NMLS SAFE EXAM QUESTIONS & ANSWERS
Regulation Z - Answer -Enforced by Consumer Financial Protection Bureau (CFPB),
covers the Consumer Protection Act and the Truth in Lending Act (TILA)
Consumer Protection Act - Answer -Disclosures of terms of credit
Truth in Lending Act (TILA) - Answer -Enforced by the Federal Reserve System, must
contain nominal interest rates, loan points and discount points, finance charges, amount
financed, annual percentage rate (APR)
Nominal Interest Rate - Answer -Interest rate specified in the promissory note, which is
the rate at which monthly payments are computed
Loan points and discount points - Answer -Fees paid in advance to reduce nominal
interest rate and are also expressed as a percentage of the loan amount, they are
expressed and a percentage.
Finance charge - Answer -Fees paid up front for the loan: Interest cost of the loan, loan
origination fees, loan points and discount points, and mortgage insurance premiums
Amount Financed - Answer -Loan amount plus any fees financed by the lender (ex
UFMIP) minus any fees deducted from the loan amount such as discount points
Annual Percentage Rate (APR) - Answer -The annual cost of credit expressed in
percentage terms (the total amount of all expenses used to finance the loan)
Regulation X - Answer -Enforced by The Consumer Financial Protection Bureau
(CFPB), covers the Real Estate Settlement Procedures Act (RESPA)
Real Estate Settlement Procedures Act (RESPA) - Answer -Allows consumers to shop
for settlement services by providing extensive disclosures regarding settlement costs,
prevents kickbacks and referral fees, limits escrow fees for payments of property tax,
hazard insurance and such, and prohibits sellers from requiring a certain title company
Disclosures covered by RESPA - Answer -Transfer of Service Disclosure, Good Faith
Estimate, Special Information Booklet, Mortgage Servicing Disclosures Statement
Home Ownership Equity Protection Act (HOEPA) - Answer -Amended through TILA
enforced by CFPB for depositary lenders and attorney general of each other the states.
Prohibits a number of unfair lending practices and have two different levels of loans that
trigger special rules: High-Priced Mortgage Loans (HPMLS) and High-Cost Loans
(Section 32)
Higher Priced Mortgage Loans (HPMLS) - Answer -For first mortgages, if the APR of
the loan exceeds 1.5% above the Average Prime Offer Rate (APOR) as of the date of
Regulation Z - Answer -Enforced by Consumer Financial Protection Bureau (CFPB),
covers the Consumer Protection Act and the Truth in Lending Act (TILA)
Consumer Protection Act - Answer -Disclosures of terms of credit
Truth in Lending Act (TILA) - Answer -Enforced by the Federal Reserve System, must
contain nominal interest rates, loan points and discount points, finance charges, amount
financed, annual percentage rate (APR)
Nominal Interest Rate - Answer -Interest rate specified in the promissory note, which is
the rate at which monthly payments are computed
Loan points and discount points - Answer -Fees paid in advance to reduce nominal
interest rate and are also expressed as a percentage of the loan amount, they are
expressed and a percentage.
Finance charge - Answer -Fees paid up front for the loan: Interest cost of the loan, loan
origination fees, loan points and discount points, and mortgage insurance premiums
Amount Financed - Answer -Loan amount plus any fees financed by the lender (ex
UFMIP) minus any fees deducted from the loan amount such as discount points
Annual Percentage Rate (APR) - Answer -The annual cost of credit expressed in
percentage terms (the total amount of all expenses used to finance the loan)
Regulation X - Answer -Enforced by The Consumer Financial Protection Bureau
(CFPB), covers the Real Estate Settlement Procedures Act (RESPA)
Real Estate Settlement Procedures Act (RESPA) - Answer -Allows consumers to shop
for settlement services by providing extensive disclosures regarding settlement costs,
prevents kickbacks and referral fees, limits escrow fees for payments of property tax,
hazard insurance and such, and prohibits sellers from requiring a certain title company
Disclosures covered by RESPA - Answer -Transfer of Service Disclosure, Good Faith
Estimate, Special Information Booklet, Mortgage Servicing Disclosures Statement
Home Ownership Equity Protection Act (HOEPA) - Answer -Amended through TILA
enforced by CFPB for depositary lenders and attorney general of each other the states.
Prohibits a number of unfair lending practices and have two different levels of loans that
trigger special rules: High-Priced Mortgage Loans (HPMLS) and High-Cost Loans
(Section 32)
Higher Priced Mortgage Loans (HPMLS) - Answer -For first mortgages, if the APR of
the loan exceeds 1.5% above the Average Prime Offer Rate (APOR) as of the date of
