Which federal law requires disclosure of loan terms to borrowers?

The Truth in Lending Act (TILA) is the federal law that mandates lenders to provide clear and comprehensible disclosure of the terms and costs associated with borrowing. This legislation was enacted to safeguard consumers and help them make informed decisions regarding credit. TILA requires that borrowers receive information on the total costs of a loan, including the annual percentage rate (APR), finance charges, and the amount financed, among other details. This transparency allows borrowers to compare loan offers and understand the true cost of borrowing, thus fostering informed choices and facilitating responsible lending practices.

In the context of the other options: The Home Mortgage Disclosure Act focuses primarily on monitoring lending patterns to ensure there is no discrimination in mortgage lending. The Real Estate Settlement Procedures Act deals with the disclosure of settlement costs and the process of closing on real estate transactions. The Fair Housing Act primarily aims to eliminate discrimination in housing practices.