Which federal law requires a mortgage servicer to deliver an accurate payoff statement within a set number of business days after a borrower's written request?
Correct Answer
B) The Truth in Lending Act, implemented through Regulation Z
The payoff statement duty comes from the Truth in Lending Act as amended by the Dodd-Frank Act and appears in Regulation Z at 12 CFR 1026.36(c)(3): the servicer must provide an accurate statement of the total amount required to pay the loan in full within a reasonable time, and in no event more than seven business days after receiving a written request. RESPA and its Regulation X govern other servicing correspondence, including requests for information and notices of error, and Regulation X expressly does not treat a request for a payoff balance as a request for information. Borrowers need that statement to close a refinance or a sale, which is why the deadline is short and specific.
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Related Topics & Key Terms
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Related Concepts
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
More Financing Questions
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