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InfoSight Highlight: Truth in Lending Act (Reg. Z)
Friday, March 10, 2017 6:40 AM

The purpose of the Truth in Lending Act (TILA), implemented by Regulation Z, is to promote the informed use of consumer credit by requiring disclosures about its terms and costs, to ensure that consumers are provided with greater and more timely information on the nature and costs of the residential real estate settlement process, and to effect certain changes in the settlement process for residential real estate that will result in more effective advance disclosure to home buyers and sellers of settlement costs. 

The regulation also includes substantive protections. It gives consumers the right to cancel certain credit transactions that involve a lien on a consumer’s principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes.

Regulation Z applies to each individual or business that offers or extends credit when four conditions are met:

  • The credit is offered or extended to consumers;
  • The offering or extension of credit is done regularly;
  • The credit is subject to a finance charge or is payable by a written agreement in more than four installments; and
  • The credit is primarily for personal, family, or household purposes.

If a credit card is involved, however, certain provisions apply even if the credit is not subject to a finance charge, or is not payable by a written agreement in more than four installments, or if the credit card is to be used for business purposes.

In addition, certain requirements apply to persons who are not creditors but who provide applications for home-equity plans to consumers.

Certain provisions within Regulation Z apply to institutions of higher education.

Source:  InfoSight Compliance.

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