Finance
What is the primary purpose of the Truth in Lending Act (TILA) as it applies to California residential mortgage loans?
ATo set maximum interest rates on consumer loans
BTo require lenders to disclose the Annual Percentage Rate (APR) and loan terms to borrowers✓ Correct
CTo prohibit prepayment penalties on all mortgages
DTo regulate the secondary mortgage market
Explanation
TILA (Regulation Z) requires lenders to clearly disclose the cost of credit, including the APR, finance charges, and loan terms, so borrowers can make informed comparisons. It does not set rate ceilings or prohibit prepayment penalties on all loans.
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