TILA Flashcards
TILA is also known as
Regulation Z
TILA is implemented by the
Consumer Credit Protection Action (CCPA)
Loan whereby a lender disburses all of the funds at closing and demands repayment within a specified period of time.
Closed-End Loan
Loan whereby both the borrower and the lender anticipate repeat transactions.
Open-End Loan
Key data points that constitute an application under TILA
- The consumer’s name
- Social Security Number
- Income
- The address of the property to secure the loan
- An estimate of the value of the property securing the loan
- The loan amount sought
The time that a consumer becomes contractually obligated on a credit transaction
Consummation
The safest assumption for a lender to make is that Consummation will occur at
Time of Closing
A residential structure that contains one to four units, whether or not the structure is attached to real property
Dwelling
The cost of credit, expressed as a dollar amount
Finance Charge
The cost of credit, expressed as a yearly rate
APR
What is the only fee a lender may charge prior to quoting the APR and Finance Charge?
Cost to pull credit
True or False:
Third-Party fees are included in the Finance Charge
True - if the lender requires use of the third party or the lender retains a portion of the fee
True or False:
Optional insurance is always included in the Finance Charge
False - not included if it is voluntarily chosen by the borrower and it is in writing
What fees are explicitly excluded from Finance Charge?
Any fees that are payable in a comparable cash transaction, such as taxes
True or False:
Fees charged by the closing agent are included in the finance charge if the creditor requires these services, requires a charge for these services, or retains a portion of the charge.
True
How much of a retained Closing Charge should be included in the calculation of the Finance Charge?
Only the amount retained by the lender
Examples of fees typically included in Finance Charge / APR
- Private mortgage insurance
- Discount points and mortgage broker fees
- Origination fees
- Processing fees, and
- Underwriting fees
Examples of fees typically excluded in Finance Charge / APR
- Title fees
- Escrow fees
- Notary fees
- Appraisal and credit report fees, and
- Document preparation fees
A measure of the cost of credit, expressed as a yearly rate, that relates to the amount and timing of value received by the consumer to the amount and timing of payments made”
APR for Closed-End Loans
Computed by multiplying each periodic rate by the number of periods in a year
APR for Open-End Loans
Tolerance for APR miscalculations
1/8 of a percentage point up or down
Disclosures regarding the risks of adjustable rates are found in the following document, due 3 business days after application
Consumer Handbook on Adjustable-Rate Mortgages (CHARM Booklet)
True or False:
Post-consummation ARM disclosures can be delivered by any of the lender, servicer, or asignee
TRUE
When is a rate change disclosure due to the borrower of an ARM?
At least 60, but no more than 120 days prior to the rate and payment change
If the first rate change will occur within the first 210 days of an ARM loan, the first rate-change disclosure must be provided….
At closing / consummation
A form of credit that is secured by a mortgage on the borrower’s home.
Home Equity Plan
True or False:
Loan Estimate and Closing Disclosure are only applicable to Close-End loans and therefore do not apply to Home Equity Plans
True
Creates a cooling-off interval after closing on a loan. This interval is intended to give a borrower the opportunity to reconsider whether he/she wants the loan, and the ability to cancel the loan by simply providing the lender with timely notice of the cancellation
Three-Day Rescission Period
How long does a borrower have to rescind a HELOC when proper TILA disclosures were not provided?
Three years
Right to rescind notice must be provided to:
Each party that has an ownership interest in the principal dwelling (two copies each)
Finance charge miscalculation tolerance (purchases)
The greater of:
- .5% of note amount, or
- $100
Finance charge miscalculation tolerance (refinance)
The greater of:
- 1% of note amount, or
- $100
Trigger Terms for Open-End LOC:
- Finance charge
- Other charges, such as late payment charges, title, appraisal, and credit report fees
- Taxes imposed on the credit transaction, and
- Payment terms of the home equity plan
An initial APR that is not based on the index and margin used to make rate adjustments for adjustable-rate home equity plans.
Discounted or Premium Rate
Advertising a minimum periodic payment triggers the need to disclose the possibility of a….
Balloon Payment
Trigger Terms for Closed-End Loans:
- Amount or percentage of any down payment
- Number of payments or the period of repayment
- Payment amounts, and
- The finance charge
What amount of interest on a mortgage is tax deductible?
Any amount paid on the fair market value of the home (i.e. if the loan is greater than the appraised value, this additional amount is non-deductible)
Loan Estimate Retention Period
3 years
Closing Disclosure Retention Period
5 years
Escrow Closing Notice Retention Period
2 years
Post-Consummation Partial Payment Policy Retention Period
2 years
Loan Originator Compensation Retention Period
3 years
