Federal law tightly regulates how loans are disclosed and approved. These consumer-protection statutes are tested in the national Financing topic and overlap with closing procedures.
The major lending laws
- RESPA
- Real Estate Settlement Procedures Act — governs settlement on most residential loans; prohibits kickbacks and unearned referral fees.
- TILA (Reg Z)
- Truth in Lending Act — requires disclosure of the APR and total finance charges; governs advertising of credit terms.
- TRID
- The TILA-RESPA Integrated Disclosure rule — combines disclosures into the Loan Estimate (within 3 business days of application) and Closing Disclosure (3 business days before closing).
- ECOA
- Equal Credit Opportunity Act — prohibits lending discrimination based on protected characteristics.
Key triggers and rules
- Loan Estimate: delivered within 3 business days of a completed loan application.
- Closing Disclosure: received at least 3 business days before consummation.
- Reg Z 'trigger terms' in ads (like a down payment amount or monthly payment) require full disclosure of terms.
- RESPA bans kickbacks and fee-splitting for referrals of settlement services.
Predatory practices — steering borrowers to high-cost loans, loan flipping, and equity stripping — are prohibited. An agent who refers a buyer to an affiliated lender must disclose the relationship and cannot accept an illegal referral fee.