Nationwide Mortgage Licensing System (NMLS) Practice Exam

Which law is referred to as Regulation C?

1. Real Estate Settlement Procedures Act

2. Truth-in-Lending

3. Equal Credit Opportunity Act

4. Home Mortgage Disclosure Act

The correct answer is: Home Mortgage Disclosure Act

Regulation C refers specifically to the Home Mortgage Disclosure Act (HMDA). This Act was enacted to provide public with information about how financial institutions are meeting the needs of their communities regarding housing. HMDA's primary purpose is to ensure that banks and lenders are serving the housing needs of their communities, and it aims to identify potential discriminatory lending patterns. Under Regulation C, lenders are required to collect and report specific data about their mortgage lending activity, including the race, gender, and income of applicants, the type of loan, and the location of the property. This data collection helps promote transparency and allows for better oversight of lending practices. The other laws listed, such as the Real Estate Settlement Procedures Act (RESPA) and the Truth-in-Lending Act (TILA), have different objectives. RESPA aims to provide disclosures that help consumers understand the costs associated with settlement services and prohibits certain practices that can lead to higher costs for borrowers. TILA is focused on disclosure of the terms and costs associated with borrowing, ensuring that consumers have clear information about credit terms. The Equal Credit Opportunity Act (ECOA) prohibits discrimination in lending based on specific protected characteristics, but it is distinct from the data reporting requirements of HMDA as laid out in Regulation C