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Real estate glossaryNational exam concept

Truth in Lending Act (TILA)

TILA is the federal consumer-credit law requiring standardized disclosure of credit costs and terms, including finance charges and annual percentage rate, and governing specified advertising and rescission rights through Regulation Z.

Exam area: Financing

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What does “Truth in Lending Act (TILA)” mean in real estate?

TILA is the federal consumer-credit law requiring standardized disclosure of credit costs and terms, including finance charges and annual percentage rate, and governing specified advertising and rescission rights through Regulation Z.

How is “Truth in Lending Act (TILA)” different from the closest wrong answer?

TILA concerns credit cost and terms. RESPA concerns settlement services and prohibited referral compensation.

What is the Georgia-specific rule?

TILA applies to covered consumer credit in Georgia. The familiar three-business-day rescission right generally applies to certain transactions secured by a principal dwelling, not to a purchase-money loan used to buy that dwelling.

Worked exam example

Scenario

A lender discloses the APR and finance charge so a borrower can compare the cost of two credit offers on a standardized basis.

What is the most common exam trap?

Trap correction

The APR is not simply the note interest rate, and the right of rescission does not cover every real estate loan.

Original exam check

Apply the definition

Two lenders offer the same buyer loans with identical note rates, but one charges much higher points and fees. Which federal law requires a standardized APR disclosure that lets the buyer see that difference?

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Related terms to learn next

Real Estate Settlement Procedures Act (RESPA)

RESPA is the federal law governing specified settlement practices for covered federally related mortgage loans.

TILA-RESPA Integrated Disclosures (TRID)

TRID is the federal integrated-disclosure framework that combines specified TILA and RESPA mortgage information into the Loan Estimate and Closing Disclosure for most covered closed-end consumer mortgages.

Equal Credit Opportunity Act (ECOA)

ECOA is the federal law prohibiting creditors from discriminating in any aspect of a credit transaction on protected bases specified by the Act and Regulation B.

Loan origination fee

A loan origination fee is a charge for the lender's work in making, processing, or underwriting a loan.

Recommended next complete lesson

Continue with Financing complete lesson. It places this term inside the full rule, worked examples, exam traps, and mixed practice required for mastery.
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