What's the difference between Truth In Lending/RESPA/Reg-Z?

Question

Hey Folks,

I'm taking my national and state salesperson exam early tomorrow morning. One thing I can't seem to remember and consistently get wrong on practice tests is the difference between Truth In Lending, RESPA, and Regulation-Z and what they each require. The only reason I remember the Equal Credit Opportunity Act is because it stands alone as credit. I was wondering what the key differences are between the main three mentioned, as far as what will be required of me as an agent and on the test. Thanks in advance!

-Best

Jason E.

Dillon Loomis · Answer

@Jason Eyerly Hey! I'm only a year late but if anyone else stumbles across this thread prior to their RE exam this should help!

~ Reg Z requires full disclosure for "trigger terms" in advertising

~ TILA (Truth In Lending Act) has a right called "right of rescission" that allows the buyer to cancel their transaction with the lender within three days of closing. Also referred to as a buyer's remorse clause.

~ RESPA requires lenders to provide loan applicants a statement of a good faith estimate of closing costs within three days of filling out a loan application. The standard form used is known as a loan estimate.

Matt Mulvihill · Answer

That's very helpful, thank you! I have the NC exam this Friday and am trying to get all those little things down.

Robert Adams · Answer

Don't worry about it too much as a lot is changing on Oct 3rd, 2015 when the CFPB implements TRID. Should be interesting to see how it all works out since there will be so many new changes affecting so many aspects of the deals.

Good faith estimates will be gone

HUD1's will be gone

Redisclosure time periods should be interesting for agents in the field when having to deal with title companies and lenders that are not prepared for the changes.

Over all I think it is a better system for the consumer which is most important but many will not be prepared for the changes and it will still affect deals of the experienced agents due to the other side of the deal not being up to speed.

In real estate you have to roll with the changes and adapt. This is just another example of that.

Jason Eyerly · Answer

Easy enough! Thanks! Which covers the "trigger items" in ads that require full disclosure? Which allows the buyer 3 days to cancel the financing?

Fred Heller · Answer

Here's the Cliffnotes version:

The Truth in Lending Act and Regulation Z are almost identical. TILA is a law, while Regulation Z is a Federal Reserve regulation. They both require full disclosure of the costs and terms associated with credit financing.

RESPA is a law which requires full disclosure of settlement costs.

Hope that helps.

Good luck!

What's the difference between Truth In Lending/RESPA/Reg-Z?

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