Federal Mortgage-Related Laws — Study Notes

SAFE MLO domain weight ~24% · TILA · RESPA · TRID · ECOA · HMDA · FCRA · GLBA

TILA / Regulation Z (12 CFR 1026)

Purpose: meaningful disclosure of credit costs so consumers can compare — built around the APR and the finance charge.
Right of rescission: 3 business days to cancel for refinances and other non-purchase loans secured by the principal dwelling. No rescission on purchase loans. If required notices or material disclosures are not given, the right extends up to 3 years.
Advertising trigger terms: stating a down payment amount, payment amount, number of payments, term, or amount of any finance charge triggers full disclosure (APR, terms of repayment, etc.). The APR may always be stated alone.
ATR/QM: lenders must make a reasonable, good-faith determination of ability to repay using the eight underwriting factors. Qualified Mortgages cap points and fees (around 3% for larger loans), ban toxic features (negative amortization, interest-only, terms beyond 30 years, most balloons).
HOEPA "high-cost" loans: triggered by APR or points-and-fees thresholds; require pre-loan counseling and ban features like balloon payments and prepayment penalties.
HPMLs (higher-priced mortgage loans): generally require an escrow account for at least 5 years and, in some cases, additional appraisal requirements.
LO compensation rule: an originator's compensation may not be based on a loan's terms (other than loan amount), and dual compensation (consumer-paid plus creditor-paid) is prohibited.

RESPA / Regulation X (12 CFR 1024)

Coverage: federally related mortgage loans on 1–4 unit residential property.
Section 8: no kickbacks, referral fees, or unearned fee-splitting for settlement-service referrals. Penalties can include fines and imprisonment. Payments must be for services actually performed.
Section 9: a seller may not require the buyer to purchase title insurance from a particular company.
Affiliated Business Arrangements (AfBA): permitted only with disclosure, no required use, and no payment beyond a return on ownership interest.
Escrow accounts: cushion capped at 1/6 of annual disbursements (about 2 months); annual escrow analysis required.
Servicing transfers: notice generally 15 days before the effective date; 60-day grace period where payments mistakenly sent to the old servicer cannot be treated as late.

TRID — the TILA-RESPA Integrated Disclosures

An "application" = six items: name, income, Social Security number, property address, estimated property value, and loan amount sought. Once you have all six, the clock starts.
Loan Estimate (LE): delivered or placed in the mail within 3 business days of application, and no later than 7 business days before consummation.
Closing Disclosure (CD): received by the borrower at least 3 business days before consummation. Certain changes (APR beyond tolerance, loan product change, adding a prepayment penalty) restart the 3-day clock.
Fee tolerances: zero tolerance for lender/broker charges and affiliate fees the borrower cannot shop for; 10% aggregate tolerance for recording fees and third-party services on the written provider list; unlimited for prepaids and services the borrower shops for independently.
Intent to proceed must be received before any fee other than a reasonable credit-report fee is charged.

ECOA / Regulation B (12 CFR 1002)

Prohibited bases: race, color, religion, national origin, sex, marital status, age (if of contractual capacity), receipt of public assistance income, and good-faith exercise of rights under the Consumer Credit Protection Act.
Notification: action on a completed application within 30 days; adverse action notices must state specific reasons (or the right to request them).
Appraisal copies: for first-lien dwelling-secured loans, copies of appraisals and valuations must be provided promptly upon completion or 3 business days before consummation, whichever is earlier.
You may not discourage applicants, ask about childbearing intentions, or require a spouse's signature when the applicant qualifies individually.

HMDA / Regulation C

Requires covered lenders to collect and report mortgage application data (the Loan/Application Register) — used by regulators and the public to detect discriminatory lending patterns such as redlining.
Government monitoring information (ethnicity, race, sex) is collected for HMDA purposes and may not be used to make the credit decision.

FCRA / FACTA

Permissible purpose is required to pull a consumer report — a mortgage application qualifies.
Adverse action based on a credit report requires notice identifying the consumer reporting agency.
FACTA Red Flags Rule: identity-theft prevention programs; users of reports must respond to address discrepancies.
Risk-based pricing notice: required when materially less favorable terms are offered based on a credit report (or use the credit-score disclosure exception).

GLBA — privacy of consumer financial information

Privacy notice at account opening (and generally annually) describing information-sharing practices.
Opt-out right before sharing nonpublic personal information (NPI) with nonaffiliated third parties, subject to exceptions.
Safeguards Rule: written information-security program protecting customer records.

SAFE Act & MAP Rule

SAFE Act: state-licensed MLOs must pass the National Test, complete PE/CE, and clear background and credit checks; the unique NMLS identifier must be provided on applications and in advertising. (Details in the UST notes.)
MAP Rule (Regulation N): bans material misrepresentations in mortgage advertising — fake "government affiliation," misleading "fixed" claims on ARMs, hidden conditions on advertised rates.

Memorize-these numbers

LE: within 3 business days of application; CD: 3 business days before consummation
Rescission: 3 business days (up to 3 years if disclosures defective); ECOA decision notice: 30 days
Escrow cushion: 2 months / one-sixth; servicing-transfer grace: 60 days
HPML escrow: 5 years; QM points-and-fees cap: ~3%

For exam preparation reference only — condensed summaries, not legal advice. Statutes and regulations change; verify against the current official text (eCFR, CFPB). Independent study aid, not affiliated with or endorsed by NMLS or CSBS.