TILA ( Truth In Lending Act)

Question 1

lays out disclosure and advertising requirements, rights of rescission, and penalties for violation, as stated in this federal statue, as well as a detailed APR explanation.

Answer 1

TILA(THE TRUTH IN LENDING ACT)

Question 2

The Truth in Lending Act (TILA)

Answer 2

is a statute that requires creditors to disclose key terms and costs to consumers for credit transactions (e.g. a mortgage loan) through statements and fair advertising practices. TILA is part of the Federal Consumer Credit Protection Act.
Disclosures Required by TILA are essential to a homebuyers success

Question 3

Also Known As Regulation Z

Answer 3

TILA

Question 4

Regulation Z Applies to each Individual business that offers or extends consumer credit if they are what

Answer 4

• The credit is offered to consumers.
• Credit is offered on a regular basis.
• The credit is subject to a finance charge (i.e. interest) or must be paid in more than four (4) installments according to a written agreement.
• The credit is primarily for personal, family or household purposes

Question 5

is an arrangement where the mortgagor may draw additional funds on a line of credit (Home Equity Line of Credit HELOC) and-or is not required to pay the principal amount by a specific deadline. The borrower is charged interest periodically and is usually required to make a minimum monthly payment.

Answer 5

Open-end credit

Question 6

closed-end credit

Answer 6

credit arrangement involves a loan that requires the borrower to pay the principal amount according to a set payment schedule

Question 7

This is the actual cost of credit in the form of an annual interest rate the mortgage borrower will pay after all of the closing costs and other charges are taken into consideration. Along with the simple interest rate (aka note rate or periodic rate) the () related loan costs are totaled and averaged on an annualized basis over the life of the loan. This encompasses the rate, points, MIP, processing fees, and any other() related costs associated with the loan and is calculated to the nearest one-eighth (1/8) of a percent. The () is commonly referred to as “the cost of credit as a yearly rate” or “the cost of credit as a ratio”

Answer 7

APR(Annual Percentage Rate)

Question 8

One of the most important disclosures made, this figure represents the amount the creditor charges the borrower for credit. This is commonly referred to as “the cost of credit in an exact dollar amount.”.

Answer 8

Finance Charge

Question 9

The finance charge includes but is not limited to the following types of charges:

Answer 9

• Loan discount fee
• Loan commitment fee
• Borrower paid mortgage broker fees Processing fees
• Underwriting fee
• Tax service fee
• Flood certification fee
• Escrow/ impound waiver fee
• Assumption fee
• Interest (pre-paid)
• Courier fees
• Mortgage insurance premiums
• Document preparation fee
• Credit life premiums
• Accident, health or LOI insurance
• Closing fees, including attorney’s fees Service, transaction, activity and carrying fee Loan fees, finder’s fees and similar charges

Question 10

the following are examples of fees NOT included in the finance charge

Answer 10

• Points and fees paid by the seller
• Application fee charges to all applicants for credit
• Fees for preparing deeds and mortgages
• Fees for title examination , abstract of title, property survey -Notary or appraisal fees
• Recording fees
• Well and septic inspection fees
• Final inspection fee
• Flood hazard inspection
• Amounts required to be paid in escrow or trustee accounts -Any escrow fee or money on reserve for taxes and insurance Appraisal

Question 11

the amount that is being borrowed in a consumer loan transaction

Answer 11

Amount Financed

Question 12

According to TILA what days are defined as business days

Answer 12

Monday through Saturday, excluding Federal holidays.

Question 13

How many days does the Creditor need to provide the borrower a general , Preliminary disclosure, statement

Answer 13

three (3) business days after the consumer’s completed application is received

Question 14

When the APR changes by more than .125% what should the lender do and how many days do they need to provide the statement to the borrower

Answer 14

efore the closing then the creditor must re-disclose by providing another truth in lending statement. This disclosure must be provided allowing the borrower three (3) full business days to review prior to the closing of the loan.

Question 15

What is a variable credit rate plan

Answer 15

arrangement where the APR may increase or decrease (e.g. based on market rates) throughout the duration of the repayment period.

Question 16

What is in the CHARM (Consumer Handbook on Adjustable Rate Mortgages) Booklet?

Answer 16

the CHARM booklet is a consumer friendly informational document describing the attributes of Adjustable Rate Mortgages (ARMS). Introducing terms to the consumer such as index, margin, etc.

Question 17

What disclosures needs to be provided for each variable

Answer 17

1. The fact that the interest rate, payment, or term of loan can change;
2. The index or formula used in making adjustments, and a source of information
   about the index or formula (where it can be obtained);

Question 18

Where are the finance charges reported to the borrower initially?

Answer 18

On the Truth in Lending initial disclosure form

Question 19

What is a Principal Dwelling?

Answer 19

the primary residence.

Question 20

The transaction secured by what type of loan is not rescindable?

Answer 20

second or vacation home

Question 21

If the required notice or material disclosures are not delivered, the right to rescind shall expire

Answer 21

3 years

Question 22

To rescind a Loan the borrower must do what

Answer 22

he consumer must notify the creditor (by mail, telegram, e-mail, etc.) before midnight (12:00 AM) of the third (3rd) business day after one of the following (whichever comes last):

• The consummation of the loan.
• The delivery of the right to rescind notice.
• The delivery of all disclosures.

Question 23

Waiving the right to Rescission for a financial emergency what do you need to provide in a written statement?

Answer 23

• Describes the emergency

- Specifically waives (or modifies) the right to rescind -Contains all of the concerned consumers’ signatures

Question 24

What are Trigger terms ?

Answer 24

“Trigger terms” are phrases that represent the most attractive features of a credit plan in the context of an ad. I

Question 25

If a consumer orally asks about a credit plan and the costs associated with it, the mortgage loan originator must do what ?

Answer 25

mortgage loan originator must state the APR!

Question 26

For what type of plan (open ended or closed ended) can the creditor give the periodic rate, if he or she so chooses.?

Answer 26

Open-ended

Question 27

What plan (open ended or closed ended) can the creditor offer the periodic or simple interest rate that is applicable to an unpaid balance—but only after the APR has been disclosed.

Answer 27

Closed ended

Question 28

A broker or a creditor must keep evidence of compliance with TILA regulations for how long from disclosure date?

Answer 28

two (2) years

Question 29

What are the penalties for violating regulation Z?

Answer 29

an be fined up to $5,000 dollars, be imprisoned for up to a year, or both

Question 30

A consumer lawsuit must begin within what time frame of the actual violation to TILA

Answer 30

1 Year, but f a note holder sues a consumer more than one (1) year after the lender’s violation date, violations in the Truth in Lending Act can be used as a defense and a counterclaim by the consumer for up to three (3) years.

Question 31

This Act was to amend the reporting rules for both Regulation X (RESPA), and Regulation Z (TILA)

Answer 31

Mortgage Disclosure Improvement Act

Question 32

initial disclosures are due in three (3) business days; there must be seven (7) business days allowed to close the loan; and redisclosure requires a three (3) business days wait period before you can close , this is called ?

Answer 32

3/7/3 rule or July rule