Podcast
Questions and Answers
What is the stated purpose of the Truth-in-Lending Act?
What is the stated purpose of the Truth-in-Lending Act?
Which of the following advertisements contains a term that would require additional disclosures under the Truth-in-Lending Act?
Which of the following advertisements contains a term that would require additional disclosures under the Truth-in-Lending Act?
Which of the following would be considered a 'dwelling' under the Truth-in-Lending Act?
Which of the following would be considered a 'dwelling' under the Truth-in-Lending Act?
A first lien higher-priced mortgage loan (HPML) is defined as a loan with an annual percentage rate which exceeds the average prime offer rate by?
A first lien higher-priced mortgage loan (HPML) is defined as a loan with an annual percentage rate which exceeds the average prime offer rate by?
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Which of the following is true if a borrower effectively rescinds on a refinance transaction on their primary residence?
Which of the following is true if a borrower effectively rescinds on a refinance transaction on their primary residence?
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Which of the following is NOT required to be disclosed in an advertisement which contains a trigger term as set forth in the Truth-in-Lending Act?
Which of the following is NOT required to be disclosed in an advertisement which contains a trigger term as set forth in the Truth-in-Lending Act?
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Which of the following would be considered to be a high-cost home loan if the average prime offer rate is 3%?
Which of the following would be considered to be a high-cost home loan if the average prime offer rate is 3%?
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Study Notes
Truth-in-Lending Act (TILA) Overview
- Aims to assist consumers in comparing credit options to prevent uninformed use of credit.
- Requires lenders to disclose clear and conspicuous terms of consumer loans, protecting borrowers from unethical practices.
Trigger Terms in Advertisements
- The advertisement stating "Own for $700 per month!" qualifies as a trigger term.
- Trigger terms necessitate additional disclosures regarding down payments, loan terms, payment amounts, or finance charges.
Definition of Dwelling
- Under TILA, a "dwelling" consists of residential structures with one to four units.
- Includes various types like condominiums, cooperatives, mobile homes, and trailers when used as residences.
Definition of Higher-Priced Mortgage Loan (HPML)
- A first lien HPML is defined by an APR exceeding the average prime offer rate by 1.5%.
- Subordinate lien loans exceed the average prime offer by 3.5% to be considered HPMLs.
Rights upon Rescinding a Refinance Transaction
- When a borrower rescinds on a refinance transaction for their primary residence, they are entitled to a refund of prepaid appraisal fees.
- Creditors must return funds and void any mortgage or trust deed, eliminating consumer responsibility for the loan.
Disclosure Requirements for Trigger Terms
- Disclosures that must be made if trigger terms are present include down payment amounts, payment schedules, and annual percentage rates.
- The specific amount of principal covered in each payment does not require disclosure under TILA.
High-Cost Home Loan Identification
- A loan is classified as high-cost if its APR exceeds the average prime offer rate by over 6.5 percentage points for first lien loans.
- For a loan with a 3% average prime offer rate, a 15-year mortgage at 10% APR qualifies as a high-cost home loan.
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Description
Test your knowledge on the Truth-in-Lending Act (TILA) with these flashcards. This quiz focuses on the key purposes and definitions related to TILA, helping you understand consumer protections in lending. Perfect for students of finance or anyone interested in consumer rights.
