Real Estate/Mortgage Laws and Regulations [Resources for Consumers]

Consumers can equip themselves with the resources to make their own decisions. HomeTraq was created to give the consumer more control over the real estate process. Real Estate agents spend days or even weeks studying all of the laws and regulations surrounding real estate transactions. We have dug up some resources so the consumer can have access to the same resources that agents, brokers, and lenders use to stay up-to-date with the regulations. 

See below two agencies that create laws to protect consumers. Educating yourself on consumer rights is a great way to avoid any unlawful acts that might put you in a bad position. We've got you covered! If you have any questions or believe you've been misled, here's a great place to look:

Consumer Federal Protection Bureau (CFPB)

The CFPB was formed to protect consumers' rights. It is not specifically for real estate, but there are sections about financing, such as mortgage loans, bank accounts, and services, credit reports and scores, etc. Anything to do with banking, loans, and credit will have resources in the CFPB portal to offer advice on financial planning and laws that protect you as the consumer. 

Federal Trade Commission (FTC)

Another group that advocates for consumers' rights is the Federal Trade Commission. In fact, if you feel like you've been treated poorly, misled, or the victim of fraud, the Federal Trade Commission may step in to investigate. Otherwise, you can use the site as a resource to gain insight into how the regulations are evolving. 

Real Estate Settlement Procedures Act (RESPA)

Commonly known in the real estate industry as "RESPA," the real estate settlement procedures act is designed to increase transparency in the mortgage transaction. Lenders are required to share the full disclosure with their clients at least 3 days before the closing date. If something changes within this 3-day period, the lender is required to relay that information to the borrower and push back the closing date to accommodate any changes. 

RESPA also protects consumers from unnecessary closing fees and limits the use of escrow accounts. It also limits the illegal exchange of money known as "kickbacks," where lenders and real estate professionals would hand over clients in exchange for cash. To be clear, referral fees are different and completely legal. Kickbacks are an unlawful exchange of money for services. 

Truth in Lending Act (TILA) 

TILA is another example of a disclosure act, but this one applies to more types of loans such as credit cards and auto loans. The lender is required to provide sufficient information to the borrower at least 3 days before closing, and the borrower has the right to back out of the loan at any time within the three-day period. Similar to RESPA, if anything changes within the 3-day time frame, the lender must share that information and allow the borrower sufficient time to review the changes and back out at any point. TILA was designed to allow consumers time to think about their purchases and not fall for pushy sales tactics or coercion by the lender. 

Community Reinvestment Act (CRA)

Fair lending laws also protect consumers from discrimination. In the past, lenders have chosen to refuse loans to minority and low-income individuals. The CRA prohibits these practices and penalizes lenders who don't comply. Since the CRA was introduced, low-to-moderate income communities have seen an increase in access to loans. Banks and mortgage companies are encouraged to provide the necessary resources to everyone in their constituency, not just the well-off neighborhoods. 

Equal Credit Opportunity Act (ECOA)

Similar to the CRA, the ECOA requires banks to consider all credit applications. The CRA mainly pertains to mortgage loans, but the ECOA covers all other major loans. Banks and credit unions cannot discriminate based on sex, race, age, religion, or any other non-financial category. With the increase in technology, it's fairly easy to determine the credit score and DTI of most people, so there is no need to consider any other characteristic. There never was a need, but now it is illegal to do so. 


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