Mortgage Compliance Checks Explained

Introduction

Mortgage compliance checks ensure that loans and processes meet federal and state regulations. Lenders (and their compliance teams) verify that disclosures are provided on time, that fees are within allowed tolerances, and that the loan meets ability-to-repay and other rules. As a borrower, you benefit from these checks—they support transparency and consumer protection.

Key Regulations

• TILA (Truth in Lending Act) — Requires disclosure of loan terms, APR, and costs. Governs the right of rescission for refinances.
• RESPA (Real Estate Settlement Procedures Act) — Governs closing disclosures, prohibits kickbacks, and requires servicing disclosures.
• TRID — Combines TILA and RESPA into the Loan Estimate and Closing Disclosure. Sets timing and tolerance rules.
• ATR (Ability to Repay) — Requires lenders to verify that borrowers can repay the loan. QM loans meet ATR criteria.

See What Is a Loan Estimate? and What Is a Closing Disclosure?

What Lenders Check

Compliance teams verify that the Loan Estimate was sent within 3 business days, that the Closing Disclosure was sent at least 3 business days before closing, that fees are within tolerance, that the loan meets QM/ATR criteria (if applicable), and that state-specific rules are followed. Issues can delay closing or require revised disclosures.

Frequently Asked Questions

What are mortgage compliance checks?

Compliance checks ensure that loans and processes meet federal and state regulations. Lenders verify that disclosures (Loan Estimate, Closing Disclosure) are provided on time, that fees are within tolerance, and that the loan meets ability-to-repay and other rules. These checks protect borrowers and reduce lender risk.

What is TRID?

TRID (TILA-RESPA Integrated Disclosure) is the rule that requires the Loan Estimate (within 3 business days of application) and Closing Disclosure (at least 3 business days before closing). It also sets tolerance rules for certain fees. TRID helps borrowers compare offers and understand costs.

What is the ability-to-repay rule?

The ability-to-repay (ATR) rule requires lenders to make a reasonable, good-faith determination that the borrower can repay the loan. Lenders evaluate income, assets, debt, and credit. Qualified Mortgages (QM) are a category of loans that meet ATR and other criteria.

Why do compliance checks matter to borrowers?

Compliance checks ensure you receive required disclosures on time, that fees are disclosed accurately, and that the loan meets regulatory standards. They support transparency and consumer protection. If a lender fails compliance, it can delay closing or require corrective action.