TILA Part 1: Overview

Question 1

What does TILA stand for and what is its Regulation?

Answer 1

The Truth-in-Lending Act; Regulation Z… “TILA the Godzilla.”

Question 2

What is the purpose of TILA?

Answer 2

Its purpose is to disclose the complete cost of credit to consumer loan applicants.

Question 3

What are the 3 things that TILA deal with?

Answer 3

1. ) Credit
2. ) APR
3. ) Advertising

Question 4

TILA establishes a “3-day right of rescission” for which transactions, and why?

Answer 4

1. ) HELOC
2. ) Refinance

Essentially, to give the customer time to decide if they want to finalize on the transactional decision.

Question 5

TILA, according to a “3-day right of rescission,” if there is more than one borrower, does it take all of them to rescind for the loan to be cancelled?

Answer 5

No, only one. For example, if there are four borrowers, only one of them would be needed.

Question 6

TILA, according to a “3-day right of rescission,” the consumer has until midnight of the 3rd day to rescind for the loan to be cancelled—true or false?

Answer 6

True. Rescission starts after the 3rd day.

Question 7

TILA, according to the 3-day right of rescission, the creditor must return any money collected related to the loan within 20 calendar days—true or false?

Answer 7

True.

Question 8

TILA, according to the 3-day right of rescission, the borrower must receive 2 copies of a Notice of Right to Rescind, if they don’t, how long can the right of rescind be prolonged to?

Answer 8

If the borrower was not properly notified, did not receive 2 Notices of the Right to Rescind, the 3-day time frame is extended to 3 YEARS.

Question 9

In what transactions does TILA apply?

Answer 9

In transactions, if there are more than 4 installments/payments.

Question 10

According to TILA, what is the only fee that may be collected prior to these disclosures and agrees to the terms?

Answer 10

The credit report.

Question 11

What is another phrase(s) for the Annual Percentage Rate (APR) and the Interest Rate?

Answer 11

1. ) Annual Rate=Effective Rate

2. ) Interest Rate=Note Rate or Nominal Rate

Question 12

How long must TILA disclosures be kept for—and what are the 2 exceptions to this rule?

Answer 12

General TILA disclosures must be kept for 2 years.

1. ) Loan Estimate 3 years.
2. ) Closing Disclosure 5 years.

Question 13

What are the TILA disclosures?

Answer 13

1. ) Loan Estimate & Closing Disclosure.
2. ) Consumer Handbook on Adjustable Rate Mortgages (CHARM booklet).
3. ) When Your Home is on the Line Booklet (HELOC/Refinancing).

Question 14

What are the penalties associated with TILA/TRID?

Answer 14

1. ) $5,000 per day for single violation.
2. ) $25,000 per day for reckless violation,
3. ) $1,000,000 per day for knowingly violating TRID.

Question 15

According to TILA, what is included in the Finance Charge?

Answer 15

1. ) Interest, time price differential, & any amount payable under an add-on or discount system of additional charges.
2. ) Service, transaction, activity, and carrying charges.
3. ) Points, loan fees, assumption fees, finder’s fees, & similar charges.

Question 16

According to TILA, what is not included in the Finance Charge?

Answer 16

1. ) Seller’s Points
2. ) Interest forfeited result of an interest reduction on a time deposit used as security for an extension of credit.
3. ) Fees in a transaction secured by real property or in a residential mortgage transaction.
4. ) Notary Fee, Credit Report Fee, and Appraisal Fee. *