Federal Mortgage-Related Laws and Regulations
This domain tests the federal statutes and regulations that govern the mortgage file from first contact through payoff. Questions target disclosure timing and accuracy, fair-lending notices, ability-to-repay underwriting, escrow and servicing rules, and anti-money-laundering controls - at the working-originator level, not the lawyer level.
Disclosure and settlement rules
- TILA/Reg Z requires cost-of-credit disclosures. Under TRID, the Loan Estimate is due within three business days of application and the Closing Disclosure at least three business days before consummation.
- RESPA Section 8 bars fees for referrals of settlement-service business; Section 6 and Reg X govern escrow cushions, escrow statements, and servicing-transfer notices.
- Tolerance tiers: zero tolerance (lender origination charges, transfer taxes, fees paid to affiliates), 10 percent cumulative, and unlimited.
Fair lending and data reporting
- ECOA/Reg B: adverse action notice within 30 days of a completed application; discrimination is prohibited on the enumerated bases in terms, pricing, and steering.
- HMDA/Reg C collects application, decision, and pricing data; FCRA requires a permissible purpose for credit reports; GLBA requires privacy and safeguards notices.
Repayment and property protections
- Reg Z §1026.43 requires a documented ability to repay; a Qualified Mortgage gives a safe harbor when points-and-fees and APR thresholds are met.
- HOEPA adds disclosures and restrictions for high-cost mortgages.
- Flood Disaster Protection Act: flood insurance must be in force before closing whenever the improved property sits in a Special Flood Hazard Area - for refinances as well as purchases.
- BSA/AML: customer identification program, written AML program, and suspicious activity reporting.
Worked example
A Loan Estimate shows $500 in lender origination charges and a $300 appraisal. At closing, origination is $650 because the lender repriced. Origination charges are zero tolerance, so the $150 increase is a tolerance violation that must be cured; only a valid changed circumstance affecting that fee, re-disclosed within three business days, could reset the baseline. The appraisal is a 10 percent item, tested cumulatively with other 10 percent fees.
Traps that cost marks
- Counting Closing Disclosure days as calendar days, or forgetting that mail delivery adds three days.
- Treating every fee as zero tolerance, or assuming a changed circumstance automatically permits any increase.
- Confusing ECOA's 30-day adverse action clock with servicing-transfer notice timing.
- Equating HOEPA with Qualified Mortgage status; they are separate tests.