Reprinted with permission from Kathleen J. Hopkins and Evan L. Loeffler, Real Estate Closing Deskbook (3d Ed. 2012), at 77-80. Copyright © 2012 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Truth-in-Lending and Regulation Z
The Truth-in-Lending Simplification and Reform Act (TILA), a revision of the old truth-in-lending law, is another federal disclosure act affecting the purchase and financing of residences. The primary purpose of TILA is disclosure of credit information by means of standardized terms, such as “annual percentage rate” and “finance charge,” with disclosures presented to the consumer before closing. The Federal Reserve Board is empowered to issue regulations to carry out the purposes of TILA, and the result is Regulation Z. Various federal agencies are charged with enforcement of TILA, depending upon the nature of the financial institution. The discussion in this book is a cursory examination of those portions of TILA and Regulation Z that affect a closing lawyer. It should also be noted that TILA and Regulation Z, as used here, refer to the Reform Act and the revised Regulation Z. Finally, the discussion in this and the following sections relates to “closed-end” credit transactions, which make up the majority of real estate loan closings. As with RESPA, TILA enforcement was transferred to the Consumer Financial Protection Bureau on July 21, 2011. This gave one federal agency document design and enforcement control over the mortgage loan and closing process. The plan was to design coordinated TILA, GFE, and HUD documents and procedures starting in 2012.