TILA is the consumer credit disclosure law. For mortgage, TILA’s key contributions are standardized APR disclosures (so borrowers can compare loan offers), the right of rescission for refinances, and the LO Compensation Rule restricting how loan officers can be paid.
TRID — TILA-RESPA Integrated Disclosures
The 2015 TRID rule consolidated TILA and RESPA disclosures into two documents: the Loan Estimate (replacing the old GFE and TILA disclosures) and the Closing Disclosure (replacing the HUD-1 and final TILA). Both are now governed jointly under TRID with specific timing requirements.
LO Compensation Rule
Reg Z’s Section 226.36 restricts how mortgage loan officers can be compensated. LO comp cannot vary based on terms of the loan (rate, term, points). Most mortgage operations now pay LOs as basis points of loan amount. Compensation arrangements with both the borrower and the creditor are restricted.
Right of rescission
Borrowers refinancing their primary residence have a 3-business-day right to cancel the transaction without penalty. The rescission period begins after the latest of: signing the loan, receiving the Truth in Lending disclosure, or receiving the notice of right to rescind. Cash-out refis and HELOCs are subject to rescission; purchase loans are not.
