Question:

What are the most common Truth-in-Lending loan noncompliance mistakes?

Answer:

There are some very typical Truth-in-Lending loan noncompliance errors found in mortgage contracts. The most common among them are:

  • Overages;
  • Disclosed cost of credit does not correspond to actual costs;
  • Yield Spread Premium (YSP);
  • Higher escrow amount;
  • Non-disclosing referral fees to insurance and title companies;
  • Failure to issue necessary Notice papers - Notice of Rescind right, or PMI Cancellation guidelines;
  • Imposing unauthorized charges;
  • Improper adjustable rate mortgage (ARM) loans disclosure - caps, possible monthly payment increase, ARM adjustment rate scenario missing;
  • Lender-paid undeclared compensation to the broker or mortgage originator.

Lenders are liable for TIL noncompliance errors.

Whether or not the borrower is harmed by T.I.L.A. non-compliant mortgage contract the lender will still be liable, unless they correct any omissions

  • within 60-day period after TILA errors have been found;
  • and before any written notice of customer has been received.

If the TILA mistakes were completely unintentional, the lender is responsible for showing evidence that every attempt to provide TILA compliance following established compliance procedures has been made.

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