Truth in Lending Act (TILA) examination procedures

The TILA examination procedures have been updated to reflect the four final rules issued by the Bureau in 2020 and 2021 that amended the qualified mortgage provisions of Regulation Z.

Summary

The Truth in Lending Act (TILA) is intended to ensure that credit terms are disclosed in a meaningful way so consumers can compare credit terms more readily and knowledgeably. Before its enactment, consumers were faced with a bewildering array of credit terms and rates. It was difficult to compare loans because they were seldom presented in the same format. Now, all creditors must use the same credit terminology and expressions of rates.

In addition to providing a uniform system for disclosures, the act:

• Protects consumers against inaccurate and unfair credit billing and credit card practices
• Provides consumers with rescission rights
• Provides for rate caps on certain dwelling-secured loans
• Imposes limitations on home equity lines of credit and certain closed-end home mortgages
• Provides minimum standards for most dwelling-secured loans
• Delineates and prohibits unfair or deceptive mortgage lending practices

The TILA and Regulation Z do not, however, tell financial institutions how much interest they may charge or whether they must grant a consumer a loan.