The federal government, through various agencies and a host of Congressional acts, regulates mortgage lenders. The Federal Truth in Lending Act, its most well-known part being Regulation Z, and the Real Estate Settlement Procedures Act (RESPA) dictate most of the regulations mortgage lenders must follow. In light of the 2008 financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act has piled on additional mortgage industry regulations to protect consumers.
Mortgage Regulation Basics
Regulation Z of the Federal Truth in Lending Act provides the backbone of mortgage industry regulations, covering topics such as mortgage disclosures, servicing and appraisal requirements. RESPA regulates the relationships among mortgage lenders and other real estate professionals, principally real estate agents, to ensure no parties receive kickbacks for encouraging consumers to use certain mortgage services. The Dodd-Frank Act imposes tough regulations regarding predatory lending and mortgage qualifying standards.
In the wake of the 2008 crisis, the Consumer Financial Protection Bureau (CFPB), an independent government agency, has the greatest latitude when it comes to creating and enforcing mortgage industry regulations. The Federal Reserve’s power to regulate the banking industry also extends to the mortgage lending industry. The U.S. Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA), regulates FHA lending practices. The Federal Housing Finance Agency regulates the activities of mortgage market liquidity providers Fannie Mae and Freddie Mac.
Filing a Complaint
Consumers with complaints about mortgage lenders should first reach out to CFPB via the agency’s website. It provides consumers with numerous tools to address lending complaints. The Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) also invite consumers to contact them about mortgage lender complaints.