Truth in Lending Act (TILA) Violations

The TILA favors consumers.  Any lender or creditor who does not comply with the TILA will be held liable to the consumer for said violation.

The TILA applies under the following conditions:

• Credit offered or extended to consumers.
• The offering or extension of credit is done in the normal course of business for more than 25 times (or more than 5 times for any transactions that are secured by a dwelling) per year.
• Finance charges are involved or the credit is payable by written agreement in more than four installments.
• The credit is used for personal, family, or household purposes only.
• For credit cards, there are certain provisions that apply even if there is no finance charge involved ,or the payment is not payable in four installments or if the credit is used for business purposes instead of personal. Also, note that credit card holders are only liable for $50.00 per card for unauthorized use. The TILA does not apply to student loans.

Disclosures

The lender or creditor must disclose in the following manner:

• Clearly and obvious.
• In a meaningful sequence.
• In writing.
• In a form that the consumer may keep.
• Identity of the creditor.
• Amount financed.
• Itemization of amount financed.
• Annual percentage rate, including applicable variable-rate disclosures.
• Finance charge, method determining the charge, balance upon which charge is imposed.
• Total of payments.
• Payment schedule.
• Prepayment/late payment penalties.
• Any membership or participation fees, amount and method of determining.
• Statement of billing rights.
• If applicable to the transaction: (1) Total sales cost, (2) Demand feature, (3) Security interest, (4) Insurance, (5) Required deposit, and (6) Reference to contract.

Remedies for Violations

If any of these disclosures are not met, the lender is in violation of the Act. The following remedies are available to the consumer:

• Rescind the loan within three days from signing mortgage loan papers. If the time has already passed, and the lender has filed a foreclosure action against the borrower, then the borrower has three years from discovery to rescind the loan based upon the lender’s violations of the Act. 
• Civil remedies for actual damages in all cases.
• Attorneys' fees and court costs for successful enforcement and rescission actions.
• Statutory damages.
• (1) For individual actions, double the correctly calculated finance charge but not less than $100 or more than $1,000 for individual actions.
• For class actions, an amount allowed by the court with no required minimum recovery per class member to a maximum of $500,000 or 1% of the creditor's net worth, whichever is less.

For more information regarding the Act, you can find it in Title I of the Consumer Credit Protection Act. The act is enforced by the Federal Reserve Board via Regulation Z (12 C.F.R. Part 226).

• If you may have been a victim of foreclosing due to a deceitful Real Estate deal, Submit your Case for a Free Review from a Foreclosure Attorney in your area to be aware of your options.

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