NMLS SAFE EXAM QUESTIONS AND
CORRECT ANSWERS VERIFIED LATEST
2023-2024 GRADE A +
Where credit institutions originate loans - CORRECT ANSWER
>>Primary Mortgage Market
When an ARM has rate caps of 5/2/6, the 6 refers to what?
A. The maximum rate increase at the initial adjustment
B. The start rate for the loan
C. The maximum the rate can increase over the life of the loan
D. The rate maximum the rate can decrease over the life of the
loan - CORRECT ANSWER >>C. The maximum the rate can
increase over the life of the loan
When utilizing a temporary buydown to lower the interest rate on
a FHA loan, which of the following are correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate
C. The rate cannot be more than 2% below the note rate
D. Seller or builder can pay the discount points to buydown the
rate - CORRECT ANSWER >>B. The borrower qualified at the
buydown rate
All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
C. Disability
,D.Religion - CORRECT ANSWER >>A. Age
Claim against property held by one who is not the legal owner -
CORRECT ANSWER >>Encrumbrance
Advertised term that requires additional disclosures - CORRECT
ANSWER >>Trigger Term
An advertisement must be presented "clearly and conspicuously"
to keep from being deceptive, unfair, or otherwise violate a
Commission rule - CORRECT ANSWER >>Advertising
Disclosure
Extenuating circumstances such as "bona fide personal financial
emergency - CORRECT ANSWER >>Waving Right of Rescission
Right that borrowers have to cancel a loan or line of credit with a
lender within three days of closing - CORRECT ANSWER
>>Right of Rescission
When creditors office is open to the public, a calendar working
day except Sunday or a federal holiday - CORRECT ANSWER
>>Business Day
Financial information used for purposes of obtaining an extension
of credit - CORRECT ANSWER >>Application
The act of making new information known - CORRECT ANSWER
>>Disclosure
,Mission is to promote consumer protection and eliminate and
prevent anticompetitive business practices - CORRECT
ANSWER >>FTC
Federal Trade Commission
Regulatory agency charged with overseeing financial products
and services offered to consumers - CORRECT ANSWER
>>CFPB
Consumer Financial Protection Bureau
Enacted 1968 promotes the informed use of consumer credit by
requiring disclosures about terms and costs and standardizes the
manner in which costs with borrowing are calculated and
disclosed - CORRECT ANSWER >>TILA
Truth in Lending Act
Interest charged on a loan for one or more days - CORRECT
ANSWER >>Per Diem Interest
Principal (X) Interest Rate = Annual Interest Rate - CORRECT
ANSWER >>Annual Interest Rate Formula
Mortgage where the mortgagor is only required to pay off the
interest that arises from the principal that is borrowed for a set
period - CORRECT ANSWER >>Interest Only Mortgage
Borrower chooses to pay additional "discount points" to buy down
the interest rate for the life of the mortgage note - CORRECT
ANSWER >>Permanent Buydown
, Used on fixed rate loans over two years
Set of two initial temporary-start interest rates that increase in
stair-step fashion until a permanent interest rate is reached -
CORRECT ANSWER >>2/1 Buydown
A form of pre-paid interest which effectively increases the yield on
the loan above the amount of the stated interest rate - CORRECT
ANSWER >>Discount Point
An amount in addition to the Loan to Value, which simply
represents the first position mortgage or loan as a percentage of
the property's value - CORRECT ANSWER >>CLTV
Combined Loan to Value
Ratio of a loan to the value of an asset purchased - CORRECT
ANSWER >>LTV
Loan to Value
Principal, Interest, Taxes, Insurance
Refers to the components of a mortgage payment - CORRECT
ANSWER >>PITI
Housing to Debt
Ratio that measures an individual's ability to manage monthly
payment and repay debts - CORRECT ANSWER >>DIF
Agreement between the lender and the borrower to delay
foreclosure - CORRECT ANSWER >>Forbearance
CORRECT ANSWERS VERIFIED LATEST
2023-2024 GRADE A +
Where credit institutions originate loans - CORRECT ANSWER
>>Primary Mortgage Market
When an ARM has rate caps of 5/2/6, the 6 refers to what?
A. The maximum rate increase at the initial adjustment
B. The start rate for the loan
C. The maximum the rate can increase over the life of the loan
D. The rate maximum the rate can decrease over the life of the
loan - CORRECT ANSWER >>C. The maximum the rate can
increase over the life of the loan
When utilizing a temporary buydown to lower the interest rate on
a FHA loan, which of the following are correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate
C. The rate cannot be more than 2% below the note rate
D. Seller or builder can pay the discount points to buydown the
rate - CORRECT ANSWER >>B. The borrower qualified at the
buydown rate
All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
C. Disability
,D.Religion - CORRECT ANSWER >>A. Age
Claim against property held by one who is not the legal owner -
CORRECT ANSWER >>Encrumbrance
Advertised term that requires additional disclosures - CORRECT
ANSWER >>Trigger Term
An advertisement must be presented "clearly and conspicuously"
to keep from being deceptive, unfair, or otherwise violate a
Commission rule - CORRECT ANSWER >>Advertising
Disclosure
Extenuating circumstances such as "bona fide personal financial
emergency - CORRECT ANSWER >>Waving Right of Rescission
Right that borrowers have to cancel a loan or line of credit with a
lender within three days of closing - CORRECT ANSWER
>>Right of Rescission
When creditors office is open to the public, a calendar working
day except Sunday or a federal holiday - CORRECT ANSWER
>>Business Day
Financial information used for purposes of obtaining an extension
of credit - CORRECT ANSWER >>Application
The act of making new information known - CORRECT ANSWER
>>Disclosure
,Mission is to promote consumer protection and eliminate and
prevent anticompetitive business practices - CORRECT
ANSWER >>FTC
Federal Trade Commission
Regulatory agency charged with overseeing financial products
and services offered to consumers - CORRECT ANSWER
>>CFPB
Consumer Financial Protection Bureau
Enacted 1968 promotes the informed use of consumer credit by
requiring disclosures about terms and costs and standardizes the
manner in which costs with borrowing are calculated and
disclosed - CORRECT ANSWER >>TILA
Truth in Lending Act
Interest charged on a loan for one or more days - CORRECT
ANSWER >>Per Diem Interest
Principal (X) Interest Rate = Annual Interest Rate - CORRECT
ANSWER >>Annual Interest Rate Formula
Mortgage where the mortgagor is only required to pay off the
interest that arises from the principal that is borrowed for a set
period - CORRECT ANSWER >>Interest Only Mortgage
Borrower chooses to pay additional "discount points" to buy down
the interest rate for the life of the mortgage note - CORRECT
ANSWER >>Permanent Buydown
, Used on fixed rate loans over two years
Set of two initial temporary-start interest rates that increase in
stair-step fashion until a permanent interest rate is reached -
CORRECT ANSWER >>2/1 Buydown
A form of pre-paid interest which effectively increases the yield on
the loan above the amount of the stated interest rate - CORRECT
ANSWER >>Discount Point
An amount in addition to the Loan to Value, which simply
represents the first position mortgage or loan as a percentage of
the property's value - CORRECT ANSWER >>CLTV
Combined Loan to Value
Ratio of a loan to the value of an asset purchased - CORRECT
ANSWER >>LTV
Loan to Value
Principal, Interest, Taxes, Insurance
Refers to the components of a mortgage payment - CORRECT
ANSWER >>PITI
Housing to Debt
Ratio that measures an individual's ability to manage monthly
payment and repay debts - CORRECT ANSWER >>DIF
Agreement between the lender and the borrower to delay
foreclosure - CORRECT ANSWER >>Forbearance
