Truth in lending (TIL)

One of the vital documents of the loan program. This is actually done at the time of closing part of loan process. Closing of a loan process means the beginning of the servicing part of the loan. All the expenses during the loan process are settled at the closing table because now mortgage starts and there would be only two parties, buyer or the mortgagor and lender or the mortgagee.

So before the mortgage starts by lending money to the borrower, the lender has to make a statement of all the future expenses. Irrespective of the loan applied by the borrower, the federal government has made it mandatory to all the lenders to disclose the expenses statement before mortgage gets start. So this law is called as Truth in lending act that clearly mention that the lender has to make clear about all the charges, terms of the loan before the borrower sign the collateral document.

Borrower receives the TIL statement from the lending company after some days of applying and submitting the loan application. Basically this statement consists of total loan amount, interest rate, type of mortgage program and the total cost that can be incurred by the borrower, various fees details, terms and conditions along with the annual rate of interest. Usually annual interest rate shows some more that the interest rates on the loan amount.

Due to the recession part affected very much to the mortgage market, the federal government has become stricter in the Truth in lending act (TILA). Lenders have to be more specific in disclosing their terms and submitting to the borrowers.