NMLS FINAL EXAM UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS
Question:
1. Who is responsible for ensuring that the Closing Disclosure is delivered to the consumer?
A.The creditor
B.The loan processor
C.The consumer
D. The CFPB
Answer:
A. the creditor
Question:
2. Which law restricts the sharing of information given when a consumer applies for a mortgage loan?
A. Fair Credit Reporting Act
B. FTC Disposal Rules
C. Gramm-Leach-Bliley Act
D. Consumer Regulatory Protection Act
Answer:
C. Gramm-Leach-Bliley Act
Question:
3. Which document actually contains the borrower's promise to repay the loan?
A. The deed
B. The mortgage
C. The note
D. The TIL Disclosure
Answer:
C. The note
Question:
4. The practice of intentionally targeting borrowers in poor or underserved areas with predatory loans is
known as:
A. Redlining
B. Steering
C. Misappropriation
D. Reverse redlining
Answer:
D. Reverse redlining
Question:
5. If a lender wants to obtain copies of a borrower's tax returns, the borrower is asked to sign what?
A. 4506-T
B. A waiver of financial information
C. 1003
D. 1040
,Answer:
A. 4506-T
Question:
6. An increase in fees and issuance of a revised Loan Estimate to reflect the new amounts is permitted in
which of the following cases?
A. The creditor failed to provide an accurate estimate of transfer taxes and wants to issue a revised Loan
Estimate showing actual costs
B. The consumer is not allowed to shop for flood zone determination services and the actual costs are more
than the estimated costs
C. The title company affiliated with the lender decides to charge more for its services than initially
disclosed
D. The consumer has failed to respond to a loan officer within ten business days and the lending terms
have changed
Answer:
D. The consumer has failed to respond to a loan officer within ten business days and the lending terms
have changed
Question:
7. All of the following are true of FHA fixed-rate loans, except:
A. They require upfront MIP on all loans
B. They are available in 15- and 30-year terms
C. The borrower is only required to carry MIP until the LTV reaches 78%
D. The borrower must make at least a 3.50% investment
Answer:
C. The borrower is only required to carry MIP until the LTV reaches 78%
Question:
8. Previously used as compensation for mortgage professionals, yield spread premiums must now be used:
A.As referral fees paid to the broker by a settlement service provider
B. As credits to the borrower to help pay settlement costs
C. As commissions paid in addition to mortgage broker compensation
D. As credits off of the interest rate of the loan
Answer:
B. As credits to the borrower to help pay settlement costs
Question:
9. On which portion of the loan application would one find a street address and legal description of the
property?
A. Section X
B. Section II
C. Section XV
D. Section III
Answer:
B. Section II
, Question:
10. Which of the following best describes the legal consequences of providing an inflated description of
income on a loan application?
A. It is not an illegal act, but may impact the consumer's credit score
B. It is a violation of multiple federal lending laws and constitutes fraud
C. It is not a violation of criminal laws, and any penalties imposed are civil, not criminal
D. It is not illegal if the applicant inflates his or her income to secure approval for the loan but fully intends
to repay the obligation
Answer:
B. It is a violation of multiple federal lending laws and constitutes fraud
Question:
11. Which of the following is permitted as a result of a referral?
A. A free monthly pass to the gym with each closing
B. A well-written thank you note
C. A coffee card for each client
D. The names, phone numbers, and annual incomes of clients who have applied for loans
Answer:
B. A well-written thank you note
Question:
12. What agency ensures that GSEs are using sound financial practices and have adequate capital to
engage in the mortgage business?
A. The Federal Housing Finance Agency
B. The Department of Housing and Urban Development
C. The Office of the Comptroller of the Treasury
D. The Office of Federal Housing Enterprise Oversight
Answer:
A. The Federal Housing Finance Agency
Question:
13. What is the maximum fee that may be charged for preparation of the Closing Disclosure?
A. $50
B. .1% of the loan amount
C. $0
D. 1% of the loan amount
Answer:
C) $0
Question:
14. Don is refinancing his home in order to save money. If the loan goes through, his payment will drop
from $2,000 per month (PITI) to $1,500 per month (PITI). Don's gross income each month is $6,800, but
he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is
Don's housing ratio on the proposed loan?
A.29%
B.31%
C.48%
D. 22%
CORRECT ANSWERS
Question:
1. Who is responsible for ensuring that the Closing Disclosure is delivered to the consumer?
A.The creditor
B.The loan processor
C.The consumer
D. The CFPB
Answer:
A. the creditor
Question:
2. Which law restricts the sharing of information given when a consumer applies for a mortgage loan?
A. Fair Credit Reporting Act
B. FTC Disposal Rules
C. Gramm-Leach-Bliley Act
D. Consumer Regulatory Protection Act
Answer:
C. Gramm-Leach-Bliley Act
Question:
3. Which document actually contains the borrower's promise to repay the loan?
A. The deed
B. The mortgage
C. The note
D. The TIL Disclosure
Answer:
C. The note
Question:
4. The practice of intentionally targeting borrowers in poor or underserved areas with predatory loans is
known as:
A. Redlining
B. Steering
C. Misappropriation
D. Reverse redlining
Answer:
D. Reverse redlining
Question:
5. If a lender wants to obtain copies of a borrower's tax returns, the borrower is asked to sign what?
A. 4506-T
B. A waiver of financial information
C. 1003
D. 1040
,Answer:
A. 4506-T
Question:
6. An increase in fees and issuance of a revised Loan Estimate to reflect the new amounts is permitted in
which of the following cases?
A. The creditor failed to provide an accurate estimate of transfer taxes and wants to issue a revised Loan
Estimate showing actual costs
B. The consumer is not allowed to shop for flood zone determination services and the actual costs are more
than the estimated costs
C. The title company affiliated with the lender decides to charge more for its services than initially
disclosed
D. The consumer has failed to respond to a loan officer within ten business days and the lending terms
have changed
Answer:
D. The consumer has failed to respond to a loan officer within ten business days and the lending terms
have changed
Question:
7. All of the following are true of FHA fixed-rate loans, except:
A. They require upfront MIP on all loans
B. They are available in 15- and 30-year terms
C. The borrower is only required to carry MIP until the LTV reaches 78%
D. The borrower must make at least a 3.50% investment
Answer:
C. The borrower is only required to carry MIP until the LTV reaches 78%
Question:
8. Previously used as compensation for mortgage professionals, yield spread premiums must now be used:
A.As referral fees paid to the broker by a settlement service provider
B. As credits to the borrower to help pay settlement costs
C. As commissions paid in addition to mortgage broker compensation
D. As credits off of the interest rate of the loan
Answer:
B. As credits to the borrower to help pay settlement costs
Question:
9. On which portion of the loan application would one find a street address and legal description of the
property?
A. Section X
B. Section II
C. Section XV
D. Section III
Answer:
B. Section II
, Question:
10. Which of the following best describes the legal consequences of providing an inflated description of
income on a loan application?
A. It is not an illegal act, but may impact the consumer's credit score
B. It is a violation of multiple federal lending laws and constitutes fraud
C. It is not a violation of criminal laws, and any penalties imposed are civil, not criminal
D. It is not illegal if the applicant inflates his or her income to secure approval for the loan but fully intends
to repay the obligation
Answer:
B. It is a violation of multiple federal lending laws and constitutes fraud
Question:
11. Which of the following is permitted as a result of a referral?
A. A free monthly pass to the gym with each closing
B. A well-written thank you note
C. A coffee card for each client
D. The names, phone numbers, and annual incomes of clients who have applied for loans
Answer:
B. A well-written thank you note
Question:
12. What agency ensures that GSEs are using sound financial practices and have adequate capital to
engage in the mortgage business?
A. The Federal Housing Finance Agency
B. The Department of Housing and Urban Development
C. The Office of the Comptroller of the Treasury
D. The Office of Federal Housing Enterprise Oversight
Answer:
A. The Federal Housing Finance Agency
Question:
13. What is the maximum fee that may be charged for preparation of the Closing Disclosure?
A. $50
B. .1% of the loan amount
C. $0
D. 1% of the loan amount
Answer:
C) $0
Question:
14. Don is refinancing his home in order to save money. If the loan goes through, his payment will drop
from $2,000 per month (PITI) to $1,500 per month (PITI). Don's gross income each month is $6,800, but
he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is
Don's housing ratio on the proposed loan?
A.29%
B.31%
C.48%
D. 22%
