What requirement was included in the Dodd-Frank Act for mortgage lenders?

The Dodd-Frank Act introduced significant reforms to the mortgage lending process, one of which was the requirement for lenders to provide a Loan Estimate to borrowers. This document must be given within three business days of a loan application, and it outlines the loan's terms, projected payments, and closing costs. The intent behind this requirement is to promote transparency, allowing borrowers to better understand the financial obligations associated with their mortgage, and to make informed comparisons between different loan offers.

This requirement addresses the previous lack of clarity in the mortgage process, which contributed to borrower confusion and inadequate decision-making. By mandating the provision of a Loan Estimate, the Dodd-Frank Act aims to protect consumers and promote responsible lending practices within the mortgage industry.

The other choices touch on important aspects of the Dodd-Frank Act but do not encapsulate this specific requirement. For example, while the Act does impose more severe penalties for fraud and works to reform regulatory frameworks, these are broader changes rather than specific actions related directly to the consumer experience, like the Loan Estimate. Adjustable-rate mortgages are still permissible under the Dodd-Frank Act, but additional regulations and disclosure requirements apply rather than an outright elimination.