How to Audit a Truth in Lending Disclosure
- 1). Review the loan documents. The National Loan Audits company states that the loan agreement is a contract like any other, and the lender has to comply with the terms. If the actual loan terms---the interest rate, the penalties for late payment or any other point---differ from what the contract promised, you may have grounds for a TILA challenge.
- 2). Look for understated finance charges. The loan's annual percentage rate doesn't reflect those charges, so the actual interest you pay on the loan will be slightly higher. Under TILA, the lender has to show exactly how much you will be paying in interest. The U.S. Lender Audit company notes that understated charges are the most frequent cause of TILA violations, for example, when the full cost of the loan includes overpriced title insurance or inflated appraisal fees.
- 3). Check the local "fair market rate" to determine whether title insurance charges and similar fees are reasonable. U.S. Lender Audit states that if the lender had access to information about fair market rates, and you didn't, that puts the burden of proof on the lender if his rate is questioned.
- 4). Check for fraud and error. If the loan broker, loan officer or anyone working for the lender misrepresented or failed to disclose important facts or made statements that contradict the loan documents, that could be a TILA violation. If your lender claims that she made an honest mistake, the burden of proof is on her.
- 5). Verify that the lender honored your right of rescission. In many real-estate transactions, the lender has to grant you three days to reconsider. The lender must give you two copies of a document explaining your rights: setting out when the rescission period expires, telling you how to exercise your rights, giving you contact information for the lender and explaining the effects of rescission. Unless you choose to waive the option, the lender can do nothing to deprive you of your right of rescission.
