NMLS SAFE EXAM QUESTIONS AND
ANSWERS
1.What does TILA stand for?
Answers Truth-In-Lending Act, Regulation Z
2.What is a HELOC loan?
Answers a secured loan in that you are borrowing against the equity
that has been built in your house
3.What is a REFI loan?
Answers
4.LTV stands for
Answers Loan to Value
5.Define PMI and state what the acronym stands for.
Answers Private mortgage insur- ance- on conventional loans
6.Define one time variable funding fee and people in what situations is
it waived for?
Answers Disabled veterans and surviving spouses.
7.USDA loans are also called what?
Answers 502 loans
,8.Define MIP
Answers Can be paid up front or in installments. Mortgage insurance
premium used by FHA to protect themselves against higher-risk
borrowers who are more likely to default on loans
9.Define APR
Answers annual percentage rate
10.Define APOR
Answers average prime offer rate
11.Define HPML
Answers High price mortgage loans or Section 35 loans. A mortgage
with an annual percentage rate (APR) that's higher than the average
prime offer rate (APOR)
12.When is a loan considered to be a section 35 loan? (High price mortgage
loan)
Answers - When the APR exceeds APOR by 1.5% on a first lien, 2.5% on
Jumbo first lien or 3.5% on subordinate lien
13.What requirements are placed on section 35 loans? (High price mortgage
loans)
Answers APE
,A- ATR / ability to repay
P- no PREPAYMENT penalty unless in the first 2 years
E- requires ESCROW of the taxes and hazard insurance for the first 5
years
14.Define ATR
Answers Ability to repay
15.8 Factors of ATR
Answers MICE DOES M-
Monthly mortgage
I- Income +
assets C- Credit
history E-
Employment
D- Debt to Income
Ratio O- Other debts
E- Expenses
S- Simultaneous mortgage
16.What are section 32 loans?
Answers High cost mortgage loans. Considered to be HCML when APR
exceeds APOR by 6.5% on first lien on loan $50,000 or higher, or 8.5%
on first lien on a loan that's less than $50,000 or 8.5% on subordinate
lien.
, 17.What requirements are placed on Section 32 loans / HCML / High cost
mortgage loans?
Answers BAPS
B- no BALLOON
payment A- must have
ATR
P- no PREPAYMENT PENALTY
S- must SPEAK to a HUD counselor
18.What makes a complete application?
Answers ALIENS A- Address
L- Loan
amount I-
Income
E- Estimated
value N- Name
S- Social security number
19.What is a 1003 and a 1004 form?
Answers URLA - Uniform Residential Loan Applica- tion
and
URAR - Uniform Residential Appraisal Report
20.What is a 1005 and 1006 form?
ANSWERS
1.What does TILA stand for?
Answers Truth-In-Lending Act, Regulation Z
2.What is a HELOC loan?
Answers a secured loan in that you are borrowing against the equity
that has been built in your house
3.What is a REFI loan?
Answers
4.LTV stands for
Answers Loan to Value
5.Define PMI and state what the acronym stands for.
Answers Private mortgage insur- ance- on conventional loans
6.Define one time variable funding fee and people in what situations is
it waived for?
Answers Disabled veterans and surviving spouses.
7.USDA loans are also called what?
Answers 502 loans
,8.Define MIP
Answers Can be paid up front or in installments. Mortgage insurance
premium used by FHA to protect themselves against higher-risk
borrowers who are more likely to default on loans
9.Define APR
Answers annual percentage rate
10.Define APOR
Answers average prime offer rate
11.Define HPML
Answers High price mortgage loans or Section 35 loans. A mortgage
with an annual percentage rate (APR) that's higher than the average
prime offer rate (APOR)
12.When is a loan considered to be a section 35 loan? (High price mortgage
loan)
Answers - When the APR exceeds APOR by 1.5% on a first lien, 2.5% on
Jumbo first lien or 3.5% on subordinate lien
13.What requirements are placed on section 35 loans? (High price mortgage
loans)
Answers APE
,A- ATR / ability to repay
P- no PREPAYMENT penalty unless in the first 2 years
E- requires ESCROW of the taxes and hazard insurance for the first 5
years
14.Define ATR
Answers Ability to repay
15.8 Factors of ATR
Answers MICE DOES M-
Monthly mortgage
I- Income +
assets C- Credit
history E-
Employment
D- Debt to Income
Ratio O- Other debts
E- Expenses
S- Simultaneous mortgage
16.What are section 32 loans?
Answers High cost mortgage loans. Considered to be HCML when APR
exceeds APOR by 6.5% on first lien on loan $50,000 or higher, or 8.5%
on first lien on a loan that's less than $50,000 or 8.5% on subordinate
lien.
, 17.What requirements are placed on Section 32 loans / HCML / High cost
mortgage loans?
Answers BAPS
B- no BALLOON
payment A- must have
ATR
P- no PREPAYMENT PENALTY
S- must SPEAK to a HUD counselor
18.What makes a complete application?
Answers ALIENS A- Address
L- Loan
amount I-
Income
E- Estimated
value N- Name
S- Social security number
19.What is a 1003 and a 1004 form?
Answers URLA - Uniform Residential Loan Applica- tion
and
URAR - Uniform Residential Appraisal Report
20.What is a 1005 and 1006 form?
