Truth in Lending Act (TILA) examination procedures

Updated Sept. 15, 2015

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Applicable for examinations on or after the Oct. 3, 2015 effective date. Updated to include Oct. 3, 2015 revised effective date for the Know Before You Owe regulations.


The Truth in Lending Act (TILA) is intended to ensure that credit terms are disclosed in a meaningful way so consumers can compare credit terms more readily and knowledgeably. Before its enactment, consumers were faced with a bewildering array of credit terms and rates. It was difficult to compare loans because they were seldom presented in the same format. Now, all creditors must use the same credit terminology and expressions of rates.

 In addition to providing a uniform system for disclosures, the act:

  • Protects consumers against inaccurate and unfair credit billing and credit card practices
  • Provides consumers with rescission rights
  • Provides for rate caps on certain dwelling-secured loans
  • Imposes limitations on home equity lines of credit and certain closed-end home mortgages
  • Provides minimum standards for most dwelling-secured loans
  • Delineates and prohibits unfair or deceptive mortgage lending practices

The TILA and Regulation Z do not, however, tell financial institutions how much interest they may charge or whether they must grant a consumer a loan.