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NMLS SAFE Exam Questions and Answers
100% Pass
Primary Mortgage Market - ANS Where credit institutions originate loans
C. The maximum the rate can increase over the life of the loan - ANS 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
B. The borrower qualified at the buydown rate - ANS 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
A. Age - ANS All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
C. Disability
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D.Religion
Encrumbrance - ANS Claim against property held by one who is not the legal owner
Trigger Term - ANS Advertised term that requires additional disclosures
Advertising Disclosure - ANS An advertisement must be presented "clearly and
conspicuously" to keep from being deceptive, unfair, or otherwise violate a Commission rule
Waving Right of Rescission - ANS Extenuating circumstances such as "bona fide personal
financial emergency
Right of Rescission - ANS Right that borrowers have to cancel a loan or line of credit with a
lender within three days of closing
Business Day - ANS When creditors office is open to the public, a calendar working day
except Sunday or a federal holiday
Application - ANS Financial information used for purposes of obtaining an extension of credit
Disclosure - ANS The act of making new information known
FTC
Federal Trade Commission - ANS Mission is to promote consumer protection and eliminate
and prevent anticompetitive business practices
CFPB
, ©THESTAR 2025 ALL RIGHTS RESERVED
Consumer Financial Protection Bureau - ANS Regulatory agency charged with overseeing
financial products and services offered to consumers
TILA
Truth in Lending Act - ANS 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
Per Diem Interest - ANS Interest charged on a loan for one or more days
Annual Interest Rate Formula - ANS Principal (X) Interest Rate = Annual Interest Rate
Interest Only Mortgage - ANS Mortgage where the mortgagor is only required to pay off the
interest that arises from the principal that is borrowed for a set period
Permanent Buydown - ANS Borrower chooses to pay additional "discount points" to buy
down the interest rate for the life of the mortgage note
2/1 Buydown - ANS 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
Discount Point - ANS A form of pre-paid interest which effectively increases the yield on the
loan above the amount of the stated interest rate
CLTV
Combined Loan to Value - ANS 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
, ©THESTAR 2025 ALL RIGHTS RESERVED
LTV
Loan to Value - ANS Ratio of a loan to the value of an asset purchased
PITI - ANS Principal, Interest, Taxes, Insurance
Refers to the components of a mortgage payment
DIF - ANS Housing to Debt
Ratio that measures an individual's ability to manage monthly payment and repay debts
Forbearance - ANS Agreement between the lender and the borrower to delay foreclosure
Loan Modification - ANS A permanent restructuring of the mortgage where one or more of
the terms of a borrower's loan are changed to provide a more affordable payment
Foreclosure - ANS Legal process to collect debt on mortgaged property
Satisfaction of Mortgage Letter - ANS Document generated and signed by a mortgage lender,
acknowledging that the borrower has paid off the mortgage loan in full and the mortgage is not
a lien on the property
Subordination Agreement - ANS When two mortgages are on a property, this specifies which
mortgage takes precedence
Payoff Statement - ANS Provides homeowner proof the mortgage is paid off
Constructive Note - ANS Legal presumption that anything recorded in a public record can be
known by anyone
NMLS SAFE Exam Questions and Answers
100% Pass
Primary Mortgage Market - ANS Where credit institutions originate loans
C. The maximum the rate can increase over the life of the loan - ANS 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
B. The borrower qualified at the buydown rate - ANS 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
A. Age - ANS All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
C. Disability
, ©THESTAR 2025 ALL RIGHTS RESERVED
D.Religion
Encrumbrance - ANS Claim against property held by one who is not the legal owner
Trigger Term - ANS Advertised term that requires additional disclosures
Advertising Disclosure - ANS An advertisement must be presented "clearly and
conspicuously" to keep from being deceptive, unfair, or otherwise violate a Commission rule
Waving Right of Rescission - ANS Extenuating circumstances such as "bona fide personal
financial emergency
Right of Rescission - ANS Right that borrowers have to cancel a loan or line of credit with a
lender within three days of closing
Business Day - ANS When creditors office is open to the public, a calendar working day
except Sunday or a federal holiday
Application - ANS Financial information used for purposes of obtaining an extension of credit
Disclosure - ANS The act of making new information known
FTC
Federal Trade Commission - ANS Mission is to promote consumer protection and eliminate
and prevent anticompetitive business practices
CFPB
, ©THESTAR 2025 ALL RIGHTS RESERVED
Consumer Financial Protection Bureau - ANS Regulatory agency charged with overseeing
financial products and services offered to consumers
TILA
Truth in Lending Act - ANS 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
Per Diem Interest - ANS Interest charged on a loan for one or more days
Annual Interest Rate Formula - ANS Principal (X) Interest Rate = Annual Interest Rate
Interest Only Mortgage - ANS Mortgage where the mortgagor is only required to pay off the
interest that arises from the principal that is borrowed for a set period
Permanent Buydown - ANS Borrower chooses to pay additional "discount points" to buy
down the interest rate for the life of the mortgage note
2/1 Buydown - ANS 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
Discount Point - ANS A form of pre-paid interest which effectively increases the yield on the
loan above the amount of the stated interest rate
CLTV
Combined Loan to Value - ANS 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
, ©THESTAR 2025 ALL RIGHTS RESERVED
LTV
Loan to Value - ANS Ratio of a loan to the value of an asset purchased
PITI - ANS Principal, Interest, Taxes, Insurance
Refers to the components of a mortgage payment
DIF - ANS Housing to Debt
Ratio that measures an individual's ability to manage monthly payment and repay debts
Forbearance - ANS Agreement between the lender and the borrower to delay foreclosure
Loan Modification - ANS A permanent restructuring of the mortgage where one or more of
the terms of a borrower's loan are changed to provide a more affordable payment
Foreclosure - ANS Legal process to collect debt on mortgaged property
Satisfaction of Mortgage Letter - ANS Document generated and signed by a mortgage lender,
acknowledging that the borrower has paid off the mortgage loan in full and the mortgage is not
a lien on the property
Subordination Agreement - ANS When two mortgages are on a property, this specifies which
mortgage takes precedence
Payoff Statement - ANS Provides homeowner proof the mortgage is paid off
Constructive Note - ANS Legal presumption that anything recorded in a public record can be
known by anyone
