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!

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Which type of loans does the Dodd-Frank Amendment to HOEPA encompass?

Only fixed-rate loans for purchases
Home purchase and home equity loans
Only closed-end home equity loans
Loans with no prepayment penalties

The correct answer is: Home purchase and home equity loans

The Dodd-Frank Amendment to the Home Ownership and Equity Protection Act (HOEPA) expands the scope of loans that are covered under this legislation, specifically encompassing home purchase loans as well as home equity loans. The goal of the amendment is to protect consumers against abusive lending practices, particularly in the context of higher-cost loans. By including both types of loans, the amendment acknowledges the varying ways in which consumers may secure financing, whether through purchasing a home or tapping into the equity of an existing one. Home purchase loans are vital as they often involve significant financial commitment and potential risk for the borrower, while home equity loans are similarly essential as they allow homeowners to leverage their property value. The inclusion of both categories ensures comprehensive consumer protection in the mortgage industry. Conversely, the other options are too narrow in their scope; some focus solely on specific types of loans or features that do not align with the broader consumer protections aimed at by the Dodd-Frank Amendment. Thus, option B accurately captures the intent of the legislation.