The federal Truth in Lending Act, or "TILA," is also known as Federal Regulation Z. The goal of the law was to require lenders and real estate agents, among others, to make specified disclosures on real estate credit transactions so that consumer credit would be used in an informed manner. The law has since been amended and expanded. The Consumer Financial Protection Bureau enforces it now. If you are wondering about the terms of your mortgage, the experienced Boston real estate lawyers at Pulgini & Norton can advise you on the requirements of the Truth in Lending Act and other aspects of your home loan.
Understanding the Truth in Lending ActTILA is codified at 15 U.S.C. 1601 et seq., and it was enacted in 1968 as Title I of the Consumer Credit Protection Act. It was implemented by Regulation Z and became effective in 1969. TILA has been amended in a major way many times, as has Regulation Z. For example, as of 1988, Regulation Z includes adjustable rate mortgage loan disclosures. Additionally, as of 2008, Regulation Z was amended to provide protection to borrowers from deceptive or abusive lending practices, such as higher priced mortgage loans, including closed-end subprime loans secured by a home. Several advertising practices were determined to be deceptive and were also banned.
TILA requires lenders to disclose all of the terms and conditions of a mortgage in writing. What must be in writing includes the APR and other fees and charges. Certain fees may be excluded, however, such as property appraisal fees, insurance fees, notary and recording fees, and the title search, among other things. This means that figuring out the actual costs of a particular loan as compared to other loans may still be challenging.
A lender who extends credit and takes any sort of security interest on your home must also deliver the notice of the right of rescission to each consumer in the real estate transaction. You have a three-day right of rescission if the lender complies with all of the disclosure requirements. However, if your lender fails to comply with the disclosure requirements, even if it is only a technical violation of TILA, you will receive an extension of your right of rescission to three years.
Your lender is required to provide you with an updated form at or before closing if the information on the TILA statement changes. Your lender is supposed to be able to break down your TILA statement for you. When a mortgage company is operated by a builder or real estate agent, you should also receive an affiliated business arrangement disclosure, letting you know that you are not required to use the affiliated business' services and can get your mortgage some other place. The lender should also disclose to you whether there will be someone else servicing the loan. Servicing the loan includes functions such as collecting payments, sending escrow statements, and handling any disputes. However, taking out a mortgage is a significant decision, and it may help you to have an attorney go over the disclosures with you.
Contact a Boston Lawyer to Protect Your Property InterestsSecuring a mortgage is a huge financial commitment that may have significant consequences for your family down the road. It is important to fully understand the terms of your mortgage. At Pulgini & Norton, our Boston attorneys can advise homeowners on Truth in Lending Act disclosures. Our firm handles real estate transactions in Malden, Andover, and Waltham, among other Massachusetts communities. For a consultation with a mortgage attorney, contact us online or call us at 781-843-2200.