The Truth in Lending Act (TILA) is a federal law that requires lenders to provide clear and accurate information to consumers about the terms of their loans. This includes providing advance disclosures for any closed loan that is secured by a principal home and is subject to the Real Estate Settlement Procedures Act. Additionally, TILA prohibits certain deceptive or misleading advertising practices, such as claiming that a rate or payment is fixed when it can change. The Federal Trade Commission (FTC) has issued a Final Rule that expands the scope of TILA's advertising requirements.
This includes requiring additional information on rates, monthly payments, and other characteristics of loans in advertisements. The Final Rule also prohibits seven deceptive or misleading advertising practices, such as misrepresenting the terms of a loan. When advertising issues are identified, it is important for lenders to take corrective measures to ensure compliance with TILA's regulations. This includes providing the board of directors and senior management with an overview of Regulation Z changes and explaining how the standard will affect the institution's practices and procedures.
Additionally, lenders should be aware of third-party vendors who may be unaware of the advertising rules and take steps to ensure compliance. The Commission has also asked for evidence of individuals or entities knowingly providing substantial assistance to those who engage in misleading mortgage advertising. The Final Rule does not cover the practices of entities that are excluded from the FTC's jurisdiction. It is important for lenders to understand TILA's regulations and ensure compliance with its advertising requirements.
This will help protect consumers from deceptive or misleading practices and ensure that they receive clear and accurate information about their loan terms.