SW Legal studies in Business

Technical Violations of TILA Disclosure Requirements Are Still Violations
Description

Appeals court held that a lender violated the Truth in Lending Act by failing to state that there were 360 total payments due on a 30-year mortgage. While there was nothing misleading in the disclosure statement, specific TILA requirements must be followed or the law is violated.

Topic

Consumer Protection

Key Words

Truth in Lending Act; Disclosure; Mortgage

C A S E   S U M M A R Y
Facts

Several parties got mortgages from Ameriquest. They sued Ameriquest for violating the Truth in Lending Act (TILA). They claimed Ameriquest failed to state explicitly the payment period in TILA disclosure statements. The lower courts had conflicting rulings on the issues, so the appeals court reviewed the matter.

Decision

On a 30-year mortgage, the disclosure form said you have 359 payments of a certain amount and one payment (the last month) of a slightly different amount. It did not state there were 360 payments as TILA requires. That is a violation of TILA. It clearly requires a statement of how many payments (360). While the math is obvious and the information was not incorrect or intended to mislead, it was still a violation of a specific TILA requirement. TILA has a number of specific requirements that must be followed exactly on the disclosure statement or there is a violation of the law.

Citation

Hamm v. Ameriquest Mortgage Co., 506 F.3d 525 (7th Cir., 2007)

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