Truth in Lending Act

The declared purpose of the Truth In Lending Act, which regulates consumer credit transactions, is “to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and to avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.” 15 U.S.C. § 1601(a); see Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412, 118 S.Ct. 1408, 1410-11, 140 L.Ed.2d 566 (1998).

Accordingly, the TILA requires creditors to provide consumers with “clear and accurate disclosures of terms dealing with things like finance charges, annual percentage rates of interest, and the borrower's rights,” including the right of rescission. Id. at 412, 118 S.Ct. at 1410. Further, the TILA provides that when a loan made in a consumer credit transaction is secured by the consumer's principal dwelling, the consumer has the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or delivery of the material disclosure and rescission forms, whichever is later. 15 U.S.C. § 1635(a). If the creditor fails to deliver the forms, or fails to provide the required information, then the consumer's right of rescission extends for three years after the date of consummation of the transaction, or until the property is sold, whichever occurs first. 15 U.S.C. § 1635(f); 12 C.F.R. § 226.23(a)(3). The TILA imposes the duty to disclose upon “creditors” as that term is defined by 15 U.S.C. § 1602. Section 1602(f) defines “creditor” as follows: The term “creditor” refers only to a person who both (1) regularly extends ... consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness....15 U.S.C. § 1602.

The parallel provision in Regulation Z provides: Creditor means: (i) A person (A) who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than 4 installments (not including a down payment), and (B) to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract.12 C.F.R. § 226.2(a)(17). Section 1640 provides that creditors who fail to comply with the TILA's disclosure requirements are subject to civil liability. 15 U.S.C. § 1640(a) (“[A]ny creditor who fails to comply with any requirement imposed under this part, including any requirement under section 1635 of this title ... with respect to any person is liable to such person....”).