WJFA - Definition and Case Law for TILA Violations

Mortgage Fraud
TILA

Explanation of TILA

TILA: Truth in Lending Act

TILA is an acronym for: Truth in Lending Act. Throughout this explanation and citing of case law, we'll use the acronym TILA.

Essentially, TILA is a consumer protection law that requires lenders to provide borrowers with full disclosure of all the costs, terms, and conditions, and impacts of a loan.

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Truth in Lending Act

Truth in Lending Act was passed to prevent unsophisticated consumer from being misled as to the total cost of financing. Truth in Lending Act, Section 102, 15 U.S.C.A. Section 1601. Ckigg. Prpvident CgnsuTOe-PJSTOnntjr-Q. 680 F.2d 927, certiorari granted, vacated 103 S.Ct. 400, 459 U.S. 56, 74 L.Ed.2d 225, on remand 699 F.2d 642.

Purpose: TILA is strictly a liability statute liberally construed in favor of consumers. Truth in Lending Act Section 102 et seq., 15 U.S.C.A. Section 1601 et seq. Brophv v. Chase Manhattan Morgt Co, 947 F.Supp. 879.

Must be Credit Transaction: To qualify for protection of Truth in Lending Act [15 U,S,C,A. Section 1601 et seq.], you must show that the transaction, you claim was a TILA violation, was a consumer credit transaction not a business transaction, Truth in Lending Act, Section 102 et seq., 15 U.S.C.A. Section 1601 et seq. Quino v A-I CredjlCom. 635 F.Supp. 151.

Lender Requirements: Lenders' compliance with TILA are required. Even a minor TILA violation cannot be ignored, Truth in Lending Act, Section 102 et seq. as amended, 15 U.SC.A. Section 1601 et seq.; Truth in Lending Act Regulations, Regulation Z Section 226.1 et seq., 15 U.S.C.A. foil. Section 1700. Griggs v. firpyideot Consumer Discount Co.r 503 F.Supp. 246, appeal dismissed 672 F2d 903, appeal after remand 680 F.2d 927, certiorari granted, vacated 103 S.Ct, 400, 459 U.S. 56, 74 L.Ed.2d 225, on remand 699 F,2d 642.

In Plain Sight: TILA regulation requires the lender to provide written disclosure and that said disclosure shall not be "stated, utilized or placed so as to mislead or confuse" consumer, placement of disclosures is to be considered along with their statement and use. Truth in Lending Act Regulations, Regulation Z, Section 226.6(c), 15 U.S,C A. following section 1700 .Geimuso v. Commercial Bank & Trust Co.. 566 F.2d 437.

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Goal of TILA: TILA should be construed liberally to ensure achievement of goal of aiding unsophisticated consumers so that consumers are not easily misled as to total costs of financing. Truth in Lending Act, Sections 102 et seq, 102(a), 105 as amended, IS U.S.C.A. Sections 1601 et seq., 1601(a), 1604; Truth in Lending Regulations, Regulation Z, Sections 226.1 et seq., 226.18, 15 U.S.C.A. foil. Section 1700, Basile v. H&R Block. Jlt(L. 897 F.Supp. 194.

TILA Violations: Truth in Lending Act must be strictly construed and liability imposed for any violation, no matter how technical. Truth in Lending Act Section 102 et seq., as amended, 15 U.S.C.A. Section 1601 et seq, Abele v. Mid-Penn Consumer Discount. 77 B.R. 460, affirmed S45 F.2d 1009.

Remedies: Truth in Lending Act must be liberally construed to effectuate remedial purposes Of protecting consumer against inaccurate and unfair credit billing and credit card practices and of promoting intelligent comparison shopping by consumers contemplating the use of credit by full disclosure of terms and conditions of credit card charges, Truth in Lending Act Section 102 et seq, as amended, 15 U.S.C.A. Section 1601 et seq Lifschitz v. American Exp. Co. 560 F.Supp. 458.

Summary Judgment: Question of whether lender's Truth in Lending Act disclosures are inaccurate, misleading, or confusing ordinarily will be for fact finder; however, where confusing, misleading, and inaccurate character of disputed disclosure is so clear that it cannot reasonably be disputed, summary judgment for plaintiff is appropriate - Truth in Lending Act Section 102 et seq-; Truth in Lending Regulations, Regulation Z, Section 226.1 et seq., 15 U.S.C.A. foil. Section 1700. Griggs v. Provident Consumer Discount Co. 503 F, Supp 246, appeal dismissed 672 F.2d 903, appeal after remand 680 F.2d 927, certiorari granted, vacated 103 S.Ct, 400, 459 U.S. 56, 74 L.Ed.2d 225, on remand 699 E2d 642.

No Voiding of TILA Violations: A valid rescission of a credit sale (such as a mortgage) contract does not render inoperative the disclosure requirements of TILA, as creditor's (lender's) obligations to make specific disclosures arises prior to consummation of transaction. Truth in Lending Act Section 102 et seq., 15 U.S.C.A. Section 1601 et seq.; Truth in Lending Regulations, Regulation Z, Sections 226.2(fck) - 226.8(a), 15 U.S.C.A, following section 1700. O'Neil c 484 F.Supp. 18.

Lender Penalties: Any violation of TILA, regardless of technical nature, must result in finding of liability against lender. Truth in Lending Regulations, Regulation Z Section 226.1 et seq., 15 U.S.C.A. foil. Section 1700; Truth in Lending Act Section 130 (a, e), IS U.S.C.A. Section 1640 (a, e). In Re Steinbrecher. 110 B,R. 155, 116 A.L.R. Fed. 881. Once a creditor violates Truth in Lending Act, no matter how technical the violation appears, unless one of statutory defenses applies, the court has no discretion in imposing liability Truth in Lending Act, Sections 102-186 as amended, 15 U.SC.A. Section 1601-1667e. Solis v. Fidelity Consumer Discount Co. 58 B.R, 983, Under the facts at hand the Plaintiff Bank has patently violated the Truth in Lending Act, At all relevant times the Bank misled and attempted to confuse Defendant. The Bank did not provide appropriate disclosure as required by the Truth in Lending Act in a substantive and technical manner.

Tila update

Comment From WJFA reader

From: Dave M.
08/11/2009

"It gets even weirder:

The penalty for a lender's TILA violation is forfeiture of the mortgage interest and other charges received from the borrower, the judge noted. But, unless the borrowers can repay their loan principal, rescission for a TILA violation will not be granted, the judge ruled.

Based on the 2003 U.S. Court of Appeals decision in Yamamoto v. Bank of New York, 329 Fed.3d 1167.

In other words, you owe the principal and in the 3rd District, if you're not prepared to refinance at that moment the rescission won't be granted by the court.

So it appears the court won't drag in the previous lender - they won't rescind unless you're prepared to pay, which means another refinancing.

The ruling is from the 3rd District Federal Court of appeals which directly affects Federal Courts in Delaware, New Jersey and the eastern, middle and western districts of Pennsylvania.

Other cases in other districts may cite those decisions, but each district can and will have variations."

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