Truth-in-Lending (TIL) Statement

Question 1

TILA protects the rights of clients by enforcing certain standards on credit and mortgage disclosures. So, with this knowledge, what is a truth-in-lending (TIL) statement?

A. A means to help lenders understand the lending process (handy tips and
summaries).

B. A breakdown of the lending process for borrowers (a step-by-step guide).

C. A federal document by law that outlines the lending costs to clients (a clear summary of credit and mortgage-related laws)

D. A lender must recite a speech to all clients before signing documents (recorded and sent to TILA regulators).

Answer 1

Correct answer: C
C is correct because a TIL is a document clearly outlining lending costs to a client. It includes the cost of the loan and extra fees such as the closing and insurance. The TILA requires the TIL to reduce junk fees and make the costs clear to clients, making for fairer trading practices

Question 2

Why must lenders provide a truth-in-lending (TIL) statement?

A. A requirement of the TILA.

B. To be upfront about lending costs.

C. To encourage borrowers to be upfront about their expenses for loan approval.

D. To find a middle ground between the lender and the borrower on the loan
amount.

E. A & B.

Answer 2

Correct answer: E
E is correct because the TILA requires by law that lenders provide clients with a TIL, which outlines upfront lending costs to borrowers. This plainly breaks down each cost so that there are no hidden fees that cannot be
questioned or explained, allowing clients to challenge fees before the closing.

Question 2

A truth-in-lending (TIL) statement does not have what?

A. Loan amount.

B. The annual percentage rate (APR).

C. Finance charges.

D. Late fees.

E. The income of the applicant.

Answer 2

Correct answer: E
E is correct, as the TIL includes all the billing-related charges for a mortgage, including the loan total, the animal percentage rate (APR), financing charges, and late fees. It does not include the income details of
the applicant.

Question 2

The TIL is a complex document with many facets which a lender should get very familiar with. So, to test this knowledge, what is the APR section?

A. A breakdown of all account charges.

B. The annual interest rate.

C. The mortgage broker fees.

D. The annual percentage rate of the mortgage interest.

E. All except A.

Answer 2

Correct answer: E
E is correct because the APR is a crucial section of the TIL which essentially breaks down the annual percentage rates of mortgage interests into tiny bite-size pieces so an applicant can clearly see how much the loan will increase. This includes annual interest rates, mortgage broker fees, and
general interests

Question 3

What is the TILA Regulation Z and how it is critical to the truth-in-lending (TIL) statement?

A. A 1989 federal law that lets clients decide what they will pay for a loan.

B. A 1968 federal law that advocates for open financial disclosures in lending.

C. A standardization of lending costs and the abolishing of some fees.

D. 1956 amendment to the TILA requires lenders to give a TIL for clients to fill in.

E. B & C.

Answer 3

Correct answer: E
E is correct because essentially the TILA Regulation Z is a 1968 federal law that makes lending costs standardized while also banning many types of lending fees. A TIL document allows clients to see clear loan costs and how they were calculated, giving them the power of disclosure to ask for
corrections if they feel the lender is going against fair trading practices.

Answer 4

Correct answer: D
D is correct, as the client shouldn’t need to request a TIL; it is part of standard practice to give out a TIL disclosure before the underwriting period and during the closing appointment. The first TIL will be an estimate of costs for the client to consider and approve, with the final TIL a complete
final costing breakdown with the underwriting process complete.