15 U.S.C. § 1615: Prohibition on use of “Rule of 78’s” in connection with mortgage refinancings and other consumer loans

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. 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. any prepayment made in connection with the refinancing, consolidation, or restructuring of the transaction; and any prepayment made as a result of the acceleration of the obligation to repay the amount due with respect to the transaction. 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 September 30, 1993 , the creditor shall compute the refund based on a method which is at least as favorable to the consumer as the actuarial method. the amount necessary to prepay the account in full; and 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. If the customer’s request is in writing, the statement under paragraph (1) shall be in writing. A consumer shall be entitled to obtain 1 statement under paragraph (1) each year without charge. 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. 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. The terms “consumer” and “creditor” have the meanings given to such terms in section 1602 of this title . has the meaning given to such term in section 1602 of this title ; and 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.