Loan Officer Practice Exam

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Which regulatory act requires that loan applicants receive specific rights disclosures related to appraisals?

Truth in Lending Act (TILA).
Real Estate Settlement Procedures Act (RESPA).
Equal Credit Opportunity Act (ECOA).
Sarbanes-Oxley Act.

The correct answer is: Real Estate Settlement Procedures Act (RESPA).

The Real Estate Settlement Procedures Act (RESPA) is the regulatory act that requires loan applicants to receive specific rights disclosures related to appraisals. RESPA mandates that lenders provide transparency regarding the costs and conditions associated with real estate transactions, including the appraisal process. This ensures that borrowers are aware of their rights and the procedures involved when obtaining a loan. Under RESPA, lenders are required to disclose information about how the appraisal will impact the loan process and the situation of potential conflicts of interest concerning the appraiser. By doing this, RESPA aims to protect consumers from unethical practices and helps them understand their financial decisions better when it comes to real estate transactions. The other options, while related to lending and consumer rights, do not focus on appraisal disclosures. TILA deals primarily with the disclosure of credit terms, ECOA focuses on preventing discrimination in credit, and the Sarbanes-Oxley Act pertains more to corporate governance and financial disclosures rather than consumer rights in real estate transactions.