Quiz 20: Mortgages and Foreclosures After the Recession

Business

Truth in Lending Act" Truth in Lending Act (TILA), 1968 to regularize the lending market in US, it restricts the credit making companies by asking them to make all the information pertaining to the credits to be disclosed to customers. This protection is offered by implementing measures such as offering all the information regarding the various charged to the debtor, the percentage of interest charged and the number of installments in offer. Facts: The person RA borrows an amount of $175, 000 from S bank to buy a house, based on the TILA requirements the bank made the financial information disclosures in a clear and understandable language. Outcome: The disclosure requirements of TILA specify that following major terms must be disclosed: • All the financial information such as the principal amount of loan, • Interest rates at which loan is provided, • Annual percentage rate which reflects the yearly cost of loan, and • Other costs are to be made in clear and understandable language. Thus, it can be concluded that above terms reflects the terms that are required to disclose as per TILA.

Mortgage: It refers to an agreement between the lender and the borrower referred to as mortgagee and mortgagor. Mortgagee will be making a down payment along with the agreement order. Sub- prime Mortgages: In sub- prime mortgages the rate of interest will be very high because they are offered to mortgagors who did not qualify for loans. The rate of interest may wary from time to time. Differences between Standard and Sub-prime Mortgage img Thus, it can be concluded that above factors reflects the difference between standard and subprime mortgage.

Mortgage: It refers to an agreement between the lender and the borrower referred to as mortgagee and mortgagor. Mortgagee will be making a down payment along with the agreement order. Sub- prime Mortgages: In sub- prime mortgages the rate of interest will be very high because they are offered to mortgagors who did not qualify for loans. The rate of interest may wary from time to time. Differences between Standard and Sub-prime Mortgage img Thus, it can be concluded that above factors reflects the difference between standard and subprime mortgage.

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