Ford Motor Credit Co. v. Milhollin

Summary

The Supreme Court held that the Truth in Lending Act and Regulation Z do not impose a general requirement that creditors disclose acceleration clauses on the face of credit agreements. The Court deferred to the Federal Reserve Board staff’s reasonable interpretation that acceleration rebate practices need separate disclosure only when they differ from voluntary prepayment rebate practices. The Court reversed and remanded the Ninth Circuit’s decision.

Holdings

1. The Truth in Lending Act does not impose a general requirement that the existence of an acceleration clause be disclosed on the face of every credit agreement. An acceleration right is not itself a default, delinquency, or similar charge because it is a collection mechanism rather than a specific monetary penalty.
2. Separate disclosure of acceleration rebate practices is not invariably required. Under the Federal Reserve staff's reasonable interpretation, disclosure is necessary when the creditor's rebate practice upon acceleration differs from its voluntary prepayment rebate practice, but not when the practices are identical.
3. Federal Reserve Board and staff interpretations of the Truth in Lending Act and Regulation Z should be treated as dispositive unless demonstrably irrational when the statutory or regulatory text does not clearly resolve the issue.

Questions Presented

1. Whether the Truth in Lending Act requires creditors to disclose the existence of an acceleration clause on the face of a credit agreement.
2. Whether the Truth in Lending Act or Regulation Z requires creditors to disclose acceleration rebate practices in every case.
3. Whether courts must defer to Federal Reserve Board and staff interpretations resolving ambiguity or silence in the Truth in Lending Act and Regulation Z.

Disposition

reversed_and_remanded