Module 4: Federal Laws and Regulations
Overview of federal laws and regulations that impact the mortgage industry
The mortgage industry is highly regulated by federal laws and regulations aimed at ensuring fairness, transparency, and accountability in the lending process. Here is an overview of some of the major federal laws and regulations that impact the mortgage industry:
Truth in Lending Act (TILA): This law requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR) and other loan terms. TILA also provides consumers with the right to cancel certain loans within a specified period.
Real Estate Settlement Procedures Act (RESPA): This law governs the process of closing a mortgage loan, including the requirement for lenders to provide borrowers with a Good Faith Estimate (GFE) of closing costs and a HUD-1 Settlement Statement at closing.
Home Mortgage Disclosure Act (HMDA): This law requires lenders to collect and report data on their mortgage lending activity, including information on the race, ethnicity, and gender of borrowers.
Fair Housing Act (FHA): This law prohibits discrimination in the housing industry on the basis of race, color, national origin, religion, sex, familial status, or disability.
Equal Credit Opportunity Act (ECOA): This law prohibits lenders from discriminating against borrowers on the basis of race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.
Dodd-Frank Wall Street Reform and Consumer Protection Act: This law, enacted in response to the 2008 financial crisis, created new regulations and oversight mechanisms for the mortgage industry, including the establishment of the Consumer Financial Protection Bureau (CFPB).
Servicemembers Civil Relief Act (SCRA): This law provides certain protections for active-duty service members who take out mortgages, including a cap on interest rates and protection against foreclosure.
In addition to these federal laws and regulations, each state may have its own set of laws and regulations governing the mortgage industry.