Loan Auditors

TILA stands for truth in lending. It’s a piece of legislation put in place to protect consumers from predatory lenders who prey on consumer ignorance and borrower innocence.

The part of the Truth in Lending Act that is cited most often and which affords the latest and most protection for borrowers is Part 226, also called Regulation Z. This is the part of the act that requires lenders to provide certain disclosures and gives the time line for those disclosures based on the type of loan.

For instance, Part 226.5b says in part:

(d)   Content of disclosures. The creditor shall provide the following disclosures, as applicable:
(1)   Retention of information. A statement that the consumer should make or otherwise retain a copy of the disclosures.
(2)   Conditions for disclosed terms. (i)  A statement of the time by which the consumer must submit an application to obtain specific terms disclosed and an identification of any disclosed term that is subject to change prior to opening the plan.
(ii)  A statement that, if a disclosed term changes (other than a change due to fluctuations in the index in a variable-rate plan) prior to opening the plan and the consumer therefore elects not to open the plan, the consumer may receive a refund of all fees paid in connection with the application.
(3)   Security interest and risk to home. A statement that the creditor will acquire a security interest in the consumer’s dwelling and that loss of the dwelling may occur in the event of default.
(4)   Possible actions by creditor. (i)  A statement that, under certain conditions, the creditor may terminate the plan and require payment of the outstanding balance in full in a single payment and impose fees upon termination; prohibit additional extensions of credit or reduce the credit limit; and, as specified in the initial agreement, implement certain changes in the plan.

Subsection d of this part of the code contains 12 specific instructions to lenders that must be complied with or the lender is in violation of the loan agreement. All 12 must be adhered to, if applicable. Other items not mentioned above include:

• Disclosures for variable-rate plans
• Tax implication disclosure
• Transaction requirements
• Negative amortization disclosure
• Third-party fees disclosure
• Creditor fees disclosure
• and APR disclosure

All of this can be found just within one small part of Regulation Z. You can read the entire regulation on the FDIC website.

To learn more about how a loan audit can help you uncover lender violations - either a violation of Regulation Z or one of the many other state, local, and federal laws that apply - visit one of the oldest and most comprehensive loan auditors in the nation.