TILA

Question 1

Congress enacted ________ in 1968 as Title I of the Consumer Credit Protection Act.

Answer 1

Truth-in-Lending Act (TILA)

Question 2

What was the ultimate goal of CCPA?

Answer 2

To promote the informed use of credit by consumers.

Question 3

What was the first law in which the federal government enacted disclosure requirements as a means of protecting consumers from unfair treatment by creditors?

Answer 3

Truth-in-Lending Act (TILA)

Question 4

Primary goals of TILA

Answer 4

1. To protect consumers by disclosing the costs and terms of credit
2. To create uniform standards for stating the cost of credit
3. Ensure advertising for credit is truthful and not misleading
4. To provide borrowers with the right to rescind certain types of mortgage transactions

Question 5

Title XIV of the Dodd Frank Act

Answer 5

Mortgage Reform and Anti-Predatory Lending Act

Question 6

Implementing Regulations for TILA

Answer 6

Regulation Z

Question 7

Who is primarily responsible for for implementing and enforcing TILA and Regulation Z?

Answer 7

CFPB

Question 8

What conditions must a loan adhere to in order to be covered by TILA?

Answer 8

1. The credit is offered to consumers.
2. The offer or extension of credit is made regularly.
3. The credit includes a finance charge or written agreement stating the loan may be repaid in more than 4 installments.
4. The credit is primarily for personal, family, or household purpose.

Question 9

Open End or Closed End

“Both the borrower and the lender anticipate repeat transactions”

Answer 9

Open-End

Question 10

Open End or Closed End

“A lender gives the borrower a limit on the amount of funds that he/she can withdraw and the borrower can request a cash advance”

Answer 10

Open-End

Question 11

Open End or Closed End

“The borrower may have the option of requesting an increase in the credit amount”

Answer 11

Open-End

Question 12

Open End or Closed End

“Payments depend on the interest due on the amount withdrawn”

Answer 12

Open-End

Question 13

Open End or Closed End

“A lender disburses all of the funds at closing and demands repayment within a specified time frame”

Answer 13

Closed-End

Question 14

Open End or Closed End

“Borrowers may not receive an increase in the principle amount of a loan”

Answer 14

Closed-End

Question 15

“Natural persons or business and financial organizations that extend consumer credit, make credit subject to finance charges, receive the initial payments on the debt a borrower assumes”

Answer 15

Creditor

Question 16

“The submission of a consumer’s financial information for the purposes of obtaining an extension of credit”

Answer 16

Application

Question 17

Regarding a mortgage transaction, a complete application includes what pieces of information?

Answer 17

1. Consumer’s Name
2. Social Security Number
3. Income
4. Address of property to secure the loan
5. An estimate of the value of the property
6. Loan Amount Sought

Question 18

“The time that a consumer becomes contractually obligated on a credit transaction”

Answer 18

Consummation

Question 19

Two uniform standards defined by TILA pertaining to the cost of credit.

Answer 19

1. The Finance Charge

2. The Annual Percentage Rate

Question 20

Regulation Z defines Finance Charge as:

Answer 20

“the cost of credit as a dollar amount”

Question 21

Regulation Z defines Annual Percentage Rate as:

Answer 21

“a measure of the cost of credit, expressed as a yearly rate”

Question 22

Is this fee included or not included in the Finance Charge?

“Fees paid to third parties or retains a portion of the fee, when the creditor requires the service”

Answer 22

Included

Question 23

Is this fee included or not included in the Finance Charge?

“Charges of Credit Life, Disability, or Employment Insurance, if optional and voluntarily chosen by the borrower”

Answer 23

Not Included

Question 24

Is this fee included or not included in the Finance Charge?

“Mortgage Broker Fees”

Answer 24

Included

Question 25

Accuracy Tolerances for Open-End Loans

Answer 25

Regulation Z does not establish tolerances for Open-End loans.

Question 26

The creditor will need to redisclose amounts when:

Answer 26

the charges are not accurate within tolerances that the regulation establishes for closed-end credit.

Question 27

Inaccurate disclosures of the finance charge or the annual percentage rate give consumers a basis for exercising _________________.

Answer 27

the right to rescind a loan up to three years after consummation.

Question 28

For closed-end loans: "A measure of the cost of credit, expressed as a yearly rate, that relates to the amount and timing of the value received by the consumer to the amount and timing of payments made"

Answer 28

Annual Percentage Rate

Question 29

For open-end loans: | "Annual Percentage Rate shall be computed by multiplying each ___________ by the number of periods in a year"

Answer 29

periodic rate

Question 30

For closed-end loans, the APR is considered accurate if it is within _____ of the disclosed APR.

Answer 30

1/8th of a percent

Question 31

For irregular loans, the APR is considered accurate if it is within _____ of the disclosed APR.

Answer 31

1/4 of a percent

Question 32

Disclosures for ARMs provide consumers with:

Answer 32

1. Summaries of loan costs and lending terms 2. Warnings related to the inherent risks of adjustable interest rates 3. Advance notice of rate changes that will impact the amount of future loan payments

Question 33

CHARM Booklet is due to the borrower _________.

Answer 33

no later than three business days after a consumer submits an application.

Question 34

When a consumer applies for an ARM, the creditor must provide loan program disclosures ____________.

Answer 34

for each variable-rate mortgage product in which the applicant has expressed an interest in.

Question 35

Rate Change Disclosure for ARMS are required:

Answer 35

at least 60, but no more than 120, days before the first payment is due at an adjusted interest rate.

Question 36

Post consummation disclosure requirements apply to ARMS that are:

Answer 36

1. Closed-end loans | 2. Secured by the borrowers principal residence

Question 37

An exception to the Rate Change Disclosure requirement:

Answer 37

required at consummation if the first payment at the adjusted interest rate is due within 210 days of consummation.

Question 38

Regulation and Section governing Home Equity Plans

Answer 38

Regulation Z, Section 1026.40

Question 39

A ______________ is a form of revolving credit that is secured by a mortgage on the borrower's home.

Answer 39

Home Equity Plan

Question 40

A legal remedy that voids a contract between two parties, restoring each to the position held prior to the transaction.

Answer 40

Rescission

Question 41

Intended to give a borrower the opportunity to reconsider whether he/she wants a loan, and the ability to cancel the loan by simply providing the lender with a timely notice of the cancellation.

Answer 41

Three business-day rescission period

Question 42

Available to a borrower who did not receive a notice of the right to rescind or accurate Truth in Lending disclosures at the time that he/she entered an agreement for a mortgage loan.

Answer 42

Three-year rescission period

Question 43

Loans not covered under the Right to Rescind:

Answer 43

1. Temporary loans 2. A loan that has been refinanced as a new transaction. 3. A lending transaction with a state agency 4. An advance or series of advances for a construction loan. 5. A renewal of optional insurance products.

Question 44

Creditors must provide two copies of ___________ to each party with an ownership interest in the principal dwelling that serves as security for the loan.

Answer 44

Notice of the Right to Rescind

Question 45

Advertising Trigger Terms for Open-End Credit:

Answer 45

1. Finance Charge 2. Other Charges (late payment, title, appraisal, credit report fees) 3. Taxes imposed on the credit transaction 4. Payment terms

Question 46

A ____________ is an initial APR that is not based on the index and margin used to make rate adjustments for Adjustable Rate Home Equity Plans.

Answer 46

discounted or premium rate

Question 47

Advertising Trigger Terms for Closed-End Credit:

Answer 47

1. Amount or percentage of a down payment 2. number of payments or the period of repayment 3. payment amounts 4. the finance charge

Question 48

Regulation __ includes a list of seven prohibited practices when advertising closed-end credit secured by a dwelling.

Answer 48

Z

Question 49

Penalties for criminal liability for violations of TILA include:

Answer 49

fines of up to $5000 and or up to one year in prison.

Question 50

For closed-end loans secured by a dwelling, the Civil Liability penalty for violations of TILA is:

Answer 50

no less than $400, no more than $4000.

Question 51

Individual actions for violations of TILA and Regulation Z may lead to:

Answer 51

1. Actual Damages 2. twice the amount of the finance charge 3. monetary penalties 4. the costs of bringing the action and attorney fees

Question 52

In class actions for violations of TILA, the amount of recovery possible is limited to:

Answer 52

$1,000,000 or 1% of the creditor's net worth, whichever is less.