Federal Mortgage-Related Laws and Regulations
What this domain tests
Federal Mortgage-Related Laws and Regulations covers the federal rules an MLO applies at application, disclosure, underwriting, closing, and servicing. Expect questions on RESPA/Regulation X, TILA/Regulation Z and TRID, ECOA/Regulation B, HMDA/Regulation C, the Fair Housing Act, SAFE Act licensing, FCRA, GLBA privacy, flood insurance, and HOEPA/QM/ATR. The exam favors timing rules, prohibited practices, and notice content over statute names alone.
Core rules
- RESPA Section 8 bans fees or things of value for referrals, not bona fide goods or services. Section 6 limits escrow deposits; Regulation X implements servicing and loss-mitigation rules.
- TRID requires a Loan Estimate within three business days after application and a Closing Disclosure at least three business days before consummation. Fee tolerances are zero, 10 percent, or unlimited, depending on the fee and whether a valid changed circumstance exists.
- ECOA/Regulation B prohibits discrimination and requires adverse-action notice generally within 30 days. HMDA requires collection and reporting of loan data.
- TILA requires accurate APR and finance-charge disclosure; rescission applies to certain refinances and home-equity lines on a principal dwelling, not to a purchase-money mortgage.
- SAFE Act: MLOs must be licensed and use their unique NMLS identifier; federal law sets minimum prelicensing and continuing education.
Worked example
A borrower submits an application on Monday. Tuesday, Wednesday, and Thursday are the three business days; the Loan Estimate must be delivered or placed in the mail no later than Thursday, assuming no intervening federal holiday or office closure. If the creditor later learns the borrower's income is lower and the loan amount must change, that may be a valid changed circumstance; a revised Loan Estimate must be provided within three business days of receiving the information, and the fee tolerance analysis must be redone.
Traps
Do not use the CD's “three business days before consummation” rule for the LE. Do not treat every fee increase as a changed circumstance. Do not call a referral payment a “marketing fee” if it is really compensation for business. Remember that purchase loans have no TILA rescission.