NMLS CERTIFICATION EVALUATION
2026 PRACTICE SOLUTION TESTED.
⫸ Per the Dodd-Frank Act an abusive act would include which of the
following:
1. One that materially interferes with the consumers ability to understand
the product or service.
2. One that take unreasonable advantage of a consumers' lack of
understanding.
3. One that takes unreasonable advantage of the consumer's reasonable
reliance on the MLO. Ans- All three would be considered abusive acts.
⫸ Per the Dodd-Frank Act if an MLO receives compensation directly
from a consumer, up to how much additional compensation may be
received from a lender in the same transaction? Ans- $0.00, dual
compensation is not allowed. Compensation must be borrower paid or
lender paid.
⫸ What kinds of reasons are necessary for a lender to take adverse
action with regard to a borrower? Ans- Specific reasons.
⫸ Adverse action means ______________________. Ans- A denial or
revocation of credit. Also, a change in the terms of an existing credit
arrangement or a refusal to grant credit in substantially the amount or
terms requested.
,⫸ Per Regulation B, Lenders should retain certain records for
_____________ months. Ans- 25 Months
⫸ Because of the impact of the Dodd-Frank Act on a second mortgage,
an APR that exceeds the ________ by more than _____% is the trigger
that defines a high cost loan. Ans- APOR ( Average Prime Offer Rate),
8.5%
⫸ Regulation C is known as ________________________. Ans-
HMDA, The Home Mortgage Disclosure Act.
⫸ What is the purpose of HMDA? Ans- The HMDA determines
whether financial institutions are serving the housing needs of their
communities. It also identifies patterns of discriminatory lending.
⫸ Under what circumstances can a lender with an Affiliated Business
Arrangement require a borrower to use a specific third party service
provider? Ans- If there are no kickback or referral fees and the service
provider is an attorney, credit reporting agency or appraiser the lender
can require that the borrower uses the provider
⫸ If a transfer of servicing occurs, the _______________ must provide
a servicing transfer statement not less than ________ days before the
transfer occurs. Ans- Servicer, 15 (fifteen) days.
,⫸ An individual who fails the MLO written exam 3 times must wait
_________ months to retake the exam. Ans- 6 (Six) Months
⫸ Per RESPA, an annual escrow statement is required to
______________. Ans- determine shortages and surpluses in the escrow
account.
⫸ When must the Servicing Disclosure Statement be provided to the
borrower? Ans- Within 3 (three) Business Days of the Application.
⫸ Any party involved in a federally covered loan that submits
fraudulent information is subject to a fine of up to $___________ and up
to __________years in prison. Ans- $1,000,000 (one million dollars),
30 years in prison
⫸ Per RESPA, an escrow cushion is limited to a maximum of
_________ of the annual payments and surpluses over $_____must be
refunded within ________ days. Ans- 1/6th (2 months), $50 (fifty
dollars), 30 (thirty) days.
⫸ A seller takes back a $100,000 PMM @ 5.5% interest. This straight
note will balloon after 10 years of payments. How much is the balloon
payment? Ans- $100,000 + interest for the last month. A straight note
(term mortgage) is a non-amortizing interest only mortgage. The balloon
, would include the entire principal plus the last month's interest, as
interest is paid in arrears.
⫸ FNMA conforming debt ratios equal ______/________. Ans- 28%,
maximum housing expense/36% maximum total obligations
⫸ HOEPA stands for ___________________________. Ans- Home
Ownership and Equity Protection Act.
⫸ RESPA applies to what type of properties? Ans- 1-4 Unit Residential
Properties
⫸ On a conventional mortgage loan, who makes the final decision
regarding approval, denial or counter offer? Ans- The Underwriter
⫸ The Civil Rights Act of 1866, prohibited public and private racial
discrimination in any property transaction and was expanded in 1968 in
which act? Ans- The Civil Rights Act of 1968, also known as Title VIII
of the Civil Rights Act , Also known as Title VIII, Also Known as The
Fair Housing Act
⫸ Of the following, which is not required to be disclosed on the TIL
statement? The (1) APR, (2) Note Rate, (3) Finance Charge, (4) Amount
Financed or (5) Total of Payments. Ans- The note rate is NOT required.
2026 PRACTICE SOLUTION TESTED.
⫸ Per the Dodd-Frank Act an abusive act would include which of the
following:
1. One that materially interferes with the consumers ability to understand
the product or service.
2. One that take unreasonable advantage of a consumers' lack of
understanding.
3. One that takes unreasonable advantage of the consumer's reasonable
reliance on the MLO. Ans- All three would be considered abusive acts.
⫸ Per the Dodd-Frank Act if an MLO receives compensation directly
from a consumer, up to how much additional compensation may be
received from a lender in the same transaction? Ans- $0.00, dual
compensation is not allowed. Compensation must be borrower paid or
lender paid.
⫸ What kinds of reasons are necessary for a lender to take adverse
action with regard to a borrower? Ans- Specific reasons.
⫸ Adverse action means ______________________. Ans- A denial or
revocation of credit. Also, a change in the terms of an existing credit
arrangement or a refusal to grant credit in substantially the amount or
terms requested.
,⫸ Per Regulation B, Lenders should retain certain records for
_____________ months. Ans- 25 Months
⫸ Because of the impact of the Dodd-Frank Act on a second mortgage,
an APR that exceeds the ________ by more than _____% is the trigger
that defines a high cost loan. Ans- APOR ( Average Prime Offer Rate),
8.5%
⫸ Regulation C is known as ________________________. Ans-
HMDA, The Home Mortgage Disclosure Act.
⫸ What is the purpose of HMDA? Ans- The HMDA determines
whether financial institutions are serving the housing needs of their
communities. It also identifies patterns of discriminatory lending.
⫸ Under what circumstances can a lender with an Affiliated Business
Arrangement require a borrower to use a specific third party service
provider? Ans- If there are no kickback or referral fees and the service
provider is an attorney, credit reporting agency or appraiser the lender
can require that the borrower uses the provider
⫸ If a transfer of servicing occurs, the _______________ must provide
a servicing transfer statement not less than ________ days before the
transfer occurs. Ans- Servicer, 15 (fifteen) days.
,⫸ An individual who fails the MLO written exam 3 times must wait
_________ months to retake the exam. Ans- 6 (Six) Months
⫸ Per RESPA, an annual escrow statement is required to
______________. Ans- determine shortages and surpluses in the escrow
account.
⫸ When must the Servicing Disclosure Statement be provided to the
borrower? Ans- Within 3 (three) Business Days of the Application.
⫸ Any party involved in a federally covered loan that submits
fraudulent information is subject to a fine of up to $___________ and up
to __________years in prison. Ans- $1,000,000 (one million dollars),
30 years in prison
⫸ Per RESPA, an escrow cushion is limited to a maximum of
_________ of the annual payments and surpluses over $_____must be
refunded within ________ days. Ans- 1/6th (2 months), $50 (fifty
dollars), 30 (thirty) days.
⫸ A seller takes back a $100,000 PMM @ 5.5% interest. This straight
note will balloon after 10 years of payments. How much is the balloon
payment? Ans- $100,000 + interest for the last month. A straight note
(term mortgage) is a non-amortizing interest only mortgage. The balloon
, would include the entire principal plus the last month's interest, as
interest is paid in arrears.
⫸ FNMA conforming debt ratios equal ______/________. Ans- 28%,
maximum housing expense/36% maximum total obligations
⫸ HOEPA stands for ___________________________. Ans- Home
Ownership and Equity Protection Act.
⫸ RESPA applies to what type of properties? Ans- 1-4 Unit Residential
Properties
⫸ On a conventional mortgage loan, who makes the final decision
regarding approval, denial or counter offer? Ans- The Underwriter
⫸ The Civil Rights Act of 1866, prohibited public and private racial
discrimination in any property transaction and was expanded in 1968 in
which act? Ans- The Civil Rights Act of 1968, also known as Title VIII
of the Civil Rights Act , Also known as Title VIII, Also Known as The
Fair Housing Act
⫸ Of the following, which is not required to be disclosed on the TIL
statement? The (1) APR, (2) Note Rate, (3) Finance Charge, (4) Amount
Financed or (5) Total of Payments. Ans- The note rate is NOT required.
