Loan Originator Practice Exam 7 Questions and Answers Latest Update 2025
"Which of the following is responsible for determining whether to issue a license approval?
The NMLS
The Governor
The Legislature
The Commissioner" - Answers "The Commissioner.
The Commissioner or state regulator for financial institutions determines licensing eligibility.
"
"Which of the following is required if a borrower receives an Adverse Action Notice?
A suggestion of a loan product for which the consumer may be eligible
A referral to a lender who offers subprime products
A statement that ECOA prohibits discrimination against credit applicants
A statement of the minimum credit score required for loan approval" - Answers "a statement that ECOA
prohibits discrimination against credit applicants.
There must be a statement on the Adverse Action Notice stating that ECOA prohibits discrimination
against credit applicants.
"
A state-licensed loan originator who fails to maintain a valid license for a period of _____ years or longer
shall be required to retake the NMLS test. - Answers "five.
The NMLS requires a licensee who fails to maintain a license for five years or longer to retake the exam.
"
, "Which of the following is a limit on the amount that the payment can change on any adjustment date
from the current or previous payment amount on an ARM?
Initial rate cap
Payment cap
Periodic rate cap
Lifetime rate cap" - Answers "payment cap.
The payment cap is a limit on the amount by which the payment can change on any adjustment date
from the current or previous payment amount on an ARM.
"
"Renewal of a loan originator license is the responsibility of:
" - Answers "the loan originator.
The loan originator's individual license is the sole responsibility of the originator. While the sponsoring
entity is responsible for the actions of the originator while employed, renewal of an individual license is
not the entity's responsibility.
"
A borrower obtains an ARM with a start rate of 2%. The ARM has an initial cap of 1%, a periodic cap of
2%, and a lifetime cap of 4%. Assume that the ARM will adjust three times, and that at each adjustment,
the rate will increase by the maximum amount possible. What is the maximum amount that the interest
rate can reach? - Answers "6%.
At the first adjustment, the ARM rate would increase from 2% to 3%. At the second adjustment, it would
increase from 3% to 5%. At the third increase, it would increase from 5% to 7%. However, the lifetime
rate cap is 4%, meaning that the rate may never be higher than 6% (2% + 4% = 6%). As a result, the
interest rate may never be higher than 6%.
"
"Which of the following is responsible for determining whether to issue a license approval?
The NMLS
The Governor
The Legislature
The Commissioner" - Answers "The Commissioner.
The Commissioner or state regulator for financial institutions determines licensing eligibility.
"
"Which of the following is required if a borrower receives an Adverse Action Notice?
A suggestion of a loan product for which the consumer may be eligible
A referral to a lender who offers subprime products
A statement that ECOA prohibits discrimination against credit applicants
A statement of the minimum credit score required for loan approval" - Answers "a statement that ECOA
prohibits discrimination against credit applicants.
There must be a statement on the Adverse Action Notice stating that ECOA prohibits discrimination
against credit applicants.
"
A state-licensed loan originator who fails to maintain a valid license for a period of _____ years or longer
shall be required to retake the NMLS test. - Answers "five.
The NMLS requires a licensee who fails to maintain a license for five years or longer to retake the exam.
"
, "Which of the following is a limit on the amount that the payment can change on any adjustment date
from the current or previous payment amount on an ARM?
Initial rate cap
Payment cap
Periodic rate cap
Lifetime rate cap" - Answers "payment cap.
The payment cap is a limit on the amount by which the payment can change on any adjustment date
from the current or previous payment amount on an ARM.
"
"Renewal of a loan originator license is the responsibility of:
" - Answers "the loan originator.
The loan originator's individual license is the sole responsibility of the originator. While the sponsoring
entity is responsible for the actions of the originator while employed, renewal of an individual license is
not the entity's responsibility.
"
A borrower obtains an ARM with a start rate of 2%. The ARM has an initial cap of 1%, a periodic cap of
2%, and a lifetime cap of 4%. Assume that the ARM will adjust three times, and that at each adjustment,
the rate will increase by the maximum amount possible. What is the maximum amount that the interest
rate can reach? - Answers "6%.
At the first adjustment, the ARM rate would increase from 2% to 3%. At the second adjustment, it would
increase from 3% to 5%. At the third increase, it would increase from 5% to 7%. However, the lifetime
rate cap is 4%, meaning that the rate may never be higher than 6% (2% + 4% = 6%). As a result, the
interest rate may never be higher than 6%.
"
