Mortgage Loan Originator (MLO) Licensing Practice Test

The Homeowners Protection Act (HPA) specifically applies to residential mortgages for primary residences. This legislation was designed to protect homeowners from automatic private mortgage insurance (PMI) premiums and to facilitate the cancellation of PMI once the homeowner has built sufficient equity in their property. The HPA allows homeowners to request the cancellation of PMI once they reach a certain amount of equity, typically 20% of their home's appraised value, and it mandates that lenders automatically terminate PMI when the equity threshold is reached at specified intervals.

While the act has exclusions, such as commercial mortgages and residential mortgages for investment properties, it focuses solely on owner-occupied primary residences to support consumer interests in homeownership. Therefore, residential mortgages for primary residences are the correct and relevant focus of the HPA, distinguishing it from other types of mortgage loans.