Federal Mortgage Laws and Regulations
This domain tests the federal statutes and implementing regulations that govern mortgage origination: disclosure timing and accuracy, fair lending, ability-to-repay, anti-fraud, and recordkeeping. Questions often turn on a date, a tolerance category, or which regulation applies.
Core rules
- TILA/Reg Z and TRID: Give the Loan Estimate within 3 business days after application and make sure the consumer receives it at least 7 business days before consummation. Give the Closing Disclosure at least 3 business days before consummation. A revised LE generally must be received at least 4 business days before consummation.
- Tolerances: Zero tolerance applies to fees paid to the creditor or its affiliate, fees for services the consumer cannot shop for, and transfer taxes. A 10% cumulative tolerance applies to recording fees and to services the consumer chooses from a written provider list. Other fees have no tolerance.
- RESPA: Section 8 prohibits kickbacks and unearned fees. Servicing-transfer notices are required. Escrow accounts are subject to RESPA limits.
- ECOA/Reg B: Prohibits discrimination and requires adverse-action notices, generally within 30 days.
- ATR/QM: The creditor must verify ability to repay. Qualified mortgages must meet product-feature and points-and-fees limits.
- SAFE Act and HMDA: MLOs must be licensed and use their unique identifier; covered lenders collect and report HMDA data.
Worked example
An LE lists a $400 appraisal fee from a lender-affiliated appraisal management company. The actual fee is $450. This is a zero-tolerance fee. The creditor must cure the $50 overage within 60 days after consummation. If the same fee were for a service the consumer could shop for and chose from the written list, it would fall in the 10% bucket instead.
Traps
Do not confuse the general business-day definition for delivering the LE with the specific definition used for the 7-day receipt and 3-day CD waiting periods. Do not assume every third-party fee is 10%. Do not forget that a revised LE can restart disclosure timing.