Which transaction would be subject to the Truth in Lending Act?

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Study for the Washington Real Estate Fundamentals Rockwell Exam. Utilize flashcards, multiple choice questions with hints and explanations. Prepare thoroughly for your real estate career!

Multiple Choice

Which transaction would be subject to the Truth in Lending Act?

Explanation:
Truth in Lending Act applies to consumer credit transactions, especially when a dwelling is involved. A loan to buy a mobile home and lot that will be used as a principal residence is a consumer loan that is secured by a dwelling, so it falls under TILA and requires the standard disclosures about cost of credit, APR, and terms. Loans for a commercial building are for business purposes and not consumer credit, so TILA doesn’t apply. A loan to purchase stock in a real estate development is an investment transaction, not consumer credit tied to a dwelling, so it isn’t covered either. The duplicate option describes the same dwelling-backed consumer loan and would have the same TILA treatment.

Truth in Lending Act applies to consumer credit transactions, especially when a dwelling is involved. A loan to buy a mobile home and lot that will be used as a principal residence is a consumer loan that is secured by a dwelling, so it falls under TILA and requires the standard disclosures about cost of credit, APR, and terms. Loans for a commercial building are for business purposes and not consumer credit, so TILA doesn’t apply. A loan to purchase stock in a real estate development is an investment transaction, not consumer credit tied to a dwelling, so it isn’t covered either. The duplicate option describes the same dwelling-backed consumer loan and would have the same TILA treatment.

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