Federal Mortgage Laws and Regulations
Core statutes and what they govern
Federal law supplies the floor of conduct for every mortgage loan originator, regardless of state. Know the purpose and trigger of each statute rather than isolated dates.
- RESPA (Regulation X): Requires a good-faith estimate of settlement charges within three business days of application, a settlement statement, and prohibits kickbacks or unearned fees for referral of settlement services. Section 8 is the anti-kickback provision; Section 10 covers escrow accounting.
- TILA (Regulation Z): Governs disclosure of credit terms, the annual percentage rate, and the right of rescission for certain refinances on a principal dwelling. The Loan Estimate and Closing Disclosure timing rules live here, as do ability-to-repay and qualified mortgage standards.
- ECOA (Regulation B): Prohibits discrimination in credit on prohibited bases and sets adverse action notice rules, including the 30-day notice requirement and the specific reasons for denial.
- HMDA (Regulation C): Requires collection and reporting of loan data for covered applications.
- SAFE Act: Establishes NMLS licensing and registration of loan originators.
- Flood Disaster Protection Act: Mandates flood insurance for improved structures in special flood hazard areas and notice to the borrower.
Traps candidates miss
Questions frequently blur disclosure timing: the Loan Estimate must be delivered or placed in the mail within three business days of application, and the Closing Disclosure must be received by the consumer at least three business days before consummation. Another trap is confusing rescission (three business days, refinance or home equity on a principal dwelling) with the right to receive a copy of an appraisal. Watch for questions that describe a business loan or an investment property as requiring rescission; it does not.
Rule of thumb
Count business days from the event, not calendar days, and remember the consumer must receive the Closing Disclosure-mailing it on day three is too late. For ECOA, a denial requires notice within 30 days of a completed application.
Worked example
An application is taken Monday. The Loan Estimate must be delivered or mailed by Thursday (three business days). If the Closing Disclosure is mailed Wednesday, delivery is presumed three business days later, so consummation cannot occur before the following Monday.