What is the Truth in Lending Act?

The Truth in Lending Act is a federal law that was enacted in 1968 to protect consumers in their credit transactions. It requires lenders to disclose key terms and costs of credit agreements to borrowers in a clear, conspicuous, and uniform manner so that borrowers can make informed decisions when they enter into credit agreements. The Act also requires lenders to provide accurate and timely credit disclosures. In the state of New Mexico, the Truth in Lending Act is known by its shortened title, the TILA-RESPA Integrated Disclosure (TRID) Rule. TRID applies to all consumer credit transactions where the loan amount is equal to or greater than $50,000. It requires lenders to provide clear and accurate disclosure forms when loan estimates, closing costs, and funds to close are available. The TRID Rule also sets limits on fees that lenders can charge for credit transactions, as well as other restrictions on fees and rates. The Truth in Lending Act also provides consumers with the right to cancel certain credit transactions without penalty. In New Mexico, the rescission period for these transactions is three business days from when the credit agreement is signed. This period can be extended if an application was completed by a third-party who is not the creditor. In addition, the Truth in Lending Act requires lenders to credit application fees to the loan amount, which can result in a lower interest rate or a lower total loan amount. It is important to note that the TRID Rule is applicable to credit transactions in New Mexico and that lenders must abide by it.

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What is the Truth in Lending Act?

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