Nationwide Mortgage Licensing System (NMLS) Practice Exam

Which law is identified as Regulation B?

1. Truth-in-Lending

2. Real Estate Settlement Procedures Act

3. Equal Credit Opportunity Act

4. Patriot Act

The correct answer is: Equal Credit Opportunity Act

Regulation B is the implementation of the Equal Credit Opportunity Act (ECOA), which is a significant piece of legislation designed to promote fairness and equality in lending. This law prohibits discrimination in credit transactions based on race, color, religion, national origin, sex, marital status, age, or because an applicant receives public assistance. In essence, Regulation B requires lenders to evaluate credit applications based on the applicant's financial situation, not on personal characteristics or stereotypes. It aims to ensure that all applicants have equal access to credit opportunities, thus fostering a more inclusive financial environment. The other options pertain to different areas of consumer protection and lending regulations. Truth-in-Lending focuses on disclosure of credit terms, while the Real Estate Settlement Procedures Act deals with transparency in real estate transactions and the Patriot Act addresses national security concerns related to money laundering and terrorist financing. Each of these laws serves important functions but does not govern issues of discrimination in lending like Regulation B does.