What is the Truth In Lending Act and how does it apply to closing?
The Truth in Lending Act (TILA) 15 U.S.C. 1601 is a federal law designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all fees so that borrowers may make informed decisions as to the true cost of borrowing money. The statute is contained in Title I of the Consumer Credit Protection Act. The Act is sometimes referred to as “Regulation Z” which is the section within the Act that provides the most protections for residential home mortgages. There are five terms which are considered to be “material” disclosures required by TILA whenever a consumer borrows money and pledges their home as security for the repayment of the money borrowed. These terms are required to be presented to the consumer as a “Good Faith Estimate” within three days of the consumers application for a home loan and re-disclosed to the consumer at consummation of the transaction if the terms are modified beyond specified tolerances of accuracy. Becau
