# § 1615. Prohibition on use of “Rule of 78’s” in connection with mortgage refinancings and other consumer loans
**(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.
**1** **Exception for refund of de minimus 1 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.
So in original. Probably should be “de minimis”.
**(3)** **Applicability to refinanced transactions and acceleration by the creditor** This 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** September 30, 1993
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 , 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 general** Before 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)** **Definitions** For 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** section 1602 of this title
The terms “consumer” and “creditor” have the meanings given to such terms in .
**(3)** **Creditor** The 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.
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**Source Credit**: (Pub. L. 102–550, title IX, § 933, Oct. 28, 1992, 106 Stat. 3891.)
## Editorial Notes
### Codification
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.