Federal Lending Laws for the Texas Exam: RESPA, TILA, ECOA

Federal lending questions combine recall with short fact patterns. The trick is not confusing the rules. Each one does a different job: RESPA addresses settlement practices, TILA addresses consumer-credit disclosure, and ECOA addresses fair access to credit. This spoke sits under the Financing and Settlement guide.

Start with the three laws, then add the official mortgage-fraud and predatory-lending row.

What are the three main federal lending laws?

Three federal laws dominate mortgage-lending questions. RESPA, the Real Estate Settlement Procedures Act, is implemented by Regulation X. TILA, the Truth in Lending Act, is implemented by Regulation Z. ECOA, the Equal Credit Opportunity Act, is implemented by Regulation B. The CFPB maintains the current regulations and has supervisory and enforcement authority for covered entities, but enforcement responsibility can vary by institution and statute.

Start with a map of the three, because half the exam questions just ask which law does what.

Pair the names and letters: RESPA with X, TILA with Z, and ECOA with B.

RESPA: settlement costs and no kickbacks

RESPA, the Real Estate Settlement Procedures Act, applies to federally related mortgage loans and governs specified settlement and servicing practices. Its most tested rule is Section 8, which bans kickbacks, referral fees, and unearned fee splits involving settlement-service business. RESPA also bars a seller from requiring the buyer to use a particular title insurance company. The modern Loan Estimate and Closing Disclosure are TILA-RESPA integrated disclosures implemented in Regulation Z, so do not attribute both forms solely to Regulation X.

RESPA is about the closing table. It applies to federally related mortgage loans, which covers most residential mortgages, and its goal is to keep settlement costs honest and transparent.

The rule the exam cares about most is Section 8. Regulation X prohibits giving or accepting a fee, kickback, or thing of value under an agreement that settlement-service business will be referred. It also prohibits splitting a charge when no services are actually performed. A title company cannot pay a broker simply for sending buyers to it. Disclosure does not cure the payment.

Do not turn that rule into an absolute ban on every payment. Regulation X recognizes bona fide compensation for actual goods, facilities, or services, as well as certain cooperative brokerage arrangements between real estate agents and brokers acting in a brokerage capacity. The facts must show what was paid for.

TILA and Regulation Z: the cost of credit

TILA, the Truth in Lending Act, is carried out by Regulation Z. It requires covered creditors to disclose credit costs so consumers can compare transactions. The finance charge is the cost of consumer credit stated as a dollar amount and includes charges imposed directly or indirectly as an incident to or condition of the extension of credit, subject to regulatory inclusions and exclusions. The annual percentage rate, or APR, expresses the regulated credit cost as a yearly rate. TILA generally does not set the note rate; it regulates disclosures and other credit practices.

TILA is about disclosure, not price control. It does not tell a lender what to charge. It forces the lender to reveal the cost clearly, so a borrower can shop and compare on equal footing. Regulation Z is the rule that implements it.

The two disclosures to remember are the finance charge and APR. The finance charge is a regulated dollar measure, not simply every dollar the consumer will ever spend. APR converts the regulated cost into an annual rate and can include finance charges beyond note interest. It therefore may differ from the note rate and is often higher, but “APR is always higher” is not a safe absolute.

The TILA right of rescission

TILA gives a borrower a three-business-day right of rescission on certain non-purchase consumer-credit transactions secured by the borrower's principal dwelling. A residential mortgage transaction used to acquire or construct the principal dwelling is exempt. Certain same-creditor refinancings with no new advance are also exempt apart from qualifying new money.

The right of rescission is often overstated. A covered home-equity loan or qualifying refinance can carry the right, but the word refinance alone does not settle the question. Identify the dwelling, transaction purpose, creditor, and whether new credit is advanced. For this rescission rule, “business day” means every calendar day except Sundays and the federal legal holidays listed in 5 U.S.C. Section 6103(a), and the period runs from the latest of consummation, delivery of the rescission notice, or delivery of all material disclosures.

The clean exam anchor is that a purchase-money residential mortgage transaction does not carry this TILA rescission right. For a refinance, apply the covered-transaction rule instead of memorizing "refinance yes."

Regulation Z advertising and trigger terms

Regulation Z also controls how credit is advertised. If an ad states a trigger term, like a specific down payment, a monthly payment amount, the number of payments, or the finance charge, it must then disclose the full terms, including the down payment, the repayment terms, and the APR. Stating only the APR is allowed on its own. The rule stops ads from teasing one attractive number while hiding the real cost.

Advertising rules are a smaller but tested corner of Regulation Z. The idea is that a lender cannot advertise one appealing detail while hiding the rest. Certain specifics, called trigger terms, set off a duty to disclose the full picture.

The trigger terms are a specific down payment amount, a specific monthly payment, the number of payments or the loan term, and the finance charge. Mention any of those in an ad, and the ad must also state the down payment, the repayment terms, and the APR. There is one friendly exception: an advertiser may state the APR by itself without triggering the full disclosure, because the APR is the honest comparison number the law wants front and center.

ECOA and Regulation B: fair access to credit

ECOA, the Equal Credit Opportunity Act, implemented by Regulation B, bans discrimination in any credit transaction. A creditor may not discriminate based on race, color, religion, national origin, sex, marital status, or age, or because an applicant receives public-assistance income or has exercised a consumer-credit right in good faith. ECOA covers all credit, not just housing, which makes it broader than the Fair Housing Act.

ECOA guarantees fair access to credit. Regulation B carries it out, and it prohibits discrimination in any part of a credit transaction, from the application to the terms offered.

Memorize the protected bases, because the exam lists them. A creditor may not discriminate on the basis of race, color, religion, national origin, sex, marital status, or age, provided the applicant has the capacity to contract. It also may not discriminate because an applicant receives income from a public-assistance program, or because the applicant exercised a right under the federal consumer-credit laws in good faith. The inclusion of marital status, age, and public-assistance income is what distinguishes the ECOA list from other fair-housing lists.

ECOA adverse-action timing

For a completed application, Regulation B generally requires the creditor to notify the applicant of action taken within 30 days. If the creditor takes adverse action, the written notice must state the specific reasons or tell the applicant how to request them. A generic statement that the applicant failed internal standards is not a substitute for the rule's required reasons.

A creditor may still evaluate legitimate underwriting facts such as verified income, debt, credit history, repayment ability, and collateral. ECOA prohibits decisions based on protected characteristics. It does not require approval when legitimate credit standards are not met.

ECOA versus the Fair Housing Act

ECOA and the Fair Housing Act both ban discrimination, but they cover different ground. The Fair Housing Act covers housing, including the sale and rental of homes, and its classes include familial status and disability. ECOA covers credit of all kinds and adds marital status, age, and public-assistance income. A lending discrimination question can implicate both laws, so watch which one the facts point to.

This contrast is a favorite trap, so hold the two lists side by side. Both laws fight discrimination, but the Fair Housing Act is about housing, while ECOA is about credit.

Because a mortgage is both a housing transaction and a credit transaction, both laws can apply at once. If a question is about being denied a loan because of marital status or age, that points to ECOA. If it is about familial status or disability in housing, that points to the Fair Housing Act. Reading which fact the question emphasizes is how you pick.

Mortgage fraud and predatory lending

Mortgage fraud is a material misstatement, misrepresentation, or omission intended to influence a lender or the mortgage process. Common exam facts include false income, employment, assets, debt, identity, occupancy, appraisal information, or undisclosed agreements. A straw buyer or a false claim that an investment property will be owner occupied should send you to fraud.

Predatory lending involves abusive or deceptive conduct, not merely a loan with a high lawful cost. Watch for falsified terms, fee packing, equity stripping, steering a borrower into an unaffordable product, or repeated refinancing that provides no meaningful borrower benefit. A lawful purchase and resale at a profit is not automatically illegal flipping. The deception or material false statement is what changes the answer.

How to study federal lending laws

Study the three laws by their jobs: RESPA is settlement practices, TILA is credit disclosure, and ECOA is fair access. Pair each with X, Z, and B. Then add four distinctions: actual service versus paid referral, covered rescission versus purchase-money exemption, protected basis versus legitimate underwriting, and honest application versus material misrepresentation.

Do not blur the three together. RESPA points to settlement-service referrals, TILA to APR and other credit disclosures, and ECOA to protected bases in a credit decision.

Keep this spoke tied to its neighbors. The Closing Disclosure and TRID spoke shows how RESPA and TILA disclosures merged, and the types of mortgages and loans pillar frames the loans these laws regulate.

Frequently asked questions

What is the main purpose of RESPA? RESPA governs specified settlement and servicing practices for federally related mortgage loans. Its most tested provision is Section 8, which bans kickbacks, referral fees, and unearned fee splits involving settlement-service business; Section 9 bars a seller from requiring the buyer to use a particular title insurer. The Loan Estimate and Closing Disclosure are integrated TILA-RESPA forms whose current delivery rules sit in Regulation Z.

Who gets the three-day right of rescission under TILA? A borrower in certain non-purchase consumer-credit transactions secured by the borrower's principal dwelling. A purchase-money residential mortgage transaction is exempt, and certain same-creditor refinancings with no new advance are also exempt apart from qualifying new money.

What is the difference between the interest rate and the APR? The note rate is the contractual interest rate. APR is Regulation Z's annual measure of the cost of credit and incorporates covered finance charges beyond note interest. APR may differ from, and is often higher than, the note rate, but it is not accurate to say it must always be higher.

How is ECOA different from the Fair Housing Act? ECOA bans discrimination in credit of all kinds and includes marital status, age, and public-assistance income among its protected bases. The Fair Housing Act bans discrimination in housing and includes familial status and disability. A mortgage is both a credit and a housing transaction, so both laws can apply, and the facts of a question tell you which one is in play.

Practice questions

1. A real estate agent accepts a monthly payment from a title company in exchange for steering closings to that company. Which law does this most directly violate? A. TILA B. RESPA Section 8 C. ECOA D. Regulation Z

Answer: B. RESPA Section 8 bans kickbacks and referral fees for settlement-service business, which is exactly what this payment is. TILA and Regulation Z address credit-cost disclosure (A and D), and ECOA addresses discrimination in credit (C).

2. A homeowner obtains a covered home-equity loan secured by their principal dwelling. Under TILA, they generally have: A. No right to cancel once signed B. A three-business-day right of rescission C. A 30-day right to cancel D. A right to cancel only if the lender agrees

Answer: B. A covered non-purchase credit transaction secured by the principal dwelling generally carries a three-business-day right of rescission. A purchase-money residential mortgage transaction is exempt.

3. Which basis for denying a loan is protected specifically under ECOA? A. The applicant's credit score B. The applicant's debt-to-income ratio C. The applicant's marital status D. The value of the collateral

Answer: C. ECOA prohibits credit discrimination based on marital status, along with race, color, religion, national origin, sex, age, and receipt of public assistance. Credit score, debt-to-income ratio, and collateral value are legitimate underwriting factors, not protected bases.

4. An ad states, "Only $2,000 down and $1,200 a month." Under Regulation Z, the ad must now also disclose: A. Nothing further, because the numbers are accurate B. The full terms, including the repayment terms and the APR C. Only the lender's name D. Only the property address

Answer: B. Stating a specific down payment and monthly payment are trigger terms under Regulation Z, so the ad must disclose the full terms, including the down payment, repayment terms, and APR. Accurate numbers alone do not satisfy the rule (A).

Sources and methodology

This guide was written from primary federal sources and reverified on August 12, 2026. CFPB's electronic Regulation Z reflects amendments through April 8, 2026. These laws and implementing rules are periodically amended, so confirm the current rule text before relying on a technical detail.

• The RESPA scope, Section 8 kickback and fee-split prohibitions, and seller-required title-insurer prohibition come from the statute and Regulation X. The Loan Estimate and Closing Disclosure are accurately identified as integrated TILA-RESPA forms delivered under Regulation Z rather than as purely Regulation X forms.
• The TILA disclosures, regulatory finance-charge definition, APR, three-business-day rescission rule and clock, and advertising trigger terms come from Regulation Z.
• The ECOA prohibited bases of discrimination come from the Equal Credit Opportunity Act and Regulation B. Regulation B is periodically amended by the CFPB, so confirm the current rule for any enforcement-level detail.
• The mortgage-fraud examples were checked against current FBI materials. Predatory-lending warning signs were checked against current CFPB mortgage and foreclosure-relief resources.
• The Fair Housing Act classes used for the contrast come from the federal Fair Housing Act.

Verify all lending-law details against the current CFPB rules before you rely on them in practice.

Official source links

• CFPB, Real Estate Settlement Procedures Act (RESPA)
• CFPB, Truth in Lending Act (Regulation Z)
• CFPB, Regulation Z Section 1026.4: Finance Charge
• CFPB, Regulation Z Section 1026.23: Right of Rescission
• CFPB, TILA-RESPA Integrated Disclosure resources
• CFPB, Equal Credit Opportunity Act (Regulation B)
• CFPB, Regulation B adverse-action notices
• FBI, Mortgage Application Fraud
• HUD, Fair Housing Act

This article is exam-prep education for the Texas real estate sales agent license. It is not legal or lending advice, and it does not create an agency relationship. Federal lending laws and their implementing regulations change and depend on the specific transaction. Always confirm the current CFPB and HUD sources and work under the supervision of your sponsoring broker before acting.