NMLS FINAL EXAM UPDATED QUESTIONS AND
CORRECT ANSWERS
Question:
1. Under TILA guidelines, all of the following disclosures are provided for an adjustable-rate loan except:
a. The index used to determine rate adjustments
b. Statement that the interest rate will be offered for the duration of the loan
c. Possibility of changes in the payment amount over time
d.Frequency of changes in the annual percentage rate
Answer:
Statement that the interest rate will be offered for the duration of the loan
Question:
2. According to federal fair lending laws, which of the following facts cannot be considered when
qualifying an applicant for a loan?
a. A female applicant is four months pregnant and might not continue working once her baby is born
b. A minority applicant does not have sufficient funds for a down payment
c. A female applicant's credit report and application shows gaps of several months between jobs over the
past two years
d. A disabled applicant's credit report shows several instances of 60- and 90-day late credit card payments
Answer:
A female applicant is four months pregnant and might not continue working once her baby is born
Question:
3. Which of the following is not a change or correction to the closing disclosure that would cause a new
three business day waiting period to begin?
a. A change in the annual percentage rate
b. A change in the type of loan product
c. The addition of a prepayment penalty
d. An additional $500 seller credit
Answer:
An additional $500 seller credit
Question:
4. For which of the following is the creditor permitted to charge more than it discloses in the loan estimate
(i.e., there is no tolerance limitation) and still meet the good faith requirement?
a. Brokerage fee
b. Transfer taxes
c. Recording fees
d. Prepaid interest
Answer:
Prepaid interest
,Question:
5. When must a lender advise loan applicants about the status of their application?
a. Within 30 days
b. Within 90 days
c. Within 3 days
d. Within a week
Answer:
Within 30 days
Question:
6. XYZ Mortgage Company just mailed a closing disclosure to a consumer. The waiting period prior to
closing will begin:
a. The third business day after the closing disclosure is mailed
b. The day on which the company received a completed, signed loan application
c. On the date that the closing disclosure is mailed
d. The next business day in which the closing disclosure is mailed
Answer:
The third business day after the closing disclosure is mailed
Question:
7. Which of the following is one of the stated reasons for implementing the integrated mortgage disclosure
forms?
a. To reduce identity theft
b. To permit lenders to collect fees earlier
c. To lower borrowers' costs
d. To use clear language that borrowers can understand
Answer:
To use clear language that borrowers can understand
Question:
8. Five siblings have ownership rights to a property. If a refinance transaction affecting the property is
subject to rescission, how many of these individuals must submit a rescission order to void the loan?
a. Any one of the five
b. A majority of the five
c. All five
d. At least two of the five
Answer:
Any one of the five
Question:
9. It is legal for settlement service provider A to pay settlement service provider B a portion of fees
charged to a borrower only when
a. Both service providers have a written agreement in place to split fees
b. Service provider B has performed bona fide services to earn the fee
c. The consumer is aware the service providers are splitting the fees
d. The service providers are separate entities and not affiliated in any way
,Answer:
Service provider B has performed bona fide services to earn the fee
Question:
10. All of the following features are prohibited for a qualified mortgage, except
a. 40 year terms
b. Negative amortization
c. Interest-only payments
d.Adjustable interest rates
Answer:
Adjustable interest rates
Question:
11. Which of the following is defined as the cost of credit expressed as a dollar amount?
a. Loan-to-value
b. Finance charge
c. APR
d. Debt ratios
Answer:
Finance charge
Question:
12. The rule that established requirements for ensuring that a borrower can afford to take on a mortgage
loan is known as the
a. Ability to repay rule
b. Qualified borrower rule
c. Repayment rule
d.RESPA rule
Answer:
Ability to repay rule
Question:
13. Under ECOA, when is a notice concerning the right to obtain a copy of the appraisal due to a
customer?
a. Within 90 days of loan application
b. Within three business days of loan application
c. Within 30 days of closing
d. At the time of notice of action taken
Answer:
Within three business days of loan application
Question:
14. A customer with an excellent credit score submits a loan application. When does ECOA require that
the applicant be advised of the status of the application?
a. Within one week
b. Within 90 days
c. Within 30 days
d. Within three days
, Answer:
Within 30 days
Question:
15. 15. HMDA's implementing regulation is:
a. Regulation c
b. Regulation a
c. Regulation z
d. Regulation x
Answer:
Regulation c
Question:
16. The Supreme Court has issued an opinion regarding markups, stating that:
a. Markups, including those that are split, are legal under RESPA
b. Markups are legal under TILA
c. Markups are not a violation of RESPA as long as the fee is not split
d. No markups are legal under TILA
Answer:
Markups are not a violation of RESPA as long as the fee is not split
Question:
17. The USA PATRIOT Act is a federal law that Congress adopted in response to:
a. The meltdown of the mortgage lending market in 2007
b. The terrorist attacks on September 11, 2001
c. The need to make HAMP loans more available to more Americans
d. The need to revitalize the economy in 2008
Answer:
The terrorist attacks on September 11, 2001
Question:
18. John and Jane Brown are co-owners of a property that is their principal residence and are entering into
a refinance transaction that is subject to rescission. John provided with one copy of the Notice of Right to
Cancel, and Jane receives none. What is their deadline for rescission?
a. Three business days after closing
b. Midnight on the third day following closing
c. 72 hours after closing
d. Three years after closing
Answer:
Three years after closing
Question:
19. Under the Homeowners Protection Act, borrowers can request that lenders cancel PMI when their loan
balance is less than ___, or a lender may collect PMI until __ loan-to-value is reached.
a. 80%-78%
b. 65-50%
c. 78-62%
d. 80-65%
CORRECT ANSWERS
Question:
1. Under TILA guidelines, all of the following disclosures are provided for an adjustable-rate loan except:
a. The index used to determine rate adjustments
b. Statement that the interest rate will be offered for the duration of the loan
c. Possibility of changes in the payment amount over time
d.Frequency of changes in the annual percentage rate
Answer:
Statement that the interest rate will be offered for the duration of the loan
Question:
2. According to federal fair lending laws, which of the following facts cannot be considered when
qualifying an applicant for a loan?
a. A female applicant is four months pregnant and might not continue working once her baby is born
b. A minority applicant does not have sufficient funds for a down payment
c. A female applicant's credit report and application shows gaps of several months between jobs over the
past two years
d. A disabled applicant's credit report shows several instances of 60- and 90-day late credit card payments
Answer:
A female applicant is four months pregnant and might not continue working once her baby is born
Question:
3. Which of the following is not a change or correction to the closing disclosure that would cause a new
three business day waiting period to begin?
a. A change in the annual percentage rate
b. A change in the type of loan product
c. The addition of a prepayment penalty
d. An additional $500 seller credit
Answer:
An additional $500 seller credit
Question:
4. For which of the following is the creditor permitted to charge more than it discloses in the loan estimate
(i.e., there is no tolerance limitation) and still meet the good faith requirement?
a. Brokerage fee
b. Transfer taxes
c. Recording fees
d. Prepaid interest
Answer:
Prepaid interest
,Question:
5. When must a lender advise loan applicants about the status of their application?
a. Within 30 days
b. Within 90 days
c. Within 3 days
d. Within a week
Answer:
Within 30 days
Question:
6. XYZ Mortgage Company just mailed a closing disclosure to a consumer. The waiting period prior to
closing will begin:
a. The third business day after the closing disclosure is mailed
b. The day on which the company received a completed, signed loan application
c. On the date that the closing disclosure is mailed
d. The next business day in which the closing disclosure is mailed
Answer:
The third business day after the closing disclosure is mailed
Question:
7. Which of the following is one of the stated reasons for implementing the integrated mortgage disclosure
forms?
a. To reduce identity theft
b. To permit lenders to collect fees earlier
c. To lower borrowers' costs
d. To use clear language that borrowers can understand
Answer:
To use clear language that borrowers can understand
Question:
8. Five siblings have ownership rights to a property. If a refinance transaction affecting the property is
subject to rescission, how many of these individuals must submit a rescission order to void the loan?
a. Any one of the five
b. A majority of the five
c. All five
d. At least two of the five
Answer:
Any one of the five
Question:
9. It is legal for settlement service provider A to pay settlement service provider B a portion of fees
charged to a borrower only when
a. Both service providers have a written agreement in place to split fees
b. Service provider B has performed bona fide services to earn the fee
c. The consumer is aware the service providers are splitting the fees
d. The service providers are separate entities and not affiliated in any way
,Answer:
Service provider B has performed bona fide services to earn the fee
Question:
10. All of the following features are prohibited for a qualified mortgage, except
a. 40 year terms
b. Negative amortization
c. Interest-only payments
d.Adjustable interest rates
Answer:
Adjustable interest rates
Question:
11. Which of the following is defined as the cost of credit expressed as a dollar amount?
a. Loan-to-value
b. Finance charge
c. APR
d. Debt ratios
Answer:
Finance charge
Question:
12. The rule that established requirements for ensuring that a borrower can afford to take on a mortgage
loan is known as the
a. Ability to repay rule
b. Qualified borrower rule
c. Repayment rule
d.RESPA rule
Answer:
Ability to repay rule
Question:
13. Under ECOA, when is a notice concerning the right to obtain a copy of the appraisal due to a
customer?
a. Within 90 days of loan application
b. Within three business days of loan application
c. Within 30 days of closing
d. At the time of notice of action taken
Answer:
Within three business days of loan application
Question:
14. A customer with an excellent credit score submits a loan application. When does ECOA require that
the applicant be advised of the status of the application?
a. Within one week
b. Within 90 days
c. Within 30 days
d. Within three days
, Answer:
Within 30 days
Question:
15. 15. HMDA's implementing regulation is:
a. Regulation c
b. Regulation a
c. Regulation z
d. Regulation x
Answer:
Regulation c
Question:
16. The Supreme Court has issued an opinion regarding markups, stating that:
a. Markups, including those that are split, are legal under RESPA
b. Markups are legal under TILA
c. Markups are not a violation of RESPA as long as the fee is not split
d. No markups are legal under TILA
Answer:
Markups are not a violation of RESPA as long as the fee is not split
Question:
17. The USA PATRIOT Act is a federal law that Congress adopted in response to:
a. The meltdown of the mortgage lending market in 2007
b. The terrorist attacks on September 11, 2001
c. The need to make HAMP loans more available to more Americans
d. The need to revitalize the economy in 2008
Answer:
The terrorist attacks on September 11, 2001
Question:
18. John and Jane Brown are co-owners of a property that is their principal residence and are entering into
a refinance transaction that is subject to rescission. John provided with one copy of the Notice of Right to
Cancel, and Jane receives none. What is their deadline for rescission?
a. Three business days after closing
b. Midnight on the third day following closing
c. 72 hours after closing
d. Three years after closing
Answer:
Three years after closing
Question:
19. Under the Homeowners Protection Act, borrowers can request that lenders cancel PMI when their loan
balance is less than ___, or a lender may collect PMI until __ loan-to-value is reached.
a. 80%-78%
b. 65-50%
c. 78-62%
d. 80-65%
