California Real Estate Broker ExaminationFinancingMedium
A homeowner is selling their property and wants to ensure transparency regarding all closing costs and loan terms for the buyer. Which federal act requires lenders to provide a Loan Estimate and a Closing Disclosure to consumers?
- ATruth in Lending Act (TILA)
- BBoth B and C
- CEqual Credit Opportunity Act (ECOA)
- DReal Estate Settlement Procedures Act (RESPA)
Show answer & explanationAnswer & explanation
Correct answer: B. Both B and C
The TILA-RESPA Integrated Disclosure (TRID) Rule, often referred to as 'Know Before You Owe,' integrated the disclosures required by both the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). This rule mandates the provision of the Loan Estimate and Closing Disclosure to consumers.
Why the other options are wrong
- A. TILA, specifically through the TRID rule, is a component of the requirement for these disclosures, but it's part of a joint effort with RESPA.
- C. ECOA prohibits discrimination in credit, but does not mandate specific disclosure forms like the Loan Estimate or Closing Disclosure.
- D. RESPA, specifically through the TRID rule, is a component of the requirement for these disclosures, but it's part of a joint effort with TILA.
TILA-RESPA Integrated Disclosure (TRID)
A rule that integrated the disclosure requirements of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). It mandates the use of the Loan Estimate and Closing Disclosure forms to provide consumers with clear information about mortgage loan costs.
- Combines TILA and RESPA disclosure requirements
- Requires Loan Estimate and Closing Disclosure forms
- Aims for greater transparency in mortgage lending
Memory trick: TRID = TILA + RESPA Integrated Disclosures.