Protect consumers
by disclosing the
costs and terms of
credit
Create Uniform
standards for stating
the cost of credit,
thereby envouraging
consumers to
compare the costs of
loans offered by
different creditors
Two Uniform Standards
Stating the Cost of Credit
Finance Charge: The calculation of a
loan's finance charge is a process that
invovles determining which of the
many fees associated with a loan's
orgination and closing
Closed end accuracy
requirements: Charge is
not understated by more
than $100 or The amount
stated is greater then the
amount required to be
disclosed
Annual Percentage Rate:
Measure of the cost of credit
expressed as a nominal yearly
rate. It relates the amount and
timing of the value received by
the consumer to the amount
and timing of payments made
Included in the APR, PMI or MIP,
Discount Points and mortgage
borrower fees, origination fees,
processing fees, and underwriting
fees. Many of these are calculated
in the finance charge
TILE enforces APR accuracy, if it
is not more the 1/8 of one
percentage point above or
below the APR, Open-ended
loans need to be 1/4 of one
percentage point about or below
Excluded fees, Title, escrow, notary,
appraisal and credit report, and document
preperation fees
Ensure that
advertising for
credit is truthful
and not
misleading
Trigger terms
Finance Charge, Other
charges, Taxes imposed
on credit transactions,
and payment terms
These terms require to
clearly and
conspicuoulsy include:
Any loan fee that is a
percentage of the credit
limit, An estimate,
stated as a dollar
amount, any periodic
rate used to compute
the finance charge, and
the maximum apr that
may be imposed under a
variable rate plan
Penalties for criminal
liability may inclde a
fine of up to $5,000
imprisonment for up to
one year, or both a fine
and imprionment
Prohibition against misleading
terms for closed end loans
7 deadly sins
Misleading advertising of "fixed rates
misleading comparisons in advertisements
Misrepresentations about goverment endorsement
Misleading use of the current lender's name
Misleading claims of debt elimination
misleading use of the term counselor
misleading foreign-language advertisements
Provide borrowers
with the right to
rescind certain types of
mortgage transactions
Three Business Day Recission Period:
This interval is intended to give a
borrower the opportunity to reconsider
whether they eant the loan, and the
ability to cancel the loan by simply
providing the lender with timely notice
of cancellation
Three Year Rescision Period: The three year
rescission period is available to a borrower who
did not receive a notice of the right to rescindn or
accurate TILA disclosures at the time he/she
entered an agreement for a mortgage loan
ONLY FOR PRINCIPAL DWELLING
2 copies must be
sent to each party
of interest
Foreclosures
can rescind if:
The loan was originated through a
mortgage broker and the creditor
failed to include the mortgage
broker fee in the finance charge
The creditor failed to use the
appropriate model form under Reg
Z or a substantially similar notice
Application: To meet
the deadlines of TILA
an application needs
6 pieces of
information to be
complete
1.Name 2. SSN 3. Income 4.
Address of property to
secure the loan 5. Estimated
value of property securing
the loan 6. The Loan
amount sought
ARMs
Every ARM gets a CHARM
within 3 days of the loan
application
CHARM=
Consumer
Handbook on
Adjustable- Rate
Mortgages
ARMs require a
rate/payment
change
disclosure and
A disclosure is not
required when the
transaction
involves an ARM
with a term of one
year or less
Look-back Period:
Number of days prior
to the change date on
which the index value
would be selected
Range between 15 and
60 days. General rule
requiring 60 day
advance notice
Initial rate adjustment
The estimated
interest rate and
payment change
must be calculated
15 business days
prior to the date of
the disclosure
HELOC Disclosures
Rention Disclosure
Availability of disclosed terms
Risk of Losing the home
Possibility of unfavorable actions by the creditor