Final answer:
TILA requires lenders to disclose key financing terms like APR and loan costs, as well as to collect borrower demographic information to ensure compliance with anti-discrimination laws. Lenders are prohibited from discriminating based on demographics and must publicly share loan distribution data.
Step-by-step explanation:
Understanding TILA Disclosures
The Truth in Lending Act (TILA) requires lenders to provide clear and accurate disclosures of certain financing terms when issuing loans, particularly those related to a dwelling. These disclosures ensure that consumers are provided with the information they need to make informed decisions about credit and to protect against unfair practices. Under TILA, lenders must disclose terms such as the annual percentage rate (APR), the terms of the loan, and the total costs to the borrower. Additionally, the Federal Government mandates the collection of applicant information for monitoring compliance with equal credit opportunity, fair housing, and home mortgage disclosure laws. Applicants are encouraged, though not required, to provide information on ethnicity and race, which helps in monitoring discrimination. The Fed also requires banks to publicly disclose how loans are distributed geographically, and by sex and race to prevent discrimination.
Speaking to the ethical and legal compliance under TILA, lenders are prohibited from discriminating based on age, race, sex, or marital status. Any prospective borrower can reassure a bank of their creditworthiness by demonstrating a solid credit history, stable income, and any additional collateral or guarantees.