TILA Returns With a Vengeance — Neil Garfield Show Tonight!

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The Federal Truth in Lending Act (TILA) has, from the time it was enacted, been the sole protection to consumers of increasingly sophisticated financial products. In the last 30 years the number of different types of loans went from 4 or 5 to over 400. Lenders became aware that they were vulnerable to huge penalties including the proverbial free house if they screwed around with the requirements of TILA. Then came an army of lawyers paid by Wall Street and with briefs stacked to the ceiling and assumptions on the part of Judges that no Bank with a big brand name would engage in a systemic pattern of fraud, and suddenly the TILA protections started to melt away as millions lost their homes to phantom mortgages in phantom foreclosures that were made real by misguided orders of the courts. And then suddenly the United States Supreme Court, usually bitterly divided on partisan lines came out with a unanimous decision that put TILA back as the centerpiece on the table. And everything is changing.

9 Responses

  1. Heres the link


    “Q: What are the penalties for violating the Truth in Lending Act (TILA)?

    A: While there are criminal provisions that set forth penalties for willful violations of TILA, such as a fine of up to $5000, one year in prison, or both [15 USC § 1611(3), 2006], most violations are associated with civil monetary penalties. Creditor liability is extensive in TILA, covers a wide range of potential violations, and may include any actual damage sustained by a person as a result of the creditor’s failure to comply with this statute.

    Covered transactions include home equity plans, open-end transactions, closed-end transactions secured by real property or dwelling, consumer leases, HOEPA transactions, appraiser independence, and UDAAP.

    The following is the range of civil monetary penalties [15 USC § 1640(a), 2006]:

    In the case of an individual action: twice the amount of any finance charge in connection with the transaction.
    In the case of an individual action relating to certain consumer leases: 25% of the total amount of monthly payments under the lease, minimum $200, and maximum $2,000.
    In the case of an individual action relating to an open-end consumer credit plan that is not secured by real property or a dwelling: twice the amount of any finance charge in connection with the transaction, minimum $500, and maximum $5,000 – which could be even higher where a violation is evinced by an established pattern or practice of such failures.
    In the case of an individual action relating to a closed-end transaction secured by real property or a dwelling: either minimum $400, and maximum $4,000, or, in the case of a class action, such amount as the court may allow, no minimum per each member of the class, and the total recovery in any class action (or series of class actions) arising out of the same failure to comply by the same creditor may not be more than the lesser of $1,000,000 or 1% of the net worth of the creditor.
    In the case of a failure to comply with many TILA requirements set forth in certain sections of Regulation Z: an amount equal to the sum of all finance charges and fees paid by the consumer, unless the creditor demonstrates that the failure to comply is not material.
    Any of the foregoing, where rescission applies, in a prevailing action the costs of the action itself is included, together with a reasonable attorney’s fee (viz., determined by the court); and, in the case of a failure to comply, an amount equal to the sum of all finance charges and fees paid by the consumer, unless the creditor demonstrates that the failure to comply is not material.

    In determining the amount of award in any class action, the following relevant factors, among other things, are considered by the court: the amount of any actual damages awarded, the frequency and persistence of failures of compliance by the creditor, the resources of the creditor, the number of persons adversely affected, and the extent to which the creditor’s failure of compliance was intentional.

    Regarding appraiser independence, certain violations lead to civil monetary penalties of up to $10,000 per day for each day a first violation continues, and $20,000 for all subsequent violations. [Pub. L. 111-203, 7/21/10, Sub F, 1472 § 129E(k)]

    With respect to UDAAP, the Federal Trade Commission sets forth rules concerning unfair or deceptive acts or practices [15 USC § 57a, Section 18, FTC Act]. Violations of UDAAP are treated through various sections of TILA.[PUB. L. 111–8, 3/11/09, Omnibus Appropriations Act, Division D, Title VI, § 626(b)(D)] Under the FTC Act, civil monetary penalty for each UDAAP violation may reach to $16,000. [15 USC § 45(m), 2006; 16 CFR §§ 1.98(d) and (e), 2010 (Title 16, Ch. I, Sub A, Part 1, Sub L § 1.98]

    Civil monetary penalties for violations of HOEPA are substantial. The authority to promulgate HOEPA rules [TILA § 129(1)(2)] is the same authority pertaining to loan originator compensation and higher-priced mortgage loans. In the case of HOEPA violations, penalties are equal to the sum of all finance charges and fees paid by the consumer, permitting only for an exception where the creditor demonstrates that the compliance failure is not material. [15 USC § 1640(a), 2006]”

    Violation of TILA may lead to both criminal punishment to include fine and/or jail term and civil monetary penalties enumerated above.

    Dont you love the last paragraph.

  2. pay back the principle to who? is the next question. Where did my payments go?


  3. Who Really Cares anymore ?
    It’s all for nothing.

  4. 2015 WL 144681 United States Supreme Court.


    No. 13–684 | Argued November 4, 2014 | Decided January 13, 2015

  5. Everybody – and especially Neil – please cite the “unanimous” case you’re referring to. Arguments are worthless in court without the case law to back them up. Thanks

  6. Qwester,

    Case law please. Too many suckers here don’t need fuel to their raging, irrational fire that keeps burning them. Otherwise you’re part of that enormous problem that the US have become for the entire world.

  7. If the lender failed to contest the TILA rescission during the twenty day window both the note and the mortgage become void ab initio and only the lender must return all payments borrower made?. Lender may be liable for damages and costs for false foreclosure?. Borrower returns nothing because the loan never happened?. ?= not legal advice

  8. It has to be very clear that rescinding a loan only means that one specific contract is being rescinded under the Truth in lending Act: the lender gets back whatever he advanced without any interest, penalties and whatnot but… the borrower must be able to give back that exact amount originally lent. TILA is great when one has the money to pay back. The reason TILA gives only 3 DAYS for borrowers to reconsider the contract for no reason whatsoever is because it is expected that they still have whatever was lent to them.

    The Jesinoski case allows the plaintiffs to get out of the contract without penalties 3 years after the fact for good reasons. That’s all.

    The question of the principal lent remains: it has to be paid back. Unless the Jeninoskis have the money to pay back that principal, they are in a bind: they owe it. Except that, now, it may have become insecure. That SCOTUS decision does not, by any stretch of imagination, mean a free house. Anyone telling you the opposite has a bridge in Brooklyn to sell Hapless.

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