NMLS License Exam 2026/2027
Latest Actual Exam Questions with Detailed Correct Answers | Updated & Verified – SAFE MLO Exam
Total Questions: 120 | Format: Multiple Choice (A–D) | Cognitive Levels: 30% Recall / 45% Application / 25% Analysis
Aligned with: 2026–2027 NMLS SAFE MLO Test Content Outline | Sections: 7
Instructions: Each question has exactly one correct answer. Select the option that best reflects applicable federal and state
mortgage laws, regulations, and industry standards. The rationale provided for each question includes regulatory citations
and explains why the correct answer is right and why the distractors are wrong. Use this exam for self-assessment, study,
and review prior to sitting for the NMLS SAFE MLO National Test.
Section 1: Federal Mortgage-Related Laws and Regulations (Q1-Q25)
Q1: A creditor receives a complete loan application on Monday. Under Regulation Z (TILA-RESPA
Integrated Disclosure rule), the Loan Estimate must be delivered or placed in the mail no later than:
A. Within 3 calendar days after the application and at least 3 business days before consummation
B. Not later than the third business day after receiving the consumer's loan application and not later than the
seventh business day before consummation [CORRECT]
C. Within 1 business day of the application and at least 7 calendar days before consummation
D. Within 7 calendar days after the application and not later than 3 business days before consummation
Correct Answer: B
Rationale: Under 12 CFR § 1026.19(e)(1)(iii), the creditor must deliver or place in the mail the Loan Estimate no later than
the third business day after receiving the consumer's loan application (defined by the six pieces of information) and not later
than the seventh business day before consummation. If mailed, an additional 3-day mail delivery safe harbor applies.
Option A mixes calendar and business days; option C imposes a non-existent 1-day rule; option D reverses the timing rules.
Q2: A consumer refinances her primary residence. The loan is a non-purchase-money,
non-business-purpose loan secured by the dwelling. Under Regulation Z, when does the right of rescission
expire?
A. At midnight on the third business day after consummation, delivery of the notice of right to cancel, and
delivery of all material disclosures, whichever occurs last [CORRECT]
B. At midnight on the third calendar day after consummation
C. At the close of business on the consummation date
D. Three years after consummation, regardless of disclosures
Correct Answer: A
Rationale: Under 12 CFR § 1026.23(a)(2), the consumer has the right to rescind a non-purchase-money consumer credit
transaction secured by the consumer's principal dwelling until midnight of the third business day after consummation,
delivery of the notice of right to cancel, or delivery of all material disclosures, whichever occurs last. Saturdays count as
business days; Sundays and federal legal holidays do not. Option B is wrong because it uses calendar days; option C is far
too early; option D reflects the statutory three-year maximum that applies only when required notices were never delivered.
Q3: A creditor discloses an APR of 6.500% on the Loan Estimate. The actual APR at consummation is
6.875%. Under Regulation Z, what is the APR tolerance for a regular first-lien transaction secured by real
property?
A. 1/8 of 1 percentage point (0.125%) for irregular transactions and 1/4 of 1 point (0.25%) for regular
transactions
B. 1/8 of 1 percentage point (0.125%) for regular transactions secured by real property or a dwelling, and 1/4
of 1 percentage point (0.25%) for irregular transactions [CORRECT]
, C. 1/4 of 1 percentage point (0.25%) for all mortgage transactions
D. 1/2 of 1 percentage point (0.50%) for all transactions exceeding $50,000
Correct Answer: B
Rationale: Under 12 CFR § 1026.22(a)(2)–(3), for regular transactions secured by real property or a dwelling, the
disclosed APR is accurate if it is not more than 1/8 of 1 percentage point (0.125%) above or below the actual APR. For
irregular transactions, the tolerance is 1/4 of 1 percentage point (0.25%). Since the actual APR exceeds the disclosed APR by
0.375%, the disclosure is out of tolerance and may trigger redisclosure and restitution. Option A reverses the tolerances;
options C and D state tolerances that do not exist under Reg Z.
Q4: Which of the following items is NOT a finance charge under Regulation Z (12 CFR § 1026.4)?
A. Discount points paid by the borrower
B. Loan origination fees charged by the creditor
C. Title insurance premiums for a lender's policy required by the creditor and paid to an unaffiliated
third-party insurer [CORRECT]
D. Prepaid interest paid by the borrower
Correct Answer: C
Rationale: Under 12 CFR § 1026.4(a), finance charges include charges paid as a condition of credit such as discount points
(A), origination fees (B), and prepaid interest (D). However, under 12 CFR § 1026.4(e), premiums for title insurance (both
lender and owner policies) are excluded from the finance charge, provided the premiums are bona fide and the insurer is
not affiliated with the creditor. The premiums must still be disclosed as settlement charges on the Loan Estimate and Closing
Disclosure, but they are not part of the APR calculation. Options A, B, and D are all finance charges under Reg Z.
Q5: For purposes of determining whether a mortgage is a 'high-cost mortgage' under HOEPA (12 CFR §
1026.32), which APR threshold applies?
A. APR exceeds APOR by 1.5 percentage points for first-lien loans
B. APR exceeds APOR by more than 6.5 percentage points for first-lien loans and more than 8.5 percentage
points for junior-lien loans [CORRECT]
C. APR exceeds APOR by 3 percentage points for any lien
D. APR exceeds 8% for first-lien loans
Correct Answer: B
Rationale: Under 12 CFR § 1026.32(a)(1)(i), a covered transaction is a high-cost mortgage (HOEPA loan) if its APR
exceeds the average prime offer rate (APOR) by more than 6.5 percentage points for first-lien loans, or by more than 8.5
percentage points for junior-lien loans. The alternative points-and-fees trigger under § 1026.32(a)(1)(ii) is set at 5% of the
total loan amount for loans at or above the annual threshold (adjusted each January), or 8% for loans below that threshold.
Options A, C, and D do not reflect the correct HOEPA APR thresholds.
Q6: After a Loan Estimate has been issued, an appraisal comes in materially lower than estimated. Under
Reg Z, the creditor may:
A. Issue a revised Loan Estimate only if the borrower consents in writing
B. Issue a revised Loan Estimate within 3 business days of receiving the information establishing the changed
circumstance [CORRECT]
C. Refuse to issue any revised Loan Estimate
D. Wait until the Closing Disclosure to update any disclosures
Correct Answer: B
Rationale: Under 12 CFR § 1026.19(e)(3)(iv), a changed circumstance affecting settlement charges, eligibility, or loan
terms permits the creditor to issue a revised Loan Estimate within 3 business days of receiving the information. A materially
lower appraisal is a valid changed circumstance. Option A is wrong because consumer consent is not required for revised
LEs (only for the original LE waiver); option C is wrong because revisions are expressly permitted; option D ignores the
explicit revised LE provisions.
,Q7: A loan consummated on March 1 disclosed an APR of 5.250%. The actual APR was 5.375% — a 0.125%
understatement. Under Reg Z, what is the creditor's obligation?
A. The disclosure is in tolerance; no cure required because the variance is within 1/8 of 1% for regular
transactions secured by real property [CORRECT]
B. The creditor must reimburse the borrower for the 0.125% difference for the life of the loan
C. The creditor must re-disclose within 30 days of consummation
D. The borrower has a private right of action only if the variance exceeds 1/4 of 1%
Correct Answer: A
Rationale: Under 12 CFR § 1026.22(a)(2), the APR disclosed for a regular transaction secured by real property or a
dwelling is accurate if it is not more than 1/8 of 1 percentage point (0.125%) above or below the actual APR. A variance
that equals the tolerance (0.125% exactly) is considered in tolerance, and no cure or restitution is required. The 1/4 of 1%
tolerance applies only to irregular transactions under § 1026.22(a)(3). Option B is wrong because tolerance allows the
variance without reimbursement; option C is wrong because no automatic re-disclosure is required for in-tolerance
variances; option D misstates the irregular-transaction tolerance.
Q8: Under the Ability-to-Repay rule (12 CFR § 1026.43), which of the following is REQUIRED to be
considered by a creditor when underwriting a qualified mortgage?
A. The borrower's projected future income based on the borrower's stated expectation of a raise
B. The consumer's current or reasonably expected income or assets, current employment status, and monthly
mortgage payment obligations [CORRECT]
C. The appreciation potential of the mortgaged property
D. The borrower's relationship with a referral source
Correct Answer: B
Rationale: 12 CFR § 1026.43(c)(2) specifies the eight factors a creditor must consider for ATR: (1) current or reasonably
expected income or assets; (2) current employment status; (3) monthly mortgage payment; (4) monthly payments on
simultaneous loans; (5) mortgage-related obligations (taxes, insurance, HOA); (6) debts, alimony, child support; (7) monthly
DTI ratio; and (8) credit history. Option A is wrong because speculative future income cannot be used; option C is wrong
because property appreciation cannot be considered; option D is irrelevant to ATR.
Q9: A loan originator refers a borrower to a title company owned by the originator's spouse without
disclosing the relationship, and the title company pays the originator $500 for the referral. Under RESPA
Section 8:
A. This is permissible because no fee was charged to the borrower
B. This is a prohibited kickback and referral arrangement that violates RESPA Section 8 [CORRECT]
C. This is permissible so long as the borrower was free to choose a different title company
D. This is permissible if the $500 is reported as income on the originator's taxes
Correct Answer: B
Rationale: Under RESPA Section 8 (12 U.S.C. § 2607), no person shall give and no person shall accept any fee, kickback,
or thing of value pursuant to an agreement or understanding that business incident to or part of a settlement service involving
a federally related mortgage loan shall be referred. The $500 payment from the title company to the originator is a
prohibited referral fee. The arrangement may also violate the affiliated business arrangement disclosure requirements of 12
CFR § 1024.15. Option A is wrong because a fee need not be charged to the borrower; option C is wrong because borrower
choice does not cure an undisclosed kickback; option D is wrong because tax reporting does not legalize an illegal kickback.
Q10: To comply with the RESPA Affiliated Business Arrangement (ABA) requirements under Regulation
X (12 CFR § 1024.15), the lender must:
A. Provide the ABA Disclosure at or before loan application, refer the borrower only if not required to use the
affiliate, and the affiliate must not require any particular provider
B. Provide the ABA Disclosure at or before the time of referral, the borrower must not be required to use the
affiliate, and the only thing of value received from the arrangement is a return on ownership interest
, [CORRECT]
C. Provide the ABA Disclosure within 3 business days after loan application and obtain a written commitment
from the borrower to use the affiliate
D. Disclose the affiliation only on the Closing Disclosure and pay the affiliate no more than a flat $50 referral
fee
Correct Answer: B
Rationale: Under 12 CFR § 1024.15, an affiliated business arrangement is exempt from Section 8's prohibition on referrals
only if three conditions are met: (1) the person making the referral provides an ABA Disclosure to the borrower at or before
the time of referral; (2) the borrower is not required to use any particular provider; and (3) the only thing of value received
from the arrangement is a return on the ownership interest. Option A's timing is incorrect (disclosure must be at or before
referral, not at application); option C is wrong because no written commitment is allowed; option D is wrong because a
referral fee is prohibited.
Q11: For charges NOT subject to the 10% cumulative tolerance under TRID (e.g., charges paid to a
third-party service provider not identified by the creditor, charges paid to an affiliate, or charges for
services the consumer shopped for separately), the disclosed amount is considered in good faith if:
A. The disclosed charge is within $100 of the actual charge
B. The disclosed charge is within 10% of the actual charge
C. The disclosed charge equals or exceeds the actual charge paid or imposed on the consumer [CORRECT]
D. The disclosed charge is within 1/8 of 1% of the actual charge
Correct Answer: C
Rationale: Under 12 CFR § 1026.19(e)(3)(ii), for charges not in the 10% cumulative tolerance category, the disclosed
amount is in good faith if it equals or exceeds the actual charge paid or imposed on the consumer. If the actual charge
exceeds the disclosed amount, the creditor must cure the difference. The 10% cumulative tolerance applies to charges paid to
third-party providers identified on the creditor's written list, recording fees, and certain other charges. Option A is wrong
because no flat dollar tolerance exists; option B is wrong because these charges are not in the 10% category; option D
confuses the APR tolerance.
Q12: A servicing transfer is planned. Under Regulation X (12 CFR § 1024.33), the transferor servicer must
provide a Notice of Transfer to the borrower:
A. Within 3 business days after the effective date of transfer
B. No later than 15 days before the effective date of transfer, except that the notice may be delivered at
consummation if the transfer is to occur at or before the first payment date [CORRECT]
C. Within 30 days after the effective date of transfer
D. Within 3 business days of loan consummation
Correct Answer: B
Rationale: Under 12 CFR § 1024.33(b), the transferor servicer must deliver the Notice of Transfer to the borrower no later
than 15 days before the effective date of the transfer. However, if the transfer is to occur at or before the first payment
date, or if the transferor did not have the loan at consummation, the notice may be delivered at consummation. The
transferee servicer must also provide a separate Notice of Transfer within 15 days after the effective date of the transfer.
Option A is wrong because the transferor notice must precede the transfer; option C reflects the transferee's obligation, not
the transferor's; option D confuses the rule with the Loan Estimate timing.
Q13: A borrower sends a written Notice of Error to the servicer regarding an escrow shortage on January 5.
Under Regulation X (12 CFR § 1024.35), the servicer must:
A. Acknowledge the notice within 5 business days and conduct a reasonable investigation, then respond within
30 business days [CORRECT]
B. Acknowledge the notice within 30 days and respond within 60 days
C. Respond verbally within 5 days and resolve within 10 business days
D. Take no action if the borrower has not paid the disputed amount in full
Latest Actual Exam Questions with Detailed Correct Answers | Updated & Verified – SAFE MLO Exam
Total Questions: 120 | Format: Multiple Choice (A–D) | Cognitive Levels: 30% Recall / 45% Application / 25% Analysis
Aligned with: 2026–2027 NMLS SAFE MLO Test Content Outline | Sections: 7
Instructions: Each question has exactly one correct answer. Select the option that best reflects applicable federal and state
mortgage laws, regulations, and industry standards. The rationale provided for each question includes regulatory citations
and explains why the correct answer is right and why the distractors are wrong. Use this exam for self-assessment, study,
and review prior to sitting for the NMLS SAFE MLO National Test.
Section 1: Federal Mortgage-Related Laws and Regulations (Q1-Q25)
Q1: A creditor receives a complete loan application on Monday. Under Regulation Z (TILA-RESPA
Integrated Disclosure rule), the Loan Estimate must be delivered or placed in the mail no later than:
A. Within 3 calendar days after the application and at least 3 business days before consummation
B. Not later than the third business day after receiving the consumer's loan application and not later than the
seventh business day before consummation [CORRECT]
C. Within 1 business day of the application and at least 7 calendar days before consummation
D. Within 7 calendar days after the application and not later than 3 business days before consummation
Correct Answer: B
Rationale: Under 12 CFR § 1026.19(e)(1)(iii), the creditor must deliver or place in the mail the Loan Estimate no later than
the third business day after receiving the consumer's loan application (defined by the six pieces of information) and not later
than the seventh business day before consummation. If mailed, an additional 3-day mail delivery safe harbor applies.
Option A mixes calendar and business days; option C imposes a non-existent 1-day rule; option D reverses the timing rules.
Q2: A consumer refinances her primary residence. The loan is a non-purchase-money,
non-business-purpose loan secured by the dwelling. Under Regulation Z, when does the right of rescission
expire?
A. At midnight on the third business day after consummation, delivery of the notice of right to cancel, and
delivery of all material disclosures, whichever occurs last [CORRECT]
B. At midnight on the third calendar day after consummation
C. At the close of business on the consummation date
D. Three years after consummation, regardless of disclosures
Correct Answer: A
Rationale: Under 12 CFR § 1026.23(a)(2), the consumer has the right to rescind a non-purchase-money consumer credit
transaction secured by the consumer's principal dwelling until midnight of the third business day after consummation,
delivery of the notice of right to cancel, or delivery of all material disclosures, whichever occurs last. Saturdays count as
business days; Sundays and federal legal holidays do not. Option B is wrong because it uses calendar days; option C is far
too early; option D reflects the statutory three-year maximum that applies only when required notices were never delivered.
Q3: A creditor discloses an APR of 6.500% on the Loan Estimate. The actual APR at consummation is
6.875%. Under Regulation Z, what is the APR tolerance for a regular first-lien transaction secured by real
property?
A. 1/8 of 1 percentage point (0.125%) for irregular transactions and 1/4 of 1 point (0.25%) for regular
transactions
B. 1/8 of 1 percentage point (0.125%) for regular transactions secured by real property or a dwelling, and 1/4
of 1 percentage point (0.25%) for irregular transactions [CORRECT]
, C. 1/4 of 1 percentage point (0.25%) for all mortgage transactions
D. 1/2 of 1 percentage point (0.50%) for all transactions exceeding $50,000
Correct Answer: B
Rationale: Under 12 CFR § 1026.22(a)(2)–(3), for regular transactions secured by real property or a dwelling, the
disclosed APR is accurate if it is not more than 1/8 of 1 percentage point (0.125%) above or below the actual APR. For
irregular transactions, the tolerance is 1/4 of 1 percentage point (0.25%). Since the actual APR exceeds the disclosed APR by
0.375%, the disclosure is out of tolerance and may trigger redisclosure and restitution. Option A reverses the tolerances;
options C and D state tolerances that do not exist under Reg Z.
Q4: Which of the following items is NOT a finance charge under Regulation Z (12 CFR § 1026.4)?
A. Discount points paid by the borrower
B. Loan origination fees charged by the creditor
C. Title insurance premiums for a lender's policy required by the creditor and paid to an unaffiliated
third-party insurer [CORRECT]
D. Prepaid interest paid by the borrower
Correct Answer: C
Rationale: Under 12 CFR § 1026.4(a), finance charges include charges paid as a condition of credit such as discount points
(A), origination fees (B), and prepaid interest (D). However, under 12 CFR § 1026.4(e), premiums for title insurance (both
lender and owner policies) are excluded from the finance charge, provided the premiums are bona fide and the insurer is
not affiliated with the creditor. The premiums must still be disclosed as settlement charges on the Loan Estimate and Closing
Disclosure, but they are not part of the APR calculation. Options A, B, and D are all finance charges under Reg Z.
Q5: For purposes of determining whether a mortgage is a 'high-cost mortgage' under HOEPA (12 CFR §
1026.32), which APR threshold applies?
A. APR exceeds APOR by 1.5 percentage points for first-lien loans
B. APR exceeds APOR by more than 6.5 percentage points for first-lien loans and more than 8.5 percentage
points for junior-lien loans [CORRECT]
C. APR exceeds APOR by 3 percentage points for any lien
D. APR exceeds 8% for first-lien loans
Correct Answer: B
Rationale: Under 12 CFR § 1026.32(a)(1)(i), a covered transaction is a high-cost mortgage (HOEPA loan) if its APR
exceeds the average prime offer rate (APOR) by more than 6.5 percentage points for first-lien loans, or by more than 8.5
percentage points for junior-lien loans. The alternative points-and-fees trigger under § 1026.32(a)(1)(ii) is set at 5% of the
total loan amount for loans at or above the annual threshold (adjusted each January), or 8% for loans below that threshold.
Options A, C, and D do not reflect the correct HOEPA APR thresholds.
Q6: After a Loan Estimate has been issued, an appraisal comes in materially lower than estimated. Under
Reg Z, the creditor may:
A. Issue a revised Loan Estimate only if the borrower consents in writing
B. Issue a revised Loan Estimate within 3 business days of receiving the information establishing the changed
circumstance [CORRECT]
C. Refuse to issue any revised Loan Estimate
D. Wait until the Closing Disclosure to update any disclosures
Correct Answer: B
Rationale: Under 12 CFR § 1026.19(e)(3)(iv), a changed circumstance affecting settlement charges, eligibility, or loan
terms permits the creditor to issue a revised Loan Estimate within 3 business days of receiving the information. A materially
lower appraisal is a valid changed circumstance. Option A is wrong because consumer consent is not required for revised
LEs (only for the original LE waiver); option C is wrong because revisions are expressly permitted; option D ignores the
explicit revised LE provisions.
,Q7: A loan consummated on March 1 disclosed an APR of 5.250%. The actual APR was 5.375% — a 0.125%
understatement. Under Reg Z, what is the creditor's obligation?
A. The disclosure is in tolerance; no cure required because the variance is within 1/8 of 1% for regular
transactions secured by real property [CORRECT]
B. The creditor must reimburse the borrower for the 0.125% difference for the life of the loan
C. The creditor must re-disclose within 30 days of consummation
D. The borrower has a private right of action only if the variance exceeds 1/4 of 1%
Correct Answer: A
Rationale: Under 12 CFR § 1026.22(a)(2), the APR disclosed for a regular transaction secured by real property or a
dwelling is accurate if it is not more than 1/8 of 1 percentage point (0.125%) above or below the actual APR. A variance
that equals the tolerance (0.125% exactly) is considered in tolerance, and no cure or restitution is required. The 1/4 of 1%
tolerance applies only to irregular transactions under § 1026.22(a)(3). Option B is wrong because tolerance allows the
variance without reimbursement; option C is wrong because no automatic re-disclosure is required for in-tolerance
variances; option D misstates the irregular-transaction tolerance.
Q8: Under the Ability-to-Repay rule (12 CFR § 1026.43), which of the following is REQUIRED to be
considered by a creditor when underwriting a qualified mortgage?
A. The borrower's projected future income based on the borrower's stated expectation of a raise
B. The consumer's current or reasonably expected income or assets, current employment status, and monthly
mortgage payment obligations [CORRECT]
C. The appreciation potential of the mortgaged property
D. The borrower's relationship with a referral source
Correct Answer: B
Rationale: 12 CFR § 1026.43(c)(2) specifies the eight factors a creditor must consider for ATR: (1) current or reasonably
expected income or assets; (2) current employment status; (3) monthly mortgage payment; (4) monthly payments on
simultaneous loans; (5) mortgage-related obligations (taxes, insurance, HOA); (6) debts, alimony, child support; (7) monthly
DTI ratio; and (8) credit history. Option A is wrong because speculative future income cannot be used; option C is wrong
because property appreciation cannot be considered; option D is irrelevant to ATR.
Q9: A loan originator refers a borrower to a title company owned by the originator's spouse without
disclosing the relationship, and the title company pays the originator $500 for the referral. Under RESPA
Section 8:
A. This is permissible because no fee was charged to the borrower
B. This is a prohibited kickback and referral arrangement that violates RESPA Section 8 [CORRECT]
C. This is permissible so long as the borrower was free to choose a different title company
D. This is permissible if the $500 is reported as income on the originator's taxes
Correct Answer: B
Rationale: Under RESPA Section 8 (12 U.S.C. § 2607), no person shall give and no person shall accept any fee, kickback,
or thing of value pursuant to an agreement or understanding that business incident to or part of a settlement service involving
a federally related mortgage loan shall be referred. The $500 payment from the title company to the originator is a
prohibited referral fee. The arrangement may also violate the affiliated business arrangement disclosure requirements of 12
CFR § 1024.15. Option A is wrong because a fee need not be charged to the borrower; option C is wrong because borrower
choice does not cure an undisclosed kickback; option D is wrong because tax reporting does not legalize an illegal kickback.
Q10: To comply with the RESPA Affiliated Business Arrangement (ABA) requirements under Regulation
X (12 CFR § 1024.15), the lender must:
A. Provide the ABA Disclosure at or before loan application, refer the borrower only if not required to use the
affiliate, and the affiliate must not require any particular provider
B. Provide the ABA Disclosure at or before the time of referral, the borrower must not be required to use the
affiliate, and the only thing of value received from the arrangement is a return on ownership interest
, [CORRECT]
C. Provide the ABA Disclosure within 3 business days after loan application and obtain a written commitment
from the borrower to use the affiliate
D. Disclose the affiliation only on the Closing Disclosure and pay the affiliate no more than a flat $50 referral
fee
Correct Answer: B
Rationale: Under 12 CFR § 1024.15, an affiliated business arrangement is exempt from Section 8's prohibition on referrals
only if three conditions are met: (1) the person making the referral provides an ABA Disclosure to the borrower at or before
the time of referral; (2) the borrower is not required to use any particular provider; and (3) the only thing of value received
from the arrangement is a return on the ownership interest. Option A's timing is incorrect (disclosure must be at or before
referral, not at application); option C is wrong because no written commitment is allowed; option D is wrong because a
referral fee is prohibited.
Q11: For charges NOT subject to the 10% cumulative tolerance under TRID (e.g., charges paid to a
third-party service provider not identified by the creditor, charges paid to an affiliate, or charges for
services the consumer shopped for separately), the disclosed amount is considered in good faith if:
A. The disclosed charge is within $100 of the actual charge
B. The disclosed charge is within 10% of the actual charge
C. The disclosed charge equals or exceeds the actual charge paid or imposed on the consumer [CORRECT]
D. The disclosed charge is within 1/8 of 1% of the actual charge
Correct Answer: C
Rationale: Under 12 CFR § 1026.19(e)(3)(ii), for charges not in the 10% cumulative tolerance category, the disclosed
amount is in good faith if it equals or exceeds the actual charge paid or imposed on the consumer. If the actual charge
exceeds the disclosed amount, the creditor must cure the difference. The 10% cumulative tolerance applies to charges paid to
third-party providers identified on the creditor's written list, recording fees, and certain other charges. Option A is wrong
because no flat dollar tolerance exists; option B is wrong because these charges are not in the 10% category; option D
confuses the APR tolerance.
Q12: A servicing transfer is planned. Under Regulation X (12 CFR § 1024.33), the transferor servicer must
provide a Notice of Transfer to the borrower:
A. Within 3 business days after the effective date of transfer
B. No later than 15 days before the effective date of transfer, except that the notice may be delivered at
consummation if the transfer is to occur at or before the first payment date [CORRECT]
C. Within 30 days after the effective date of transfer
D. Within 3 business days of loan consummation
Correct Answer: B
Rationale: Under 12 CFR § 1024.33(b), the transferor servicer must deliver the Notice of Transfer to the borrower no later
than 15 days before the effective date of the transfer. However, if the transfer is to occur at or before the first payment
date, or if the transferor did not have the loan at consummation, the notice may be delivered at consummation. The
transferee servicer must also provide a separate Notice of Transfer within 15 days after the effective date of the transfer.
Option A is wrong because the transferor notice must precede the transfer; option C reflects the transferee's obligation, not
the transferor's; option D confuses the rule with the Loan Estimate timing.
Q13: A borrower sends a written Notice of Error to the servicer regarding an escrow shortage on January 5.
Under Regulation X (12 CFR § 1024.35), the servicer must:
A. Acknowledge the notice within 5 business days and conduct a reasonable investigation, then respond within
30 business days [CORRECT]
B. Acknowledge the notice within 30 days and respond within 60 days
C. Respond verbally within 5 days and resolve within 10 business days
D. Take no action if the borrower has not paid the disputed amount in full
