©THESTAR 2025 ALL RIGHTS RESERVED
MLO SAFE NMLS safe test Practice Exam
Questions and Answers 100% Pass
Taking advantage of ill-informed consumers through excessively high fees, misrepresented loan
terms, frequent refinancing that does not benefit the borrower and other prohibited acts is
called __________________________. - ANS Predatory Lending.
RESPA-Real Estate Settlement Procedures Act - ANS The Federal Statute that deals with the
settlement of residential mortgage loans.
RESPA's section 9 Prohibits - ANS Home sellers from requiring home buyers to purchase title
insurance from a particular company providing title services.
The Dodd-Frank Act modifies ECOA to require a creditor to furnish a copy of an appraisal
developed in connection with a first mortgage_____________________ and absolutely not
later than ________ business days prior to closing. - ANS upon completion and 3 business
days
TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate) - ANS Per the Dodd Frank Act,
a single disclosure form combines these 2 statements.
Per the Dodd-Frank Acvt, to be a "qualified mortgage" total points and fees may not exceed
________% of the total loan amount. - ANS 3% (three percent)
, ©THESTAR 2025 ALL RIGHTS RESERVED
Per a provision of the Dodd-Frank Act mortgage lenders are to determine that a borrower has a
reasonable ability to repay a loan. Does this provision apply to all loans or just owner occupied
loans? - ANS All loans, whether owner occupied or not.
A loan subject to HOEPA allows prepayment penalties for the first ______ years of the loan. -
ANS 2 (two) years
Per the Dodd-Frank Act an abusive act would include which of the following:
1. One that materially interferes with the consumers ability to understand the product or
service.
2. One that take unreasonable advantage of a consumers' lack of understanding.
3. One that takes unreasonable advantage of the consumer's reasonable reliance on the MLO. -
ANS All three would be considered abusive acts.
Per the Dodd-Frank Act if an MLO receives compensation directly from a consumer, up to how
much additional compensation may be received from a lender in the same transaction? -
ANS $0.00, dual compensation is not allowed. Compensation must be borrower paid or
lender paid.
What kinds of reasons are necessary for a lender to take adverse action with regard to a
borrower? - ANS Specific reasons.
Adverse action means ______________________. - ANS A denial or revocation of credit.
Also, a change in the terms of an existing credit arrangement or a refusal to grant credit in
substantially the amount or terms requested.
Per Regulation B, Lenders should retain certain records for _____________ months. - ANS 25
Months
, ©THESTAR 2025 ALL RIGHTS RESERVED
Because of the impact of the Dodd-Frank Act on a second mortgage, an APR that exceeds the
________ by more than _____% is the trigger that defines a high cost loan. - ANS APOR (
Average Prime Offer Rate), 8.5%
Regulation C is known as ________________________. - ANS HMDA, The Home Mortgage
Disclosure Act.
What is the purpose of HMDA? - ANS The HMDA determines whether financial institutions
are serving the housing needs of their communities. It also identifies patterns of discriminatory
lending.
Under what circumstances can a lender with an Affiliated Business Arrangement require a
borrower to use a specific third party service provider? - ANS If there are no kickback or
referral fees and the service provider is an attorney, credit reporting agency or appraiser the
lender can require that the borrower uses the provider
If a transfer of servicing occurs, the _______________ must provide a servicing transfer
statement not less than ________ days before the transfer occurs. - ANS Servicer, 15
(fifteen) days.
An individual who fails the MLO written exam 3 times must wait _________ months to retake
the exam. - ANS 6 (Six) Months
Per RESPA, an annual escrow statement is required to ______________. - ANS determine
shortages and surpluses in the escrow account.
When must the Servicing Disclosure Statement be provided to the borrower? - ANS Within 3
(three) Business Days of the Application.
, ©THESTAR 2025 ALL RIGHTS RESERVED
Any party involved in a federally covered loan that submits fraudulent information is subject to
a fine of up to $___________ and up to __________years in prison. - ANS $1,000,000 (one
million dollars), 30 years in prison
Per RESPA, an escrow cushion is limited to a maximum of _________ of the annual payments
and surpluses over $_____must be refunded within ________ days. - ANS 1/6th (2 months),
$50 (fifty dollars), 30 (thirty) days.
A seller takes back a $100,000 PMM @ 5.5% interest. This straight note will balloon after 10
years of payments. How much is the balloon payment? - ANS $100,000 + interest for the last
month. A straight note (term mortgage) is a non-amortizing interest only mortgage. The balloon
would include the entire principal plus the last month's interest, as interest is paid in arrears.
FNMA conforming debt ratios equal ______/________. - ANS 28%, maximum housing
expense/36% maximum total obligations
HOEPA stands for ___________________________. - ANS Home Ownership and Equity
Protection Act.
RESPA applies to what type of properties? - ANS 1-4 Unit Residential Properties
On a conventional mortgage loan, who makes the final decision regarding approval, denial or
counter offer? - ANS The Underwriter
The Civil Rights Act of 1866, prohibited public and private racial discrimination in any property
transaction and was expanded in 1968 in which act? - ANS The Civil Rights Act of 1968, also
known as Title VIII of the Civil Rights Act , Also known as Title VIII, Also Known as The Fair
Housing Act
MLO SAFE NMLS safe test Practice Exam
Questions and Answers 100% Pass
Taking advantage of ill-informed consumers through excessively high fees, misrepresented loan
terms, frequent refinancing that does not benefit the borrower and other prohibited acts is
called __________________________. - ANS Predatory Lending.
RESPA-Real Estate Settlement Procedures Act - ANS The Federal Statute that deals with the
settlement of residential mortgage loans.
RESPA's section 9 Prohibits - ANS Home sellers from requiring home buyers to purchase title
insurance from a particular company providing title services.
The Dodd-Frank Act modifies ECOA to require a creditor to furnish a copy of an appraisal
developed in connection with a first mortgage_____________________ and absolutely not
later than ________ business days prior to closing. - ANS upon completion and 3 business
days
TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate) - ANS Per the Dodd Frank Act,
a single disclosure form combines these 2 statements.
Per the Dodd-Frank Acvt, to be a "qualified mortgage" total points and fees may not exceed
________% of the total loan amount. - ANS 3% (three percent)
, ©THESTAR 2025 ALL RIGHTS RESERVED
Per a provision of the Dodd-Frank Act mortgage lenders are to determine that a borrower has a
reasonable ability to repay a loan. Does this provision apply to all loans or just owner occupied
loans? - ANS All loans, whether owner occupied or not.
A loan subject to HOEPA allows prepayment penalties for the first ______ years of the loan. -
ANS 2 (two) years
Per the Dodd-Frank Act an abusive act would include which of the following:
1. One that materially interferes with the consumers ability to understand the product or
service.
2. One that take unreasonable advantage of a consumers' lack of understanding.
3. One that takes unreasonable advantage of the consumer's reasonable reliance on the MLO. -
ANS All three would be considered abusive acts.
Per the Dodd-Frank Act if an MLO receives compensation directly from a consumer, up to how
much additional compensation may be received from a lender in the same transaction? -
ANS $0.00, dual compensation is not allowed. Compensation must be borrower paid or
lender paid.
What kinds of reasons are necessary for a lender to take adverse action with regard to a
borrower? - ANS Specific reasons.
Adverse action means ______________________. - ANS A denial or revocation of credit.
Also, a change in the terms of an existing credit arrangement or a refusal to grant credit in
substantially the amount or terms requested.
Per Regulation B, Lenders should retain certain records for _____________ months. - ANS 25
Months
, ©THESTAR 2025 ALL RIGHTS RESERVED
Because of the impact of the Dodd-Frank Act on a second mortgage, an APR that exceeds the
________ by more than _____% is the trigger that defines a high cost loan. - ANS APOR (
Average Prime Offer Rate), 8.5%
Regulation C is known as ________________________. - ANS HMDA, The Home Mortgage
Disclosure Act.
What is the purpose of HMDA? - ANS The HMDA determines whether financial institutions
are serving the housing needs of their communities. It also identifies patterns of discriminatory
lending.
Under what circumstances can a lender with an Affiliated Business Arrangement require a
borrower to use a specific third party service provider? - ANS If there are no kickback or
referral fees and the service provider is an attorney, credit reporting agency or appraiser the
lender can require that the borrower uses the provider
If a transfer of servicing occurs, the _______________ must provide a servicing transfer
statement not less than ________ days before the transfer occurs. - ANS Servicer, 15
(fifteen) days.
An individual who fails the MLO written exam 3 times must wait _________ months to retake
the exam. - ANS 6 (Six) Months
Per RESPA, an annual escrow statement is required to ______________. - ANS determine
shortages and surpluses in the escrow account.
When must the Servicing Disclosure Statement be provided to the borrower? - ANS Within 3
(three) Business Days of the Application.
, ©THESTAR 2025 ALL RIGHTS RESERVED
Any party involved in a federally covered loan that submits fraudulent information is subject to
a fine of up to $___________ and up to __________years in prison. - ANS $1,000,000 (one
million dollars), 30 years in prison
Per RESPA, an escrow cushion is limited to a maximum of _________ of the annual payments
and surpluses over $_____must be refunded within ________ days. - ANS 1/6th (2 months),
$50 (fifty dollars), 30 (thirty) days.
A seller takes back a $100,000 PMM @ 5.5% interest. This straight note will balloon after 10
years of payments. How much is the balloon payment? - ANS $100,000 + interest for the last
month. A straight note (term mortgage) is a non-amortizing interest only mortgage. The balloon
would include the entire principal plus the last month's interest, as interest is paid in arrears.
FNMA conforming debt ratios equal ______/________. - ANS 28%, maximum housing
expense/36% maximum total obligations
HOEPA stands for ___________________________. - ANS Home Ownership and Equity
Protection Act.
RESPA applies to what type of properties? - ANS 1-4 Unit Residential Properties
On a conventional mortgage loan, who makes the final decision regarding approval, denial or
counter offer? - ANS The Underwriter
The Civil Rights Act of 1866, prohibited public and private racial discrimination in any property
transaction and was expanded in 1968 in which act? - ANS The Civil Rights Act of 1968, also
known as Title VIII of the Civil Rights Act , Also known as Title VIII, Also Known as The Fair
Housing Act
