Federal Mortgage-Related Laws
What this domain tests
Federal mortgage law questions focus on disclosure timing, fair treatment, advertising, privacy, and lending conduct. Expect scenarios on RESPA/Regulation X, TILA/Regulation Z and TRID, ECOA/Regulation B, HMDA/Regulation C, the Fair Housing Act, and SAFE Act licensing.
Core rules
- TRID timing: Deliver the Loan Estimate within 3 business days after application and the Closing Disclosure at least 3 business days before consummation. A TRID application requires six pieces of information: borrower name, income, Social Security number, property address, estimated value, and loan amount.
- Tolerance categories: Zero tolerance applies to lender-selected fees, affiliate fees, and transfer taxes. A 10% cumulative tolerance applies to required services where the borrower can shop and the lender selects the provider. Other fees have no tolerance.
- RESPA Section 8: No fee, kickback, or thing of value may be exchanged for referrals of settlement service business. Bona fide services for reasonable value are permitted.
- TILA rescission: Three business days for refinances and HELOCs secured by a primary residence, not for purchase loans or investment property.
- ECOA: Adverse action notice is due within 30 days after a completed application; provide the appraisal promptly.
- Ability to repay: Verify income, assets, employment, monthly payment, other obligations, DTI, credit history, and residual income.
Worked example
An application is taken on Monday. The Loan Estimate must be delivered or placed in the mail by Thursday, the third business day after Monday. If the lender later requires a second appraisal, that is a changed circumstance. A revised Loan Estimate must be issued within three business days of receiving the information and before the Closing Disclosure. If the revised estimate is late and the fee increases, the lender may have to absorb the cost.
Traps
A rate quote is not automatically an application. Do not confuse the three-day Closing Disclosure waiting period with the three-day rescission period. Do not treat every fee as zero tolerance, and do not accept a referral payment disguised as marketing.