Plain-English overview of RESPA (Reg X) and TILA (Reg Z) for new mortgage loan originators, including how TRID combined disclosures and the 3/7/3 timing rules.
Every new LO needs a working mental model of RESPA and TILA before day one. TRID unified the two disclosure regimes into the Loan Estimate and Closing Disclosure most originators know.
RESPA (Regulation X) and TILA (Regulation Z) are the two federal statutes that shape almost everything a loan originator does. RESPA governs settlement services, kickbacks, and servicing. TILA governs cost-of-credit disclosures, APR calculation, and consumer's right to cancel refinances. In 2015 the CFPB combined the RESPA GFE + TILA Early Disclosure into the Loan Estimate and combined the RESPA HUD-1 + TILA Final Disclosure into the Closing Disclosure — the rule known as TRID.
RESPA covers most federally-related mortgage loans. Core prohibitions: no kickbacks or unearned fees for referrals of settlement services (Section 8), no required use of an affiliated service provider (Section 9), and specific servicing rules including escrow accounting and error resolution (Section 6).
Marketing service agreements, co-marketing with real estate agents, and lender-paid title fees are the highest-risk RESPA areas for originators. If you cannot draw a straight line from a payment to a bona fide service actually performed at fair market value, do not do it.
TILA is a cost-of-credit disclosure statute. It requires disclosure of the Annual Percentage Rate (APR), finance charge, amount financed, and total of payments, along with rules on advertising, ability-to-repay, and the consumer's three-day right of rescission on most refinances.
TILA requires creditors to make a reasonable, good-faith determination that the consumer can repay. Loans meeting the Qualified Mortgage (QM) definition receive a legal presumption of compliance — which is why QM structure drives so much lending strategy.
Loan Estimate (LE): given to the consumer within 3 business days of receiving a complete application (name, income, SSN, property address, estimated value, loan amount). Closing Disclosure (CD): given to the consumer at least 3 business days before consummation.
The consumer must receive the LE before paying any fee other than a reasonable credit-report fee. At least 7 business days must pass between LE delivery and consummation. Certain changes to the CD (APR increase > 1/8%, loan product change, prepayment penalty added) restart the 3-business-day CD wait.
Business days matter: TRID uses 'general' business days for the LE (all calendar days except Sundays and federal holidays) and 'specific' business days for the LE-to-consummation 7-day rule. Get the definition wrong and you will re-issue documents.
Generally no — they apply to consumer credit secured by a dwelling. Verify per loan program.
The CFPB is the primary federal enforcer; state regulators and the DOJ can also act.
The consumer has a three-business-day right to rescind most refinances of a principal residence. Waiver is only allowed in narrowly-defined bona-fide personal financial emergencies.