NMLS PRACTICE EXAM 2026
QUESTIONS AND ANSWERS. VERIFIED
1. Under the TILA-RESPA Integrated Disclosure (TRID) rule, which of the following changes
would require a new three-business-day waiting period before consummation?
A. A decrease in the hazard insurance premium due to a provider change.
B. A change in the loan product, such as switching from a fixed-rate to an ARM.
C. An increase in the aggregate amount of settlement charges by 5%.
D. A reduction in the APR by 0.05% for a regular transaction.
Answer: B
Conceptual Explanation: According to TILA, a new three-business-day waiting period is
triggered if the APR becomes inaccurate, a prepayment penalty is added, or the loan
product changes. A change in the loan product is a specific trigger under TRID.
2. Regulation B, which implements the Equal Credit Opportunity Act (ECOA), requires a lender
to provide a notice of adverse action within how many days of receiving a completed
application?
A. 15 days
,B. 60 days
C. 45 days
D. 30 days
Answer: D
Conceptual Explanation: ECOA (Regulation B) requires notification to the applicant
within 30 days of receiving a completed application regarding the lender’s approval of,
counteroffer to, or adverse action on the application.
3. The Homeowners Protection Act (HPA) mandates that a servicer must automatically cancel
Private Mortgage Insurance (PMI) when the LTV reaches what percentage, provided the
borrower is current?
A. 80% of the original value
B. 78% of the original value
C. 75% of the appraised value
D. 80% of the current market value
Answer: B
Conceptual Explanation: HPA requires automatic termination of PMI when the LTV
reaches 78% of the ‘original value’ of the property, as long as the borrower is current on
payments.
, 4. A Mortgage Loan Originator (MLO) is working with a borrower who is a veteran. The
borrower wants to use a VA loan. What is the maximum flat fee a lender can charge to cover
administrative costs, according to VA guidelines?
A. 3% of the loan amount
B. 2% of the purchase price
C. $500 total
D. 1% of the loan amount
Answer: D
Conceptual Explanation: VA guidelines allow lenders to charge a flat fee of no more than
1% of the loan amount to cover administrative costs and overhead.
5. Under the Home Mortgage Disclosure Act (HMDA/Regulation C), which of the following
data points is NOT required to be reported on the Loan Application Register (LAR)?
A. The borrower’s religion.
B. The gross annual income of the applicant.
C. The borrower’s credit score used in the decision.
D. The race and ethnicity of the applicant.
Answer: A
Conceptual Explanation: HMDA requires reporting of race, ethnicity, sex, and income, but
explicitly prohibits the collection or reporting of an applicant’s religion.
QUESTIONS AND ANSWERS. VERIFIED
1. Under the TILA-RESPA Integrated Disclosure (TRID) rule, which of the following changes
would require a new three-business-day waiting period before consummation?
A. A decrease in the hazard insurance premium due to a provider change.
B. A change in the loan product, such as switching from a fixed-rate to an ARM.
C. An increase in the aggregate amount of settlement charges by 5%.
D. A reduction in the APR by 0.05% for a regular transaction.
Answer: B
Conceptual Explanation: According to TILA, a new three-business-day waiting period is
triggered if the APR becomes inaccurate, a prepayment penalty is added, or the loan
product changes. A change in the loan product is a specific trigger under TRID.
2. Regulation B, which implements the Equal Credit Opportunity Act (ECOA), requires a lender
to provide a notice of adverse action within how many days of receiving a completed
application?
A. 15 days
,B. 60 days
C. 45 days
D. 30 days
Answer: D
Conceptual Explanation: ECOA (Regulation B) requires notification to the applicant
within 30 days of receiving a completed application regarding the lender’s approval of,
counteroffer to, or adverse action on the application.
3. The Homeowners Protection Act (HPA) mandates that a servicer must automatically cancel
Private Mortgage Insurance (PMI) when the LTV reaches what percentage, provided the
borrower is current?
A. 80% of the original value
B. 78% of the original value
C. 75% of the appraised value
D. 80% of the current market value
Answer: B
Conceptual Explanation: HPA requires automatic termination of PMI when the LTV
reaches 78% of the ‘original value’ of the property, as long as the borrower is current on
payments.
, 4. A Mortgage Loan Originator (MLO) is working with a borrower who is a veteran. The
borrower wants to use a VA loan. What is the maximum flat fee a lender can charge to cover
administrative costs, according to VA guidelines?
A. 3% of the loan amount
B. 2% of the purchase price
C. $500 total
D. 1% of the loan amount
Answer: D
Conceptual Explanation: VA guidelines allow lenders to charge a flat fee of no more than
1% of the loan amount to cover administrative costs and overhead.
5. Under the Home Mortgage Disclosure Act (HMDA/Regulation C), which of the following
data points is NOT required to be reported on the Loan Application Register (LAR)?
A. The borrower’s religion.
B. The gross annual income of the applicant.
C. The borrower’s credit score used in the decision.
D. The race and ethnicity of the applicant.
Answer: A
Conceptual Explanation: HMDA requires reporting of race, ethnicity, sex, and income, but
explicitly prohibits the collection or reporting of an applicant’s religion.
