TILA, RESPA & Fair Lending
~12 min read · Apply Reg Z advertising triggers, RESPA kickback rules and ECOA to brokerage work.
Three federal regimes police mortgage lending as the RE exam frames it: TILA's cost disclosures and trigger-term advertising, RESPA's kickback ban and settlement disclosures, and ECOA's protected classes. Salespeople meet them in advertising and referrals more than in underwriting.
TILA / Regulation Z
Truth in Lending standardizes credit-cost disclosure through the finance charge and APR. For real-estate advertising — the agent's exposure — stating a trigger term (down payment amount, monthly payment, term/number of payments, finance-charge amount) requires disclosing the full package including the APR. General phrases ('low rates', 'easy financing') trigger nothing. Owner-occupant refinances carry the 3-business-day rescission right; purchase loans do not. TRID's Loan Estimate (3 business days after application) and Closing Disclosure (received 3 business days before closing) are TILA-RESPA's combined paperwork.
- Trigger terms in ads → full disclosure + APR
- '$1,200/month!' triggers; 'great rates!' doesn't
- Rescission: 3 business days, refis on principal dwellings only
- LE within 3 days of application; CD 3 days before closing
RESPA
The Real Estate Settlement Procedures Act (1–4 unit federally related loans) bans kickbacks and unearned fees for settlement-service referrals — Section 8's rule that catches agents: no cash, gifts, or disguised 'marketing fees' from lenders, title companies, or inspectors for steering business. Affiliated business arrangements are lawful only with written disclosure, consumer freedom to shop, and returns limited to ownership interest. RESPA also delivers the servicing and escrow-account rules and the settlement-cost booklet for purchasers.
- Section 8: nothing of value for referrals
- Payment must match services actually rendered
- AfBA: disclose, keep choice free, ownership returns only
ECOA and credit fairness
The Equal Credit Opportunity Act bars credit discrimination on race, color, religion, national origin, sex, marital status, age, public-assistance income, or exercising consumer-credit rights. Lenders must notify applicants of action within 30 days and give specific reasons for denial. For agents, ECOA pairs with fair-housing duties: never steer buyers toward or away from financing on a protected basis, and refer credit questions to lenders rather than screening buyers yourself.
Worked example
An agent's Facebook ad: 'Move in for just $5,000 down and $1,850/month!' Her favorite lender responds by offering $100 per buyer referred plus co-paid ads. A buyer couple then asks her whether the wife's part-time income 'will count.' Sort all three moments.
The ad: '$5,000 down' and '$1,850/month' are both trigger terms — Reg Z now owes the reader the full disclosure set: terms of repayment and the APR labeled as such; the fix is either add the disclosures or retreat to non-numeric puffery. The $100-per-referral: a RESPA Section 8 kickback, cash for steering settlement business — illegal for lender and agent alike; genuinely shared advertising priced at fair value for each party's promotion is the narrow lawful cousin, but per-buyer payments are not that. The income question: ECOA bars discounting part-time income categorically — the agent's correct move is referring the couple to the lender rather than handicapping their credit herself. Three touches, three statutes, all before underwriting begins.
Common exam pitfalls
Thinking dollar-free ads are automatically safe.
They usually are — triggers are specific numbers (down payment, payment, term, finance charge). Add a number, owe the APR.
Accepting 'marketing agreements' priced per referral.
Section 8 looks through labels: compensation tracking referral volume for token services is a kickback.
Granting rescission rights to homebuyers.
Purchase-money loans carry no rescission — the 3-day right belongs to refinances on the borrower's principal dwelling.
Numbers trigger TILA, referrals trigger RESPA, screening triggers ECOA — advertise clean, refer free, and let lenders judge credit.
Recap
- TILA/Reg Z: finance charge + APR; trigger terms demand full ad disclosure
- Rescission: 3 business days, principal-dwelling refis only
- TRID: LE within 3 days of application; CD 3 days before closing
- RESPA §8: no kickbacks or unearned fees; AfBAs need disclosure + choice
- ECOA: protected classes, 30-day notices, specific denial reasons
- Agents: clean ads, free referrals, credit questions to lenders
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