NMLS SAFE EXAM QUESTIONS
& ANSWERS RATED 100%
CORRECT
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
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 - correct answer ✔✔Loan Modification
Legal process to collect debt on mortgaged property - correct answer ✔✔Foreclosure
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 - correct
answer ✔✔Satisfaction of Mortgage Letter
When two mortgages are on a property, this specifies which mortgage takes precedence -
correct answer ✔✔Subordination Agreement
Provides homeowner proof the mortgage is paid off - correct answer ✔✔Payoff Statement
& ANSWERS RATED 100%
CORRECT
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
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 - correct answer ✔✔Loan Modification
Legal process to collect debt on mortgaged property - correct answer ✔✔Foreclosure
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 - correct
answer ✔✔Satisfaction of Mortgage Letter
When two mortgages are on a property, this specifies which mortgage takes precedence -
correct answer ✔✔Subordination Agreement
Provides homeowner proof the mortgage is paid off - correct answer ✔✔Payoff Statement
