Which law requires Mortgage Loan Originators to provide borrowers with a loan estimate of closing costs?

The requirement for Mortgage Loan Originators to provide borrowers with a loan estimate of closing costs is governed by the Truth in Lending Act (TILA). TILA is designed to promote informed consumer decision-making by requiring lenders to disclose important information about the terms and costs associated with borrowing, including loan estimates that detail the closing costs a borrower can expect to pay.

This facilitates transparency and allows borrowers to make more informed comparisons between different loans and lenders. The loan estimate includes key information such as interest rates, monthly payments, and other fees associated with the mortgage. This advance notice is crucial for helping borrowers understand their financial commitments before fully committing to a mortgage.

While other laws, like the Fair Credit Reporting Act (FCRA) and the Home Mortgage Disclosure Act (HMDA), focus on different aspects of lending practices and consumer rights, they do not specifically mandate the provision of a loan estimate for closing costs like TILA does. The Real Estate Settlement Procedures Act (RESPA) is also related, as it deals with settlement costs and procedures, but the direct requirement for the loan estimate itself falls under TILA.