NMLS PRACTICE EXAM 2026/2027
QUESTIONS AND ANSWERS. VERIFIED
1. Under the SAFE Act, which of the following is NOT required for a state-licensed Mortgage
Loan Originator (MLO)?
A. Completion of 20 hours of pre-licensing education.
B. Passing a qualified written test.
C. A minimum of five years experience in the financial industry.
D. Submission of fingerprints to the NMLS for a background check.
Answer: C
Conceptual Explanation: The SAFE Act does not require a specific number of years of
experience in the industry to obtain a license, although it does require education and
testing.
2. Which regulation prohibits a lender from discouraging a borrower from applying for a
mortgage based on their receipt of public assistance?
A. Regulation Z (TILA)
B. Regulation C (HMDA)
,C. Regulation X (RESPA)
D. Regulation B (ECOA)
Answer: D
Conceptual Explanation: Regulation B, the Equal Credit Opportunity Act (ECOA),
prohibits discrimination based on the fact that all or part of the applicant’s income derives
from any public assistance program.
3. What is the primary purpose of the Home Mortgage Disclosure Act (HMDA)?
A. To ensure lenders provide accurate APR disclosures.
B. To identify potential discriminatory lending patterns.
C. To prevent kickbacks between settlement service providers.
D. To provide borrowers with a three-day right of rescission.
Answer: B
Conceptual Explanation: HMDA (Regulation C) requires lenders to report data to help
identify potential discriminatory lending patterns and ensure institutions are meeting the
housing needs of their communities.
4. A borrower is purchasing a home for $300,000 and putting 10% down. The lender is
charging 2 discount points. How much will the points cost?
A. $6,000
B. $5,400
, C. $3,000
D. $2,700
Answer: B
Conceptual Explanation: Discount points are calculated based on the loan amount. The
loan amount is $270,000 ($300k - $30k down). 2% of $270,000 is $5,400.
5. According to TILA, which of the following is considered a ‘triggering term’ in an
advertisement?
A. ‘Low monthly payments’
B. ‘Competitive interest rates’
C. ‘Terms to fit your budget’
D. ‘10% down payment’
Answer: D
Conceptual Explanation: Under TILA, specific numbers related to the credit terms (like
the down payment amount or percentage) are triggering terms that require full disclosure
of all loan details.
6. Which of these is a prohibited act under RESPA Section 8?
A. Disclosing an affiliated business arrangement.
B. Paying a fee to an appraiser for their services.
C. Providing a Loan Estimate within three business days.
QUESTIONS AND ANSWERS. VERIFIED
1. Under the SAFE Act, which of the following is NOT required for a state-licensed Mortgage
Loan Originator (MLO)?
A. Completion of 20 hours of pre-licensing education.
B. Passing a qualified written test.
C. A minimum of five years experience in the financial industry.
D. Submission of fingerprints to the NMLS for a background check.
Answer: C
Conceptual Explanation: The SAFE Act does not require a specific number of years of
experience in the industry to obtain a license, although it does require education and
testing.
2. Which regulation prohibits a lender from discouraging a borrower from applying for a
mortgage based on their receipt of public assistance?
A. Regulation Z (TILA)
B. Regulation C (HMDA)
,C. Regulation X (RESPA)
D. Regulation B (ECOA)
Answer: D
Conceptual Explanation: Regulation B, the Equal Credit Opportunity Act (ECOA),
prohibits discrimination based on the fact that all or part of the applicant’s income derives
from any public assistance program.
3. What is the primary purpose of the Home Mortgage Disclosure Act (HMDA)?
A. To ensure lenders provide accurate APR disclosures.
B. To identify potential discriminatory lending patterns.
C. To prevent kickbacks between settlement service providers.
D. To provide borrowers with a three-day right of rescission.
Answer: B
Conceptual Explanation: HMDA (Regulation C) requires lenders to report data to help
identify potential discriminatory lending patterns and ensure institutions are meeting the
housing needs of their communities.
4. A borrower is purchasing a home for $300,000 and putting 10% down. The lender is
charging 2 discount points. How much will the points cost?
A. $6,000
B. $5,400
, C. $3,000
D. $2,700
Answer: B
Conceptual Explanation: Discount points are calculated based on the loan amount. The
loan amount is $270,000 ($300k - $30k down). 2% of $270,000 is $5,400.
5. According to TILA, which of the following is considered a ‘triggering term’ in an
advertisement?
A. ‘Low monthly payments’
B. ‘Competitive interest rates’
C. ‘Terms to fit your budget’
D. ‘10% down payment’
Answer: D
Conceptual Explanation: Under TILA, specific numbers related to the credit terms (like
the down payment amount or percentage) are triggering terms that require full disclosure
of all loan details.
6. Which of these is a prohibited act under RESPA Section 8?
A. Disclosing an affiliated business arrangement.
B. Paying a fee to an appraiser for their services.
C. Providing a Loan Estimate within three business days.
