Mortgage Loan Originator (MLO) Licensing Practice Test

RESPA stands for the Real Estate Settlement Procedures Act. This federal law was enacted to help protect consumers during the home buying process, primarily addressing the aspects of real estate settlement processes. RESPA requires lenders to provide clear information about the costs associated with a mortgage loan, including the requirement for a Good Faith Estimate (GFE) that outlines fees and charges.

The act plays a critical role in providing transparency and preventing abusive practices during real estate transactions. It also outlines a borrower's rights regarding the loan closing process and mandates that certain disclosures be given to the consumers, ensuring they understand the terms and costs involved.

The other options provided do not accurately describe the legislation in question, as they either refer to non-existent acts or incorrectly formulate the name of RESPA. Understanding the purpose and requirements of RESPA is fundamentally important for those involved in mortgage lending and real estate transactions.