Have you ever wondered who regulates mortgage companies? Does anyone make sure they are following all the rules and treating customers fairly?
The answer is yes. The federal government supervises mortgage companies through a host of different agencies, as well as acts enacted by Congress. Here’s an overview of how the mortgage lending industry and companies like Mr. Cooper rely on regulators to ensure our customers get fair and square service.
How has Congress regulated the mortgage lending industry?
Congress has taken many actions related to mortgage lending intended to protect consumers — and mortgage lenders are held accountable by law to follow these requirements. Some are anti-discrimination laws, like the Equal Credit Opportunity Act (ECOA), that help ensure everyone has a fair shot at their dream home. Many are related to the disclosure of information that helps borrowers make educated decisions. The Truth in Lending Act (TILA) “requires lenders to provide you with loan cost information so that you can comparison shop for certain types of loans,” according to the Office of the Comptroller of the Currency, a division of the U.S. Department of Treasury.
The Real Estate Settlement Procedures Act (RESPA) “requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process. The act also prohibits specific practices, such as kickbacks, and places limitations upon the use of escrow accounts,” according to the Federal Deposit Insurance Corporation (FDIC) — itself an independent agency created by Congress to supervise banking and financial institutions.
What are the federal regulatory agencies, and what do they do?
So who makes sure companies are compliant with acts like TILA and RESPA? The answer is a combination of a government agencies that have the authority to create and enforce regulations on mortgage lenders.
- The Consumer Financial Protection Bureau (CFPB) was created in the wake of the 2008 financial crisis and is the main enforcer of the aforementioned ECOA, which “makes it illegal for a creditor to discriminate in any aspect of credit transaction based on certain characteristics,” such as age or race or gender. In addition, the CFPB enforces TILA and RESPA — which both require lenders to disclose information to homebuyers before buying and over the life of a mortgage — as well as HMDA, UDAAP, Fair Lending, HOPA, and the SAFE Act.
- The Department of Housing and Urban Development (HUD) enforces the Fair Housing Act, which “prohibits discrimination in renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities.”
- The Federal Trade Commission (FTC) regulates unfair and deceptive practices affecting consumers. Mortgage companies that make deceptive statements, omit important facts, or take misleading actions — such as charging fees for services that are not provided — would fall under the FTC’s oversight authority.