Thousands of people enter mortgage loans every day, but few of them really know what they are getting into. Mortgage laws such as the Truth in Lending Act and RESPA can save your home from predatory lenders.

The federal Truth in Lending Act, commonly referred to as “TILA,” is a powerful tool for homeowners facing escalating loan payments. TILA, imposes strict disclosure requirements on lenders for certain loans secured by a borrower’s principal residence. TILA was originally drafted as a consumer protection act.

This is the first act that homeowners should become familiar with. Many homeowners do not know that violations of certain requirements of TILA by lenders and banks can result in the entire loan being rescinded, with every dime the borrowers ever paid on the mortgage returned to them, a foreclosure lawsuit thrown out and or, late mortgage payments no longer reflected on a credit report.

Borrowers need to be aware that the Act is about proper disclosure and requires lenders to disclose the specific terms and costs of their home equity plans which include terms such as APR, broker charges, the payment terms, and any variable-rates that may apply to their loan.

As consumer loans, and mortgages in particular, turned more complicated the government saw it became necessary to help regulate the way lenders advertise and notify the potential borrower of their interest rates. The attempt was to help people compare similar loans from different lenders and to explain the ultimate cost of credit. This also helps identify certain high-cost, potentially predatory mortgage loans and prohibit their expensive terms.

The Truth in Lending Act of 1968 is there to protect you, the consumer, and it contains everything that you need to know on how to fight your lender in the case of short sale or foreclosure.

Banks and lenders failure to provide and disclose a “Notice of Right to Cancel” appears to be the most common violation of the Truth in Lending Act, especially with predatory lenders. If the lender fails to disclose fees or charges, a violation of may be present. All charges and fees for a mortgage MUST be disclosed on the documents homeowners receive at closing, as well as listed on the HUD-1 Settlement Statement.

Also under the Truth in Lending Act, the cost of payday loans - like other types of credit - must be disclosed. Among other information, one must receive, in writing, the finance charge (a dollar amount) and the annual percentage rate or APR (the cost of credit on a yearly basis.Any business purpose loan is not covered by TILA.and it does not regulate the rate a credit institution may charge on a line of consumer credit.

This entry was posted on Wednesday, March 18th, 2009 at 1:27 am and is filed under Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.