What federal act requires lenders to provide a Loan Estimate form?

The correct answer relates to the Truth in Lending Act (TILA), which is a federal law that mandates lenders to provide a Loan Estimate form to borrowers. This requirement is part of the efforts to ensure transparency in lending practices, allowing borrowers to understand the costs associated with the loan they are considering. The Loan Estimate must be presented to borrowers within three business days of their application, and it details key aspects such as the loan amount, interest rate, monthly payments, and the estimated closing costs.

TILA aims to help borrowers make informed decisions and compare different loan offers more easily, which is crucial for protecting consumer rights in the financial sector. While other laws like the Equal Credit Opportunity Act and the Real Estate Settlement Procedures Act address important aspects of lending practices, they do not specifically require the providing of the Loan Estimate form. The Equal Credit Opportunity Act focuses primarily on prohibiting discrimination in lending, and the Real Estate Settlement Procedures Act ensures that borrowers receive adequate disclosures about the settlement process and the costs involved. The Home Mortgage Disclosure Act, on the other hand, regulates the collection of data related to mortgage lending to ensure lending practices are fair but does not involve the Loan Estimate form.