Who Regulates Mortgage Lenders?

Most financial institutions are regulated by someone to keep them accountable. The Department of Financial Institutions (DFI) is one such watchdog. Not all financial institutions come under their jurisdiction though; only those in California. These include banks, credit unions, trust companies, industrial loan companies and others that are all state-licensed.

Those lending institutions whose names include the word ‘national’ are the ones that are regulated by the state they are in. E.g. City National Bank or Bank of America, NA. Thus each state has its own regulatory body for the mortgage lenders in that particular state.

Those financial (lending) institutions whose names include the word ‘federal’ or the initials FA, FSLA or FSB are usually regulated by the Office of Thrift Supervision, a Department of the Treasury.

The Department of Corporations is responsible for licensing mortgage and finance companies, while it is the Department of Real Estate that licenses mortgage brokers and some other mortgage lenders. The National Credit Union Administration regulates federal credit unions. They should have the word ‘federal’ or the initials FCU in their titles.

To find out who regulates your particular lending body, check out the documents you have from them. In some cases, the pertinent name or initial may be left out of advertising.

If you have a problem with your lending institution, then you could start off by contacting the Federal Reserve Consumer Help. You can file a complaint through them and they will investigate it. It must be a legitimate complaint such as discrimination, violation of regulation or law, or if you think they’ve misled you or been unfair in some way.

Of course to be fair you should first try to settle the complaint by going to your lender, but if that doesn’t work, then the phone number for the above body can be found on their website. You can also write, fax or email them. Be sure to include your full contact details and a description of your complaint, including dates and names.

The Federal Reserve Consumer Help will be able to tell you what the regulatory body is for the lending institution you deal with. If they are the ones who regulate it, then one of their twelve Reserve Banks will deal with it. This usually takes between 30-60 days, though in the case of more serious allegations it could take several months.

They are unable to help in some areas, such as disagreements over particular bank procedures and policies, or if there is a lawsuit impending.

This is the sixth podcast of our series on getting the best home mortgage.