Federal Mortgage-Related Laws and Regulations
Federal Mortgage-Related Laws and Regulations
This domain tests the federal statutes and regulations that govern residential mortgage origination, disclosure, fair lending, and settlement practices. Expect questions that require you to identify the rule, the trigger, the timing, and the remedy.
Core rules
- TILA / Regulation Z: APR disclosure, right of rescission for refinances and HELOCs but not purchases, loan originator compensation limits, ability-to-repay and qualified mortgage standards, and high-cost mortgage protections.
- RESPA / Regulation X: Section 8 prohibits kickbacks and fee splits for referral of settlement services; escrow accounting and servicing-transfer rules apply; TRID integrates the Loan Estimate and Closing Disclosure.
- ECOA / Regulation B: prohibits discrimination in credit, requires adverse-action notice generally within 30 days, and limits spousal signature requirements.
- Fair Housing Act: prohibits discrimination based on race, color, religion, sex, national origin, familial status, or disability.
- HMDA / Regulation C, FCRA, GLBA, Flood Disaster Protection Act, Homeowners Protection Act, SCRA: data reporting, credit-report accuracy, privacy, flood insurance, PMI cancellation, and servicemember protections.
Worked example
A borrower refinances a primary residence. The Closing Disclosure is delivered in person on Monday and consummation occurs Friday. The creditor has met the three-business-day CD rule, but the borrower still has a three-business-day right of rescission after consummation. The loan cannot be funded until that period expires. If the same transaction were a purchase, rescission would not apply. If it were a HELOC, rescission would generally apply.
Traps
Do not apply rescission to a purchase. Do not confuse the TRID business-day definition with the rescission business-day definition. Do not treat a fee split as lawful merely because it is disclosed; Section 8 requires a bona fide service, not a referral payment. Adverse-action timing runs from receipt of a completed application, not from the first phone call.