Which act mandates written notice for borrowers when their loan servicing is transferred?

• A. Truth in Lending Act
• B. Real Estate Settlement Procedures Act
• C. Home Mortgage Disclosure Act
• D. Fair Housing Act

Answer: (B)

The Real Estate Settlement Procedures Act (RESPA) is the correct answer because it specifically requires loan servicers to provide written notification to borrowers when their loan servicing is transferred from one company to another. This notice must be sent to the borrower at least 15 days before the transfer occurs, ensuring that the borrower is informed about who will be handling their loan payments and what to expect.

This regulation is crucial in maintaining transparency and preventing any confusion or disruption in the borrower's payment process. RESPA is designed to protect consumers by providing them with clear and timely information regarding their mortgage loans, especially during significant changes such as servicing transfers.

In contrast, the Truth in Lending Act focuses more on information disclosure and costs associated with loans, while the Home Mortgage Disclosure Act deals primarily with monitoring lending practices and the Fair Housing Act prohibits discrimination in housing-related transactions. These acts serve important functions, but they do not specifically mandate written notification for servicing transfers like RESPA does.