Which law requires an annual escrow disclosure if escrows or impounds are involved?

The law that mandates an annual escrow disclosure when escrows or impounds are involved is the Real Estate Settlement Procedures Act (RESPA). This federal legislation is designed to provide consumers with relevant information about the costs associated with their mortgage settlement process, with a particular focus on ensuring transparency in the handling of escrow accounts.

Under RESPA, lenders are required to disclose certain information to borrowers, including how their escrow accounts function and the terms under which they are maintained. This annual disclosure pertains to any changes in the escrow account over the previous year, including the amount collected for payments such as property taxes and homeowners insurance. This transparency helps borrowers understand the allocations of their payments and allows them to assess whether enough funds are being held in reserve.

The other laws mentioned, such as the Fair Lending Act, primarily focus on preventing discrimination in lending practices, the Consumer Credit Protection Act aims to promote informed consumer choice through disclosures, and the Federal Reserve Act primarily addresses the structure and functions of the Federal Reserve System rather than specific mortgage practices. Therefore, none of these laws specifically require an annual disclosure regarding escrow accounts like RESPA does.