NMLS EXAM UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

NMLS EXAM UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS

Question:
1. Conventional Front-End Ratio
Answer:
28%

Question:
2. Conventional Back-End Ratio
Answer:
36%

Question:
3. FHA Front-End Ratio
Answer:
31%

Question:
4. FHA Back-End Ratio
Answer:
43%

Question:
5. VA Front-End Ratio
Answer:
Not Used

Question:
6. VA Back-End Ratio
Answer:
41%

Question:
7. USDA Front-End Ratio
Answer:
29%

Question:
8. USDA Back-End Ratio
Answer:
41%

Question:
9. Wet settlement occurs when...

,Answer:
Parties meet to execute documents and funds are subsequently disbursed.

Question:
10. Dry settlement occurs when...
Answer:
Parties meet to execute documents, but funds are not disbursed. Funds are not disbursed and property is not
conveyed until certain conditions are met.

Question:
11. A "registered mortgage loan originator" is an individual who is...
Answer:
employed by an exempt depository institution and is therefore also exempt from licensure as a loan
originator

Question:
12. The intention of the Safeguards Rule is to...
Answer:
ensure the protection of personal information through an effective security program.

Question:
13. The Dodd-Frank Act broadened the scope of HOEPA to cover almost all mortgage types, except for...
Answer:
reverse mortgages.

Question:
14. The Derringers have rescinded their loan transaction, informing their lender of their decision by mail.
They are entitled to a full refund within:
Answer:
20 Days

Question:
15. If a loan originator has not renewed his/her license by December 31st, he/she may:
Answer:
not continue to conduct any loan originator activities until the license has been renewed.

Question:
16. TILA allows for a rescission period on the refinance of a borrower's ________ dwelling...
Answer:
Principal

Question:
17. To determine the lifetime rate cap...
Answer:
Subtract the start rate from the maximum rate

,Question:
18. Does a seller pay % of the sales price or % of the loan amount?
Answer:
Sales Price

Question:
19. When a creditor takes steps legally to force the sale of a property in an effort to collect on a loan in
default, it is known as...
Answer:
foreclosure

Question:
20. Foreclosure is...
Answer:
the sale of property to satisfy unpaid debt after a borrower's default on payments.

Question:
21. What term describes the transfer of ownership of real estate from one owner to another?
Answer:
conveyance

Question:
22. Enhancing protection and reducing fraud by directing states to adopt minimum uniform standards for
the licensing and registration of residential mortgage loan originators was the purpose of the federal act
known as the...
Answer:
S.A.F.E. Act

Question:
23. Does a consumer need to pay for a second appraisal if one is needed?
Answer:
NO

Question:
24. The term "maximum guaranty amount" applies to _____ loans, and it refers to _____.
Answer:
VA; the maximum amount that the VA will pay to a lender if the borrower defaults on a loan.

Question:
25. Is it federal law or state law that best describes the fiduciary duty that a loan originator owes to a
consumer?
Answer:
State

Question:
26. The ______ is a trigger term in advertising for both open- and closed-end loans.

, Answer:
Finance Charge

Question:
27. 100% financing, more lenient underwriting requirements, and no prepayment penalties.
Answer:
Advantages of VA loans

Question:
28. Exempt from the ATR rule
Answer:
An open end HELOC

Question:
29. What entity requires to give the CHARM Booklet?
Answer:
TILA

Question:
30. Additional disclosures required in an ad containing a trigger term include...
Answer:
the amount or percentage of the down payment, the terms of repayment, and the annual percentage rate.

Question:
31. The Right to Rescind applies to...
Answer:
HELOC / Refinances

Question:
32. How much hazard insurance does FNMA require on a property?
Answer:
100% of the insurable replacement cost of project improvements

Question:
33. Examples of FHA loan products...
Answer:
Cash-out refinances, home equity conversion mortgages, and streamline refinances.

Question:
34. When a creditor revises a Loan Estimate, it must deliver the revised disclosure to the loan applicant:
Answer:
No later than four business days prior to consummation.

Question:
35. The funding fee for a first-time user who is regular military, purchasing a home using a VA loan, is...