Violations of Federal Law (TILA, RESPA) – Lanin Law P.C. (2024)

FAQs

What are some examples of TILA violations? ›

Some examples of violations are the improper disclosure of the amount financed, finance charge, payment schedule, total of payments, annual percentage rate, and security interest disclosures. Under TILA, a creditor can be strictly liable for any violations, meaning that the creditor's intent is not relevant.

Criminal penalties – Willful and knowing violations of TILA permit imposition of a fine of $5,000, imprisonment for up to one year, or both.

The two main types of TILA violations that can provide relief to borrowers when a creditor doesn't adhere to the law are violations for damages and violations that allow rescission. Rescission is a remedy that might help if you're facing foreclosure, as you'll see below.

Failure to comply with the rules of TILA would render the loan unsecured, thus devaluing the mortgage to the lender because it is not tied to any collateral (i.e. your home).

A RESPA violation occurs when a title company has a financial interest (or ownership) in a real estate transaction where a buyer's loan is “federally insured.” RESPA is a consumer protection law created to make sure that buyers of residential properties of one to four family units are informed in detailed writing ...

Examples of the TILA's Provisions

For example, loan officers and mortgage brokers are prohibited from steering consumers into a loan that will mean more compensation for them, unless the loan is actually in the consumer's best interests.

Failure to calculate the amount financed properly

Speaking of the “amount financed,” using the incorrect amount financed violates TILA and can also sabotage the rest of your TILA disclosures. The “amount financed” is effectively the amount of credit provided to the consumer or on the consumer's behalf.

Here are examples of when you may have a TILA claim: A lender changed the terms of your home equity line of credit without your knowledge and consent. A lender did not provide you with an accurate and truthful rate calculation.

The Truth in Lending Act (TILA) protects you against inaccurate and unfair credit billing and credit card practices. It requires lenders to provide you with loan cost information so that you can comparison shop for certain types of loans.

Truth in Lending (Regulation Z) Threshold Adjustments

This final rule increases the dollar threshold for certain exempt consumer credit transactions under Regulation Z from $61,000 to $66,400, effective January 1, 2023.

What is the TILA trigger rule? ›

Definition and Examples of Triggering Terms

Triggering terms are words or phrases that must be accompanied by a disclosure when they're used in advertising. These disclosures are mandated by the TILA, which is designed to protect consumers from inaccurate and unfair credit billing and credit card practices.

Triggering terms need not be stated explicitly; additional disclosures are still required if the term may be readily determined from the advertisem*nt. For example, if the advertisem*nt says “80 percent financing available,” the statement is indicating a 20 percent down payment is required (a triggering term).

This 1968 federal law was created to promote honesty and clarity by requiring lenders to disclose terms and costs of consumer credit. The TILA standardized the process of how borrowing costs are calculated and disclosed, making it easier for consumers to compare loans and credit costs with various lenders.

The Dodd-Frank Act generally granted rulemaking authority under the TILA to the Consumer Financial Protection Bureau (CFPB).

The Federal Trade Commission is authorized to enforce Regulation Z and TILA. Federal law also gives the Office of the Comptroller of the Currency the authority to order lenders to adjust and edit the accounts of consumers whose finance charges or annual percentage rate (APR) was inaccurately disclosed.

Lenders have to provide borrowers a Truth in Lending disclosure statement. It has handy information like the loan amount, the annual percentage rate (APR), finance charges, late fees, prepayment penalties, payment schedule and the total amount you'll pay.

TILA disclosures include the number of payments, the monthly payment, late fees, whether a borrower can prepay the loan without penalty and other important terms. TILA disclosures is often provided as part of the loan contract, so the borrower may be given the entire contract for review when the TILA is requested.

What loans does the Truth In Lending Act apply to? TILA's provisions cover open and closed-end credit. Open-end credit includes home equity lines of credit (HELOCs), credit cards, reverse mortgages and bank-issued cards. Closed-end credit includes home equity loans, mortgage loans and car loans.