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Tila Disclosure Req Viol Remedies

Tila Disclosure Req Viol Remedies

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Categories:Business/Law, Finance
Published by: Carrieonic on May 17, 2009
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TRUTH-IN-LENDING
DISCLOSURE REQUIREMENTS, VIOLATIONS, AND REMEDIESLESLIE B. NGJune 13, 2007
 
PURPOSE OF THE TRUTH-IN-LENDING ACT (TILA)
TILA seeks to assure meaningful disclosure of credit terms and conditions that theconsumer will be informed with accurate costs and benefits of their credit transaction, allowingthem to shop for the best credit terms available on the market. 15 U.S.C. § 1601(a).
STANDARD OF LAW
Since TILA specifically remedial in nature, its provisions must be strictly construed. Acreditor must comply with TILA in all credit transactions and “misleading disclosure is as mucha violation of TILA as a failure to disclose at all.” Smith v. Chapman, 614 F.2d 968, 977 (5th Cir.1980). It is not sufficient to attempt to comply with the Act, but rather, creditors are required tostrictly comply with all the requirements of the Act. There is no need to show that the consumer was misled or deceived by ambiguous credit terms in order to prevail. Noel v. Fleet Finance,Inc., 971 F. Supp. 1102 (E.D. Mich. 1997).Congress did not intend for creditors to escape liability for merely technical violations,that even minor or technical violations impose liability upon the creditors. Huff v. Steward-Gwinn Furniture Co., 713 F.2d 67, 69 (4th Cir. 1983). See also, Washington v. AmeriquestMortg. Co., 2006 W.L. 1980201 (N.D. Ill.).
SCOPE
TILA applies to most consumer credit transactions and was specifically enacted to ensureaccurate and meaningful disclosure of the charges involved in a transaction, allowing consumersto make their own decisions about obtaining a loan.A lawsuit for violation of TILA may be based upon a lenders failure to comply withdisclosure requirements. U.S.C. §§ 1631-34
.
Most of TILA violations involve the creditor’sfailure to charge the correct amount, failure to disclose all the material terms, or failure to provide necessary forms or documents required by the Act.TILA does not apply to the following transactions:1.Transactions that are made for business, commercial, or agricultural purposes. 15U.S.C. § 1603(1); Reg. Z § 226.3(a)(1).2.Extensions of Credit to Organizations as opposed to natural persons. U.S.C. § 1603(1);Page 2 of 15
 
Reg. Z. § 2026.3(a)(2).3.Credit over $25,000 Not Secured by Real Property or a Dwelling. U.S.C. § 1603(3);Reg. Z. § 226.3(b).4.Student Loans. U.S.C. § 1603(7); Reg. Z. § 226.3(f).5.Transactions under Public Utility Tariffs. U.S.C. § 1603(4); Reg. Z. § 226.3(c).6.Securities or Commodities transactions that are registered with the Securities andExchange Commission. U.S.C. § 1603(2); Reg. Z. § 226.3(d).
STATUTE OF LIMITATIONS
When a violation of TILA occurs, the one-year limitations period applicable to actions for statutory and actual damages begins to run. U.S.C. § 1641(e).A TILA violation may occur at the consummation of the transaction between a creditor and its consumer if the transaction is made without the required disclosures.A creditor may also violate TILA by engaging in fraudulent, misleading, and deceptive practices that conceal the TILA violation occurring at the time of closing. Often consumers donot discover any violation until after they have paid excessive charges imposed by their creditors.Consumers who later learn of the creditors TILA violations can allege an equitable tolling of thestatute of limitations. When the consumer has an extended right to rescind or pursue other statutory remedies because a violation occurs, the statute of limitations for all the damages theconsumers seek extends to three years from the date the violation is revealed. McIntosh v. IrwinUnion Bank & Trust Co., 215 F.R.D. 26, 30 (D. Mass. 2003).
TILA AND REGULATION Z
Congress delegated authority for the implementation of TILA to the Federal ReserveBoard (FRB). The Board of Governors (the Board) of the FRB interpreted TILA and promulgated a detailed and comprehensive set of rules that sets out the Board’s interpretationknown as Regulation Z. Regulation Z is an official set of rules and most pleadings alleging TILAviolations also alleging violations of Regulation Z as well.
DISCLOSURE REQUIREMENTS AND VIOLATIONS
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