Weekly Rewind...News from Your Regulators

TILA and Regulation Z: Top 10 Material Violations

By: Justin Hosie[1] and Cliff Cook[2]

June 5, 2022


Excerpt from presentation at the 2022 ACUIA Convention:


#2  Failure to calculate the amount financed properly

Speaking of the “amount financed,” using the incorrect amount financed violates TILA and can also sabotage the rest of your TILA disclosures. The “amount financed” is effectively the amount of credit provided to the consumer or on the consumer’s behalf. Calculating the amount financed is a three-step process. First, you must start with the principal loan amount (or cash price after subtracting any down payment in a credit sale transaction). Second, you must add amounts financed that are not part of the finance charge. Third, you must subtract the prepaid finance charges. If you skip one of those steps, you’ll violate TILA.



From the Federal Reserve

Prohibition Orders – The Federal Reserve issued Prohibition Orders against an ex-bank employee for obtaining fraudulent Paycheck Protection Program loans in the amount of $17,533.


OCC Issues Prohibition Order Against Former Teller

Prohibition Order – The OCC issued a prohibition order against a former teller for misappropriating more than $16,000 from his teller drawer and falsifying journal entries to conceal his misconduct. 


FFIEC Releases 2021 HMDA Data

2021 HMDA Data Available – The FFIEC announced the availability of data on 2021 mortgage lending transactions reported under the Home Mortgage Disclosure Act. The HMDA data are the most comprehensive publicly available information on mortgage market activity.


From the FinCEN

Elder Financial Exploitation – FinCEN issued an advisory alerting financial institutions of the rising trend of elder financial exploitation. The advisory highlights new exploitation types and red flags since its 2011 advisory. 

From the State of Montana


Flooding Closures – The OCC issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices in areas affected by flooding in Montana. The OCC expects that only those bank offices directly affected by potentially unsafe conditions will close. Those offices should make every effort to reopen as quickly as possible to address the banking needs of their customers.


Servicemember Affairs Annual Report – The CFPB issued the 2021 annual report from the Office of Servicemember Affairs. The report includes the top financial concerts facing servicemembers, veterans, and military families, based on the complaints filed with the CFPB. 


CFPB Seeks Public Input on Customer Service

Customer Service – The CFPB is seeking public input on how bank customers can assert their rights to better customer service with big banks. A 2010 federal law specifies that consumers have rights to obtain timely responses to requests for information about their accounts from large depository institutions. In the Request for Information, the CFPB seeks data about, and consumer experiences with, the obstacles that may prevent people from receiving high standards of customer service and high-quality human interactions with their banks or credit unions.

[1] Justin B. Hosie is a partner and practice group leader at Hudson Cook, LLP, a nationwide law firm focused on compliance with consumer protection laws governing financial services. Justin provides day-to-day compliance advice on various laws including the Federal Truth-in-Lending Act. Among various publications, Justin is co-authoring the “Annual Percentage Rates” chapter of the forthcoming American Bar Association’s Truth in Lending Manual, 2023 edition. He is AV rated by Martindale Hubbell and is recognized in The Best Lawyers in America for Financial Services Regulation Law.

[2] Cliff E. Cook is an Executive Consultant with Compliance Services Group. Cliff began his banking and compliance career in 1974, and has since been widely recognized by the Banking, Credit Union, Consumer Loan, Payday Loan, and Title Loan industries as an authoritative source for Truth-in-Lending Act compliance, with particular expertise in assisting lenders in complying with the Annual Percentage Rate requirements, as well as issues related to product development, loan agreements, loan origination systems, and loan servicing systems. Recently, Cliff has been assisting commercial lenders and law firms to comply with the new state-required commercial loan APR disclosures.

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