Truth in Lending Act Overview

<p>A loan made by a private lender to a consumer for household use. (A)</p> Signup and view all the answers

<p>Days when creditors are open for business activities. (A)</p> Signup and view all the answers

<p>A right to rescind the transaction. (C)</p> Signup and view all the answers

<p>Using deceptive mortgage lending practices. (C)</p> Signup and view all the answers

<p>Timely delivery of standardized loan disclosures. (D)</p> Signup and view all the answers

<p>The lender may order an appraisal to determine the property's value. (D)</p> Signup and view all the answers

<p>No later than three business days prior to loan consummation. (C)</p> Signup and view all the answers

<p>The penalty does not apply if refinancing is done with the creditor. (D)</p> Signup and view all the answers

<p>Lenders must confirm the borrower's ability to repay the loan. (C)</p> Signup and view all the answers

<p>Loan originator compensation cannot be based on terms or their proxies. (D)</p> Signup and view all the answers

<p>Unexpected increases in estimated settlement costs. (D)</p> Signup and view all the answers

<p>This type of compensation is strictly prohibited. (A)</p> Signup and view all the answers

<p>They should be fixed for at least the first four years. (A)</p> Signup and view all the answers

<p>The amount of each payment over the loan term (D)</p> Signup and view all the answers

<p>The number of payments or period of repayment (A)</p> Signup and view all the answers

<p>Clarification stating the rates can vary after a certain period (A)</p> Signup and view all the answers

<p>Consumer Financial Protection Bureau (CFPB) (B)</p> Signup and view all the answers

<p>When the payments do not include taxes and insurance (D)</p> Signup and view all the answers

<p>The loan's APR exceeds the APOR by more than 8.5 percentage points (A)</p> Signup and view all the answers

<p>The terms of repayment and information about rate increases (B)</p> Signup and view all the answers

<p>Stating rates are fixed when they may vary (B)</p> Signup and view all the answers

<p>Presentation of a government endorsement (B)</p> Signup and view all the answers

<p>8% (A)</p> Signup and view all the answers

<p>When disclosures are placed clearly and conspicuously on a designated page (A)</p> Signup and view all the answers

<p>Exempt advertisements that state a reference number and phone number (B)</p> Signup and view all the answers

<p>The dollar amount or percentage of any down payment (C)</p> Signup and view all the answers

<p>Loans made to corporations and government entities (D)</p> Signup and view all the answers

<p>To ensure lenders disclose loan terms in a standardized format (A)</p> Signup and view all the answers

<p>Within 1/8th percent of the actual APR (A)</p> Signup and view all the answers

<p>It applies only to residential mortgage transactions (C)</p> Signup and view all the answers

<p>Offering fixed interest rates throughout the loan term (C)</p> Signup and view all the answers

<p>The cost of consumer credit as a dollar amount (C)</p> Signup and view all the answers

<p>By midnight of the third business day after specific events (B)</p> Signup and view all the answers

<p>Loan term specifics must reflect the lender's current offers (C)</p> Signup and view all the answers

<p>A loan secured by a borrower's principal dwelling (D)</p> Signup and view all the answers

<p>A charge paid separately before loan closing or from proceeds (A)</p> Signup and view all the answers

<p>Stating the terms in clear and conspicuous language (D)</p> Signup and view all the answers

<p>Its interest rate can increase after loan consummation (C)</p> Signup and view all the answers

<p>1/8 percent (D)</p> Signup and view all the answers

<p>The loan agreement is voided without penalty (A)</p> Signup and view all the answers

<p>Reverse mortgages (D)</p> Signup and view all the answers

<p>Late fees are limited to four percent (D)</p> Signup and view all the answers

<p>The consumer has received counseling (B)</p> Signup and view all the answers

<p>Escrow for taxes and insurance is mandatory (D)</p> Signup and view all the answers

<p>Cooperative share loans (A)</p> Signup and view all the answers

<p>A final payment that is twice the regular amount (D)</p> Signup and view all the answers

<p>They must assess the consumer's ability to repay (A)</p> Signup and view all the answers

<p>Provide a disclosure of obligations (C)</p> Signup and view all the answers

<p>For loans issued by urban lenders (B)</p> Signup and view all the answers

<p>Encouraging the consumer to default on a loan (A)</p> Signup and view all the answers

<p>1.5 percentage points (B)</p> Signup and view all the answers

<p>One year (D)</p> Signup and view all the answers

<p>Consider borrower requests to cancel escrow (A)</p> Signup and view all the answers

A federal law requiring lenders to disclose loan terms clearly, so consumers can compare them.

Another name for the Truth in Lending Act (TILA).

To protect consumers by requiring lenders to clearly disclose loan terms.

A residential structure (1-4 units) used as a residence, including condos, co-ops, mobile homes, and trailers.

A day when a lender's office is open for normal business.

The right to cancel a loan transaction.

Loans to consumers, made by lenders, with charges, and >4 installments for personal use are covered.

Lenders must use the same terms and calculation methods to present loan costs.

Advertisements for loans secured by a dwelling must prominently display the simple annual interest rate along with the annual percentage rate (APR).

Specific terms in loan ads that require additional disclosures about the loan.

Loan ads must include details about down payment amounts/percentages, repayment terms (including balloon payments), APR, and potential rate increases (for adjustable-rate loans).

Loan ads for adjustable-rate loans must clearly state that the interest rate may change after the loan is finalized.

Loans that meet specific criteria regarding APR, points/fees, or prepayment penalties are considered high-cost and are covered by HOEPA.

A key factor determining if a loan is subject to HOEPA which analyzes if the loan's APR exceed the applicable average prime offer rate (APOR).

Loan points and fees can trigger HOEPA coverage if they exceed a certain percentage of the total loan amount.

Prepayment penalties applied to certain HOEPA covered loans must have specific parameters.

A loan that falls under the scope of the home ownership protection act (HOEPA).

TILA prohibits misleading and deceptive acts or practices in mortgage loan advertisements.

Payments of adjustable-rate loans must be disclosed based on recent indices and margins.

Multi-page or multi-format ads can fulfill requirements by placing the required specifics conspicuously.

Radio & TV ads can satisfy requirements by either providing every detail explicitly or by specifying APR, a reference number, and a toll-free phone number for more information.

Ads detailing payment amounts must show all payment details, including balloon payments, and the period during which each payment is in effect.

Certain loan types are exempt from the Truth in Lending Act (TILA) requirements, mostly business, commercial, or agricultural loans, and loans to non-natural persons (like corporations or government entities).

Loans for non-owner-occupied residential properties are exempt from TILA, but only if the loan is for a business, commercial, or agricultural purpose. Personal use of proceeds voids the exemption.

A standardized measure of the true cost of credit, calculated to include all relevant loan factors. Expressed as a yearly rate.

Fixed-rate mortgages must be within 1/8th of a percent of the actual APR, while adjustable-rate mortgages must be within 1/4 for accuracy.

The total cost of consumer credit. It includes all lender charges but excludes expenses covered in the equivalent cash transaction.

A finance charge paid separately before or at closing, or withheld from the loan.

Seller contributions (seller's points) towards borrower costs are excluded from the finance charge calculation, even if they increase the purchase price.

Adjustable Rate Mortgages require two special disclosures: a consumer handbook on adjustable-rate mortgages and a loan program disclosure.

A borrower has specific timeframe to cancel debt in some secured credit transactions.

Certain loan types, like refinancing an existing mortgage (with no new funds) or advance for construction with a disclosed transaction , are exempt from the rescission right.

The moment when a borrower becomes legally bound and obligated by the credit agreement.

Borrowers have three business days after consummation, disclosure delivery, or notice receipt to rescind.

Loan ads must accurately reflect the terms offered, and rates must be clearly presented as APR. Must state if APR may change.

A transaction that creates a mortgage, deed of trust, or a security interest in a consumer's principal residence for acquiring or initially constructing it.

Loans to finance the initial building of a dwelling are exempt from HOEPA regulations.

Reverse mortgages, where homeowners receive payments from their home's equity, are exempt from HOEPA.

Loans originated and financed by Housing Finance Agencies are exempt from HOEPA.

Loans originated through the USDA's Rural Housing Service section 502 Direct Loan are exempt from HOEPA.

HOEPA loans generally prohibit balloon payments, which are significantly larger than regular payments.

HOEPA loans cannot have negative amortization, where the loan balance increases instead of decreasing.

HOEPA loans cannot have prepayment penalties for paying off the loan early.

HOEPA loans have strict limitations on points and fees.

HOEPA limits late fees to a maximum of 4% of the late payment.

HOEPA restricts fees for providing loan payoff statements.

HOEPA prohibits fees for loan modifications or payment deferrals.

HOEPA requires lenders to assess borrowers' ability to repay for Home Equity Lines of Credit.

Lenders and brokers cannot encourage HOEPA borrowers to default on loans for refinancing.

A closed-end mortgage loan with an interest rate significantly higher than the average prime offer rate.

Escrow for taxes and insurance is usually required for HPMLs, regardless of the loan-to-value ratio.

Lenders must provide a disclosure within 3 business days of loan application stating they may order an appraisal and charge the borrower. They must also provide a copy of the appraisal to the borrower within 3 business days before closing or within 30 days if the loan doesn't close.

The timing requirement for providing an appraisal to the borrower cannot be waived for high-priced mortgage loans (HPMLs).

Lenders are required to verify the borrower's income and assets to confirm their ability to repay the loan.

HPMLs cannot include a prepayment penalty in the first two years of the loan, unless permitted by law. The penalty won't apply if the prepayment source is a refinancing by the same lender or an affiliate.

High-priced mortgage loans must have a fixed interest rate and payment for at least the first four years of the loan.

Dodd-Frank Act limits how loan originators can be compensated, preventing them from being rewarded based on loan terms or factors they can influence.

Loan originator compensation cannot be reduced to lower the cost of changing loan terms, except for unexpected increases in estimated closing costs.

Loan originators cannot be compensated based on the profitability of a loan or a group of loans. This prevents incentives to 'up-charge' borrowers.