The Truth In Lending Act, commonly referred to as TILA, is a federal law enacted by Congress to standardize the way credit is disclosed to consumers. Prior to TILA, lenders could disclose finance charges on monthly, weekly, or daily basis. This made credit appear a lot cheaper than it may actually be. After TILA was enacted, credit offerors must disclose finance charges in terms of an Annual Percentage Rate, or APR, and as a dollar figure. TILA covers closed-ended credit such as mortgages, and open-ended credit like credit cards and home equity loans.
The penalties for non-compliance with TILA make for good incentives for lenders to follow TILA regulations. The main penalty is rescission of the loan transaction. However, rescission is only available for refinancing of a homeowners principle residence, and not for a loan used to purchase the residence. Rescission means that the entire mortgage transaction is unwound and the homeowner is placed in the positions he would have been in if the loan had never closed.
The Lender may also be liable for statutory damages of:
• An amount equal to the sum of the greater of: 1) any actual damage sustained by such a person as a result of the failure to comply;
• Not less than $200 or greater than $2,000 if the home loan is not a home equity loan; and
• Costs of the action, together with reasonably attorney's fees
There is a 3-year Statute of Limitations beginning when the loan closes for TILA violations used as a defense to a foreclosure action. However, the Statute of Limitations is 1-year if brought as an independent action outside of foreclosure. The lender MUST act within 20 days after receiving notice of rescission to affect the rescission, or the borrower may keep the property without further obligation.
If you are facing foreclosure, contact a Florida Foreclosure Defense Lawyer or a Jacksonville Foreclosure Defense Lawyer today to find out what foreclosure defense options may be available in your case.
