NMLS Safe Test Mortgage Licensing
Practice Exam Q's
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? - ANSTILA
What type of scam entails homeowners who are encouraged to refinance their property over
and over until little or no equity remains? - ANSLoan flipping or churning
After a loan closing, funds are disbursed. When are the funds disbursed for an
owner-occupied, residential refinance? - ANSAfter 3 business-day rescission period
What is the adjustable number used to compute the interest rate on an ARM called? -
ANSIndex
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? - ANS$4200
Which day is counted as part of the CD three business day delivery period? -
ANSMonday-Saturday
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? - ANSRedlining
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? - ANSHome Ownership and Equity Protection Act (HOEPA)
The type of mortgage that can provide the borrower with a monthly check instead of the
borrower paying a monthly payments is known as - ANSReverse mortgage
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 - ANSprovide to the consumer the name, address, and telephone number of the
consumer reporting agency that furnished the report and the credit score used
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 - ANSPredatory lending
The SAFE Act - ANSEstablishes minimum standards for licensing and registering mortgage
loan originators
,In a note, what gives the lender the right to charge the borrower a fee for retiring the loan
early? - ANSPrepayment penalty
Regulation B implements the Equal Credit Opportunity Act. True or False? - ANSTrue
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 - ANSThe title insurance premium (D)
Under RESPA, who would be subject to fines and penalties if a kickback is paid? - ANSAll
parties paying or receiving a kickback
A conforming loan is a loan that - ANSFollows the secondary market criteria set by Fannie
Mae/Freddie Mac
MLO Jon from ABC Mortgage is meeting with a potential borrower. What may Jon NEVER
ask about during the loan application process? - ANSReligion
The clause in the mortgage that makes the note due in full upon sale or transfer of a
property is call a(n) - ANSAlienation clause AKA "due at sale clause"
The APR is required to be disclosed in a Truth in Lending statement is the -
ANSRelationship between the total cost of borrowing and the actual amount borrowed
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 - ANSD
The rate that is used to amortize the mortgage loan and determining the monthly loan
payments is known as the - ANSnote rate
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? - ANSECOA
A subordination clause in a morgage - ANSPuts the mortgage in first lien position over an
earlier recorded mortgage
Where do the funds for FHA loans come from? - ANSapproved lenders
, 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? - ANS$961.00
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** - ANS90%
To comply with the Safeguard Rules of Gramm, Leach, Bliley, a loan officer should -
ANSplace all loan applications and documentation in a secure place when not working on
them
VA loans allow for a maximum LTV of what percent? - ANS100%
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? - ANS$5,460
Private mortgage insurance (PMI) is NOT required when - ANSthe loan has been paid down
to less than 78% of the property's current value
The federal Truth in Lending Act - ANSregulates advertising with references to mortgage
interest rates
When qualifying a borrower, an installment debt down not need to be included in the debt
ration on conventional loans when the balance of the term of repayment is less than how
many months? - ANS10
Market value can best be defined as a property's - ANSmost probable selling price
How many business days from the day of application does the creditor have to deliver the
Loan Estimate? - ANS3
What document does the VA use to determine the amount of a veteran's entitlement? -
ANSCOE
An applicant for a mortgage loan is a salaried employee who is paid $1,350 every two
weeks. In addition, she indicates that she receives $500 a month in alimony. what is the
gross monthly income you can use to qualify her? - ANS$3,425
Which is a disclosure that RESPA requires creditors to give to customers at the time of the
mortgage loan closing? - ANSClosing Disclosure
A Chapter 7 bankruptcy could show on a credit report for a maximum of - ANS10 years
How many days does a borrower have to occupy a home with an FHA loan? - ANS60 days
Practice Exam Q's
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? - ANSTILA
What type of scam entails homeowners who are encouraged to refinance their property over
and over until little or no equity remains? - ANSLoan flipping or churning
After a loan closing, funds are disbursed. When are the funds disbursed for an
owner-occupied, residential refinance? - ANSAfter 3 business-day rescission period
What is the adjustable number used to compute the interest rate on an ARM called? -
ANSIndex
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? - ANS$4200
Which day is counted as part of the CD three business day delivery period? -
ANSMonday-Saturday
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? - ANSRedlining
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? - ANSHome Ownership and Equity Protection Act (HOEPA)
The type of mortgage that can provide the borrower with a monthly check instead of the
borrower paying a monthly payments is known as - ANSReverse mortgage
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 - ANSprovide to the consumer the name, address, and telephone number of the
consumer reporting agency that furnished the report and the credit score used
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 - ANSPredatory lending
The SAFE Act - ANSEstablishes minimum standards for licensing and registering mortgage
loan originators
,In a note, what gives the lender the right to charge the borrower a fee for retiring the loan
early? - ANSPrepayment penalty
Regulation B implements the Equal Credit Opportunity Act. True or False? - ANSTrue
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 - ANSThe title insurance premium (D)
Under RESPA, who would be subject to fines and penalties if a kickback is paid? - ANSAll
parties paying or receiving a kickback
A conforming loan is a loan that - ANSFollows the secondary market criteria set by Fannie
Mae/Freddie Mac
MLO Jon from ABC Mortgage is meeting with a potential borrower. What may Jon NEVER
ask about during the loan application process? - ANSReligion
The clause in the mortgage that makes the note due in full upon sale or transfer of a
property is call a(n) - ANSAlienation clause AKA "due at sale clause"
The APR is required to be disclosed in a Truth in Lending statement is the -
ANSRelationship between the total cost of borrowing and the actual amount borrowed
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 - ANSD
The rate that is used to amortize the mortgage loan and determining the monthly loan
payments is known as the - ANSnote rate
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? - ANSECOA
A subordination clause in a morgage - ANSPuts the mortgage in first lien position over an
earlier recorded mortgage
Where do the funds for FHA loans come from? - ANSapproved lenders
, 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? - ANS$961.00
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** - ANS90%
To comply with the Safeguard Rules of Gramm, Leach, Bliley, a loan officer should -
ANSplace all loan applications and documentation in a secure place when not working on
them
VA loans allow for a maximum LTV of what percent? - ANS100%
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? - ANS$5,460
Private mortgage insurance (PMI) is NOT required when - ANSthe loan has been paid down
to less than 78% of the property's current value
The federal Truth in Lending Act - ANSregulates advertising with references to mortgage
interest rates
When qualifying a borrower, an installment debt down not need to be included in the debt
ration on conventional loans when the balance of the term of repayment is less than how
many months? - ANS10
Market value can best be defined as a property's - ANSmost probable selling price
How many business days from the day of application does the creditor have to deliver the
Loan Estimate? - ANS3
What document does the VA use to determine the amount of a veteran's entitlement? -
ANSCOE
An applicant for a mortgage loan is a salaried employee who is paid $1,350 every two
weeks. In addition, she indicates that she receives $500 a month in alimony. what is the
gross monthly income you can use to qualify her? - ANS$3,425
Which is a disclosure that RESPA requires creditors to give to customers at the time of the
mortgage loan closing? - ANSClosing Disclosure
A Chapter 7 bankruptcy could show on a credit report for a maximum of - ANS10 years
How many days does a borrower have to occupy a home with an FHA loan? - ANS60 days
