NMLS Practice Exam #3 Question and
Answers Latest Updates 2026 Graded
A+
Money paid by a buyer to a seller at the time of entering into
a contract to indicate intent and ability to carry out the
contract is called:
- Down payment
- Earnest money
- Escrow funds
- Service release premium
Earnest money
The Pois have just closed on their mortgage loan at a formal
settlement meeting. What is mortgage loan originator
Leilani's responsibility after loan closing?
- She must provide any required re-disclosures
- None; Leilani's tasks are complete
- She must provide another set of disclosures, showing final
costs and expenses
- She must record the transaction with the county recorder
None; Leilani's tasks are complete
In order for a small creditor to originate a balloon payment
qualified mortgage, the small creditor must hold the loan in
its portfolio for:
- Twelve months
- Three years
- Two years
- Five years
,Three years
Mortgage loan originator Trevor Tibbs has accepted a loan
application for a dwelling that is a mobile home not
permanently affixed to the land. Does this mobile home meet
the requirements necessary for it to be considered security
for a residential mortgage loan?
- Yes, a dwelling includes a structure whether or not that
structure is attached to real property
- No, dwellings must be permanently attached to real
property
- No, mobile homes are classified as personal property, not
real property
- Yes, as long as the real property upon which the mobile
home will be located is in the borrower's name, the loan may
be a residential mortgage loan
Yes, a dwelling includes a structure whether or not that structure
is attached to real property
UFMIP is paid:
- in full when the loan reaches maturity.
- at the end of each year of the loan term.
- in full at the time of closing.
- at the end of each month.
in full at the time of closing.
Conrad began his 20 HR pre-licensing education in one state
and ended up moving to another state prior to actually
submitting an application for a mortgage loan originator
license. What happens to the courses he has completed?
- The NMLS-approved 20 HR pre-licensing courses are
accepted towards credit in any state
- He must retake them under the requirements of the state in
,which he currently resides
- He can petition the state licensing agency for permission to
submit those courses towards the requirement
- The courses may or may not be accepted towards pre-
licensing credit, depending on the requirements of the new
state
The NMLS-approved 20 HR pre-licensing courses are accepted
towards credit in any state
By adding together the margin and index, the result is known
as the:
- True index
- Rate ceiling
- Start rate
- Fully indexed rate
Fully indexed rate
Lester is calculating prepaid finance charges that will be
withheld from the proceeds of the loan. These direct loan
charges paid by the borrower must be included in computing
the:
- Annual percentage rate
- Broker fees and the amount charged by a third party
- Amount of the payment
- Length of the loan
Annual percentage rate
A balloon mortgage has a:
- Short-term payment that can go up or down from month to
month throughout the life of the loan
- Payment that grows with each month as equity decreases
- Large payment required at the onset of the loan and
periodic payments thereafter
, - 30-year amortization period, but a requirement to pay the
loan balance within a much shorter period of time
30-year amortization period, but a requirement to pay the loan
balance within a much shorter period of time
Typical violations of advertising provisions include the use
of trigger terms without:
- Allowing the borrower to choose another alternative
- Giving the borrower a chance to choose his/her own service
provider
- Explaining to the borrower how the originator is
compensated
- Stating the less advantageous terms of repayment
Stating the less advantageous terms of repayment
When a seller provides all or part of the financing for the
borrower in order to finance a purchase transaction, it is
known as:
- For sale by owner (FSBO)
- Seller carry-back
- Seller concessions
- Seller self-financed
Seller carry-back
Which of the following is not a prohibited practice regarding
loan originator compensation?
- A loan originator receives .5% more compensation if a loan
contains a prepayment penalty
- A loan originator receives compensation for closing over $1
million in volume per month
- A loan originator receives 10% more compensation if
he/she closes more than ten transactions in a month with an
interest rate of 6.5% or more
Answers Latest Updates 2026 Graded
A+
Money paid by a buyer to a seller at the time of entering into
a contract to indicate intent and ability to carry out the
contract is called:
- Down payment
- Earnest money
- Escrow funds
- Service release premium
Earnest money
The Pois have just closed on their mortgage loan at a formal
settlement meeting. What is mortgage loan originator
Leilani's responsibility after loan closing?
- She must provide any required re-disclosures
- None; Leilani's tasks are complete
- She must provide another set of disclosures, showing final
costs and expenses
- She must record the transaction with the county recorder
None; Leilani's tasks are complete
In order for a small creditor to originate a balloon payment
qualified mortgage, the small creditor must hold the loan in
its portfolio for:
- Twelve months
- Three years
- Two years
- Five years
,Three years
Mortgage loan originator Trevor Tibbs has accepted a loan
application for a dwelling that is a mobile home not
permanently affixed to the land. Does this mobile home meet
the requirements necessary for it to be considered security
for a residential mortgage loan?
- Yes, a dwelling includes a structure whether or not that
structure is attached to real property
- No, dwellings must be permanently attached to real
property
- No, mobile homes are classified as personal property, not
real property
- Yes, as long as the real property upon which the mobile
home will be located is in the borrower's name, the loan may
be a residential mortgage loan
Yes, a dwelling includes a structure whether or not that structure
is attached to real property
UFMIP is paid:
- in full when the loan reaches maturity.
- at the end of each year of the loan term.
- in full at the time of closing.
- at the end of each month.
in full at the time of closing.
Conrad began his 20 HR pre-licensing education in one state
and ended up moving to another state prior to actually
submitting an application for a mortgage loan originator
license. What happens to the courses he has completed?
- The NMLS-approved 20 HR pre-licensing courses are
accepted towards credit in any state
- He must retake them under the requirements of the state in
,which he currently resides
- He can petition the state licensing agency for permission to
submit those courses towards the requirement
- The courses may or may not be accepted towards pre-
licensing credit, depending on the requirements of the new
state
The NMLS-approved 20 HR pre-licensing courses are accepted
towards credit in any state
By adding together the margin and index, the result is known
as the:
- True index
- Rate ceiling
- Start rate
- Fully indexed rate
Fully indexed rate
Lester is calculating prepaid finance charges that will be
withheld from the proceeds of the loan. These direct loan
charges paid by the borrower must be included in computing
the:
- Annual percentage rate
- Broker fees and the amount charged by a third party
- Amount of the payment
- Length of the loan
Annual percentage rate
A balloon mortgage has a:
- Short-term payment that can go up or down from month to
month throughout the life of the loan
- Payment that grows with each month as equity decreases
- Large payment required at the onset of the loan and
periodic payments thereafter
, - 30-year amortization period, but a requirement to pay the
loan balance within a much shorter period of time
30-year amortization period, but a requirement to pay the loan
balance within a much shorter period of time
Typical violations of advertising provisions include the use
of trigger terms without:
- Allowing the borrower to choose another alternative
- Giving the borrower a chance to choose his/her own service
provider
- Explaining to the borrower how the originator is
compensated
- Stating the less advantageous terms of repayment
Stating the less advantageous terms of repayment
When a seller provides all or part of the financing for the
borrower in order to finance a purchase transaction, it is
known as:
- For sale by owner (FSBO)
- Seller carry-back
- Seller concessions
- Seller self-financed
Seller carry-back
Which of the following is not a prohibited practice regarding
loan originator compensation?
- A loan originator receives .5% more compensation if a loan
contains a prepayment penalty
- A loan originator receives compensation for closing over $1
million in volume per month
- A loan originator receives 10% more compensation if
he/she closes more than ten transactions in a month with an
interest rate of 6.5% or more
