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NAMP CMLP: Federal Lending Regulations and Compliance

NAMP CMLP · Work through your exam, one topic at a time.

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Federal Lending Regulations and Compliance

Domain 2: Federal Lending Regulations and Compliance

This domain tests the disclosure and conduct rules that govern a mortgage file: TILA and RESPA as integrated by TRID, ECOA/Regulation B, HMDA, FCRA, flood insurance, and ability-to-repay. The exam focuses on timing, tolerance categories, and notice requirements - the details processors verify daily.

TRID timing

  • Loan Estimate: delivered or placed in the mail within 3 business days after application; the application is six pieces of information (borrower name, income, SSN, property address, estimated value, loan amount).
  • Revised LE: borrower must receive it no later than 4 business days before consummation when a changed circumstance affects terms; allow mailing time.
  • Closing Disclosure: borrower must receive it at least 3 business days before consummation. A changed APR beyond tolerance requires a corrected CD and a new 3-day wait.
  • Rescission: refinances and HELOCs on a principal residence carry a 3-business-day right to cancel after consummation.

Tolerance categories

  • Zero tolerance: lender fees, points, and services for which the borrower cannot shop (e.g., lender-selected appraiser).
  • 10% cumulative tolerance: services the borrower can shop for if the provider is on the lender's written list, plus recording fees.
  • Unlimited/no tolerance: services where the borrower chooses a provider not on the list; also prepaid interest, escrow deposits, and property insurance if shopped.

ECOA and other rules

  • Adverse action notice within 30 days of a completed application; appraisal copy promptly.
  • HMDA data collected for reportable applications: ethnicity, race, sex, age, income, and pricing.
  • Flood: determine SFHA status, require flood insurance, and send notice before closing.

Worked example

The LE shows a $550 lender appraisal fee; at closing the lender's own appraiser charges $700. This is a zero-tolerance fee, so the $150 increase exceeds tolerance and the lender must cure it - typically a refund or credit at closing - unless a valid changed circumstance justified a revised LE within the timing rules.

Traps

  • Starting the 3-day CD clock on mailing rather than receipt.
  • Treating all fees as 10% tolerance.
  • Sending adverse action only orally.
  • Missing the flood notice or escrow account rules.