Does the Truth in Lending Act (TILA) apply to a loan secured by a residential property for investment purposes?

The Truth in Lending Act (TILA) is designed to promote informed use of consumer credit by requiring disclosures about its terms and costs. This legislation applies primarily to consumer loans rather than commercial or investment loans.

When considering loans secured by residential properties, TILA's protections are focused on transactions where the property is not solely for investment purposes, thus aligning with the definition of consumer credit. TILA's regulations aim to ensure that borrowers who are taking out loans for personal, familial, or household purposes are fully informed of the credit's terms and fees.

Therefore, TILA does not extend to loans made for the purpose of acquiring or improving a property that is intended for investment, like rental properties, because these loans fall outside the scope of consumer credit as defined by the act. This clarity helps protect lenders and borrowers by delineating the nature of loans covered under TILA.