Nationwide Mortgage Licensing System (NMLS) Practice Exam

Which law is more commonly known as Regulation X?

1. Truth in Lending

2. Real Estate Settlement Procedures Act

3. Homeowner's Protection Act

4. The Equal Credit Opportunity Act

The correct answer is: Real Estate Settlement Procedures Act

Regulation X is indeed most commonly associated with the Real Estate Settlement Procedures Act (RESPA). This act was enacted to provide consumers with transparency and protection during the process of obtaining a mortgage and securing a real estate settlement. One of the key objectives of Regulation X is to ensure that borrowers receive clear and understandable information about the costs involved in obtaining a mortgage, thereby facilitating informed decision-making. RESPA specifically addresses disclosure requirements concerning settlement costs and prohibits certain practices that may lead to unnecessary increases in the costs of settlement services. For instance, it requires lenders to provide a Good Faith Estimate of the settlement costs and a HUD-1 Settlement Statement that details all costs involved in the transaction. The other laws mentioned, while important in the field of mortgage lending, do not correspond to Regulation X. Truth in Lending focuses on disclosure about the costs of borrowing, the Homeowner's Protection Act deals with private mortgage insurance, and the Equal Credit Opportunity Act prohibits discrimination in lending. Thus, the Real Estate Settlement Procedures Act is the correct identification of Regulation X due to its specific regulations and consumer protection measures surrounding real estate transactions.