Which federal law mandates pre-licensing education for MLOs?

The SAFE Act, or the Secure and Fair Enforcement for Mortgage Licensing Act, is the federal law that specifically mandates pre-licensing education for mortgage loan originators (MLOs). This legislation was enacted to enhance consumer protection and reduce fraud by requiring MLOs to meet certain educational and testing requirements before obtaining a license to operate.

Under the SAFE Act, MLOs are required to complete a minimum of 20 hours of pre-licensing education that covers subjects such as federal law and regulations, ethics, and lending standards. This requirement ensures that MLOs have a solid foundation of knowledge and skills necessary to fulfill their roles responsibly and competently.

The other options represent important laws in the mortgage and lending landscape but do not specifically mandate pre-licensing education for MLOs. The Truth in Lending Act focuses on disclosure of credit terms, the Real Estate Settlement Procedures Act deals with the process of closing residential real estate transactions, and the Equal Credit Opportunity Act prohibits discriminatory lending practices. Therefore, the choice reflecting the requirement for pre-licensing education is the SAFE Act.