NMLS SAFE TEST MORTGAGE LICENSING EXAM Q'S UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

NMLS SAFE TEST MORTGAGE LICENSING EXAM Q'S
UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS

Question:
1. Which federal law requires that the Loan Estimate be provided to the borrower within three business
days of the time of loan application is taken?
Answer:
TILA

Question:
2. What type of scam entails homeowners who are encouraged to refinance their property over and over
until little or no equity remains?
Answer:
Loan flipping or churning

Question:
3. After a loan closing, funds are disbursed. When are the funds disbursed for an owner-occupied,
residential refinance?
Answer:
After 3 business-day rescission period

Question:
4. What is the adjustable number used to compute the interest rate on an ARM called?
Answer:
Index

Question:
5. A borrower is buying a house for $180,000. He provides a down payment of $40,000. If he pays three
discount points, what is the total cost of the points?
Answer:
$4200

Question:
6. Which day is counted as part of the CD three business day delivery period?
Answer:
Monday-Saturday

Question:
7. A Latina applies to a mortgage company for a home loan. She is refused based on the reputation of the
neighborhood for a high number of foreclosures. This is an example of what illegal practice?
Answer:
Redlining

,Question:
8. Which Act amended the Truth in Lending Act, establishing disclosure requirements and prohibiting
equity stripping and other abusive practices in connection with "high cost" mortgages?
Answer:
Home Ownership and Equity Protection Act (HOEPA)

Question:
9. The type of mortgage that can provide the borrower with a monthly check instead of the borrower
paying a monthly payments is known as
Answer:
Reverse mortgage

Question:
10. According to the Fair Credit Reporting Act, if adverse action is taken against a credit applicant because
of information on a credit report, the lender who used that report is required to
Answer:
provide to the consumer the name, address, and telephone number of the consumer reporting agency that
furnished the report and the credit score used

Question:
11. At closing, the buyers realizes that the lender changed the terms of the loan, but since he was facing
foreclosure, he felt he had no choice but to go ahead with the refinance or lose the house. This could be an
example of
Answer:
Predatory lending

Question:
12. The SAFE Act
Answer:
Establishes minimum standards for licensing and registering mortgage loan originators

Question:
13. In a note, what gives the lender the right to charge the borrower a fee for retiring the loan early?
Answer:
Prepayment penalty

Question:
14. Regulation B implements the Equal Credit Opportunity Act. True or False?
Answer:
True

Question:
15. Which item is NOT included in the calculation that determines the annual percentage rate?
a. the broker's origination fee
b. the lender's discount points
c. the mortgage insurance premium
d. the title insurance premium

,Answer:
The title insurance premium (D)

Question:
16. Under RESPA, who would be subject to fines and penalties if a kickback is paid?
Answer:
All parties paying or receiving a kickback

Question:
17. A conforming loan is a loan that
Answer:
Follows the secondary market criteria set by Fannie Mae/Freddie Mac

Question:
18. MLO Jon from ABC Mortgage is meeting with a potential borrower. What may Jon NEVER ask about
during the loan application process?
Answer:
Religion

Question:
19. The clause in the mortgage that makes the note due in full upon sale or transfer of a property is call a(n)
Answer:
Alienation clause AKA "due at sale clause"

Question:
20. The APR is required to be disclosed in a Truth in Lending statement is the
Answer:
Relationship between the total cost of borrowing and the actual amount borrowed

Question:
21. Which of the following is NOT included as a protected class by the Equal Credit Opportunity Act?
a. martial status
b. receipt of public assistance
c. religion
d.Social security
Answer:
D

Question:
22. The rate that is used to amortize the mortgage loan and determining the monthly loan payments is
known as the
Answer:
note rate

, Question:
23. The loan officer knows that the applicants source of income is public assistance, so he tells the
applicant not to waster his time filling out an application and paying any fees. What federal law has the
loan officer violated?
Answer:
ECOA

Question:
24. A subordination clause in a morgage
Answer:
Puts the mortgage in first lien position over an earlier recorded mortgage

Question:
25. Where do the funds for FHA loans come from?
Answer:
approved lenders

Question:
26. An applicant for a mortgage has recurring monthly debt of $425 and a gross monthly income of
$3,850. For a conforming loan, what is the maximum house payment- including PITI- for which she
qualifies?
Answer:
$961.00

Question:
27. What is the loan-to-value if the loan amount is $139,500, the appraised value is $164,117 and the sales
price is $155,000?
**remember to use lower number of either appraised value or sales price**
Answer:
90%

Question:
28. To comply with the Safeguard Rules of Gramm, Leach, Bliley, a loan officer should
Answer:
place all loan applications and documentation in a secure place when not working on them

Question:
29. VA loans allow for a maximum LTV of what percent?
Answer:
100%

Question:
30. Byuyer with a credit score of 703 makes an offer of $156,000 on a house that was appraised for
$162,000. If the seller accepts his offer, how much will he have to pay down on a FHA loan?
Answer:
$5,460