Federal mortgage-related laws
TILA questions turn on what counts as a finance charge, how rescission works on refinances, what makes an ad trigger extra disclosures, and the price tests for higher-priced and high-cost (HOEPA) loans. The HOEPA dollar figures change every January; this note uses the 2026 figures.
Federal mortgage-related laws5 min read8 sections
The Truth in Lending Act is about the cost of credit: it makes creditors state that cost in a standard way (the finance charge and APR) and protects homeowners who pledge their home outside a purchase (rescission). The test also expects you to recognize higher-priced and high-cost loans from the APR spread and to spot advertising trigger terms in a short ad.
Regulation Z (12 CFR Part 1026) is written by the CFPB. TRID and the ability-to-repay rules also live in Regulation Z but have their own notes.
The finance charge is the cost of consumer credit as a dollar amount: interest, points, loan fees, mortgage insurance premiums and similar charges imposed as a condition of the credit (12 CFR 1026.4(a)-(b)). In a transaction secured by real property, bona fide and reasonable fees for title examination and insurance, document preparation, notary, appraisal and credit reports are excluded (12 CFR 1026.4(c)(7)). Application fees charged to all applicants are excluded too (12 CFR 1026.4(c)(1)).
The amount financed is, in short, the loan amount minus prepaid finance charges. Because payments are based on the full loan amount, the APR is higher than the note rate whenever prepaid finance charges are paid.
| Transaction | APR tolerance |
|---|---|
| Regular (most fixed-rate loans) | 1/8 of a percentage point |
| Irregular (multiple advances, irregular payments) | 1/4 of a percentage point |
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