Truth in Lending Flashcards
(25 cards)
What is Truth in Lending Act (TILA)?
Federal law requiring lenders to disclose key loan terms and costs to borrowers.
What is Regulation Z?
Federal regulation enforcing TILA disclosure rules.
What is Annual Percentage Rate (APR)?
Total yearly cost of credit (includes interest + other costs).
What is finance charge?
Total cost of borrowing (interest, fees, service charges).
What is right of rescission?
Borrower can cancel certain credit transactions within 3 days (not for purchase loans).
What is advertising trigger term?
Words that require full disclosure of loan terms in ads (e.g., “$1,000 down”).
What is disclosure statement?
Written statement showing APR, finance charges, payment schedule, total payments.
What is creditor under TILA?
Lender offering credit subject to finance charge or payable in >4 installments.
What is purpose of TILA?
Promote informed borrowing through transparent loan disclosures.
What loans does TILA apply to?
Consumer loans for personal, family, household use secured by real estate.
What is exempt from TILA?
Business, commercial, and agricultural loans.
What is closing disclosure (CD)?
Required document showing final loan terms, costs (TILA-RESPA rule).
What is Loan Estimate (LE)?
Initial disclosure form outlining estimated loan costs and terms (TILA-RESPA rule).
What is APR vs. interest rate?
APR = total cost of credit; interest rate = cost of borrowing principal.
What is rescission period for refinance?
3 business days after closing (borrower can cancel).
What is TILA enforcement agency?
Consumer Financial Protection Bureau (CFPB).
What is TILA penalty for violation?
Monetary damages, attorney fees, and regulatory sanctions.
What is material disclosure?
Key loan terms that must be disclosed under TILA (APR, finance charge, etc.).
What is CHARM booklet?
Consumer Handbook on Adjustable Rate Mortgages (required disclosure for ARMs).
What is high-cost mortgage loan?
Loan with excessive fees/rates triggering additional disclosures under HOEPA.
What is Home Ownership and Equity Protection Act (HOEPA)?
TILA amendment regulating high-cost home loans.
What is TILA’s purpose in advertising?
Prevent misleading credit advertising and require full disclosure.
What is balloon payment disclosure?
Lender must disclose balloon payment terms.
What is total of payments disclosure?
Total amount borrower will pay over life of loan.
