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

The Housing and Economic Recovery Act (HERA) is the law that allows the federal government to take control of Fannie Mae and Freddie Mac, which are government-sponsored enterprises (GSEs) that provide liquidity to the mortgage market. HERA was enacted in July 2008 in response to the financial crisis, aiming to stabilize the housing market and restore confidence in the mortgage financing system.

Under HERA, the Federal Housing Finance Agency (FHFA) was established as the regulator for Fannie Mae and Freddie Mac, and it was given the authority to place these entities into conservatorship. This action was taken to protect the interests of taxpayers and to ensure the continued operation of these crucial institutions, given their significant role in the U.S. housing finance system.

The other legislative options mentioned do not specifically grant similar authority over Fannie Mae and Freddie Mac. For example, the Community Reinvestment Act (CRA) focuses on encouraging banks to help meet the needs of the communities in which they operate, without a direct link to controlling GSEs. The Dodd-Frank Act primarily aimed to reform financial regulation following the 2008 crisis and did not address the control of these entities in the same way as HERA. The Gramm-Leach-Bl