1.) What role does the Truth In Lending Act play in a mortgage transaction? Explain the protections this Act provides to the costumer in a mortgage transaction?
2.) Once loan costs are initially disclosed to a consumer, under what circumstances would a new disclosure have to be reissued and does the rule vary by loan type?
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1.)
ReplyDeleteTILA protects consumers in their dealings with lenders and creditors. TILA mandates that all the necessary information be provided to the consumer so they can make the best decision with their mortgage. TILA also provides the consumer a right of rescission.
2.)
An increase in settlement changes, a change to consumer eligibility or a property value change, consumer requested changes, interest rate locks, expiration of the original loan estimate, and a delay in a construction loan settlement are circumstances for a new disclosure. Yes, I believe the rule does vary depending on loan type.
Q1:
ReplyDeleteThe role of TILA requires lenders to disclose any and all information in regards to limitations on closed-end mortgage loans that bear rates or fees above a certain percentage. It ultimately protects consumers from unfair and deceptive lending practices and advertisements that may be misleading.
Q2:
A new disclosure would have to be reissued if there is a major change in buyer's circumstances that result in increased charges for the loan. This may include a rate increase of more than 1/8% in APR. Most closed-end credit transactions require disclosure.
1. TILA is intended to ensure that credit terms are disclosed in a meaningful way so consumers
ReplyDeletecan compare credit terms more readily and knowledgeably
Protects consumers against inaccurate and unfair credit billing and credit card
practices;
• Provides consumers with rescission rights;
• Provides for rate caps on certain dwelling-secured loans;
• Imposes limitations on home equity lines of credit and certain closed-end home
mortgages; and
• Delineates and prohibits unfair or deceptive mortgage lending practices.
2. In the event the APR (provided on the preliminary disclosure) changes by more than .125%
before the closing then the creditor must re-disclose by providing another truth in lending
statement. The .125% applies to regular transactions. Irregular transactions (defined earlier)
carry a tolerance of .25%. This disclosure must be provided allowing the borrower three (3) full
business days to review prior to the closing of the loan
(20hr) Day 2 - TILA - Discussion Questions
ReplyDeleteA1:
TILA (Truth in Lending act) plays a role in a mortgage transaction by requiring creditors to disclose key terms and costs to consumers for credit transactions through statements and fair advertising practices. It does this by protecting consumers against inaccurate and unfair credit billing and credit card practices; Providing consumers with rescission rights as well as rate caps on certain dwelling-secured loans; Imposing limitations on home equity lines of credit and certain closed-end home mortgages; and delineating and prohibiting unfair or deceptive mortgage lending practices.
A2:
Once loan costs are initially disclosed to a consumer, a new disclosure would have to be reissued when changed circumstances cause estimated settlement charges to increase more than is permitted under the TILA-RESPA rule (§ 1026.19(e)(3)(iv)(A)); Changed circumstances affect the consumer’s eligibility for the terms for which the consumer applied or the value of the security for the loan; Revisions to the credit terms or the settlement are requested by the consumer; The interest rate was not locked when the Loan Estimate was provided, and locking the rate causes the points or lender credits disclosed on the Loan Estimate to change; The consumer indicates an intent to proceed with the transaction more than 10 business days after the Loan Estimate was originally provided; or the loan is a new construction loan, and settlement is delayed by more than 60 calendar days, if the original Loan Estimate states clearly and conspicuously that at any time prior to 60 calendar days before consummation, the creditor may issue revised disclosures.
No, I believe the rules do not vary by loan type, for example there are additional disclosures when the lone is an ARM (Adjustable Rate Mortgage), but that does not mean their circumstances to reissue a new disclosure are different than with other loans.
TILA
ReplyDelete1. Protects the borrower from predatory lending acts by requiring lenders to disclose cost and terms through statements and fair advertising practices. It gives the right for the consumer to rescind on a loan. It sets rate caps and limitations on HELOC , specific kinds of closed end loans.
2. Circumstances such as an APR hikes more than .125% and up to .25% whether it be due to changes in the consumer's eligibility or the value of security in the loan. Increased settlement fees or changes requested by the consumer all would require a new disclosure. There are exemptions to the rule for certain types of loans.
1. Among other things, TILA provides safeguards to consumers by attempting to ensure credit terms are accurately disclosed, providing rescission rights and disclosure of caps and protecting consumers from unfair/inaccurate credit practices.
ReplyDelete2. A new disclosure would need to be issued in the event of change of consumer eligibility that cause increase of settlement charges, when APR increases by 1/8% or more and expiration of interest rate lock. The rules vary based on loan type as in construction loans.
1 of 2
ReplyDeleteTo accurately disclose the costs of the loan and terms of disclosures, Rights of rescission and penalties and fines associated.
2 of 2
Only due to a qualified change of circumstance as in a product change or change in the numbers on the contract. Or if the APR is off by a max variance of .125%
1 of 2:
ReplyDeleteTILA safeguards consumers by insuring credit terms, lending practices, Disclosure costs, be fair with advertising, and the availability to rescind on loans.
2 of 2:
ReplyDeleteIf the APR is off by more than .125% or the change to the consumer eligibility, a loss in pay.
Yes, depending on the loan type I think.
Alison Roae 1 of 2
ReplyDelete1.) TILA provides protection for the consumer in their understanding the process & costs involved in dealing with lenders while seeking a mortgage. TILA made is necessary for lenders & creditors to have uniform & understandable terms across the board as well as make it mandatory to give the borrower all the terms of the loan in plain language so the consumer can make the best decision. It also allows consumers to have the opportunity to rescind or waive recession on a primary residence mortgage. It has also put standards in being transparent with advertising as well.
2 of 2
It depends on the loan type, but yes there needs to be a new disclosure issued if the APR changes a specific amount, the window on the conditions expires, or cost
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ReplyDelete