7.3 Federal Financing Regulations (RESPA, TILA, ECOA, TRID)

The four federal lending laws

The national exam reliably tests what each acronym does and which behavior it forbids.

Trap: RESPA polices settlement-service kickbacks; TILA polices the cost of credit. If the question is about an undisclosed referral fee between a lender and a title company, that is RESPA §8.

RESPA in detail

RESPA applies to federally related mortgage loans on 1–4 unit residential property. Its core rules:

• Section 8 prohibits kickbacks, fee-splitting, and unearned fees for referring settlement business. Giving an agent a gift for steering buyers to a particular lender violates it.
• Affiliated business arrangements must be disclosed, and the consumer cannot be required to use the affiliate (limited exceptions).
• Borrowers receive a Loan Estimate within 3 business days of application and a Closing Disclosure at least 3 business days before consummation.

Trap: normal, fully earned compensation for actual services rendered is not a kickback. RESPA targets payments for referrals where no service was performed.

TILA, Regulation Z, and trigger terms

TILA (implemented by Regulation Z) forces lenders to disclose the annual percentage rate (APR) and total finance charge so borrowers can compare true credit costs. In advertising, certain trigger terms — stating a specific down payment, payment amount, number of payments, or finance charge — require full disclosure of APR, down payment, and repayment terms.

TILA also grants a 3-business-day right of rescission on most refinances and home-equity loans secured by the borrower's principal residence. Trap: there is no rescission right on a purchase-money loan to buy a home — rescission applies to refinances and equity lines on a residence you already occupy.

APR vs. interest rate, and the Mortgage Acts and Practices rule

Borrowers frequently confuse the note rate with the APR. The note rate is the raw cost of borrowing the principal. The APR rolls in points, certain fees, and mortgage insurance, expressed as a yearly rate so two loans can be compared on equal footing. The APR is therefore usually higher than the note rate.

TILA advertising rules also reach real-estate agents who advertise financing terms. If an ad states 'only $500 down' or '$1,200 per month,' those are trigger terms that require the full set of disclosures. Stating merely 'low down payment available' or 'financing available' is general and triggers nothing.

Trap: quoting the APR in an ad does not by itself trigger the additional disclosures — APR is the safe figure; the down-payment and payment specifics are what trigger them.

Enforcement, penalties, and how the laws overlap

These statutes are enforced primarily by the Consumer Financial Protection Bureau (CFPB), which writes the implementing regulations (Regulation X for RESPA, Regulation Z for TILA, Regulation B for ECOA). Violations can mean civil penalties, actual and statutory damages, and rescission rights.

The laws overlap, and the exam exploits that. A single closing can involve all four: ECOA at the application decision, TILA/RESPA disclosures via the TRID Loan Estimate and Closing Disclosure, and RESPA's kickback ban on the title and escrow referrals.

• Discrimination in approval → ECOA.
• Hidden cost of credit / misleading ad → TILA.
• Referral kickback among service providers → RESPA.
• Wrong or late disclosure form/timing → TRID.

ECOA and the TRID timeline (worked)

ECOA prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, or because income comes from public assistance. A lender may not ask an applicant's marital status except in narrow community-property situations, and cannot discount part-time or alimony income solely because of its source.

TRID timing worked example. A lender must deliver the Closing Disclosure so the borrower has it at least 3 business days before consummation.

• Consummation is set for Friday.
• Counting back 3 business days (excluding Sundays and the closing day) means the borrower must receive the Closing Disclosure no later than the prior Monday.
• If the lender changes the APR beyond tolerance after delivery, a new 3-business-day waiting period restarts — a frequent exam wrinkle.

Matching the Fact Pattern to the Right Statute

Because these four laws overlap at a single closing, the exam rewards fast pattern-matching. Read the verb in the question — discriminate, kick back, mislead about cost, mis-time a form — and route it to one statute.

Two timing anchors are worth memorizing: the Loan Estimate is due within 3 business days of application, and the Closing Disclosure must be received at least 3 business days before consummation. A material APR change after delivery restarts that 3-day clock.