NMLS MLO Midterm Exam 2025/2026
Graded A+ (Comprehensive)
What law deals with credit, APR & advertising of consumer loans? - TILA/REGULATION Z
Which regulation
prohibits kickbacks? - RESPA - Reg X
Which regulation
requires the lender to
cancel PMI when the loan reaches 78% LTV? - HPA- Homeowners Protection Act
Which regulation prohibits fee splitting? - RESPA
"X" is the letter used to describe which Regulation? - RESPA
RESPA is the acronym used to describe which Law? - Real Estate Settlement Procedures Act
What type of mortgage requires a non- refundable funding fee? - VA Loan
What is the provision in a mortgage enabling a lender to demand full repayment if the borrower
DEFAULTS on the loan? - Acceleration Clause
What is the provision in a mortgage enabling a lender to demand full repayment if the borrower
TRANSFERS the loan? - Alienation Clause
What does CFPB Stand for? - Consumer Financial Protection Bureau
What two laws created the CFPB? - Dodd Frank Act and Consumer Finance Protection Act
Which regulation is designed to help meet the Credit Needs of the Communities in which it
operates? - CRA - Community Reinvestment Act
,Under ECOA rules and regulations, how many days does the borrower have to request a copy of an
appraisal report if the application was denied? - 90 Days
Under ECOA rules and regulations, if an application for credit is denied, and if requested by the
borrower - how many days does the lender have to provide a copy of an appraisal report? - 30 Days
If a loan application is APPROVED, under ECOA rules and regulations, when MUST a copy of the
appraisal be provided to the borrower? - 3 business days prior to the loan closing
Conforming Loans follow the guidelines of which regulators? - Fannie Mae and Freddie Mac
Which regulation requires the lenders to
"BE EQUAL" when extending credit to borrowers? - ECOA - Regulation B
How old must a borrower be to qualify for a Reverse Mortgage? - 62 years old
Which regulation has the primary function ofpreventing Identity Theft? - FACT Act
Which regulation has SECTION 114 Rules? - FACT Act
Which regulation requires the creditor to verify the VALIDITY of any change of address received? -
SECTION 114 of the FACT Act
What is the payment method used in a reverse mortgage that allows the homeowners to receive a
monthly check while living in the property? - TENURE Method
What is the fraud scheme where a borrower uses someone else'sname to purchase the property, but
that person WILL NOT be living at the property? - Straw Borrower
What type of lender "insures" mortgages? - FHA approved lenders
What type of lender "guarantees" mortgages? - VA approved lenders and USDA approved lenders
,What is the entity that loans money to fund purchases in rural areas? - USDA/Dept. of Agriculture
What is the value remaining in property after all liens and debts have been paid? - Equity
A borrower is refinancing his home. How much time does Reg Z give him to change his mind
(rescind)? - 3 days
Which Regulation established the 3-day right of rescission rule? - TILA/REG Z
Redlining is part of which regulation/Law? - Fair Housing Act
Blockbusting is part of which regulation/Law? - Fair Housing Act
Steering is part of which regulation/Law? - Fair Housing Act
Trying to convince a homeowner to SELL his home by implying that another race/ethnicity is moving
in the neighborhood is called? - Blockbusting/panic selling
Trying to convince a homeowner to PURCHASE in a particular neighborhood based on his race,
religion or ethnicity is called? - Steering
Refusing to make loans on a property in a certain neighborhood for discriminatory reasons is called?
- Redlining
What does HOEPA stand for? - Home Ownership and Equity Protection Act
HOEPA Loans are part of which larger regulation? - Regulation Z/TILA
High Cost Loans are part of which larger regulation? - Regulation Z/TILA
High Priced Loans are part of which larger regulation? - Regulation Z/TILA
, Section 32 Loans are part of which larger regulation? - Regulation Z/TILA
Section 35 Loans are part of which larger regulation? - Regulation Z/TILA
MDIA ACT is part of which larger regulation? - Regulation Z/TILA
Mortgage Disclosure Improvement Act is part of which larger regulation? - Regulation Z/TILA
What is another name for Annual Percentage Rate? - Effective Rate
What is another name for Interest Rate? - Nominal Rate or Note Rate
PITI divided by Gross Monthly income is referred to as what? - Housing Ratio or Front- End DTI
PITI + monthly debt divided by Gross Monthly income is referred to as what? - Total Obligation Ratio -
Back-end Ratio
How long must TILA Disclosures be kept? - 2 years
(exceptions - LE is kept for 3 years and CD is kept for 5 years)
What is the maximum amount of time that NEGATIVE info can remain on a credit report? - 7 years
What is the maximum amount of time that abankruptcy can remain on a credit report? - 10 years
Which law/regulation states that a Bankruptcy can only remain on your credit for a MAX of 10 years?
- FCRA - Fair Credit Reporting Act - Reg V
Which law/regulation states that negative information can only remain on your credit for a MAX of 7
years? - FCRA - Fair Credit Reporting Act - Reg V
Graded A+ (Comprehensive)
What law deals with credit, APR & advertising of consumer loans? - TILA/REGULATION Z
Which regulation
prohibits kickbacks? - RESPA - Reg X
Which regulation
requires the lender to
cancel PMI when the loan reaches 78% LTV? - HPA- Homeowners Protection Act
Which regulation prohibits fee splitting? - RESPA
"X" is the letter used to describe which Regulation? - RESPA
RESPA is the acronym used to describe which Law? - Real Estate Settlement Procedures Act
What type of mortgage requires a non- refundable funding fee? - VA Loan
What is the provision in a mortgage enabling a lender to demand full repayment if the borrower
DEFAULTS on the loan? - Acceleration Clause
What is the provision in a mortgage enabling a lender to demand full repayment if the borrower
TRANSFERS the loan? - Alienation Clause
What does CFPB Stand for? - Consumer Financial Protection Bureau
What two laws created the CFPB? - Dodd Frank Act and Consumer Finance Protection Act
Which regulation is designed to help meet the Credit Needs of the Communities in which it
operates? - CRA - Community Reinvestment Act
,Under ECOA rules and regulations, how many days does the borrower have to request a copy of an
appraisal report if the application was denied? - 90 Days
Under ECOA rules and regulations, if an application for credit is denied, and if requested by the
borrower - how many days does the lender have to provide a copy of an appraisal report? - 30 Days
If a loan application is APPROVED, under ECOA rules and regulations, when MUST a copy of the
appraisal be provided to the borrower? - 3 business days prior to the loan closing
Conforming Loans follow the guidelines of which regulators? - Fannie Mae and Freddie Mac
Which regulation requires the lenders to
"BE EQUAL" when extending credit to borrowers? - ECOA - Regulation B
How old must a borrower be to qualify for a Reverse Mortgage? - 62 years old
Which regulation has the primary function ofpreventing Identity Theft? - FACT Act
Which regulation has SECTION 114 Rules? - FACT Act
Which regulation requires the creditor to verify the VALIDITY of any change of address received? -
SECTION 114 of the FACT Act
What is the payment method used in a reverse mortgage that allows the homeowners to receive a
monthly check while living in the property? - TENURE Method
What is the fraud scheme where a borrower uses someone else'sname to purchase the property, but
that person WILL NOT be living at the property? - Straw Borrower
What type of lender "insures" mortgages? - FHA approved lenders
What type of lender "guarantees" mortgages? - VA approved lenders and USDA approved lenders
,What is the entity that loans money to fund purchases in rural areas? - USDA/Dept. of Agriculture
What is the value remaining in property after all liens and debts have been paid? - Equity
A borrower is refinancing his home. How much time does Reg Z give him to change his mind
(rescind)? - 3 days
Which Regulation established the 3-day right of rescission rule? - TILA/REG Z
Redlining is part of which regulation/Law? - Fair Housing Act
Blockbusting is part of which regulation/Law? - Fair Housing Act
Steering is part of which regulation/Law? - Fair Housing Act
Trying to convince a homeowner to SELL his home by implying that another race/ethnicity is moving
in the neighborhood is called? - Blockbusting/panic selling
Trying to convince a homeowner to PURCHASE in a particular neighborhood based on his race,
religion or ethnicity is called? - Steering
Refusing to make loans on a property in a certain neighborhood for discriminatory reasons is called?
- Redlining
What does HOEPA stand for? - Home Ownership and Equity Protection Act
HOEPA Loans are part of which larger regulation? - Regulation Z/TILA
High Cost Loans are part of which larger regulation? - Regulation Z/TILA
High Priced Loans are part of which larger regulation? - Regulation Z/TILA
, Section 32 Loans are part of which larger regulation? - Regulation Z/TILA
Section 35 Loans are part of which larger regulation? - Regulation Z/TILA
MDIA ACT is part of which larger regulation? - Regulation Z/TILA
Mortgage Disclosure Improvement Act is part of which larger regulation? - Regulation Z/TILA
What is another name for Annual Percentage Rate? - Effective Rate
What is another name for Interest Rate? - Nominal Rate or Note Rate
PITI divided by Gross Monthly income is referred to as what? - Housing Ratio or Front- End DTI
PITI + monthly debt divided by Gross Monthly income is referred to as what? - Total Obligation Ratio -
Back-end Ratio
How long must TILA Disclosures be kept? - 2 years
(exceptions - LE is kept for 3 years and CD is kept for 5 years)
What is the maximum amount of time that NEGATIVE info can remain on a credit report? - 7 years
What is the maximum amount of time that abankruptcy can remain on a credit report? - 10 years
Which law/regulation states that a Bankruptcy can only remain on your credit for a MAX of 10 years?
- FCRA - Fair Credit Reporting Act - Reg V
Which law/regulation states that negative information can only remain on your credit for a MAX of 7
years? - FCRA - Fair Credit Reporting Act - Reg V
