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The Truth in Lending Act of 1968, also known as Regulation Z, defends consumers against unlawful credit practices in real estate.
Lenders who violate the Truth in Lending Act may lose money, spend time in jail, and tarnish their reputations in the real estate industry. As a future real estate professional, you MUST understand the Truth in Lending Act.
Here are the chapters for this video. Feel free to jump around accordingly:
0:00 Introduction
0:26 What Is the Truth in Lending Act?
1:30 What Does the Truth in Lending Act Cover?
2:03 Closing Disclosure
2:16 Truth in Lending Act Violations
2:45 Truth in Lending Act Real Estate Example
3:15 Truth in Lending Act Penalties
3:27 Who Enforces the Truth in Lending Act?
3:53 What is the Federal Trade Commission?
4:23 What is the Consumer Financial Protection Bureau?
4:53 What Is the Office of the Comptroller of the Currency?
5:21 What Does the Truth in Lending Act Not Cover?
5:50 What Is the Fair Credit Billing Act?
6:30 What Is the Dodd-Frank Truth in Lending Act?
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0:00
the truth and lending Act of 1968 also
0:03
known as Regulation Z defends consumers
0:05
against unlawful credit practices in
0:07
real estate lenders who violate the
0:10
truth in Lending Act may lose money
0:12
spend time in jail and tarnish their
0:13
reputations in the real estate industry
0:15
as a future real estate professional you
0:17
must be aware of the truth and lending
0:19
act and how it works hello everybody
0:21
it's Zach here from real
0:22
estatelicensewizard.com today we're
0:23
talking about the truth in Lending Act
0:25
let's get started alright so what is the
0:27
truth in landing act well the truth and
0:29
lending act protects consumers against
0:31
unfair and predatory lending practices
0:34
from credit companies this act passed in
0:37
1968 requires that lenders fully explain
0:39
to Consumers the terms and conditions of
0:42
their loans according to the t i l a all
0:45
creditors must disclose the following
0:47
information on credit transactions and
0:49
I'll put these on the screen one
0:51
identity of the Creditor two annual
0:53
percentage rate three Finance charging
0:56
four number of payments five monthly
0:59
payment costs and then six late fees now
1:02
the truth and lending Act is part of the
1:04
consumer credit protection act which
1:06
protects consumers from creditors Banks
1:08
and lenders of all kinds so what is
1:10
Regulation Z well when researching the
1:12
truth and lending act you may have come
1:14
across the term Regulation Z or maybe
1:16
you've just heard people call it
1:17
Regulation Z well that's just because
1:19
people use these terms interchangeably
1:21
and in most cases that's totally okay
1:23
because Regulation Z is part of the
1:25
truth and lending act so really if
1:27
you're using these terms interchangeably
1:29
it's not that big of a deal now what
1:31
loans do cover the truth and lending act
1:33
or Regulation Z well it covers most
1:36
loans and I'm going to put these on the
1:37
screen so we've got car loans mortgages
1:39
reverse mortgages credit card loans and
1:42
home equity lines of credit so why is
1:44
the truth in Lending Act so important to
1:46
understand For Real Estate professionals
1:47
if it primarily has to deal with lenders
1:50
while the truth in Lending Act ensures
1:53
that lenders provide consumers with a
1:55
closing disclosure remember those terms
1:57
I explained earlier I'll put them on the
1:59
screen again slightly different but more
2:00
specific loan terms purchase price
2:02
monthly payment amount closing costs
2:04
other fees all those things well that is
2:07
there because of the truth and lending
2:09
act truth and lending act requires that
2:11
those things be in place via a closing
2:14
disclosure hopefully that makes sense so
2:16
what actions violate the truth in
2:18
Lending Act well if they improperly
2:21
disclose the following credit terms so
2:23
I'll put these on the screen as well if
2:25
they don't identify the identity of the
2:27
lender or amount Finance annual
2:29
percentage rate finance charges or any
2:31
of those essentially that's a violation
2:34
of the truth and lending act lenders are
2:37
responsible for these violations and
2:39
will face penalties for incorrectly
2:41
disclosing information regardless of the
2:43
intent so now let's do an example in
2:45
real estate say that a real estate agent
2:47
makes the following deal with a mortgage
2:49
company if the agent recommends a
2:51
mortgage company to their clients the
2:52
company will give the agent a commission
2:54
for certain types of loans the mortgage
2:57
company then pressures the recommended
2:59
borrowers in to choosing a certain type
3:01
of mortgage loan even if there are
3:03
better Financial options other than this
3:05
one this Behavior would violate the
3:07
truth and lending act as each party has
3:10
ulterior motives and is engaging in
3:12
predatory lending practices so then what
3:15
are the penalties for violating the
3:16
truth and lending act well if a creditor
3:18
violates the truth and Landing act for
3:20
any reason they maybe fined five
3:22
thousand dollars or even face one year
3:24
of imprisonment or both in severe cases
3:26
so who enforces the truth and lending
3:29
act well there's three different
3:30
agencies that enforce the truth and
3:32
lending act and Safeguard consumers from
3:35
corrupt creditors these agencies are the
3:39
Federal Trade Commission or the FTC to
3:41
the consumer protection Financial Bureau
3:43
or three the office of Comptroller of
3:45
the currency so let's talk a little bit
3:48
about those indefinitely because I
3:49
haven't really covered that much in the
3:51
series yet or on this channel so
3:52
obviously the FTC is the primary agency
3:55
that protects consumers from unlawful
3:57
and anti-competitive business practices
3:59
the this was created in 1914 and the
4:02
original purpose was to take down big
4:03
monopolies that violate antitrust laws
4:06
while the FTC still upholds Anti-Trust
4:08
laws as we've talked pretty much in
4:10
detail on this channel its role has
4:12
expanded into regulating lending
4:13
companies and enforcing the truth in
4:16
Lending Act if the lending company
4:17
breaks federal law the FTC will penalize
4:21
them and protect the rights of the
4:22
consumers now what about this consumer
4:24
protection Financial Bureau well the
4:27
cpfb is a government agency that ensures
4:30
that banks credit companies and lenders
4:32
treat consumers fair if a consumer feels
4:35
a creditor is breaking the truth and
4:37
lending act they can file a complaint
4:38
with the cpfb and then essentially they
4:42
will look into the issue the cpfb also
4:44
informs consumers about providing
4:46
educational lending resources including
4:49
guides for buying a house and getting a
4:50
loan things like that and then lastly
4:52
the office of comp trawler of the
4:54
currency I don't know if you guys have
4:55
ever heard of this actually in doing my
4:58
research for this specific topic I
5:00
really wasn't familiar with it
5:02
um but essentially the OCC supervises
5:04
National Banks and requires creditors to
5:07
fix situations where loan terms are
5:09
disclosed inaccurately the OCC even
5:12
offers a PDF handbook on its website
5:14
breaking down the truth and lending act
5:16
and how it applies to their supervision
5:18
of National Banks so what exactly does
5:21
the truth and learning act not cover
5:23
because it seems like it covers a lot
5:24
right well it doesn't cover student
5:26
loans business loans commercial loans or
5:28
loans over twenty five thousand dollars
5:31
unless they are for housing so it's
5:33
important to note that again this truth
5:35
and letting act well you know it's it's
5:37
involved in a lot of things and it's not
5:39
involved in every source of lending and
5:41
so just keep that in mind but but
5:44
luckily there are other laws that cover
5:46
you know those areas such as the Equal
5:48
Opportunity Act and things like that so
5:50
what is the Fair Credit billing act you
5:52
might have also heard about this one I
5:54
want to talk about it a little bit as
5:56
well because this is covered uh you know
5:58
involved in the truth Lending Act well
6:00
this plays a important role because it
6:03
was kind of the additional law it it
6:06
strengthened the truth and Landing act
6:08
so it was enacted in 1974 and
6:10
essentially it amended the truth and
6:12
lending act by ensuring creditors cannot
6:14
negatively impact an individual's credit
6:16
before an investigation is done and
6:19
essentially this allows and I'll put
6:21
these on the screen to dispute
6:23
unauthorized charges finance charges for
6:26
incorrect amounts or incorrect dates
6:28
questionable charges things like that
6:30
and then there was the Dodd-Frank truth
6:33
and lending act and this is another
6:34
notable act that you should be aware of
6:37
that amended the truth and lending act
6:38
and essentially this was done in 2010
6:42
which requires the following extra
6:44
protections from lending companies put
6:47
them on the screen mortgage loan
6:49
officers need a license to offer credit
6:51
loans lenders must adjust the dollar
6:53
threshold for exempt Consumer Credit
6:55
annually and then lenders must make
6:57
reasonable determinations of a
6:59
consumer's ability to pay back the
7:01
credit of a home now the Dodd-Frank
7:03
truth and lending Act is incredibly
7:05
important it means that creditors cannot
7:07
give out loans to borrowers who likely
7:09
cannot repay them and this is important
7:11
for a couple reasons if you're familiar
7:13
with your history and you've been
7:14
watching all of our videos on these
7:16
definitions and exam topics you'll
7:18
remember that we talked a little bit
7:19
about the 2008 financial crisis
7:21
essentially people were getting loans
7:24
where they had no income it was no
7:26
donate no down payment they called them
7:28
ninja loans and it was an insane really
7:31
really an insane time like anybody could
7:33
get a house well obviously you know it's
7:36
great you know everyone wants to have
7:37
housing and stuff like that but if
7:39
people can't afford the housing and
7:41
they're getting these these you know
7:42
loans and then years later you know the
7:45
it catches up to them that's really bad
7:47
for everybody not just the market but
7:48
the consumer so the Dodd-Frank truth and
7:51
lending act came two years after that
7:53
and it kind of made it a little bit more
7:55
difficult now don't get me wrong you
7:57
know a lot of people can still get loans
7:58
you know pretty pretty easily as long as
8:01
you have you know income and history of
8:02
income things like that but essentially
8:04
the dodd-franking truth and lending Act
8:06
was probably the most recent and most
8:08
important act so just keep that in mind
8:10
come exam day so what do you need to
8:12
know for the real estate exam well the
8:14
truth and lending act plays a crucial
8:16
role in protecting home buyers and other
8:18
lendes against unfaircraft practices
8:20
remember the truth and lending act
8:22
prohibits unfair credit practices that
8:25
are designed to put more money in
8:27
mortgage brokers Pockets this act
8:29
protects consumers who are taking out
8:31
home mortgage loans and home equity
8:32
lines of credit knowing this is
8:34
imperative to passing your exam and
8:36
succeeding as a real estate agent for
8:38
more on antitrust laws and fair housing
8:41
click the video here and click here to
8:43
subscribe thank you so much for watching
8:45
I'll see you guys next time bye
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