Federal Laws and Regulations Governing Mortgage Lending
TILA and TRID timing
- Loan Estimate: delivered or mailed no later than 3 business days after application, and received at least 4 business days before consummation (7 if mailed).
- Closing Disclosure: received at least 3 business days before consummation.
- Tolerance buckets: zero tolerance (creditor and affiliate fees, transfer taxes), 10% cumulative, and unlimited (changed circumstances, consumer-requested changes, shopped services from the written list).
RESPA
Section 8 bans fees for referrals of settlement service business; Section 9 bars sellers from requiring title insurance from a particular provider; servicing rules govern escrow accounts, transfer of servicing notice (15 days), and error resolution.
ECOA and Regulation B
Adverse action notice within 30 days; notice of incompleteness within 30 days; copies of appraisals; record retention of 12 months (25 months for certain business credit).
HMDA, Fair Housing, GLBA
Regulation C requires collection and reporting of covered loan data; the Fair Housing Act prohibits discrimination in sale, rental, and financing; GLBA requires privacy notices and an information security program meeting the Safeguards Rule.
Worked example
A lender's affiliate title agency fee rises $200 after the Loan Estimate is issued. Because fees paid to the creditor or its affiliate sit in the zero-tolerance bucket, the lender cannot pass the increase through. It must cure the excess at or before consummation and document the cure in the file.
Traps
- Counting the day of delivery when computing waiting periods.
- Confusing the 3-day right of rescission (refinance or HELOC on a principal dwelling) with TRID waiting periods.
- Assuming any revised Closing Disclosure restarts the 3-day clock - only specified changes do.