12 C.F.R. § 535.3 Unfair or deceptive cosigner practices.
Title 12 - Banks and Banking
(a) General. In connection with the extension of credit to consumers after January 1, 1986, it is: (1) A deceptive act or practice within the meaning of section 5 of the Act for a savings association, directly or indirectly, to misrepresent the nature or extent of cosigner liability to any person. (2) An unfair act or practice within the meaning of section 5 of the Act for a savings association, directly or indirectly, to obligate a cosigner unless the cosigner is informed, prior to becoming obligated, of the nature of his or her liability as cosigner. (b) Disclosure requirement. (1) A clear and conspicuous document that shall contain the following statement or one which is substantially equivalent, shall be given to the consigner prior to becoming obligated (which, in the case of open-end credit, shall mean prior to the time that the cosigner becomes obligated for any fees or transaction on the account):
Notice of Cosigner You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn't pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility. You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount. The creditor can collect this debt from you without first trying to collect from the borrower. The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record. (2) Compliance with the disclosure requirement under paragraph (b)(1) of this section shall constitute compliance with the consumer information requirement of paragraph (a)(2) of this section. (3) If the notice is a separate document, nothing other than the following times may appear with the notice: (i) The name and address of the savings association; (ii) An identification of the debt to be cosigned (e.g., a loan identification number); (iii) The date; and (iv) The statement, “This notice is not the contract that makes you liable for the debt.”
Title 12: Banks and Banking
PART 535—PROHIBITED CONSUMER CREDIT PRACTICES
§ 535.3 Unfair or deceptive cosigner practices.
