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Finance charges always include which of the following?
Mortgage broker fee. Mortgage broker fees are always included in finance charges. Credit report fees are not included when they are part of loan application fees charged to all applicants. Title and document prep fees are never included in finance charges.
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For the purposes of rescinding a loan transaction, “business days” includes every day of the week except:
Sundays and federal holidays. In calculating time limitations for the right to rescind under TILA and Regulation Z, “business days” is defined to include Saturdays. According to the federal statute and its regulations, only Sundays and federal public holidays are excluded from the definition.
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Who must receive a Notice of Right to Cancel in a refinance transaction?
Anyone with ownership interest in the property. Under TILA’s rules regarding rescission, all parties with an ownership interest in a property must be provided with notice of the right to rescind, regardless of whether they are a signatory to the loan transaction. When multiple owners exist, any one of them can independently exercise the right to cancel, or rescind, the loan with three days of closing.
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The TIL Disclosure Statement must be re-disclosed to a borrower if:
The APR varies more than 1/8th of 1% before closing. TILA provides for a certain threshold for variances in APR between the TIL Disclosure and the actual APR. However, if the APR varies – plus or minus – by more than 1/8th of 1% prior to closing, a new TIL Disclosure must be provided to the borrower.
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When must the TIL Disclosure be provided to the borrower?
Within 3 business days of application. The TIL Disclosure required by TILA is due within three days of application. It must be re-disclosed if the APR varies by more than 1/8th of 1% any time prior to closing.
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A borrower has gone to settlement for a cash out refinance on Tuesday. Their rescission period is over at midnight on Friday. According to the provisions specified under federal law, when does the loan fund?
Saturday. The count for the three day rescission period begins at midnight following settlement and ends at midnight on the third day. Once the rescission period is over, the loan must fund the next business day. According to Regulation Z, Saturday is considered a business day for the purposes of rescission, so technically, the loan would fund over the weekend. Federal holidays and Sundays are the only days considered “non-business.”
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Under the Truth-in-Lending Act, a mortgage professional is required to disclose ________ to a borrower.
Terms of the credit transaction. Congress enacted TILA in 1968 as an attempt to help inform consumers about the cost of credit. TILA includes disclosure requirements on the terms of credit transactions in order to protect consumers from unfair treatment by creditors.
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Under provisions of the Truth-in-Lending Act, what is the maximum tolerance for an understated finance charge?
$100. Accordingto TILA, a finance charge for closed-end credit secured by real property or a dwelling is considered accurate if it doesn’t vary from the actual finance charge by more than $100.
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When calculating finance charges in compliance with TILA, all of the following are included except:
Appraisal fees. Third party fees such as appraisal fees and credit report fees are generally not included in the finance charge calculation required under TILA.
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Which of the following federal agencies creates the regulations for TILA?
Federal Reserve. The Federal Reserve is responsible for issuing the regulations pertinent to the Truth-in-Lending Act. TILA’s regulations are known as Regulation Z.
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Which of the following is defined as the cost of credit expressed as a dollar amount?
Finance charge. TILA requires disclosure of the cost of credit to consumers. Cost of credit must be disclosed as a dollar amount (finance charge) and a percentage (APR).
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A loan contains prepayment penalties. Which of the following documents would a borrower review to confirm this?
TIL Disclosure and promissory note. The Truth-in-Lending Disclosure Statement includes an overview of specific loan terms – prepayment penalties are one such term that would be covered. The promissory note also contains repayment terms which would include prepayment penalties.
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What is the primary purpose of the Truth-in-Lending Act?
To ensure that creditors provide consumers clear disclosure of the terms of credit. TILA is a consumer protection law enacted by Congress with the intention of providing consumers with disclosure of the cost of credit. Regulation Z issues the rules for TILA.
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All of the following disclosures are provided for an adjustable rate loan, per TILA guidelines, except:
Statement that the interest rate will be offered for the duration of the loan. An interest rate which is offered for the duration of a loan is an indicator of a fixed rate loan Changes and adjustments are indicators of adjustable rate products.
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John Brown and Jane Brown are co-owners of a property and are entering into a refinance transaction that is subject to rescission. John is provided with one copy of the Notice of Right to Cancel, and Jane receives none. What is their deadline for rescission?
Three years after closing. According to TILA, any person with ownership interest must be provided TWO (2) copies of the right to cancel. Short of this, a lender is in violation and a 3-year extended Right to Rescind exists from the date of closing.
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