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NMLS SAFE ACT MLO Exam - Ethics and Fraud
Questions with Answers (100% Correct Answers)
A lender provides a borrower with an initial amortization schedule for
Private Mortgage Insurance (PMI) disclosure at loan closing for an
adjustable-rate mortgage. The lender MUST also provide a written
notice stating the
A. Lender's right to increase the monthly payment amount for PMI
B. Borrower's right to refuse a PMI
C. Lender's right to extend the time for monthly payments for a PMI
D. Borrower's right to cancel PMI— Answer: D. Borrower's right to
cancel PMI
The Privacy Rule of the Gramm-Leach-Bliley Act requires that
financial institutions provide the consumer with a Consumer Privacy
Policy disclosure
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A. each time the servicing is transferred.
B. each time the policy is revised.
C. annually as long as the relationship continues.
D. at closing only.— Answer: C. annually as long as the relationship
continues.
Which of the following is true of a dual contract?
A. It deprives the seller of receipt of the full price of the property.
B. It deprives third parties of their proper fees.
C. It defrauds the lender providing the funds for the purchase of the
property.
D. It is usually used so the real estate agent may earn a higher
commission.— Answer: C. It defrauds the lender providing the funds
for the purchase of the property.
Explanation:
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A dual contract is an instrument that states a sales price higher than
the actual sales price in an effort to obtain a larger loan from a lender
or lending institution or for the purpose of misinforming a
governmental agency or some other reason.
Which law ensures that some borrowers have the right of rescission for
three business days after a loan contract is signed?
A. Regulation Z
B. Regulation X
C. Title VIII
D. Equal Credit Opportunity Act— Answer: A. Regulation Z
Explanation:
The Truth in Lending Act (TILA) of 1968 is a United States federal law
and designed to protect Consumers in credit by requiring clear key
terms of the lending arrangement and all costs. is legal in Title I of the
Consumer Credit Protection Act, as amended. The regulations
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, 4
implementing the statute, which are known as "Regulation Z", are
codified at 12 CFR Part 226. Most of the specific requirements imposed
by TILA are found in Regulation Z, so a reference to the requirements
of TILA usually refers to the requirements contained in Regulation Z,
as well as the statute itself.
Which is LEAST LIKELY to be an example of illegal flipping?
A. an inflated appraisal
B. a series of sales and quick resales
C. a group of sellers and buyers changing ownership of one property
among them
D. purchasing and remodeling a house and selling it for quick profit—
Answer: D. purchasing and remodeling a house and selling it for
quick profit
Explanation:
© 2025 All rights reserved
NMLS SAFE ACT MLO Exam - Ethics and Fraud
Questions with Answers (100% Correct Answers)
A lender provides a borrower with an initial amortization schedule for
Private Mortgage Insurance (PMI) disclosure at loan closing for an
adjustable-rate mortgage. The lender MUST also provide a written
notice stating the
A. Lender's right to increase the monthly payment amount for PMI
B. Borrower's right to refuse a PMI
C. Lender's right to extend the time for monthly payments for a PMI
D. Borrower's right to cancel PMI— Answer: D. Borrower's right to
cancel PMI
The Privacy Rule of the Gramm-Leach-Bliley Act requires that
financial institutions provide the consumer with a Consumer Privacy
Policy disclosure
© 2025 All rights reserved
,2
A. each time the servicing is transferred.
B. each time the policy is revised.
C. annually as long as the relationship continues.
D. at closing only.— Answer: C. annually as long as the relationship
continues.
Which of the following is true of a dual contract?
A. It deprives the seller of receipt of the full price of the property.
B. It deprives third parties of their proper fees.
C. It defrauds the lender providing the funds for the purchase of the
property.
D. It is usually used so the real estate agent may earn a higher
commission.— Answer: C. It defrauds the lender providing the funds
for the purchase of the property.
Explanation:
© 2025 All rights reserved
,3
A dual contract is an instrument that states a sales price higher than
the actual sales price in an effort to obtain a larger loan from a lender
or lending institution or for the purpose of misinforming a
governmental agency or some other reason.
Which law ensures that some borrowers have the right of rescission for
three business days after a loan contract is signed?
A. Regulation Z
B. Regulation X
C. Title VIII
D. Equal Credit Opportunity Act— Answer: A. Regulation Z
Explanation:
The Truth in Lending Act (TILA) of 1968 is a United States federal law
and designed to protect Consumers in credit by requiring clear key
terms of the lending arrangement and all costs. is legal in Title I of the
Consumer Credit Protection Act, as amended. The regulations
© 2025 All rights reserved
, 4
implementing the statute, which are known as "Regulation Z", are
codified at 12 CFR Part 226. Most of the specific requirements imposed
by TILA are found in Regulation Z, so a reference to the requirements
of TILA usually refers to the requirements contained in Regulation Z,
as well as the statute itself.
Which is LEAST LIKELY to be an example of illegal flipping?
A. an inflated appraisal
B. a series of sales and quick resales
C. a group of sellers and buyers changing ownership of one property
among them
D. purchasing and remodeling a house and selling it for quick profit—
Answer: D. purchasing and remodeling a house and selling it for
quick profit
Explanation:
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