NMLS PRACTICE EXAM 2027
QUESTIONS AND ANSWERS. VERIFIED
1. Under the Real Estate Settlement Procedures Act (RESPA), which of the following is
considered a violation of Section 8?
A. A title company pays a mortgage broker a fee for referring a customer for title insurance.
B. A mortgage lender provides a real estate agent with promotional materials like pens and
pads with the lender’s logo.
C. A lender allows a borrower to choose their own hazard insurance provider.
D. An attorney receives a fee for actual legal services performed at a closing.
Answer: A
Conceptual Explanation: RESPA Section 8 prohibits giving or accepting any fee, kickback,
or thing of value in exchange for referrals of settlement service business.
2. According to the Truth in Lending Act (TILA), the ‘Right of Rescission’ for a principal
residence refinance lasts for how many business days after the latest of three specific events?
A. 2 business days
B. 5 business days
,C. 3 business days
D. 10 business days
Answer: C
Conceptual Explanation: TILA provides a 3-business-day right of rescission for most
loans secured by the consumer’s principal dwelling, such as a refinance or home equity line
of credit.
3. Which federal law requires the ‘Notice of Right to Receive an Appraisal Report’ to be sent
to the applicant within three business days of application?
A. ECOA
B. RESPA
C. HMDA
D. TILA
Answer: A
Conceptual Explanation: The Equal Credit Opportunity Act (ECOA), specifically
Regulation B, requires lenders to notify applicants of their right to receive a copy of all
written appraisals.
4. A ‘Higher-Priced Mortgage Loan’ (HPML) is defined by TILA Section 35 as a loan where the
APR exceeds the Average Prime Offer Rate (APOR) by what margin for a first-lien jumbo loan?
A. 1.5 percentage points
, B. 3.5 percentage points
C. 2.5 percentage points
D. 6.5 percentage points
Answer: C
Conceptual Explanation: For first-lien jumbo loans, an HPML is a loan with an APR that
exceeds the APOR by 2.5 percentage points or more.
5. Under the SAFE Act, an individual is prohibited from obtaining a Mortgage Loan Originator
(MLO) license if they have been convicted of any felony within the past how many years?
A. 5 years
B. 10 years
C. 7 years
D. Permanently, if it involved fraud
Answer: C
Conceptual Explanation: The SAFE Act prohibits licensing if an applicant has been
convicted of any felony in the 7 years preceding the application, or at any time if the felony
involved fraud, dishonesty, or money laundering.
6. The Homeowners Protection Act (HPA) mandates that Private Mortgage Insurance (PMI) be
automatically terminated when the Loan-to-Value (LTV) ratio reaches:
A. 80% of the original value
QUESTIONS AND ANSWERS. VERIFIED
1. Under the Real Estate Settlement Procedures Act (RESPA), which of the following is
considered a violation of Section 8?
A. A title company pays a mortgage broker a fee for referring a customer for title insurance.
B. A mortgage lender provides a real estate agent with promotional materials like pens and
pads with the lender’s logo.
C. A lender allows a borrower to choose their own hazard insurance provider.
D. An attorney receives a fee for actual legal services performed at a closing.
Answer: A
Conceptual Explanation: RESPA Section 8 prohibits giving or accepting any fee, kickback,
or thing of value in exchange for referrals of settlement service business.
2. According to the Truth in Lending Act (TILA), the ‘Right of Rescission’ for a principal
residence refinance lasts for how many business days after the latest of three specific events?
A. 2 business days
B. 5 business days
,C. 3 business days
D. 10 business days
Answer: C
Conceptual Explanation: TILA provides a 3-business-day right of rescission for most
loans secured by the consumer’s principal dwelling, such as a refinance or home equity line
of credit.
3. Which federal law requires the ‘Notice of Right to Receive an Appraisal Report’ to be sent
to the applicant within three business days of application?
A. ECOA
B. RESPA
C. HMDA
D. TILA
Answer: A
Conceptual Explanation: The Equal Credit Opportunity Act (ECOA), specifically
Regulation B, requires lenders to notify applicants of their right to receive a copy of all
written appraisals.
4. A ‘Higher-Priced Mortgage Loan’ (HPML) is defined by TILA Section 35 as a loan where the
APR exceeds the Average Prime Offer Rate (APOR) by what margin for a first-lien jumbo loan?
A. 1.5 percentage points
, B. 3.5 percentage points
C. 2.5 percentage points
D. 6.5 percentage points
Answer: C
Conceptual Explanation: For first-lien jumbo loans, an HPML is a loan with an APR that
exceeds the APOR by 2.5 percentage points or more.
5. Under the SAFE Act, an individual is prohibited from obtaining a Mortgage Loan Originator
(MLO) license if they have been convicted of any felony within the past how many years?
A. 5 years
B. 10 years
C. 7 years
D. Permanently, if it involved fraud
Answer: C
Conceptual Explanation: The SAFE Act prohibits licensing if an applicant has been
convicted of any felony in the 7 years preceding the application, or at any time if the felony
involved fraud, dishonesty, or money laundering.
6. The Homeowners Protection Act (HPA) mandates that Private Mortgage Insurance (PMI) be
automatically terminated when the Loan-to-Value (LTV) ratio reaches:
A. 80% of the original value
