Mortgage Loan Originator (MLO) Licensing Practice Test

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Prepare for the Mortgage Loan Originator Licensing Test. Utilize diverse question formats, including flashcards and multiple choice, with detailed explanations. Gear up for your MLO exam with comprehensive study material!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

How long is the grace period borrowers have after their loan servicer has transferred servicing responsibilities?

30 days
60 days
90 days
120 days

The correct answer is: 60 days

The grace period for borrowers after their loan servicer has transferred servicing responsibilities is 60 days. During this time, borrowers are protected from potential late fees and negative reporting on their credit if they fail to make their payment to the new servicer immediately. This ensures that borrowers have adequate time to become familiar with the new servicer's processes and payment procedures. The regulation is designed to protect consumers during the transition of servicing, acknowledging that adjustments are necessary when changes are made to servicing relationships. This grace period allows borrowers to receive notice of the transfer, which must include instructions on where to send payments and other important details that reflect the change in servicing. The 60-day window is a standardized period meant to facilitate a smooth transition without putting undue stress on borrowers, thus promoting consumer protection in mortgage servicing practices.