The Truth In Lending Act (TILA) was first enacted in 1968. Congress crafted TILA to provide consumers with significant protections from unfair credit practices. TILA requires lenders disclose credit terms to consumers. Armed with this information, consumers are then able to make a more informed use of credit. Ideally, a well-informed consumer would know the cost of various credit packages and be able to choose the best one for his or her needs. In practice, this goal is not always met.
As a result, TILA provides consumers with several rights and remedies that can be useful in a foreclosure defense or offense. One example is the right of rescission. For some mortgage transactions, it is possible for a consumer to rescind the transaction up to three years after closing. This powerful tool is designed to put the individual in a stronger bargaining position. Rescission is essentially the unwinding of the entire transaction, which can be a powerful tool for negotiating a settlement. In very rare cases, it may allow a consumer to keep his or her property without further obligation. More likely, it helps consumers walk away from properties they cannot otherwise afford.
More in-depth analysis of TILA and its component parts will follow in future posts.
