Mortgage Loan Originator (MLO) Licensing Practice Test

Regulation Z is the correct choice because it implements the Truth in Lending Act (TILA), which specifically addresses various aspects of the annual percentage rate (APR). This regulation mandates disclosures that lenders must provide to borrowers regarding the cost of borrowing, including the APR as a vital component. Regulation Z outlines the criteria for determining the APR and establishes accuracy tolerances, meaning that lenders must adhere to specific standards when calculating and disclosing the APR to ensure transparency and fairness in lending practices. This regulation is crucial in protecting consumers by providing them with clear and accurate information about the cost of credit, allowing for informed decision-making.

The other regulations listed do not pertain directly to the APR accuracy tolerance. Regulation X deals with the Real Estate Settlement Procedures Act (RESPA) and focuses on settlement costs and disclosures, while Regulation Y pertains to the definition of a bank holding company and its activities. Regulation A relates to the exemption of certain securities offerings. None of these address the specifics of APR as thoroughly as Regulation Z does.