Truth-in-Lending Act


Also found in: Legal.

Consumer Credit Protection Act of 1968

Legislation in the United States requiring lenders to disclose to potential borrowers all terms of loans, including, but not limited to, the interest rates, applicable fees, and the length of loans. The Act also allows consumers to cancel some credit transactions that require a lien to be placed on the consumer's primary residence. For the most part, the Act does not place limits on the fees lenders may charge, but instead requires transparency. It is also called the Truth in Lending Act.

Truth-in-Lending Act.

The Truth-in-Lending Act requires every lender to provide a complete and clear disclosure of the key terms of any lending or leasing arrangement, plus a statement of all costs, before the agreement is finalized.

The statement must include the finance charges stated in dollars and as an annual percentage rate (APR).

For most loans, it must also include the total of the principal amount being financed, all the interest, fees, service charges, points, credit-related insurance premiums, payment due date and terms, and any other charges.

The consumer lending section of the Act, which was first passed in 1968 and then simplified and reformed in 1980, is also known as Regulation Z. The consumer leasing section is known as Regulation M.

References in periodicals archive ?
LoanSifter Inc., Appleton, Wisconsin, a complete product and pricing platform, has enhanced its solutions to help lenders maintain compliance with federal Truth-in-Lending Act (TILA) changes that were scheduled to take effect on April 1, 2011, while at the same time continuing to deliver intuitive, real-time, up-to the-minute loan pricing with integrated marketing and secondary tools.
The integration provides joint Interthinx and MortgageFlex customers the ability to perform fraud-prevention and risk-mitigation tests on loans before approval and to verify that approved loans are in compliance with hundreds of federal and state anti-predatory-lending requirements, including the Home Ownership and Equity Protection Act (HOEPA) section 35, Truth-In-Lending Act (TILL) and Mortgage Disclosure Improvement Act (MDIA) tolerances.
The Dodd-Frank Act amends the federal Truth-in-Lending Act (TILA) to define the term "mortgage originator" as any person who for direct or indirect compensation 1) takes a residential mortgage application; 2) assists a consumer in obtaining or applying to obtain a residential mortgage loan; or 3) offers or negotiates terms of a residential loan.