Federal Mortgage-Related Laws and Regulations
This domain tests the federal statutes and implementing regulations that govern origination. Know the RESPA/Regulation X disclosure timeline (Loan Estimate within three business days of application, revised LE rules, Closing Disclosure three business days before consummation, and the changed-circumstance tolerances: zero, 10%, and unlimited). Expect questions distinguishing TRID tolerance categories and what triggers a valid changed circumstance.
Understand TILA/Regulation Z ability-to-repay and Qualified Mortgage standards, high-cost mortgage thresholds, and the loan originator compensation rule (no compensation based on loan terms; no dual compensation). Know ECOA/Regulation B adverse action timing (30 days), the government monitoring information rules, and prohibited discrimination. HMDA/Regulation C requires reporting of covered applications and loans. SAFE Act governs originator licensing and the national test. FHA rules cover MIP, borrower certifications, and the 203(k) program.
Traps: confusing disclosure delivery timing (in-person vs. mail - the three-day CD rule adds days for delivery); mixing up which disclosures fall under RESPA vs. TILA; assuming all fees are zero-tolerance when only certain ones are. Also watch for questions on Fair Housing Act protected classes versus ECOA's, and on flood insurance and PMI cancellation under the Homeowners Protection Act.
Rule of thumb: when a question asks "how many days," anchor to the regulation: LE = 3 business days from application; CD = 3 business days before closing; adverse action = 30 days; PMI cancellation at borrower request = 80% LTV.
Worked example: A borrower applies Monday; the LE must be delivered by Thursday (three business days). If the APR increases beyond tolerance before closing, a revised LE is required and must be received no later than four business days before consummation.