NMLS TEST EXAM WITH QUESTIONS AND ANSWERS (VERIFIED AND
NMLS TEST
WELL DETAILED ANSWERS) LATEST UPDATE 2024/2025
Study online at https://quizlet.com/_7hb8mo
1. RESPA 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.
2. TILA Truth in Lending Act - Reg Z. Requires lenders to reveal total cost of loan and APR.
3. HMDA Reg - C home mortgage disclosure act. an act of law that requires lneders to
upoload app data to identify discrimination
4. There are four the types of institutions are required to report;
things that are
important to un- the types of transactions must be reported;
derstanding how
what specific information is required to be collected, recorded and reported; and
HMDA works:
how the information is reported and disclosed.
5. HMDA 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
6. USDA Loans • 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
, NMLS TEST
Study online at https://quizlet.com/_7hb8mo
• 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 docu-
mented
• DTI ratio of 29% for housing and 42% for total debt
• Includes a non-refundable 2% funding fee (aka guaranty fee)
7. To qualify for a the borrower must prove that they have income up to 115 percent of the median
USDA loan income of the area. The borrower must also be living in or purchasing a property
that is in a rural area.
8. FNMA (Federal Known as Fannie Mae
National Mort- Private
gage Associa- Buys FHA, VA and conventional loans
tion) 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 which are resold and tradable; relatively safe and very
liquid; desirable for several classes of investors
9. Freddie Mac FHLMC, Federal Home Loan Mortgage Corporation: A government supervised
enterprise established to purchase primarily conventional mortgage loans in the
secondary mortgage market.
10. GSE Government Sponsored Enterprise
11. The Dodd-Frank looked to strengthen loan originator qualification requirements and regulate in-
Wall Street Re- dustry compensation practices. The CFPB then issued new rules to implement the
form and Con- Dodd-Frank Act requirements, as well as to revise and clarify existing regulations
sumer Protection and commentary on loan originator compensation.
Act
, NMLS TEST
Study online at https://quizlet.com/_7hb8mo
12. Loan Originator A section of TILA that went into effect in 2014. Mandated by the Dodd-Frank Act
Compensation and spearheaded by the CFPB
13. Steering Before the implementation of the S.A.F.E Act loan originators training and qualifi-
cations varied from individual to individual and the structure of their compensa-
tion gave them strong incentives to steer consumers into expensive loans.
14. LO Compensa- No loan originator shall receive any payment that is based on term of the loan
tion Rule
15. 1003 A Fannie Mae loan application form designed by Fannie Mae and Freddie Mac.
Used to obtain financial information from borrowers who apply for a mortgage
loan secured by a 0ne-to-four unit residential real estate.
Also Known As: Uniform Residential Loan Application (URLA); ten-oh-three, Fred-
die Mac Form 65
16. 1031 Exchange allows taxpayers to defer capital gains and recaptured depreciation taxes when
exchanging real or personal property, differed indefinitely until the replacement
property is sold or another 1031 exchange is initiated.
17. 4506-T An IRS form to retrieve past tax documents, W-2 and 1099 transcripts. Used to
validate income documentation for underwriting and quality control purposes.
18. Abstract of Title A concise state summarizing the history of a piece of loan, including all con-
veyances, interests, liens, an encumbrances that affect title to the property.
A good and merchantable abstract of title shows clear and marketable title, rather
than only the history of the property.
19. Acceleration A loan-agreement provision that requires the debtor to pay off the balance sooner
Cause than the due date if some specific event occurred, such as failure to pay an
installment or to maintain insurance. Ω
NMLS TEST
WELL DETAILED ANSWERS) LATEST UPDATE 2024/2025
Study online at https://quizlet.com/_7hb8mo
1. RESPA 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.
2. TILA Truth in Lending Act - Reg Z. Requires lenders to reveal total cost of loan and APR.
3. HMDA Reg - C home mortgage disclosure act. an act of law that requires lneders to
upoload app data to identify discrimination
4. There are four the types of institutions are required to report;
things that are
important to un- the types of transactions must be reported;
derstanding how
what specific information is required to be collected, recorded and reported; and
HMDA works:
how the information is reported and disclosed.
5. HMDA 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
6. USDA Loans • 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
, NMLS TEST
Study online at https://quizlet.com/_7hb8mo
• 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 docu-
mented
• DTI ratio of 29% for housing and 42% for total debt
• Includes a non-refundable 2% funding fee (aka guaranty fee)
7. To qualify for a the borrower must prove that they have income up to 115 percent of the median
USDA loan income of the area. The borrower must also be living in or purchasing a property
that is in a rural area.
8. FNMA (Federal Known as Fannie Mae
National Mort- Private
gage Associa- Buys FHA, VA and conventional loans
tion) 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 which are resold and tradable; relatively safe and very
liquid; desirable for several classes of investors
9. Freddie Mac FHLMC, Federal Home Loan Mortgage Corporation: A government supervised
enterprise established to purchase primarily conventional mortgage loans in the
secondary mortgage market.
10. GSE Government Sponsored Enterprise
11. The Dodd-Frank looked to strengthen loan originator qualification requirements and regulate in-
Wall Street Re- dustry compensation practices. The CFPB then issued new rules to implement the
form and Con- Dodd-Frank Act requirements, as well as to revise and clarify existing regulations
sumer Protection and commentary on loan originator compensation.
Act
, NMLS TEST
Study online at https://quizlet.com/_7hb8mo
12. Loan Originator A section of TILA that went into effect in 2014. Mandated by the Dodd-Frank Act
Compensation and spearheaded by the CFPB
13. Steering Before the implementation of the S.A.F.E Act loan originators training and qualifi-
cations varied from individual to individual and the structure of their compensa-
tion gave them strong incentives to steer consumers into expensive loans.
14. LO Compensa- No loan originator shall receive any payment that is based on term of the loan
tion Rule
15. 1003 A Fannie Mae loan application form designed by Fannie Mae and Freddie Mac.
Used to obtain financial information from borrowers who apply for a mortgage
loan secured by a 0ne-to-four unit residential real estate.
Also Known As: Uniform Residential Loan Application (URLA); ten-oh-three, Fred-
die Mac Form 65
16. 1031 Exchange allows taxpayers to defer capital gains and recaptured depreciation taxes when
exchanging real or personal property, differed indefinitely until the replacement
property is sold or another 1031 exchange is initiated.
17. 4506-T An IRS form to retrieve past tax documents, W-2 and 1099 transcripts. Used to
validate income documentation for underwriting and quality control purposes.
18. Abstract of Title A concise state summarizing the history of a piece of loan, including all con-
veyances, interests, liens, an encumbrances that affect title to the property.
A good and merchantable abstract of title shows clear and marketable title, rather
than only the history of the property.
19. Acceleration A loan-agreement provision that requires the debtor to pay off the balance sooner
Cause than the due date if some specific event occurred, such as failure to pay an
installment or to maintain insurance. Ω
