Mortgage Loan Originator (MLO) Licensing Practice Test 2025 – Your All-in-One Guide to Exam Success!

A borrower who is required to use a specific title company or settlement agent is protected under the Real Estate Settlement Procedures Act (RESPA). This act prohibits coercive practices when selecting settlement service providers, and it establishes specific penalties for violations regarding the selection of these providers.

If a violation occurs, the maximum penalty is three times the amount of the fee charged for the service. This is reflective of RESPA's intent to protect consumers from potential abuse and coercion in the settlement process. The law emphasizes the significance of consumer choice in selecting settlement providers without undue influence, which is why the threefold penalty exists as a deterrent against such practices.

The other options suggest penalties that exceed the legal limitations set forth under RESPA, making them incorrect. It is important for Mortgage Loan Originators to understand these penalties not only for compliance reasons but also to ensure they are providing fair and ethical services to their clients.