Mortgage Loan Originator (MLO) Licensing Practice Test 2025 - Free MLO Practice Questions and Study Guide

The acronym FHLB stands for Federal Home Loan Bank. This entity plays a crucial role in the residential mortgage market by providing advances, which are essentially loans, to financial institutions such as banks and credit unions. These funds are then typically used by these institutions to support residential mortgage lending. This system is designed to enhance the availability of credit in the housing market, ensuring that more individuals have access to mortgage loans needed to purchase homes.

Understanding this structure is vital, as the Federal Home Loan Bank's purpose is to promote home ownership and affordable housing by enabling financial institutions to lend money more effectively. The other options do not accurately describe the FHLB’s function or its role in the housing finance industry. Therefore, recognizing that B correctly captures both the abbreviation and the services provided is essential when considering the landscape of mortgage lending and the support systems in place for financial institutions.