NMLS TEST Questions with Solutions
USDA Loans CORRECT ANS-• Section 502 Loans
• Described under 7 CFR Part 3550 - "Direct Single Family Housing Loans and Grants"
• Covers rural areas
• Made for the purpose of assisting low income borrowers purchase homes in rural areas
• Can be used to...
• Build a home
• Repair, renovate, or relocate a home
• Purchase a lot/home site
• Prepare a lot/home sit, including water and sewage facilities
• ONLY made for 30 year terms
• No required down payment (100% financing)
• While there is no required down payment, the ability to repay must be documented
• DTI ratio of 29% for housing and 42% for total debt
• Includes a non-refundable 2% funding fee (aka guaranty fee)
, NMLS TEST Questions with Solutions
RESPA CORRECT ANS-The Real Estate Settlement Procedure Act is a federal law which
requires an information booklet covering the costs of settlement to potential borrowers
within 3 days of loan application. Must include good faith estimate of closing costs. Known
charges must be disclosed one day before closing. The disclosures are then included on the
Uniform Settlement
Statement commonly referred to as The HUD.
TILA CORRECT ANS-Truth in Lending Act - Reg Z. Requires lenders to reveal total cost of
loan and APR.
HMDA CORRECT ANS-Reg - C home mortgage disclosure act. an act of law that requires
lneders to upoload app data to identify discrimination
There are four things that are important to understanding how HMDA works: CORRECT
ANS-the types of institutions are required to report;
the types of transactions must be reported;
, NMLS TEST Questions with Solutions
what specific information is required to be collected, recorded and reported; and
how the information is reported and disclosed.
HMDA CORRECT ANS-home mortgage disclosure act. an act of law that requires lneders to
upoload app data to identify discrimination; Reg C 1975; 2005 implemented Dood-Frank
To qualify for a USDA loan CORRECT ANS-the borrower must prove that they have income
up to 115 percent of the median income of the area. The borrower must also be living in or
purchasing a property that is in a rural area.
FNMA (Federal National Mortgage Association) CORRECT ANS-Known as Fannie Mae
Private
Buys FHA, VA and conventional loans
Acts in tandem with GNMA
government-sponsored, publicly-traded company; goal to make homeownership possible for
lower-income families; buys and guarantees mortgages, creating mortgage-backed securities
, NMLS TEST Questions with Solutions
which are resold and tradable; relatively safe and very liquid; desirable for several classes of
investors
Freddie Mac CORRECT ANS-FHLMC, Federal Home Loan Mortgage Corporation: A
government supervised enterprise established to purchase primarily conventional mortgage
loans in the secondary mortgage market.
GSE CORRECT ANS-Government Sponsored Enterprise
The Dodd-Frank Wall Street Reform and Consumer Protection Act CORRECT ANS-looked to
strengthen loan originator qualification requirements and regulate industry compensation
practices. The CFPB then issued new rules to implement the Dodd-Frank Act requirements, as
well as to revise and clarify existing regulations and commentary on loan originator
compensation.
Loan Originator Compensation CORRECT ANS-A section of TILA that went into effect in
2014. Mandated by the Dodd-Frank Act and spearheaded by the CFPB
USDA Loans CORRECT ANS-• Section 502 Loans
• Described under 7 CFR Part 3550 - "Direct Single Family Housing Loans and Grants"
• Covers rural areas
• Made for the purpose of assisting low income borrowers purchase homes in rural areas
• Can be used to...
• Build a home
• Repair, renovate, or relocate a home
• Purchase a lot/home site
• Prepare a lot/home sit, including water and sewage facilities
• ONLY made for 30 year terms
• No required down payment (100% financing)
• While there is no required down payment, the ability to repay must be documented
• DTI ratio of 29% for housing and 42% for total debt
• Includes a non-refundable 2% funding fee (aka guaranty fee)
, NMLS TEST Questions with Solutions
RESPA CORRECT ANS-The Real Estate Settlement Procedure Act is a federal law which
requires an information booklet covering the costs of settlement to potential borrowers
within 3 days of loan application. Must include good faith estimate of closing costs. Known
charges must be disclosed one day before closing. The disclosures are then included on the
Uniform Settlement
Statement commonly referred to as The HUD.
TILA CORRECT ANS-Truth in Lending Act - Reg Z. Requires lenders to reveal total cost of
loan and APR.
HMDA CORRECT ANS-Reg - C home mortgage disclosure act. an act of law that requires
lneders to upoload app data to identify discrimination
There are four things that are important to understanding how HMDA works: CORRECT
ANS-the types of institutions are required to report;
the types of transactions must be reported;
, NMLS TEST Questions with Solutions
what specific information is required to be collected, recorded and reported; and
how the information is reported and disclosed.
HMDA CORRECT ANS-home mortgage disclosure act. an act of law that requires lneders to
upoload app data to identify discrimination; Reg C 1975; 2005 implemented Dood-Frank
To qualify for a USDA loan CORRECT ANS-the borrower must prove that they have income
up to 115 percent of the median income of the area. The borrower must also be living in or
purchasing a property that is in a rural area.
FNMA (Federal National Mortgage Association) CORRECT ANS-Known as Fannie Mae
Private
Buys FHA, VA and conventional loans
Acts in tandem with GNMA
government-sponsored, publicly-traded company; goal to make homeownership possible for
lower-income families; buys and guarantees mortgages, creating mortgage-backed securities
, NMLS TEST Questions with Solutions
which are resold and tradable; relatively safe and very liquid; desirable for several classes of
investors
Freddie Mac CORRECT ANS-FHLMC, Federal Home Loan Mortgage Corporation: A
government supervised enterprise established to purchase primarily conventional mortgage
loans in the secondary mortgage market.
GSE CORRECT ANS-Government Sponsored Enterprise
The Dodd-Frank Wall Street Reform and Consumer Protection Act CORRECT ANS-looked to
strengthen loan originator qualification requirements and regulate industry compensation
practices. The CFPB then issued new rules to implement the Dodd-Frank Act requirements, as
well as to revise and clarify existing regulations and commentary on loan originator
compensation.
Loan Originator Compensation CORRECT ANS-A section of TILA that went into effect in
2014. Mandated by the Dodd-Frank Act and spearheaded by the CFPB
