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

Investment properties are indeed exempt from the requirements of the Real Estate Settlement Procedures Act (RESPA). RESPA was designed primarily to protect consumers during the settlement process of residential properties used for personal occupancy. This includes homes where the borrower lives, as it addresses issues like disclosure of settlement costs, the prohibition of kickbacks and referral fees, and ensuring borrowers have access to important information related to the settlement process.

Since investment properties are not intended for primary residence use, RESPA’s consumer protections do not apply. This distinction is important for mortgage loan originators to understand, as it influences the lending requirements and disclosure obligations when dealing with investment properties.

Other options such as partial exemptions or state-dependence do not accurately reflect the entirety of RESPA’s applicability, which universally excludes investment properties. Understanding this concept is crucial for MLOs when they engage with diverse types of real estate transactions.