Which federal regulation places limitations on the amount a borrower may be required to deposit into escrow?

The Real Estate Settlement Procedures Act (RESPA) specifically addresses the requirements for escrow accounts in residential mortgage transactions. This regulation aims to protect borrowers by requiring lenders to provide clear information regarding the costs associated with settlement services and real estate transactions.

One of the key provisions of RESPA is the limitation it places on the amount that a borrower may be required to deposit into an escrow account. Under RESPA, lenders are prohibited from requiring borrowers to deposit more than one-sixth (or two months' worth) of the total annual disbursements into an escrow account for property taxes, homeowner's insurance, and other related charges. This ensures that borrowers are not overburdened by excessive reserve requirements and gives them more predictable monthly payments, which enhances transparency and fairness in the lending process.

The other regulations listed—Truth in Lending Act, Home Mortgage Disclosure Act, and Equal Credit Opportunity Act—serve different purposes related to mortgage lending and consumer protection, but do not specifically address escrow account limitations. The Truth in Lending Act primarily deals with disclosure of loan terms and costs; the Home Mortgage Disclosure Act focuses on reporting mortgage lending data; and the Equal Credit Opportunity Act prohibits discrimination in credit transactions. Therefore, the correct answer, regarding limitations on escrow deposits,