TILA/ Reg Z

andrea.browne
Mind Map by andrea.browne, updated more than 1 year ago
andrea.browne
Created by andrea.browne about 6 years ago
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Detialed flow chart of Tila

Resource summary

TILA/ Reg Z
  1. Truth in Lending Act
    1. Protect consumers by disclosing the costs and terms of credit
      1. Create Uniform standards for stating the cost of credit, thereby envouraging consumers to compare the costs of loans offered by different creditors
        1. Two Uniform Standards Stating the Cost of Credit
          1. Finance Charge: The calculation of a loan's finance charge is a process that invovles determining which of the many fees associated with a loan's orgination and closing
            1. Closed end accuracy requirements: Charge is not understated by more than $100 or The amount stated is greater then the amount required to be disclosed
            2. Annual Percentage Rate: Measure of the cost of credit expressed as a nominal yearly rate. It relates the amount and timing of the value received by the consumer to the amount and timing of payments made
              1. Included in the APR, PMI or MIP, Discount Points and mortgage borrower fees, origination fees, processing fees, and underwriting fees. Many of these are calculated in the finance charge
                1. TILE enforces APR accuracy, if it is not more the 1/8 of one percentage point above or below the APR, Open-ended loans need to be 1/4 of one percentage point about or below
              2. Excluded fees, Title, escrow, notary, appraisal and credit report, and document preperation fees
            3. Ensure that advertising for credit is truthful and not misleading
              1. Trigger terms
                1. Finance Charge, Other charges, Taxes imposed on credit transactions, and payment terms
                  1. These terms require to clearly and conspicuoulsy include: Any loan fee that is a percentage of the credit limit, An estimate, stated as a dollar amount, any periodic rate used to compute the finance charge, and the maximum apr that may be imposed under a variable rate plan
                    1. Penalties for criminal liability may inclde a fine of up to $5,000 imprisonment for up to one year, or both a fine and imprionment
                2. Prohibition against misleading terms for closed end loans
                  1. 7 deadly sins
                    1. Misleading advertising of "fixed rates
                      1. misleading comparisons in advertisements
                        1. Misrepresentations about goverment endorsement
                          1. Misleading use of the current lender's name
                            1. Misleading claims of debt elimination
                              1. misleading use of the term counselor
                                1. misleading foreign-language advertisements
                3. Provide borrowers with the right to rescind certain types of mortgage transactions
                  1. Three Business Day Recission Period: This interval is intended to give a borrower the opportunity to reconsider whether they eant the loan, and the ability to cancel the loan by simply providing the lender with timely notice of cancellation
                    1. Three Year Rescision Period: The three year rescission period is available to a borrower who did not receive a notice of the right to rescindn or accurate TILA disclosures at the time he/she entered an agreement for a mortgage loan
                      1. ONLY FOR PRINCIPAL DWELLING
                      2. 2 copies must be sent to each party of interest
                        1. Foreclosures can rescind if:
                          1. The loan was originated through a mortgage broker and the creditor failed to include the mortgage broker fee in the finance charge
                            1. The creditor failed to use the appropriate model form under Reg Z or a substantially similar notice
                        2. Application: To meet the deadlines of TILA an application needs 6 pieces of information to be complete
                          1. 1.Name 2. SSN 3. Income 4. Address of property to secure the loan 5. Estimated value of property securing the loan 6. The Loan amount sought
                          2. ARMs
                            1. Every ARM gets a CHARM within 3 days of the loan application
                              1. CHARM= Consumer Handbook on Adjustable- Rate Mortgages
                              2. ARMs require a rate/payment change disclosure and
                                1. A disclosure is not required when the transaction involves an ARM with a term of one year or less
                                  1. Look-back Period: Number of days prior to the change date on which the index value would be selected
                                    1. Range between 15 and 60 days. General rule requiring 60 day advance notice
                                    2. Initial rate adjustment
                                      1. The estimated interest rate and payment change must be calculated 15 business days prior to the date of the disclosure
                                  2. HELOC Disclosures
                                    1. Rention Disclosure
                                      1. Availability of disclosed terms
                                        1. Risk of Losing the home
                                          1. Possibility of unfavorable actions by the creditor
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