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From Wikipedia: "The Truth in Lending Act (TILA) of 1968 is a United States federal law designed to protect consumers in credit transactions, by requiring clear disclosure of key terms of the lending arrangement and all costs. The statute is contained in Title I of the Consumer Credit Protection Act, as amended (15 U.S.C. § 1601 et seq.). The regulations implementing the statute, which are known as "Regulation Z", are codified at 12 CFR Part 226. Most of the specific requirements imposed by TILA are found in Regulation Z, so a reference to the requirements of TILA usually refers to the requirements contained in Regulation Z, as well as the statute itself."

On July 14, 2009, the Board of Governors of the Federal Reserve System issued a final rule amending home mortgage provisions of Regulation Z (Truth in Lending):

http://www.federalreserve.gov/newsevents/press/bcreg/regz20080714.htm

With respect to all closed-end mortgages secured by a consumer's principal dwelling, the the new rule:

"Prohibits a creditor or broker from coercing or encouraging an appraiser to misrepresent the value of a home."

Does this mean, for example, that previous borrowers may have been duped into mortgage loans based on intentionally inflated and over-appraised home values?

That's exactly what it means, but lenders simply don't want to admit it; even though it probably happened to hundreds of thousands of homeowners all over the country and contributed, substantially, to the current mortgage crisis. It also led hundreds of thousands of homeowners to believe they had equity in their homes which, in reality, didn't exist.

Nevertheless, despite the bank bailouts, Uncle Sam wants those homeowners to pay for that equity that didn't, and doesn't, exist.

- Ed Smith, Publisher
The EHS Letter Manual