Learning Objectives

• Explain the purpose and core coverage of TILA, RESPA, ECOA, HMDA, FCRA, FACTA, and federal fair-housing lending protections.
• Distinguish APR from the note rate and a Loan Estimate from a Closing Disclosure.
• Recognize prohibited referral-fee, steering, discrimination, and credit-report practices.
• Apply consumer-protection rules to realistic brokerage and settlement scenarios.
• Identify current thresholds, forms, timing rules, and Indiana overlays requiring authoritative verification.

Key Vocabulary

Term	Definition
Truth in Lending Act (TILA)	Federal law requiring standardized disclosure of consumer-credit cost and terms.
Annual Percentage Rate (APR)	Standardized measure reflecting interest and specified finance charges as a yearly credit cost.
RESPA	Federal law addressing settlement disclosures, servicing, escrow, and prohibited referral arrangements for covered transactions.
Loan Estimate	Early standardized disclosure of estimated loan terms and closing costs for covered mortgage applications.
Closing Disclosure	Standardized final disclosure of loan and closing terms for covered transactions.
ECOA	Federal law prohibiting discrimination in any aspect of a credit transaction on protected bases.
Adverse Action	Creditor decision requiring notice under applicable credit law when defined conditions are met.
HMDA	Federal reporting law supporting public analysis of mortgage-lending patterns.
FCRA	Federal law governing consumer-report accuracy, access, permissible purposes, and notices.
Kickback	Thing of value given for referral of covered settlement-service business in violation of RESPA.
Trigger Term	Credit-advertising term that can require additional disclosures.

Core Lesson

Consumer Protection Works in Layers

No single federal statute governs the entire mortgage transaction. TILA focuses on the cost and terms of consumer credit. RESPA focuses on settlement practices and disclosures. ECOA governs equal access to credit. The Fair Housing Act reaches discriminatory residential real-estate-related transactions. FCRA controls consumer-report use. HMDA provides data for monitoring lending patterns. A transaction may be subject to several laws at once.

TILA: Making Credit Cost Comparable

TILA and Regulation Z require covered creditors to disclose credit terms in a standardized way. The note rate is the contractual interest rate applied to principal. The APR incorporates interest and specified finance charges into a standardized annual measure. Therefore APR can exceed the note rate. APR is useful for comparison but is not simply the payment rate and does not include every dollar paid in every transaction.

Credit advertising must not spotlight an attractive trigger term while hiding required companion terms. Exact trigger terms, tolerances, exemptions, rescission coverage, and timing rules change or depend on transaction type; they belong in legal compliance materials, not a broker’s guess.

Integrated Mortgage Disclosures

For many covered closed-end consumer mortgage transactions, the Loan Estimate is supplied early after a qualifying application, and the Closing Disclosure is supplied before consummation under current timing rules. The Loan Estimate is not approval and the Closing Disclosure is not a title policy. Students must distinguish disclosure of estimated/final costs from underwriting, contract acceptance, and title evidence.

RESPA: Settlement Integrity

RESPA and Regulation X address settlement disclosures, mortgage servicing, escrow administration, and abusive referral arrangements in covered federally related mortgage transactions. Section 8 generally prohibits giving or accepting a thing of value under an agreement or understanding that settlement-service business will be referred. Payment for actual, necessary, and distinct goods or services may be lawful when reasonably related to value; disguising referral compensation as marketing does not make it lawful.

RESPA does not require a consumer to use a broker’s preferred title company merely because it is convenient. Affiliated business arrangements require careful disclosures and conditions under current law.

ECOA and Fair Lending

ECOA and Regulation B prohibit discrimination in any aspect of a credit transaction on specified bases, including race, color, religion, national origin, sex, marital status, age where the applicant can contract, receipt of public-assistance income, and good-faith exercise of rights under consumer-credit law. The Fair Housing Act separately prohibits discrimination in residential real-estate-related transactions on its protected bases. Different statutes have overlapping but not identical protected classes and scopes.

Discouraging an applicant, applying different assistance standards, steering toward inferior products, or making assumptions about pregnancy, disability, age, surname, neighborhood, or income source can create fair-lending risk. Consistent qualification questions and documented objective standards are essential.

FCRA and Consumer Reports

A credit report may be obtained only for a permissible purpose. If consumer-report information contributes to adverse action, required notices identify rights and the reporting source; the reporting agency did not itself make the creditor’s decision. Consumers have rights to dispute inaccurate information. Brokers should never obtain or circulate a report casually or promise to “erase” accurate negative history.

HMDA and Pattern Detection

HMDA requires covered institutions to collect, report, and disclose specified mortgage data. The data helps regulators and communities evaluate whether institutions serve housing needs and identify patterns that may warrant investigation. A statistical disparity can prompt review but does not by itself decide every individual discrimination claim.

Brokerage Compliance Map

Situation	Main law	Safe brokerage response
Advertised payment/down payment	TILA/Reg Z	Use compliance-approved current advertising
Title/lender referral payment	RESPA/Reg X	Reject payment for referrals; review bona fide services
Different applicant treatment	ECOA/FHA	Use consistent objective service
Access to credit report	FCRA	Require permissible purpose and secure handling
Lending-pattern data	HMDA	Understand reporting purpose; avoid unsupported conclusions

Fraud Prevention and Documentation

Wire instructions, identity documents, income records, and closing disclosures are high-value fraud targets. Brokers should follow approved secure procedures, independently verify changed wire instructions using trusted contact information, minimize sensitive-data collection, and report suspected compromise promptly. Consumer protection is operational, not merely a memorized list of acronyms.

Indiana Law Spotlight

Partially verified against current authority. Indiana DFI's Consumer Credit Division regulates mortgage lenders and individual mortgage loan originators and oversees covered consumer-credit activity, including entities that advertise or solicit Indiana consumers. The Indiana Attorney General's Consumer Protection Division investigates deceptive and predatory business practices and accepts mortgage- and professional-licensing-related complaints. Federal Regulation Z, Regulation X, Regulation B, Regulation C, and Regulation V supply the current national frameworks summarized in this chapter.

Practical brokerage application: Use compliance-approved current loan advertising, reject compensation for settlement-service referrals, document bona fide services and affiliated relationships, apply objective service standards, collect only necessary sensitive information, secure it, and refer lending determinations to authorized professionals.

Still open for current-authority verification: Exact Indiana regulator jurisdiction, definitions, exemptions, borrower notices, advertising and solicitation duties, referral and affiliated-business treatment, fees, records, supervision, privacy, breach response, complaints, discipline and remedies; plus every federal coverage test, trigger term, threshold, tolerance, timing rule, form version, rescission rule, adverse-action rule, consumer-report requirement and exemption. Regulation B and other federal authorities changed in 2026, so older summaries must not be treated as current law.

Official sources: Indiana DFI Consumer Credit Division · Indiana Attorney General Consumer Protection · CFPB Regulation Z · CFPB Regulation X · CFPB Regulation B

National Exam Alert

TILA = credit cost; RESPA = settlement; ECOA = equal credit; FCRA = consumer reports; HMDA = lending data. APR is broader than the note rate. A referral payment is not made lawful merely by calling it marketing.

Common Exam Trap

Do not confuse the Loan Estimate with approval, the Closing Disclosure with title evidence, ECOA with only housing credit, or RESPA with every cash transaction. Coverage depends on the law and transaction.

PASS FIRST Memory Trick

T-R-E-F-H: TILA tells cost; RESPA regulates settlement; ECOA equalizes credit; FCRA fences reports; HMDA highlights data.

Broker Insight

Use approved scripts and advertisements, never improvise a disclosure threshold, document objective service, and treat every referral payment or data request as a compliance event.

Chapter Summary

• TILA standardizes disclosure of consumer-credit cost and terms.
• RESPA regulates covered settlement practices and prohibits referral kickbacks.
• ECOA and the Fair Housing Act address discriminatory conduct in overlapping contexts, subject to the current statutes, regulations, and controlling authority.
• FCRA controls permissible access and accuracy rights for consumer reports.
• HMDA supplies mortgage-market data for public and regulatory analysis.
• The Indiana regulatory framework is partially verified; federal and Indiana coverage, timing, form, threshold, advertising, privacy, remedy, and exemption details remain queued for current-version review.

Practice Questions

1. Which law primarily standardizes consumer-credit cost disclosures?
   1. RESPA
   2. TILA
   3. HMDA
   4. FCRA
2. Which measure includes interest and specified finance charges in a standardized annual credit cost?
   1. Note balance
   2. Equity
   3. LTV
   4. APR
3. Which law primarily addresses prohibited settlement-service referral fees?
   1. RESPA
   2. HMDA
   3. FCRA
   4. ADA
4. A title company pays for referrals disguised as rent. The key issue is whether the payment is:
   1. Recorded
   2. Tax deductible
   3. A thing of value for referrals rather than bona fide market-value services
   4. Paid monthly
5. The Loan Estimate is best described as:
   1. Final title evidence
   2. An early standardized estimate for a covered mortgage
   3. Unconditional approval
   4. A deed
6. The Closing Disclosure primarily summarizes:
   1. Inspection defects
   2. Survey bearings
   3. Broker education
   4. Final loan and closing figures for a covered transaction
7. Which law prohibits discrimination in any aspect of a credit transaction on specified bases?
   1. ECOA
   2. RESPA
   3. HMDA
   4. Recording act
8. A lender applies more demanding documentation rules based on an applicant’s national origin. This raises:
   1. Appraisal only
   2. Survey law
   3. Fair-lending concerns
   4. Deed-delivery law
9. Which law governs permissible purposes for consumer reports?
   1. RESPA
   2. FCRA
   3. HMDA
   4. Zoning law
10. HMDA data primarily helps analyze:
    1. Building code compliance
    2. Title defects
    3. Commission rates
    4. Mortgage-lending patterns
11. Which statement is correct?
    1. APR may exceed the note rate because it includes specified finance charges
    2. APR is always the note rate
    3. APR is property value
    4. APR is the appraisal fee only
12. A broker receives $100 for every buyer sent to a settlement provider without services. This is most likely:
    1. Allowed rent
    2. A commission split
    3. A prohibited referral arrangement in a covered transaction
    4. Title insurance
13. An adverse-action notice based on a credit report generally helps the consumer identify:
    1. The property boundary
    2. Rights and the report source
    3. The broker’s split
    4. The seller’s mortgage
14. Which statement about ECOA is correct?
    1. It applies only after closing
    2. It protects only cash buyers
    3. It replaces every state law
    4. It reaches any aspect of a covered credit transaction
15. A lender advertisement uses a trigger term. The safest response is to:
    1. Include all current required companion disclosures after compliance review
    2. Hide the APR
    3. Use obsolete figures
    4. Call it an estimate and ignore Regulation Z
16. Which is safest when wire instructions change by email?
    1. Send immediately
    2. Reply to the same email only
    3. Independently verify through trusted contact information
    4. Post the instructions publicly
17. A statistical HMDA disparity:
    1. Automatically proves every claim
    2. Can prompt investigation but requires further analysis
    3. Has no regulatory use
    4. Sets property value
18. Which payment is most defensible under RESPA analysis?
    1. $500 for each referral
    2. Free vacations for referrals
    3. Unearned marketing fee
    4. Reasonable payment for actual, necessary, distinct services after compliance review
19. A broker obtains a client’s credit report out of curiosity. The primary issue is lack of:
    1. Permissible purpose
    2. Legal description
    3. Survey monument
    4. Loan-to-value
20. Indiana overlays on federal lending law should be:
    1. Guessed from national rules
    2. Ignored
    3. Verified against current state statutes, rules, and regulator guidance
    4. Set by the MLS

Detailed Answer Explanations

1. B. TILA and Regulation Z standardize disclosure of consumer-credit terms and costs.
2. D. APR incorporates the interest rate and specified finance charges into a comparison measure.
3. A. RESPA and Regulation X govern covered settlement practices, including referral kickbacks.
4. C. Substance controls: sham rent can be a disguised thing of value for referrals.
5. B. The Loan Estimate provides early estimated terms and costs; it is not approval or title evidence.
6. D. The Closing Disclosure presents final loan and closing figures under applicable rules.
7. A. ECOA governs discrimination throughout covered credit transactions.
8. C. Different standards based on national origin present direct fair-lending risk.
9. B. FCRA controls access, accuracy, permissible purpose, and consumer-report notices.
10. D. HMDA data is used to examine mortgage-lending activity and patterns.
11. A. Specified finance charges can make APR higher than the contractual note rate.
12. C. Payment tied to referrals without actual compensable services is the classic RESPA concern.
13. B. The notice identifies consumer rights and the reporting source; the bureau did not make the creditor’s decision.
14. D. ECOA reaches application, evaluation, terms, servicing, and other aspects of covered credit.
15. A. Trigger terms require current compliance review and applicable companion disclosures.
16. C. Independent verification helps defeat business-email-compromise fraud.
17. B. Data can reveal patterns requiring investigation but is not alone a final liability decision.
18. D. Bona fide compensation must reflect actual, necessary, distinct services and still receive compliance review.
19. A. Curiosity is not a permissible purpose for obtaining a protected consumer report.
20. C. State laws may add duties or remedies and must be reviewed independently.

Mastery Checklist

• I can match TILA, RESPA, ECOA, FCRA, HMDA, and fair housing to their core purposes.
• I can distinguish APR from note rate.
• I can distinguish Loan Estimate, Closing Disclosure, approval, and title evidence.
• I can identify disguised referral compensation.
• I can recognize discriminatory lending and inconsistent-service scenarios.
• I can explain permissible purpose and adverse-action notice concepts.
• I can apply secure wire and data-handling practices.
• I can identify federal details and Indiana overlays requiring current verification.
• I can score at least 80% and explain every answer.