Truth in Lending Act (TILA) was implemented by “Regulation Z” back in 1968. But this site is not to give you a history or legal definitions. You can find that out on many of the government sites.
What I want to be able to do here is give you a real basic Layman’s term of what TILA is and what form or Form(s) you will see on TILA in your disclosures and why it’s important to you.
The TILA notice or disclosure is delivered in one of two basic formats. The first is the older format that most consumers remember as the disclosure form with the four boxes across the top generally just below the first paragraph. These boxes contained information on your annual percentage rate, finance charge, amount financed, and the total of all your payments.
This older format is still used in the mortgage loan industry for financing with Reverse Mortgages, Land purchases, commercial type loans, and investment properties.
Today for your refinance and purchase of your primary residence, second homes and all other real estate dwellings. The TILA form was mashed together with the RESPA form which created TRID (TILA RESPA Intergraded Disclosure). This disclosure was supposed to be simpler for the consumer to understand over the older forms. However, its proved to be overwhelming for the first home buyer, the figures are many and most people do not even read the three plus pages of them.
For most in the industry the TRID forms have grown on us. It’s does make it easier for us to explain your cost surrounding financing in your mortgage loan. For more details and a reasonable explanation of the TRID form(s) please visit our page on TRID.
As for TILA let’s keep it simple. It is the form that tells you how much your loan is going to cost you. It is designed to force lenders to disclose your total cost – it is also a way to alert you of being gouged. This form is subject to audit by both state and federal regulators. If you ever feel you are being gouge or over charged, this form, which you should receive in your initial disclosures, allows you to have in writing your total cost. This form not only discloses to you but it can also be used as your estimate to have in hand to shop around with.
The TILA forms are used in most every type of financing from credit cards, auto loans to personal loans from a licensed financial creditor. Information contain on our pages for general basics in Layman’s terms for mortgage loan purposes only.