How The Consumer Financial Protection Bureau Protects Your Mortgage

How Does The Consumer Financial Protection Bureau Protect Your Mortgage?

The Consumer Financial Protection Bureau (CFPB) was established in 2011 to protect consumers from unfair, deceptive, and abusive practices in the financial sector. One area of focus for the CFPB is on mortgage lenders and servicers. The CFPB sets standards for responsible lending and helps borrowers understand their rights when it comes to taking out a mortgage loan or dealing with a servicer.

The CFPB has established rules that must be followed by mortgage lenders, servicers, and brokers for new mortgages as well as refinancing existing ones. These include:


  • Truth-in-Lending Act (TILA): This law, enacted in 1968, requires lenders to provide clear disclosures about loan terms and costs so consumers can easily compare different loan offers.


  • Real Estate Settlement Procedures Act (RESPA): This law protects consumer rights during the closing process, including requiring lenders to provide an estimated settlement statement and an itemized list of all fees associated with the mortgage.


  • Servicemembers Civil Relief Act (SCRA): This law provides special protections for members of the military who are on active duty or have recently been discharged.


The CFPB also monitors consumer complaints about mortgages and has authority to investigate lenders and servicers if there is evidence of wrongdoing. If violations are found, the CFPB can take action to stop unfair practices and require financial institutions to pay back affected consumers.

Hand holding miniature house.

More About How TILA and RESPA Work

How TILA Works

The Truth in Lending Act (TILA) is a federal law established in 1968 to assist customers to protect themselves while dealing with lenders and creditors. The Federal Reserve Board adopted the TILA via a set of regulations.

Some of the most critical components of the TILA relate to the information that must be revealed to a borrower prior to credit extension, such as the annual percentage rate (APR), loan length, and total borrower expenses. This information must be prominently shown on documents supplied to the borrower prior to signing, as well as, in certain situations, on the borrower’s monthly billing statements.

The guidelines are intended to make it simpler for customers to compare when borrowing money for short-term loans or mortgages, or taking out a credit card, and to protect them against deceptive or unfair lending practices. Some states have their own variants of TILA, but the primary characteristic remains the correct disclosure of crucial information in credit transactions to protect both the consumer and the lender. When prospective borrowers seek an application for an adjustable-rate mortgage (ARM), for example, they must be given information on how their loan payments may increase in the future under various interest-rate scenarios.


How RESPA Works

The Real Estate Settlement Procedures Act (RESPA) was adopted by the United States Congress in 1975 to enable accurate settlement cost disclosures to purchasers and sellers. RESPA was also enacted to prevent bribes and to restrict the use of escrow accounts in the real estate settlement process. The Consumer Financial Protection Bureau (CFPB) currently enforces RESPA, which is a federal legislation.

RESPA has regulated mortgage loans tied to one- to four-family residential properties since its creation. RESPA’s goal is to educate consumers about their settlement costs and to prohibit kickback practices and referral fees that might raise the cost of getting a mortgage. The bulk of purchase loans, assumptions, refinances, property renovation loans, and home equity lines of credit (HELOCs) are covered under RESPA.

RESPA requires home loan lenders, mortgage brokers, and servicers to disclose any information regarding the real estate transaction to borrowers. Settlement services, applicable consumer protection regulations, and any other information related to the cost of the real estate settlement procedure should be disclosed. The borrower should be made aware of any business links between closing service providers and other parties involved in the settlement process.

By understanding your rights as a consumer when it comes to mortgage lending and servicing, you can be sure that you are getting a fair deal. The CFPB is here to help make sure of that.  Knowing your consumer rights is key to protecting yourself from predatory lenders and bad practices in the financial sector. For more information on consumer protections, visit

The Consumer Financial Protection Bureau is dedicated to helping ensure that everyone has access to the consumer financial protection they need for financial success and stability – especially when it comes to mortgages. With consumer protections in place, you can trust that your mortgage lender or servicer will have your best interests in mind as you go through the loan process.


The Bottom Line

The CFPB also provides consumer education materials to help inform borrowers about their rights and responsibilities when it comes to taking out a mortgage. These materials cover topics such as understanding loan terms, shopping around for loans, and avoiding predatory lending practices. The CFPB also offers online tools to help consumers compare fees and interest rates from different lenders and find the best deal for them.

The consumer financial protection bureau is committed to protecting consumer rights and ensuring a fair and transparent mortgage process for all borrowers. With their consumer protections in place, you can trust that your lender or mortgage broker will have your best interests at heart. Knowing your consumer rights is key to making sure you get the best deal on a mortgage loan – so make sure you’re informed and know what to look out for.

So, remember: If you are looking for a mortgage loan, make sure you know your consumer rights and understand the process. The Consumer Financial Protection Bureau is here to help protect consumers from unfair, deceptive, and abusive practices – so take advantage of the resources they offer.

Let Us Help You Fully Understand All Of Your Mortgage Terms And Conditions