NMLS SAFE MLO PRACTICE EXAM
100 Questions with ANSWERs and Detailed
Rationales 2026
SECTION A: FEDERAL MORTGAGE-RELATED LAWS (Questions 1-30)
Question 1
Under TILA-RESPA Integrated Disclosure (TRID) rules, the Loan Estimate must be delivered to the
borrower within how many business days of receiving the loan application?
A) 1 business day
B) 3 business days
C) 5 business days
D) 7 business days
Correct ANSWER: B) 3 business days
Rationale: TRID rules require the Loan Estimate to be delivered or placed in the mail no later than three
business days after the lender receives the loan application. This three-day requirement ensures
borrowers receive key loan terms and estimated costs early enough to comparison shop. Failure to
deliver within this timeframe constitutes a compliance violation.
Question 2
Which federal law requires lenders to provide borrowers with a Loan Estimate within three business
days of application?
,A) ECOA
B) RESPA
C) TILA-RESPA Integrated Disclosure (TRID)
D) HMDA
Correct ANSWER: C) TILA-RESPA Integrated Disclosure (TRID)
Rationale: TRID, established under the Dodd-Frank Act, mandates delivery of the Loan Estimate within
three business days after a loan application is received. TRID combined the disclosure requirements of
TILA and RESPA to simplify and improve the mortgage disclosure process.
Question 3
Under the Real Estate Settlement Procedures Act (RESPA) Section 10, what is the maximum cushion a
loan servicer can maintain in a borrower's escrow account to cover unanticipated disbursements?
A) One-twelfth (1/12) of the total annual disbursement amount
B) One-eighth (1/8) of the total annual disbursement amount
C) One-sixth (1/6) of the total annual disbursement amount
D) One-fourth (1/4) of the total annual disbursement amount
Correct ANSWER: C) One-sixth (1/6) of the total annual disbursement amount
Rationale: RESPA Section 10 limits the cushion a servicer can hold in an escrow account to an amount
equal to two months, or one-sixth (1/6), of the total annual escrow disbursements.
Question 4
Which federal regulation prohibits a mortgage loan originator from asking an applicant about their
marital status using terms other than "married," "unmarried," or "separated"?
,A) Regulation X (RESPA)
B) Regulation Z (TILA)
C) Regulation B (ECOA)
D) Regulation C (HMDA)
Correct ANSWER: C) Regulation B (ECOA)
Rationale: The Equal Credit Opportunity Act (ECOA), enforced via Regulation B, strictly limits how a
lender can inquire about an applicant's marital status to prevent discriminatory practices. Only
"married," "unmarried," and "separated" are legally permitted responses.
Question 5
According to the Truth in Lending Act (TILA), for how many business days must a consumer wait after
receiving the corrected Loan Estimate before the mortgage loan can legally close?
A) 3 business days
B) 4 business days
C) 7 business days
D) 10 business days
Correct ANSWER: B) 4 business days
Rationale: Under TRID rules, a revised Loan Estimate must be received by the consumer at least 4
business days before consummation (loan closing). A revised LE cannot be issued on or after the date
the Closing Disclosure is provided.
Question 6
What form of loan fraud occurs when an individual accepts a fee to allow their name and strong credit
profile to be used on a mortgage application for a buyer who does not intend to occupy the property?
A) Asset renting
, B) Chunking
C) Straw buying
D) Equity skimming
Correct ANSWER: C) Straw buying
Rationale: A straw buyer is an individual used to purchase property on behalf of another person. The
straw buyer applies for the loan using their own identity and credit history, hiding the identity of the
true purchaser.
Question 7
Under the SAFE Act, an applicant for an MLO license who has been convicted of an act of fraud,
dishonesty, or money laundering is subject to what statutory licensing restriction?
A) They are barred from receiving a license for a period of 7 years from the conviction date.
B) They are permanently barred from obtaining an MLO license at any time.
C) They may receive a license immediately if a licensed mortgage broker sponsors them.
D) They are barred from receiving a license for a period of 5 years from the conviction date.
Correct ANSWER: A) They are barred from receiving a license for a period of 7 years from the conviction
date.
Rationale: The SAFE Act prohibits an individual from obtaining an MLO license if they have been
convicted of a felony involving fraud, dishonesty, or money laundering within the past 7 years. This is a
statutory bar that cannot be waived.
Question 8
What is the primary purpose of the SAFE Act?
A) To establish uniform national mortgage licensing standards
B) To set interest rate caps on mortgage loans
100 Questions with ANSWERs and Detailed
Rationales 2026
SECTION A: FEDERAL MORTGAGE-RELATED LAWS (Questions 1-30)
Question 1
Under TILA-RESPA Integrated Disclosure (TRID) rules, the Loan Estimate must be delivered to the
borrower within how many business days of receiving the loan application?
A) 1 business day
B) 3 business days
C) 5 business days
D) 7 business days
Correct ANSWER: B) 3 business days
Rationale: TRID rules require the Loan Estimate to be delivered or placed in the mail no later than three
business days after the lender receives the loan application. This three-day requirement ensures
borrowers receive key loan terms and estimated costs early enough to comparison shop. Failure to
deliver within this timeframe constitutes a compliance violation.
Question 2
Which federal law requires lenders to provide borrowers with a Loan Estimate within three business
days of application?
,A) ECOA
B) RESPA
C) TILA-RESPA Integrated Disclosure (TRID)
D) HMDA
Correct ANSWER: C) TILA-RESPA Integrated Disclosure (TRID)
Rationale: TRID, established under the Dodd-Frank Act, mandates delivery of the Loan Estimate within
three business days after a loan application is received. TRID combined the disclosure requirements of
TILA and RESPA to simplify and improve the mortgage disclosure process.
Question 3
Under the Real Estate Settlement Procedures Act (RESPA) Section 10, what is the maximum cushion a
loan servicer can maintain in a borrower's escrow account to cover unanticipated disbursements?
A) One-twelfth (1/12) of the total annual disbursement amount
B) One-eighth (1/8) of the total annual disbursement amount
C) One-sixth (1/6) of the total annual disbursement amount
D) One-fourth (1/4) of the total annual disbursement amount
Correct ANSWER: C) One-sixth (1/6) of the total annual disbursement amount
Rationale: RESPA Section 10 limits the cushion a servicer can hold in an escrow account to an amount
equal to two months, or one-sixth (1/6), of the total annual escrow disbursements.
Question 4
Which federal regulation prohibits a mortgage loan originator from asking an applicant about their
marital status using terms other than "married," "unmarried," or "separated"?
,A) Regulation X (RESPA)
B) Regulation Z (TILA)
C) Regulation B (ECOA)
D) Regulation C (HMDA)
Correct ANSWER: C) Regulation B (ECOA)
Rationale: The Equal Credit Opportunity Act (ECOA), enforced via Regulation B, strictly limits how a
lender can inquire about an applicant's marital status to prevent discriminatory practices. Only
"married," "unmarried," and "separated" are legally permitted responses.
Question 5
According to the Truth in Lending Act (TILA), for how many business days must a consumer wait after
receiving the corrected Loan Estimate before the mortgage loan can legally close?
A) 3 business days
B) 4 business days
C) 7 business days
D) 10 business days
Correct ANSWER: B) 4 business days
Rationale: Under TRID rules, a revised Loan Estimate must be received by the consumer at least 4
business days before consummation (loan closing). A revised LE cannot be issued on or after the date
the Closing Disclosure is provided.
Question 6
What form of loan fraud occurs when an individual accepts a fee to allow their name and strong credit
profile to be used on a mortgage application for a buyer who does not intend to occupy the property?
A) Asset renting
, B) Chunking
C) Straw buying
D) Equity skimming
Correct ANSWER: C) Straw buying
Rationale: A straw buyer is an individual used to purchase property on behalf of another person. The
straw buyer applies for the loan using their own identity and credit history, hiding the identity of the
true purchaser.
Question 7
Under the SAFE Act, an applicant for an MLO license who has been convicted of an act of fraud,
dishonesty, or money laundering is subject to what statutory licensing restriction?
A) They are barred from receiving a license for a period of 7 years from the conviction date.
B) They are permanently barred from obtaining an MLO license at any time.
C) They may receive a license immediately if a licensed mortgage broker sponsors them.
D) They are barred from receiving a license for a period of 5 years from the conviction date.
Correct ANSWER: A) They are barred from receiving a license for a period of 7 years from the conviction
date.
Rationale: The SAFE Act prohibits an individual from obtaining an MLO license if they have been
convicted of a felony involving fraud, dishonesty, or money laundering within the past 7 years. This is a
statutory bar that cannot be waived.
Question 8
What is the primary purpose of the SAFE Act?
A) To establish uniform national mortgage licensing standards
B) To set interest rate caps on mortgage loans
