NMLS MLO Exam (Latest Update) Questions and Verified
Answers| 100% Correct| Grade A+
How long after the application date must social security payments continue to be received in order to
count as income? - ANSWER-3 years
Which appraisal approach is most suitable for an office building? - ANSWER-Income Capitalization
Approach
Term Mortgage - ANSWER-Short-term mortgage (usually less than 5 years) where the loan is not fully
amortized, instead the borrower makes interest only payments for the term of the loan. At the end of
the term, the entire principle is due in a lump sum payment aka balloon payment
Who is responsible for completing the HUD-1/Loan Disclosure? - ANSWER-The closing agent
A mortgagor's title insurance policy is based on purchase price. True or False? - ANSWER-True
What clause in a mortgage prevents the lender from recovering additional assets from the mortgagor if
there is a shortfall in the foreclosure proceeds? - ANSWER-Exculpatory
The APR appears in the lock-in agreement. True or False? - ANSWER-False
Fannie Mae allows what amount of fees to be charged to a credit card? - ANSWER-1% of the loan
amount plus $500 for the appraisal and credit report
Alimony payments must continue to be received for how long after the application date if they are to be
included as income? - ANSWER-3 years
Credit reports are good for how many days after they are pulled for qualifying purposes? - ANSWER-120
days
,Fee simple absolute - ANSWER-Denotes complete ownership, when the owner dies the real estate is
passed on to his/her heirs. Absolute means that the owner's rights of ownership are not limited by any
condition.
Tenants in common permits the property to pass to an heir. True or False? - ANSWER-True
Principle of Substitution - ANSWER-The economic concept which states that a knowledgeable buyer will
pay no more for one property than they would pay for an equally desirable comparable property.
Which act entitles an applicant to their property appraisal report? - ANSWER-ECOA
Which act requires that the Special Information booklet be given to borrowers? - ANSWER-RESPA
How often must mortgage companies submit a residential loan origination activity report to the NMLSR?
- ANSWER-3 months
The first page of an advertiser's fax must include what? - ANSWER-opt-out instructions
Individuals submit an annual Report of Foreign Bank and Financial Accounts to ___________. - ANSWER-
IRS
What happens if the acceptable variance between the GFE and the HUD-1 is exceeded? - ANSWER-The
excess is refunded to the borrower within 30 days
What happens if the acceptable variance between the LE and CD is exceeded? - ANSWER-The excess if
refunded to the borrower within 60 days
A lender won't lose money funding what type of loan? - ANSWER-FHA
A loan originator who accepts an upfront fee for negotiating a loan modification is violating which law? -
ANSWER-MARS
, A lender that works with licensed loan originators is a: - ANSWER-Wholesale lender
What type of valuation takes into account annual rent as well as other generated income? - ANSWER-
GIM (Gross Income Multiplier)
What type of mortgage fraud occurs when a loan originator submits and closes one loan application
with multiple lenders? - ANSWER-Chunking
Blockbusting - ANSWER-Spreading a rumor that a specific ethnic group is planning to move into the
neighborhood and advises residents to sell before property values drop
Sweat Equity - ANSWER-When a lender allows a tenant's improvements to be a applied toward a down
payment
Zoning - ANSWER-Local laws that control the use of the land
Quitclaim deed - ANSWER-A deed that transfers ownership without making any guarantee of clear title
ECOA applies to the extension of credit for: - ANSWER-Residential, business, commercial, and
agricultural loans
Are an LE and CD required to be disclosed for an adjustable-rate home equity plan? - ANSWER-No
Seller carry-back loan - ANSWER-Transaction in which the seller provides most or all of the financing,
typically involving an assumable mortgage
How much hazard insurance does FNMA require on a property? - ANSWER-100% of the lesser of the
loan amount or the cost to restore the improvements to the property
How often must a borrower renew owner's title insurance? - ANSWER-It is not necessary to renew
Answers| 100% Correct| Grade A+
How long after the application date must social security payments continue to be received in order to
count as income? - ANSWER-3 years
Which appraisal approach is most suitable for an office building? - ANSWER-Income Capitalization
Approach
Term Mortgage - ANSWER-Short-term mortgage (usually less than 5 years) where the loan is not fully
amortized, instead the borrower makes interest only payments for the term of the loan. At the end of
the term, the entire principle is due in a lump sum payment aka balloon payment
Who is responsible for completing the HUD-1/Loan Disclosure? - ANSWER-The closing agent
A mortgagor's title insurance policy is based on purchase price. True or False? - ANSWER-True
What clause in a mortgage prevents the lender from recovering additional assets from the mortgagor if
there is a shortfall in the foreclosure proceeds? - ANSWER-Exculpatory
The APR appears in the lock-in agreement. True or False? - ANSWER-False
Fannie Mae allows what amount of fees to be charged to a credit card? - ANSWER-1% of the loan
amount plus $500 for the appraisal and credit report
Alimony payments must continue to be received for how long after the application date if they are to be
included as income? - ANSWER-3 years
Credit reports are good for how many days after they are pulled for qualifying purposes? - ANSWER-120
days
,Fee simple absolute - ANSWER-Denotes complete ownership, when the owner dies the real estate is
passed on to his/her heirs. Absolute means that the owner's rights of ownership are not limited by any
condition.
Tenants in common permits the property to pass to an heir. True or False? - ANSWER-True
Principle of Substitution - ANSWER-The economic concept which states that a knowledgeable buyer will
pay no more for one property than they would pay for an equally desirable comparable property.
Which act entitles an applicant to their property appraisal report? - ANSWER-ECOA
Which act requires that the Special Information booklet be given to borrowers? - ANSWER-RESPA
How often must mortgage companies submit a residential loan origination activity report to the NMLSR?
- ANSWER-3 months
The first page of an advertiser's fax must include what? - ANSWER-opt-out instructions
Individuals submit an annual Report of Foreign Bank and Financial Accounts to ___________. - ANSWER-
IRS
What happens if the acceptable variance between the GFE and the HUD-1 is exceeded? - ANSWER-The
excess is refunded to the borrower within 30 days
What happens if the acceptable variance between the LE and CD is exceeded? - ANSWER-The excess if
refunded to the borrower within 60 days
A lender won't lose money funding what type of loan? - ANSWER-FHA
A loan originator who accepts an upfront fee for negotiating a loan modification is violating which law? -
ANSWER-MARS
, A lender that works with licensed loan originators is a: - ANSWER-Wholesale lender
What type of valuation takes into account annual rent as well as other generated income? - ANSWER-
GIM (Gross Income Multiplier)
What type of mortgage fraud occurs when a loan originator submits and closes one loan application
with multiple lenders? - ANSWER-Chunking
Blockbusting - ANSWER-Spreading a rumor that a specific ethnic group is planning to move into the
neighborhood and advises residents to sell before property values drop
Sweat Equity - ANSWER-When a lender allows a tenant's improvements to be a applied toward a down
payment
Zoning - ANSWER-Local laws that control the use of the land
Quitclaim deed - ANSWER-A deed that transfers ownership without making any guarantee of clear title
ECOA applies to the extension of credit for: - ANSWER-Residential, business, commercial, and
agricultural loans
Are an LE and CD required to be disclosed for an adjustable-rate home equity plan? - ANSWER-No
Seller carry-back loan - ANSWER-Transaction in which the seller provides most or all of the financing,
typically involving an assumable mortgage
How much hazard insurance does FNMA require on a property? - ANSWER-100% of the lesser of the
loan amount or the cost to restore the improvements to the property
How often must a borrower renew owner's title insurance? - ANSWER-It is not necessary to renew
