Truth in Lending Act (TILA)

Posted by kevin on March 11, 2010 under Foreclosure Blog | Comments are off for this article

The Truth in Lending Act, known as TILA, was enacted in 1968.  TILA is primarily a disclosure statute.

TILA applies to individuals or businesses that offer or extend credit under the following circumstances:

• the credit is offered or extended to a consumer (as opposed to a business)
• the offer or extension of credit is done on a regular basis
• the credit is subject to a finance charge or is payable by a written agreement in more than 4 installments; and
• the credit is primarily for personal, family or household purposes.

The application of TILA is widespread and goes beyond mortgages on real estate.  But the principles are the same whether we are talking  about a mortgage, a line of credit, ATM charges, a car loan, or credit card charges.  TILA requires that credit terms and costs be fairly and accurately disclosed to a consumer so that the consumer can make an informed choice about whether to enter into a transaction.

Violations of TILA subject the creditor to statutory damages, actual damages, rescission in some instances plus attorneys fees and costs.