NMLS SAFE EXAM Questions with 100% Verified Answers
Latest Update
Question: Where credit institutions originate loans
Answer:
Primary Mortgage Market
Question: When an ARM has rate caps of 5/2/6, the 6 refers to what?
A. The maximum rate increase at the initial adjustment
B. The start rate for the loan
C. The maximum the rate can increase over the life of the loan
D. The rate maximum the rate can decrease over the life of the loan
Answer:
C. The maximum the rate can increase over the life of the loan
Question: When utilizing a temporary buydown to lower the interest rate on a FHA loan,
which of the following are correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate
C. The rate cannot be more than 2% below the note rate
D. Seller or builder can pay the discount points to buydown the rate
Answer:
B. The borrower qualified at the buydown rate
Question: All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
C. Disability D.Religion
Answer:
A. Age
Question: Claim against property held by one who is not the legal owner
Answer:
Encrumbrance
Question: Trigger Term
Answer:
Advertised term that requires additional disclosures
Question: Advertising Disclosure
, Answer:
An advertisement must be presented "clearly and conspicuously" to keep from being
deceptive, unfair, or otherwise violate a Commission rule
Question: Waving Right of Rescission
Answer:
Extenuating circumstances such as "bona fide personal financial emergency
Question: Right of Rescission
Answer:
Right that borrowers have to cancel a loan or line of credit with a lender within three days of
closing
Question: When creditors office is open to the public, a calendar working day except Sunday
or a federal holiday
Answer:
Business Day
Question: Application
Answer:
Financial information used for purposes of obtaining an extension of credit
Question: Disclosure
Answer:
The act of making new information known
Question: FTC Federal Trade Commission
Answer:
Mission is to promote consumer protection and eliminate and prevent anticompetitive
business practices
Question: CFPB Consumer Financial Protection Bureau
Answer:
Regulatory agency charged with overseeing financial products and services offered to
consumers
Question: TILA Truth in Lending Act
, Answer:
Enacted 1968 promotes the informed use of consumer credit by requiring disclosures about
terms and costs and standardizes the manner in which costs with borrowing are calculated
and disclosed
Question: Per Diem Interest
Answer:
Interest charged on a loan for one or more days
Question: Annual Interest Rate Formula
Answer:
Principal (X) Interest Rate = Annual Interest Rate
Question: Interest Only Mortgage
Answer:
Mortgage where the mortgagor is only required to pay off the interest that arises from the
principal that is borrowed for a set period
Question: Permanent Buydown
Answer:
Borrower chooses to pay additional "discount points" to buy down the interest rate for the
life of the mortgage note
Question: 2/1 Buydown
Answer:
Used on fixed rate loans over two years Set of two initial temporary-start interest rates that
increase in stair-step fashion until a permanent interest rate is reached
Question: Discount Point
Answer:
A form of pre-paid interest which effectively increases the yield on the loan above the
amount of the stated interest rate
Question: CLTV Combined Loan to Value
Answer:
An amount in addition to the Loan to Value, which simply represents the first position
mortgage or loan as a percentage of the property's value
Question: LTV Loan to Value
, Answer:
Ratio of a loan to the value of an asset purchased
Question: PITI
Answer:
Principal, Interest, Taxes, Insurance Refers to the components of a mortgage payment
Question: DIF
Answer:
Housing to Debt Ratio that measures an individual's ability to manage monthly payment
and repay debts
Question: Forbearance
Answer:
Agreement between the lender and the borrower to delay foreclosure
Question: Loan Modification
Answer:
A permanent restructuring of the mortgage where one or more of the terms of a borrower's
loan are changed to provide a more affordable payment
Question: Foreclosure
Answer:
Legal process to collect debt on mortgaged property
Question: Satisfaction of Mortgage Letter
Answer:
Document generated and signed by a mortgage lender, acknowledging that the borrower
has paid off the mortgage loan in full and the mortgage is not a lien on the property
Question: When two mortgages are on a property, this specifies which mortgage takes
precedence
Answer:
Subordination Agreement
Question: Payoff Statement
Answer:
Latest Update
Question: Where credit institutions originate loans
Answer:
Primary Mortgage Market
Question: When an ARM has rate caps of 5/2/6, the 6 refers to what?
A. The maximum rate increase at the initial adjustment
B. The start rate for the loan
C. The maximum the rate can increase over the life of the loan
D. The rate maximum the rate can decrease over the life of the loan
Answer:
C. The maximum the rate can increase over the life of the loan
Question: When utilizing a temporary buydown to lower the interest rate on a FHA loan,
which of the following are correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate
C. The rate cannot be more than 2% below the note rate
D. Seller or builder can pay the discount points to buydown the rate
Answer:
B. The borrower qualified at the buydown rate
Question: All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
C. Disability D.Religion
Answer:
A. Age
Question: Claim against property held by one who is not the legal owner
Answer:
Encrumbrance
Question: Trigger Term
Answer:
Advertised term that requires additional disclosures
Question: Advertising Disclosure
, Answer:
An advertisement must be presented "clearly and conspicuously" to keep from being
deceptive, unfair, or otherwise violate a Commission rule
Question: Waving Right of Rescission
Answer:
Extenuating circumstances such as "bona fide personal financial emergency
Question: Right of Rescission
Answer:
Right that borrowers have to cancel a loan or line of credit with a lender within three days of
closing
Question: When creditors office is open to the public, a calendar working day except Sunday
or a federal holiday
Answer:
Business Day
Question: Application
Answer:
Financial information used for purposes of obtaining an extension of credit
Question: Disclosure
Answer:
The act of making new information known
Question: FTC Federal Trade Commission
Answer:
Mission is to promote consumer protection and eliminate and prevent anticompetitive
business practices
Question: CFPB Consumer Financial Protection Bureau
Answer:
Regulatory agency charged with overseeing financial products and services offered to
consumers
Question: TILA Truth in Lending Act
, Answer:
Enacted 1968 promotes the informed use of consumer credit by requiring disclosures about
terms and costs and standardizes the manner in which costs with borrowing are calculated
and disclosed
Question: Per Diem Interest
Answer:
Interest charged on a loan for one or more days
Question: Annual Interest Rate Formula
Answer:
Principal (X) Interest Rate = Annual Interest Rate
Question: Interest Only Mortgage
Answer:
Mortgage where the mortgagor is only required to pay off the interest that arises from the
principal that is borrowed for a set period
Question: Permanent Buydown
Answer:
Borrower chooses to pay additional "discount points" to buy down the interest rate for the
life of the mortgage note
Question: 2/1 Buydown
Answer:
Used on fixed rate loans over two years Set of two initial temporary-start interest rates that
increase in stair-step fashion until a permanent interest rate is reached
Question: Discount Point
Answer:
A form of pre-paid interest which effectively increases the yield on the loan above the
amount of the stated interest rate
Question: CLTV Combined Loan to Value
Answer:
An amount in addition to the Loan to Value, which simply represents the first position
mortgage or loan as a percentage of the property's value
Question: LTV Loan to Value
, Answer:
Ratio of a loan to the value of an asset purchased
Question: PITI
Answer:
Principal, Interest, Taxes, Insurance Refers to the components of a mortgage payment
Question: DIF
Answer:
Housing to Debt Ratio that measures an individual's ability to manage monthly payment
and repay debts
Question: Forbearance
Answer:
Agreement between the lender and the borrower to delay foreclosure
Question: Loan Modification
Answer:
A permanent restructuring of the mortgage where one or more of the terms of a borrower's
loan are changed to provide a more affordable payment
Question: Foreclosure
Answer:
Legal process to collect debt on mortgaged property
Question: Satisfaction of Mortgage Letter
Answer:
Document generated and signed by a mortgage lender, acknowledging that the borrower
has paid off the mortgage loan in full and the mortgage is not a lien on the property
Question: When two mortgages are on a property, this specifies which mortgage takes
precedence
Answer:
Subordination Agreement
Question: Payoff Statement
Answer:
