The
Truth-in-Lending Act requires that
mortgage lenders
disclose certain costs and fees before loan
application or in loan advertisements. This
regulation generally applies to individuals
or businesses that offer or extend credit to
consumers, and in such cases as when the
credit is subject to a finance charge
payable by a written agreement that extends
beyond four installments, if the credit is
primarily for personal, family or household
use, if the loan exceeds $25,000 or if a
property or dwelling is being used as
collateral.
The TILA
also provides consumers with the right to
cancel certain real estate loans within
three business days, often without having to
state a reason, and helps to insure that
lenders operate in a fair lending
environment that is safe for consumers.
The TILA typically requires lenders to
disclose the following:
-
Annual percentage points
(APR).
-
Payment amount and due
dates.
-
Term of the loan.
-
If there will be any
balloon payments.
-
Late payment fees.
-
Features of variable-rate
loans including all caps.
-
Whether the loan is
assumable.
-
Application fee.
-
Annual or one-time
service fees.
-
Pre-payment penalties.
You will
usually get these disclosures from your
lender before you apply for the loan, and
additional disclosures before the deal is
closed.
The TILA
also applies to advertisements by lenders
offering loans, and insists that they
disclose the following in the ads:
-
Specific credit terms.
-
If the advertisement
includes a rate, the rate must be stated
as an APR, which includes such costs as
points and fees incurred during the
first year.
-
If the APR on the loan
may be increased after the loan is
closed.
-
The only other rate
allowed is the simple annual rate or
periodic rate as applied to the unpaid
balance, and it can be advertised with,
but not in a more visible way than, the
APR.
Mortgage Glossary2
