Mortgage Loan Originator (MLO) Licensing Practice Test

Which regulations impact tolerance rules under TRID for mortgage loan disclosures?

1. Regulation B

2. Regulation X

3. TILA and Regulation Z

4. Regulation D

The correct answer is: TILA and Regulation Z

The correct choice highlights the importance of the Truth in Lending Act (TILA) and Regulation Z, as they establish the guidelines regarding disclosures related to mortgage loans. Under TRID (TILA-RESPA Integrated Disclosure), TILA and Regulation Z are crucial because they dictate the requirements for providing consumers with clear and accurate information about the cost of credit, including interest rates and terms of the loan. In the context of tolerance rules, TILA and Regulation Z set standards for how accurate the estimates of closing costs must be, specifying limits on the variations allowed between the initial disclosures and the final costs incurred by the borrower. This ensures transparency and protects consumers by minimizing the potential for unexpected charges at closing. In contrast, Regulation B primarily focuses on equal credit opportunity and nondiscrimination in lending, while Regulation X pertains to the Real Estate Settlement Procedures Act (RESPA), which covers different aspects of the settlement process. Regulation D deals with reserve requirements for depository institutions and does not directly relate to mortgage loan disclosures or tolerance rules. Hence, understanding TILA and Regulation Z is essential for comprehending the tolerance rules under TRID and their impact on mortgage loan disclosures.