Mortgage Loan Originator (MLO) Licensing Practice Test 2026 – Your All-in-One Guide to Exam Success!

The correct answer is MARS, which stands for the Mortgage Assistance Relief Services Rule. This law was enacted to protect consumers from misleading practices related to loan modification services. Under MARS, it is prohibited for a loan originator or any service provider to charge an upfront fee for negotiating modifications to a loan. The rationale behind this regulation is to prevent predatory practices, where individuals might be charged significant fees before any services are rendered or before successful modifications are achieved.

The other laws mentioned, while related to the mortgage process, do not specifically address the issue of upfront fees for loan modifications. HOEPA pertains to the Home Ownership and Equity Protection Act, which focuses on high-cost mortgages and additional disclosures required for those loans. RESPA, or the Real Estate Settlement Procedures Act, deals with disclosures and practices related to settlement services and prohibits kickbacks and referral fees in real estate transactions. SAR, which stands for Suspicious Activity Report, pertains to reporting requirements for financial institutions in cases of suspected fraud or money laundering, but does not directly regulate loan modification services or upfront fees.

Therefore, by accepting an upfront fee for negotiating a loan modification, a loan originator is in violation of MARS, as this law was designed specifically to protect consumers in such scenarios.