Nationwide Mortgage Licensing System (NMLS) Practice Exam

Which law requires the interviewer to complete the Government Monitoring section on the 1003 form?

1. Homeowner's Protection Act

2. The Fair and Accurate Credit Transaction Act

3. Truth-in-Lending

4. The Equal Credit Opportunity Act

The correct answer is: The Equal Credit Opportunity Act

The Equal Credit Opportunity Act (ECOA) is the law that mandates lenders to include the Government Monitoring section on the 1003 form, which is also known as the Uniform Residential Loan Application. This requirement is in place to monitor lending practices and ensure that credit is granted without discrimination based on race, color, religion, national origin, sex, marital status, age, or because the applicant receives public assistance. The data collected through the Government Monitoring section helps regulatory agencies assess compliance with the ECOA and monitors for any discriminatory practices in the lending industry. By requiring this information, the ECOA aims to promote fair lending practices and to ensure all consumers have equal access to credit. The other laws mentioned do not specifically focus on the collection of demographic information for monitoring purposes in the loan application process, making them irrelevant in this particular context.