Federal Mortgage-Related Laws
Core concepts
Federal law supplies most of the calendar math on this exam. Know which statute owns which rule: TILA/Reg Z and its TRID subpart (Loan Estimate within three business days of a complete application; Closing Disclosure at least three business days before consummation; a valid revised CD can restart the clock); RESPA Section 8 (no fee, thing of value, or split of charges for the referral of settlement service business); ECOA/Reg B (adverse action notice within 30 days, copy of the appraisal, no discrimination on a prohibited basis in any credit transaction); HMDA/Reg C (collect and report data); the SAFE Act (licensing); GLBA/Reg P (privacy and safeguarding); Fair Housing Act; FCRA; Flood Disaster Protection Act (determination, notice, escrow); and HOEPA/QM ability-to-repay rules.
Traps
- "Business day" is defined twice in Reg Z: a general definition (a day the creditor's offices are open to the public) and a precise definition (all calendar days except Sundays and federal holidays) used for the CD waiting period and rescission.
- The right of rescission is three business days for a refinance or home equity loan secured by a principal dwelling - never for a purchase and never for investment property.
- Tolerances: 0% for fees paid to the creditor or its affiliate and for transfer taxes; 10% aggregate for other third-party fees; unlimited only with a bona fide changed circumstance and a revised LE delivered in time.
- Section 8 bans unearned referral fees, not fair-market-value payment for services actually performed.
Worked example
A consumer applies on Monday at a lender open Monday–Friday. The LE must be delivered or placed in the mail by Thursday. If it is mailed, add three business days for presumed receipt.
Rule of thumb
Remember "3-3-3": LE within three business days of application, CD in hand three business days before consummation, three-day rescission after consummation for covered refinances.