Identification

• The financial terms of a lending agreement, such as a mortgage loan or a car loan, dictate the borrower's or lendee's financial obligations throughout the length of the agreement. If a borrower misunderstands the terms as stated, her ability to fulfill the terms of the agreement is compromised, which can adversely affect her future credit standing. The Credit Protection Act of 1997 protects consumers from the complexities that can appear within a financial contract, according to the Landmark America Financial Group website. It does this by requiring lender contracts to clearly state the cost of the credit terms listed in the agreement. This information enables consumers to make informed choices by comparing available credit options.
  
  

Conditions

• The requirements listed in the Credit Protection Act of 1997 apply to lenders who regularly issue loans that include finance and interest charges. Loan agreements must also exceed a four month or four payment time period. Consumers who believe a lender has violated the Credit Protection Act can sue the lending institution for any damages that result from the contract terms, including legal fees. In cases where a contract lists more than one lending agency, both the initial lender and any assigned lending agencies can be held liable if the consumer decides to sue.
  
  

Exemptions

• Certain lending institutions, as well as lending transactions, are considered exempt from the Credit Protection Act of 1997. Transactions that involve business, commercial or agricultural concerns are not subjected to the terms of the Credit Protection Act. This also goes for government agencies or any transactions involving government matters. Exemptions also play a role in protecting title insurance companies involved with mortgage transactions. A provision known as the ALTA loan policy exempts title companies from any damage incurred in cases where a lender violates the Credit Protection Act.
  
  

Rescission Rights

• Under the Credit Protection Act of 1997, borrowers have the right to rescind, or cancel a contract that conceals or misrepresents the actual financial terms of the agreement. Once a contract is signed, borrowers have three business days to cancel the contract. Lenders are also required to make borrowers aware of their right to rescind the contract within the allotted time. When lenders fail to make borrowers aware of this right, borrowers may have as long as three years to cancel a contract. Rescission rights do not apply for transactions involving residential mortgages, residential mortgage refinancing or state-sponsored lenders.