12 CFR 1026.36(h)(1).
56
See generally 12 CFR 1026.36; 15 U.S.C. 1639a,
1639b, 1639e, 1639c(a)–(h). Some provisions only
apply if the loan is secured by the consumers’
principal dwelling. See, e.g., 12 CFR 1026.23.
57
A high-cost mortgage is any consumer credit
transaction secured by a principal dwelling and
which meets certain conditions as described in 12
CFR 1026.32. 15 U.S.C. 1602(bb), 1639; see also 12
CFR 1026.31, 1026.32, 1026.34.
58
12 CFR 1026.2(a)(17)(v).
59
Id.
60
12 CFR 1026.32, 1026.34.
61
12 CFR 1026.34(a)(4) (open-end, high-cost
mortgage repayment prohibitions), 1026.34(a)(5)
(pre-loan counseling requirements), 1026.34(a)(7)–
(8), 1026.34(a)(10) (requirements and prohibitions
related to fees).
62
12 U.S.C. 5512(b)(1).
63
15 U.S.C. 1640(f).
64
5 U.S.C. 801 et seq.
65
44 U.S.C. 3501 through 3521.
1
To the extent that a federally regulated PPP
lender destroyed any PPP loan records before the
effective date of this rule in accordance with a
general internal records retention policy that was
acceptable to the PPP lender’s federal regulator,
SBA will not enforce compliance by that federally
regulated PPP lender with respect to the PPP loan
records that were destroyed before the effective date
of this rule.
amount financed, any finance charge,
and the annual percentage rate.
51

If the contract for deed is considered
to be secured by a dwelling by the
applicable law in the relevant
jurisdiction but is not a high-cost
mortgage loan, the seller will qualify as
a creditor if the seller has extended
credit secured by a dwelling more than
five times in the preceding or current
calendar year and all other elements of
the ‘‘creditor’’ definition are met.
52
In
such a case, the seller is subject to TILA
and Regulation Z’s general disclosure
requirements, as well as additional
mortgage disclosure requirements.
53

The transaction would generally also
qualify as a residential mortgage loan.
54

These transactions are subject to
important additional requirements,
including the requirement that a
creditor make a reasonable, good faith
determination of the consumer’s ability
to repay the loan as well as the
prohibition on mandatory arbitration
clauses.
55
These transactions may also
be subject to rules regarding servicing,
origination, and fees under TILA.
56

If the contract for deed is secured by
a dwelling and qualifies as a high-cost
mortgage,
57
a seller who extends credit
more than once in any 12-month period
can qualify as a creditor.
58
A seller who
originates one or more such credit
extensions through a mortgage broker
can also qualify as a creditor.
59

High-cost mortgage transactions will
also trigger HOEPA requirements and
protections, including required
disclosures.
60
Specific prohibitions also
apply to high-cost mortgages, including
a prohibition on extending high-cost
mortgages without written certification
that a consumer has obtained
counseling, a prohibition on opening a
plan without regarding a consumer’s
ability to repay, and prohibitions on
certain fees, among others.
61

Regulatory Matters
This advisory opinion is an
interpretive rule issued under the
CFPB’s authority to interpret TILA and
Regulation Z, including under section
1022(b)(1) of the Consumer Financial
Protection Act of 2010, which
authorizes guidance as may be
necessary or appropriate to enable the
CFPB to administer and carry out the
purposes and objectives of Federal
consumer financial laws.
62

By operation of TILA section 130(f),
no provision of TILA sections 130,
108(b), 108(c), 108(e), or section 112
imposing any liability applies to any act
done or omitted in good faith in
conformity with this interpretive rule,
notwithstanding that after such act or
omission has occurred, the interpretive
rule is amended, rescinded, or
determined by judicial or other
authority to be invalid for any reason.
63

Pursuant to the Congressional Review
Act,
64
the CFPB will submit a report
containing this advisory opinion and
other required information to the United
States Senate, the United States House
of Representatives, and the Comptroller
General of the United States prior to the
rule’s published effective date. The
Office of Information and Regulatory
Affairs has designated this interpretive
rule as not a ‘‘major rule’’ as defined by
5 U.S.C. 804(2).
The CFPB has determined that this
advisory opinion does not impose any
new or revise any existing
recordkeeping, reporting, or disclosure
requirements on covered entities or
members of the public that would be
collections of information requiring
approval by the Office of Management
and Budget under the Paperwork
Reduction Act.
65

Rohit Chopra,
Director, Consumer Financial Protection
Bureau.
[FR Doc. 2024–18620 Filed 8–22–24; 8:45 am]
BILLING CODE 4810–AM–P
SMALL BUSINESS ADMINISTRATION
13 CFR Part 120
[Docket Number SBA–2024–0006]
RIN 3245–AI17
Business Loan Program Temporary
Changes; Paycheck Protection
Program—Extension of Lender
Records Retention Requirements
AGENCY: U.S. Small Business
Administration.
ACTION: Interim final rule.
SUMMARY: This interim final rule
lengthens the required records retention
for lenders that made loans under the
Paycheck Protection Program (PPP) to
ten years. PPP was established under
the Coronavirus Aid, Relief, and
Economic Security Act as a temporary
emergency guaranteed loan program to
provide economic relief to small
businesses nationwide adversely
impacted by the Coronavirus Disease
2019 (COVID–19), as amended. SBA has
issued a number of final rules
implementing the PPP Program. This
interim final rule harmonizes the PPP
lender records retention requirements
with subsequent legislation extending
the statute of limitations for criminal
charges and civil enforcement actions
for alleged PPP borrower fraud to ten
years after the offense.
DATES:
Effective date: The provisions of this
interim final rule are effective August
22, 2024.
Applicability date: This interim final
rule applies to all PPP lender loan
records. This includes PPP loan
applications that were withdrawn,
approved, denied or cancelled, and all
other PPP lender loan records for PPP
loans with an outstanding balance, PPP
loans that have been forgiven, and PPP
loans that are in repayment or have been
paid in full by the borrower as of the
effective date of this rule.
1

Comment date: Comments must be
received on or before September 23,
2024.
ADDRESSES: You may submit comments,
identified by docket number SBA–
2024–0006 through the Federal
eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
VerDate Sep<11>2014 16:00 Aug 22, 2024 Jkt 262001 PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 E:\FR\FM\23AUR1.SGM 23AUR1
khammond on DSKJM1Z7X2PROD with RULES