Federal Mortgage Loan Origination Law and Regulation
Federal mortgage loan origination law and regulation
This domain tests the federal statutes and implementing regulations that govern a residential mortgage loan from application through servicing. Expect questions on TILA/Reg Z, RESPA/Reg X, TRID, ECOA/Reg B, HMDA, SAFE Act licensing, and ability-to-repay/qualified mortgage rules.
Disclosure timing and content
- Loan Estimate: within 3 business days of receiving an application containing the six pieces of information.
- Closing Disclosure: at least 3 business days before consummation.
- Revised LE: within 3 business days of a changed circumstance; re-disclose and re-start the waiting period.
- Right of rescission: 3 business days for refinances and home-equity loans, not purchase-money loans.
Conduct rules
- RESPA Section 8 prohibits fees for referrals; Section 9 limits seller-required title insurance; Section 10 caps escrow.
- ECOA/Reg B: notice of adverse action within 30 days; no spousal signature requirement if the borrower qualifies alone.
- SAFE Act: MLOs licensed through NMLS with pre-licensing education, testing, background check, and continuing education.
Worked example
A refinance applicant receives a LE on Monday. On Wednesday the lender discovers the property is in a flood zone and closing costs rise. The lender must provide a revised LE within 3 business days of the changed circumstance and ensure the borrower receives it no later than 4 business days before consummation, because the 3-day CD waiting period runs separately. A purchase loan would not carry rescission, but CD timing still applies.
Traps
- Confusing the 3-business-day LE delivery with the 7-business-day waiting period after LE.
- Treating the CD as the only disclosure; LE revisions matter.
- Applying rescission to purchases.
- Missing adverse-action timing when a file is declined.