San Diego Law Review


Elwin Griffith

Library of Congress Authority File


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The Truth in Lending Act (TILA) was passed by congress to make sure that when lending money the consumer was aware of all of the elements, including the existence of other lending companies. As a result of TILA, Regulation Z was promulgated by the Federal Reserve Board to enact the elements of TILA. However both TILA and Regulation Z has exceptions that lenders can try to meet the requirements for. The exceptions allow lenders to exclude certain charges from the finance charge which is composed of, or at least supposed to be composed of, any charge that you need to pay in order to loan money. The problem is that lenders will get their charges excluded if for instance the charge is just "connected" to the lending of money, instead of it being "incident" or "conditional" to the loaning as the statute defines. Griffith thereby advocates closing the loopholes to lenders so that consumers understand all the charges involved in borrowing money. Griffith also notes that lenders are supposed to provide a copy of the disclosure that tells the consumer all of the Truth in Lending information (what they are getting into) to the consumer before the agreement is consummated. The problem is that lenders are currently allowed to take the disclosure and physically attach it to the contract to be signed. This means that while customers are technically allowed by law to keep a copy, there is only one copy sitting on the desk-the copy that needs to be signed to consummate the agreement. Instead of providing a pre-consummation copy as the law provides, the lenders are merely keeping the same procedure of supplying one document, with the change of allowing the customer to take the document if they would like. This would be solved by providing two copies to make clear to consumers they can keep a copy if they like even if they don't sign, Griffith concludes.

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