NMLS FEDERAL MORTGAGE LAW PRACTICE EXAM
QUESTIONS AND CORRECT ANSWER WITH
EXPLANATION LATEST 2025-2026
1. The SAFE Act is a federal law designed to:
A. Regulate home prices
B. Establish licensing standards for mortgage loan originators
C. Control property taxes
D. Approve loans
Answer: B
Rationale: The SAFE Act standardizes licensing and registration of MLOs nationwide.
2. The CFPB stands for:
A. Consumer Financial Protection Bureau
B. Central Federal Property Bank
C. Credit Finance Protection Board
D. Consumer Federal Property Bureau
Answer: A
Rationale: CFPB enforces federal consumer financial laws.
3. RESPA stands for:
A. Real Estate Settlement Procedures Act
B. Residential Escrow Protection Act
C. Real Estate Security Policy Act
D. Regional Escrow Settlement Act
Answer: A
Rationale: RESPA regulates settlement practices and disclosures.
4. TILA stands for:
,A. Tax Interest Loan Act
B. Truth in Lending Act
C. Total Income Lending Agreement
D. Trust Insurance Loan Act
Answer: B
Rationale: TILA ensures clear disclosure of credit terms.
5. APR means:
A. Annual Property Rate
B. Annual Percentage Rate
C. Adjusted Payment Ratio
D. Average Payment Return
Answer: B
Rationale: APR reflects the total cost of credit.
6. ECOA prohibits discrimination based on:
A. Income only
B. Race, religion, sex, and other protected classes
C. Property type
D. Loan amount
Answer: B
Rationale: Equal Credit Opportunity Act ensures fair lending.
7. HMDA requires lenders to:
A. Approve all loans
B. Report mortgage data
C. Set interest rates
D. Appraise homes
Answer: B
Rationale: Home Mortgage Disclosure Act tracks lending data.
8. A Loan Estimate must be provided within:
, A. 1 day
B. 3 business days
C. 5 days
D. 10 days
Answer: B
Rationale: Required within 3 business days of application.
9. The Closing Disclosure must be given at least:
A. 1 day before closing
B. 3 business days before closing
C. 5 days before closing
D. 7 days before closing
Answer: B
Rationale: Federal law requires 3-day review period.
10. RESPA prohibits:
A. Mortgage lending
B. Kickbacks and referral fees
C. Appraisals
D. Insurance
Answer: B
Rationale: Prevents illegal compensation.
11. A mortgage loan originator may:
A. Approve loans
B. Take applications
C. Set interest rates
D. Issue titles
Answer: B
Rationale: MLOs gather applications but do not approve loans.
12. A mortgage loan originator may NOT:
QUESTIONS AND CORRECT ANSWER WITH
EXPLANATION LATEST 2025-2026
1. The SAFE Act is a federal law designed to:
A. Regulate home prices
B. Establish licensing standards for mortgage loan originators
C. Control property taxes
D. Approve loans
Answer: B
Rationale: The SAFE Act standardizes licensing and registration of MLOs nationwide.
2. The CFPB stands for:
A. Consumer Financial Protection Bureau
B. Central Federal Property Bank
C. Credit Finance Protection Board
D. Consumer Federal Property Bureau
Answer: A
Rationale: CFPB enforces federal consumer financial laws.
3. RESPA stands for:
A. Real Estate Settlement Procedures Act
B. Residential Escrow Protection Act
C. Real Estate Security Policy Act
D. Regional Escrow Settlement Act
Answer: A
Rationale: RESPA regulates settlement practices and disclosures.
4. TILA stands for:
,A. Tax Interest Loan Act
B. Truth in Lending Act
C. Total Income Lending Agreement
D. Trust Insurance Loan Act
Answer: B
Rationale: TILA ensures clear disclosure of credit terms.
5. APR means:
A. Annual Property Rate
B. Annual Percentage Rate
C. Adjusted Payment Ratio
D. Average Payment Return
Answer: B
Rationale: APR reflects the total cost of credit.
6. ECOA prohibits discrimination based on:
A. Income only
B. Race, religion, sex, and other protected classes
C. Property type
D. Loan amount
Answer: B
Rationale: Equal Credit Opportunity Act ensures fair lending.
7. HMDA requires lenders to:
A. Approve all loans
B. Report mortgage data
C. Set interest rates
D. Appraise homes
Answer: B
Rationale: Home Mortgage Disclosure Act tracks lending data.
8. A Loan Estimate must be provided within:
, A. 1 day
B. 3 business days
C. 5 days
D. 10 days
Answer: B
Rationale: Required within 3 business days of application.
9. The Closing Disclosure must be given at least:
A. 1 day before closing
B. 3 business days before closing
C. 5 days before closing
D. 7 days before closing
Answer: B
Rationale: Federal law requires 3-day review period.
10. RESPA prohibits:
A. Mortgage lending
B. Kickbacks and referral fees
C. Appraisals
D. Insurance
Answer: B
Rationale: Prevents illegal compensation.
11. A mortgage loan originator may:
A. Approve loans
B. Take applications
C. Set interest rates
D. Issue titles
Answer: B
Rationale: MLOs gather applications but do not approve loans.
12. A mortgage loan originator may NOT:
