Truth in Lending Act Quiz

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Questions and Answers

Under the Truth in Lending Act, when is a Notice of Cancellation required?

When the loan amount exceeds $50,000.
When the loan is secured by the borrower's investment property.
When the loan is for business operational costs.
When the loan is secured by the owner's residence. (correct)

Which of the following scenarios would NOT require a Notice of Cancellation under the Truth in Lending Act?

A loan for home renovations.
A loan secured by a personal home.
A loan secured by a commercial building. (correct)
A loan for purchasing a primary residence.

What is the minimum loan amount that may require a Notice of Right to Rescind under the Truth in Lending Act?

$30,000
$1,000
$50,000
$25,000 (correct)

Which of the following types of loans would require a Notice of Right to Rescind under the Truth in Lending Act?

<p>A loan secured by the borrower's primary residence. (B)</p> Signup and view all the answers

For which of these loans would a Notice of Cancellation NOT apply under the Truth in Lending Act?

<p>A personal loan secured by collateral other than residence. (D)</p> Signup and view all the answers

Flashcards

Notice of Right to Rescind (TILA)

The Truth in Lending Act mandates that a Notice of Right to Rescind be issued when the loan is secured by the borrower's main home.

TILA and Home Loans

Loans secured by the borrower's primary residence are subject to specific consumer protection rules under TILA.

Right to Rescind

The right to cancel a loan within a certain timeframe (usually 3 business days) if the loan uses the borrower's primary residence as collateral.

TILA Exclusions

Loans used for business expansion or secured by commercial property are not subject to the rescission requirements.

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Loan Amount & Rescission

A higher loan amount does not automatically trigger the right to rescind, it's the property being the borrower's primary residence that matters.

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Study Notes

Truth in Lending Act & Notice of Cancellation

Under the Truth in Lending Act, a Notice of Cancellation can be given when the loan is secured by the borrower's principal residence.
Loans exceeding $25,000 and not secured do not trigger a Notice of Cancellation under the Truth in Lending Act.
Loans secured by commercial buildings also do not trigger the Notice of Cancellation.
Loans used for business expansion are not covered by the Notice of Right to Rescind.

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Description

Test your knowledge on the Truth in Lending Act and its provisions, particularly regarding the Notice of Cancellation. Learn the specifics about loans secured by residences, commercial properties, and business purposes. Understand the key factors that determine when a Notice of Cancellation applies.